August 21st, 2024 - The Mine Wire

METALS MARKET

WTI Crude was up last week and right back down this week. Gold surpassed $2,500 per troy ounce, meaning average gold bars (400 troy ounces) hit a $1m valuation for the very first time. It definitely puts those bank heist movies into perspective. At 25 pounds per gold bar, one could comfortably hold a few million in their hands.

^{**For our chart above we are taking prices from Tuesday 4pm EST to Tuesday 4pm EST, so not the typical week of Monday through Friday.}

KEEPING AN EYE ON GOVERNMENT DECISIONS

With many forecasting significant demand for metals into the foreseeable future, governments are all over the place with their policies. Here are some of the notable moves this week.

• 🇨🇳 Starting September 15th, China will impose strict export controls on antimony. Why? The Chinese Commerce Ministry cited national security. Antimony is a critical input for the defense industry and is used for armor-piercing ammunition, night vision goggles, infrared sensors, nuclear weapons, as well as in batteries and photovoltaic equipment. In 2023, China accounted for 48% of the worlds antimony production while many of the other top producers could hardly be called allies of western democratic governments. Companies associated with antimony like Perpetua Resources (TSE: PPTA) saw big gains. Perpetua is up +37.24% since the Chinese news while Larvotto Resources (ASX: LRV) is up a mind-blowing +76.67%. (CNN) & (Sydney Herald)

• 🇦🇺 The Australian government has warned that it could lose several billion dollars in tax revenue should the price of iron ore drop to $60 USD per tonne by the end of September. When the government set its budget, iron ore was trading around $120 USD per tonne. A stark reminder of why the mining industry is so important for the country and the public services Australians rely upon. (Asia Nikkei)

• 🇦🇺 The coal industry will go it alone in Australia. According to the Financial Review there is a feeling that the Minerals Council of Australia cannot provide the bespoke advocacy that the controversial fossil fuel needs. The new organization will be called Coal Australia and will look to promote it’s economic contribution to the country. Given that there is a Coal Association of Canada and the American Coal Council, we aren’t surprised to see this move and it will likely benefit both groups. (AFR) 

• 🇨🇦 The Canadian government announced an additional investment of over $16m for the Saskatchewan Research Council (SRC). This includes $15.96m to enable SRC to acquire bastnaesite from Canadian sources and create new domestic capacity for bastnaesite processing, which will be integrated into SRC's Rare Earth Processing Facility. (Government of Saskatchewan)

• 🇨🇦 Through the industry-funded Technology Innovation and Emissions Reduction (TIER) program, Alberta’s government is providing $5 million to help Calgary-based E3 Lithium commercialize a new technology that extracts lithium naturally found in saltwater – known as brines – produced by the oil and gas sector and turns it into lithium products that can be sold to battery producers and automotive companies. (Government of Alberta)

• 🇨🇦 The Mining Association of Canada (MAC) put out a statement related to some changes Finance Canada has proposed in relation to its 2024/25 budget commitments. As many will recall, the government has made some notable changes to the capital gains taxes which could impact the ability of companies to raise capital. Read the associations statement here —> (Newswire)

• 🇺🇸 🇨🇦 Congratulations to Electra Battery Materials Corporation (CVE: ELBM) which received a $20m USD award from the U.S. Department of Defense via the Defense Production Act Investments (DPAI). The funds will support the completion of an industrial scale hydrometallurgical plant and establish production of cobalt sulfate at the company's facility in Temiskaming Shores, Ontario. The stock is up 31.37% since the news. (U.S. Department of Defense) & (CBC)

• 🇲🇽 A committee in Mexico's lower house of Congress approved two constitutional reforms that would prohibit open-pit mining and fracking, as well as restrict the use of genetically modified corn. The reforms will be looked at by the full lower house in September when lawmakers return. Any constitutional reforms must pass with 2/3’s support in both the lower house and the Senate. While the ruling Morena party and its allies control 372 seats in the 500 seat lower house (74.4%), they only have 83 of the 128 seats in the senate or 64.8% of the vote. Looks like this will be a close one. The Mexican Mining Chamber (Camimex) says a ban could reduce the GDP by 1% and impact roughly 200,000 jobs. (Reuters)

• 🇨🇴 A little further south, Colombia has formally signed a ban on the export of thermal coal to Israel. The ban will come into force this week. The nation was the largest exporter of coal to Israel and delivered some $450m worth in 2023. (teleSUR)

• 🇮🇩 Indonesian President Joko Widodo replaced the country’s energy and investment chiefs in a wider cabinet reshuffle just weeks before he’s due to step down, in a bid to ensure his policies remain priorities for the incoming administration of Prabowo Subianto. (Financial Times)

MINING MATTERS FROM AROUND THE WORLD 🌎

• The Government of Yukon made an application with the Ontario Superior Court of Justice to have a receiver appointed to take control of the assets of Victoria Gold Corp., including the Eagle Mine, under the federal Bankruptcy and Insolvency Act. The court granted the order appointing a receiver (PricewaterhouseCoopers) which lead the Victoria Gold Corp. board to resign. Parsons Inc. will serve as Lead Environmental Consultant. (Yukon Government) or (CBC)

• BHP (NYSE: BHP, ASX: BHP) managed to avoid an on-going strike at its Escondida copper mine in Chile. The deal gave each worker roughly $34,000 compared to BHP’s original offer of $28,900. Time will tell if other union groups are able to leverage this deal to get improved contracts at other mines in Chile. (Reuters)

• Metso’s (METSO.HE) stock was up this week on rumors of a potential merger with Sandvik (STO:SAND) which also saw a small gain. Metso said it was unaware of any merger discussions while Sandvik was not available to comment. (Mining.com)

