August 7th, 2024 - The Mine Wire

METALS MARKET

In the past few days we saw one of the biggest market routs in recent memory. The Japanese Nikkei had its biggest one day drop since its 1987 Black Monday. Taiwan’s Index suffered its worst one day loss (-8.4%) since 1967 largely due to TSMC’s decrease. So what the heck happened?

There was weaker jobs data out of the United States, but more importantly, Japan’s central bank increased interest rates to 0.25%, leading to a wind-down of carry trades where Japanese Yen is borrowed to invest elsewhere. Why? Well the increase in interest rates helped the Japanese Yen rally 11% against the dollar which may have caught some traders with their pants down so to speak. Result - sell-off, cover, vacation, wake-up, get back to it! (Reuters)

^{**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.

• 🇺🇳 Brazilian oceanographer, Ms. Leticia Carvalho, has been elected the next secretary-general of the International Seabed Authority in a vote of 79 to 34. She was up against the incumbent Michael Lodge who some felt was too close to the mining industry and too quick to push through regulations to allow seabed mining. It is expected that Ms. Carvalho will ignore the urgency by some to move quickly and focus on a measured evidence-based process that will likely take time. A research report that showed that the polymetallic nodules targeted for mining in the Pacific Ocean actually produce oxygen, has made things more complicated. In fact, it was raised by several ISA delegates in Kingston, Jamaica as a reason to slow mining efforts. (ISA Org) or (BNN Bloomberg)

• 🇨🇦 The Yukon Government provided an update on water and fish sampling related to the Victoria Gold disaster. We would like to be cautiously optimistic based on what the government is reporting, but we know the public and first nations groups are highly suspect and concerned. Adding fire to all of this is U.S. Senator from Alaska, Dan Sullivan, who is demanding transparency, cooperation and cleanup of the Yukon spill. The Senator confirmed that he has secured a commitment from the U.S. Geological Survey to conduct water testing in Alaska’s portion of the Yukon as a precautionary measure. (Yukon Government) & (U.S. Senator Dan Sullivan)

• 🇨🇦 The Canadian government has given the province of Nova Scotia $192m to help support four clean energy projects as it looks to help the province move away from coal generated electricity. Currently, there are four coal power plants in the province that generate roughly 50% of the electricity in the province. The province is building out wind power generation, but needs further investment in battery storage and other infrastructure to make the move. (iPolitics)

• 🇺🇸 Tim Walz, Governor of Minnesota, has joined the Democratic ticket as Vice President. So where does he stand on mining? Julie Lucas, Executive Director of MiningMinnesota, said, “What we have appreciated about Gov. Walz is he is very pragmatic.” With a track record of implementing policies to push renewable energy projects, electric vehicles and so forth, he clearly understands that importance of critical minerals, but balances that with protecting environmental standards. Both S&P Global and Politico have lengthy strong coverage on the Governor here —> (S&P Global) & (Politico)

• 🇺🇸 The U.S. Government Accountability Office came out with a report titled Critical Minerals: Status, Challenges, and Policy Options for Recovery from Nontraditional Sources. They take a look at recovering critical minerals from non-traditional sources like coal and hard rock mining wastes as well as brines. They look at issues around liability, economics and public consultation and suggest different policy options like a Good Samaritan Act to limit liability, government subsidies to improve economics and negotiating new community agreements for recovery operations that may have an environmental impact. (GAO)

• 🇺🇸 Congratulations to Lithium Nevada Corporation, a subsidiary of Lithium Americas Corp. (TSE: LAC), which got $11.8m USD from the U.S. Department of Defense to accelerate development of domestic lithium carbonate processing and production. (U.S. Department of Defense)

• 🇦🇺 Geoscience Australia delivered a major update to the Critical Minerals in Ores database and portal, increasing the available online high quality multielement geochemistry of mineralised ore samples from 7,300 to over 25,000. (Geoscience Australia)

• 🇦🇺 The Business Council of Australia made their submission to the Critical Minerals Production Tax Incentive Consultation Paper. They make 12 recommendations and the document is quick and easy to read at only 5 pages. Take a look —> (Business Council of Australia)

• 🇧🇩 In Bangladesh, Prime Minister Sheikh Hasina resigned and fled to India after a week of protests that left hundreds dead. So what happened? Students protested a job quota policy which allocated 30% of civil service positions to the descendants of veterans who fought in Bangladesh’s war of independence in 1971 from Pakistan. Well it just so happens that the quotas favor allies of the governing Awami League party. Surprise, Surprise! In response, the Supreme Court has ordered that the quota for descendants be cut to 5 percent, with 93 percent of jobs to be allocated on merit. The remaining 2 percent will be set aside for members of ethnic minorities and transgender and disabled people. (Reuters) & (Al Jazeera)

• 🇮🇳 Since India introduced an auction regime in 2015, 385 mines have been auctioned off with 50 beginning production. While the business standard suggests this is poor performance, we are pretty sure that companies in Western jurisdictions would take this success rate, particularly given the report last week on how slow mining approvals take. (The Business Standard)