• Zijin Mining Group plans to invest $100m in Kazakhstan to construct a processing plant for non-ferrous and precious metal concentrates. These concentrates are expected to be processed further at local metallurgical plants, contributing to Kazakhstan's industrial growth. The investment is expected to create 1,000 jobs. (Daryo)

• Congratulations to Montreal’s WSP’s which will acquire U.S. based POWER Engineers for $1.78bn USD. Based in Hailey, Idaho, POWER has roughly 4,000 employees and has a proven track record of serving the most prominent power utilities in North America. (WSP)

Q2 EARNINGS - Many companies have now reported earnings, but here are some of the companies that still reported this past week:

• K+S Group (SDF.DE) - (Report Here) - The German Potash & Salt miner increased revenues to €874m in Q2 2024 from €826m in Q2 2023. Operating earnings EBITDA rose significantly to €128m, compared with €24m the prior-year quarter. Sales volumes of its fertilizers were up which contributed to the strong earnings. While the stock was up over 2% in early trading, it is down over 4% since earnings.

• Wesdome Gold Mines Ltd. (TSX: WDO, OTCQX: WDOFF) - (Report Here) - The miner improved its Q2 revenues to $127.8m from $84.6m a year earlier. Despite a jump in the stock price after earnings, the company is now trading down over 1.5% since earnings. While there was a major to boost in revenue, analysts were mixed on the results. The consensus lead to a minor downgrade to its earnings per share forecasts. The miner is still up a whopping +75.84% this year, making us wish we had this one in our portfolio.

• Dundee Corporation (TSE: DC.A) - (Report Here) - In the first six months of 2024, the mining investment firm reported net earnings before taxes from the mining investments segment of $55.4m compared with a loss of -$0.9m a year earlier. While the stock hasn’t moved much since earnings, it is up a staggering +54.35% this year.

• Lithium Americas (TSE: LAC, NYSE: LAC) - (Report Here) - The company provided its Q2 update highlighting its conditional $2.26bn loan from the U.S. Department of Energy, its on-going investment from GM as well as an update on its Thacker Pass project. The stock is down -59.22% this year, as prices for lithium weigh on the sector.

• Antofagasta PLC (LON: ANTO) - (Report Here) - The well known Chilean copper miner posted first half results for 2024. Revenue for the first half was $2.955bn up 2.3% from a year earlier. EBITDA of $1.394.4 was also up 4.8% from a year earlier. “An exceptional fair value gain of $51.0m was recognized in H1 2024 in respect of the agreement to acquire up to an additional 30 million shares in Compañía de Minas Buenaventura S.A.A. (“Buenaventura”). A deferred tax expense of $12.7m has been recognized in respect of this gain, resulting in a post-tax impact of $38.3m.” This and the higher effective tax rate of 42% compared with 30% a year earlier, led to a 21.5% decrease in earnings per share. (Reuters)

MINING BITS

• 🇨🇳 Chinese scientists have proposed a magnetic launcher on the moon for the cost-effective resource transport to Earth. The launcher would work like a sling-shot and would be able to send two loads per day to the earth and would be a fraction of the current costs - about a 1/10. The goal would be to transport Helium-3. According to the paper, just 20 tonnes of helium-3 could meet China’s yearly electricity demand. While Earth has only around 0.5 tonnes of helium-3, the lunar soil is estimated to contain 1 million tonnes—enough to power the world’s energy needs for over a thousand years. (Interesting Engineering)

• 🇧🇷 🇺🇸 Columbia University’s Centre on Global Energy Policy published this piece titled, “Brazil’s Potential Role in Diversifying US Critical Mineral Supply.” The authors discuss Brazil as a potential US trade partner in critical minerals by considering the country’s 1. reserves and production, 2. environmental landscape linked to mining, 3. evolving policy framework, and 4. market and investment ecosystem. An interesting read. We didn’t know that Brazil had the largest share of niobium in the world, but we are sure some of you knew that! (Columbia University)

• 💰 Morningstar did an analysis of the 2024 proxy season to date and highlighted three trends. First, ESG resolutions are up, but mainly due to anti-ESG resolutions increasing. Second, resolutions looking to bolster shareholder rights and improve governance were 35% of resolutions compared to 30% in 2023. Third, support for environmental and social outcomes has fallen. Support fell to 16% for these resolutions, from 19% in 2023 and 28% in 2022. While they posit that this could be to low-quality resolutions, we would wonder whether this also has to do with the current economic uncertainty where many shareholders focus more rigidly on returns. (Morningstar)

• 🇨🇦 Timmins, Ontario-based NPLH Drilling and Northern College are offering the diamond drilling common core basic training program for free to Taykwa Tagamou Nation (TTN) members. The course normally costs $4,500 per student. The program’s first cohort will have 10 students from TTN and will give them the opportunity to both learn and work on equipment. What a great initiative! (Timmins Today)

• 📺 Ted Koppel from CBS takes a look at silica dust and underground coal mining in Virginia. The argument made is that younger miners are getting “black lung” at higher rates than before given that coal seams are getting harder and harder to reach and require more drilling through rock which equals more silica dust. A variety of shots are taken at industry and accusations of nefarious practices by some organizations. If nothing else, its worth watching to understand what is being claimed. (CBS)

• 💲Congratulations to Toronto-based Venture Capital firm Radical Ventures which will launch an $800m USD AI-Growth Fund which is the largest of its kind. Last year, Radical raised $550m USD for early-stage AI start-ups. The company is invested in some of the hottest AI startups from Toronto-based large language model developer and OpenAI competitor Cohere to autonomous driving company Waabi, AI chip startup Untether AI, and quantum computing firm Xanadu. (BetaKit)

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