MINING MATTERS FROM AROUND THE WORLD 🌎

• Workers at BHP’s (NYSE: BHP) Escondida mine in Chile have rejected a contract offer according to their union. A total of 2,371 workers, or about 99.75% of union members, voted in favor of the strike. BHP has subsequently requested mediation by the Chilean government to help avoid a strike. The union is calling for 1% of dividends to be distributed equally among workers. While BHP owns more than half of Escondida, both Rio Tinto and JECO Corp. are owners. (Reuters)

• Glencore’s (LON: GLEN) international unit was found “criminally liable” by Federal prosecutors in Switzerland on Monday. The Attorney General’s office said Glencore failed to take adequate measures to prevent bribery of a Congolese public official by a business partner over its purchase in 2011 of minority stakes in two companies from the central African country’s state mining company. The mining giant has been ordered to pay over $150m in compensation and fines. (AP News)

• Privately held Energy Exploration Technologies (EnergyX) has made an unsolicited, non-binding offer for the Argentinian lithium assets of Galan Lithium (ASX: GLN). It is reported that the proposal includes $50m cash, $50m in shares in EnergyX as well as $50m towards developing the project of which Galan Lithium would receive a 10% gross revenue royalty from commercial production for a decade. Currently, Galan Lithium has a market cap of $61.12m AUD (around $40m USD), so probably worth a closer look for you investing professionals. (Mining Technology)

• Speaking of Lithium, Albemarle (NYSE: ALB) reported its Q2 earnings. The global lithium giant suffered a net loss of $188m for the quarter compared to a net income of $650m a year earlier. Net sales for the second quarter of 2024 were $1.4 bn compared to $2.4 bn for the prior-year quarter, a year-over-year decline of 40% driven primarily by lower pricing in Energy Storage. CEO, Kent Masters, was in the Financial Times calling for more help from countries and car manufacturers to fight Chinese competition which has lead to a collapse in prices. We completely agree and would encourage government intervention, although a public dealing with a potential recession and affordability issues may not be as easy to convince. What do you think? (PR Newswire) & (Financial Times)

• Leidos (NYSE: LDOS) has been awarded a $276m task order to support the Department of Defense Information Analysis Center to conduct research and development of critical minerals and materials for use in munitions and to promote energetics supply chain resiliency. That is a big contract, congrats! (Leidos)

• Also congrats to G2 Goldfields (TSE: GTWO) which closed a non-brokered private placement of $42m CAD this week. A single European investor purchased 20m shares at 1.45 CAD per share with Anglo-Ashanti picking up the other 8,965,365, bringing its overall ownership to 15%. G2 Goldfields was trading at $1.37 CAD at market close yesterday, up a whopping 82.67% in 2024. (Junior Mining Network)

Q2 EARNINGS BONANZA! - there were so many earnings this past week that we won’t cover them all, but will post links below and how the stock has moved but keep in mind the global stock selloff is having its own impact.

• Precision Drilling (TSE: PD) - (Report Here) - stock has dropped more than -10% since its earnings report but is still up +33.29% this year.

• Cameco Corp. (TSE: CCO) - (Report Here) - its stock is down over 1/6 since its earnings disclosure and this impacted uranium shares across the market. It is now down -6.08% in 2024.

• Energy Fuels (TSE: EFR) - (Report Here) - is down -16.40% the past 5 days likely due to a mix of earnings, increased production estimates by Kazatomprom as well as their issues with the Navajo nation and transporting uranium on state/federal highways. The stock is down -31.06% in 2024 and is trading at 52 week lows.

• Lundin Mining (TSE: LUN) - (Report Here) - the stock is down over 12% since earnings release but still up +17.85% in 2024.

• Agnico Eagle (TSE: AEM) - (Report Here) - the stock is down a few percent since earnings, but still up +43.30% in 2024.

• Kinross Gold Corporation (TSX: K, NYSE: KGC) - (Report Here) - Like Agnico Eagle it is down a few percent since earnings, but is still up an impressive +49.62% in 2024.

• OceanaGold (TSE: OGC) - (Report Here) - The stock is down over -10% since its Q2 earnings report after its output was down almost 25% compared to a year earlier. Still the stock is up +29.20% in 2024.

• SSR Mining Inc. (TSE: SSRM) - (Report Here) - The stock is down around -18% since earnings came out and is down -56.41% this year.

• Capstone Copper (TSE: CS) - (Report Here) - The stock is down -8.40% since earnings. Despite this, the stock is still up +28.93% in 2024.

• Endeavour Mining (TSE: EDV) - (Report Here) - The stock is down around -13% since earnings and down -9.61% this year.

• Caterpillar Inc. (NYSE: CAT) - (Report Here) - The company saw its stock rise +3.04% yesterday after reporting earnings. The stock is up +11.52% in 2024.

• Vendanta (NSE: VEDL) - (Report Here) - The Indian conglomerate didn’t see much movement in its stock price despite strong earnings. The company’s stock has risen +61% in 2024.

• Coal India Inc. (NSE: COALINDIA) - (Reuters) - The company beat expectations but saw a slight drop in its stock over 1% on the day. Still, the company is up +31.33% this year.

MINING BITS

• 🇸🇪 Are you a geologist looking for an adventure? According to Swedish Radio P4 Värmland, there is a lack of geologists in Sweden due to younger people not studying geology in University. The average age of geologists in the exploration industry is 60+ despite there being a strong interest in mineral extraction across Sweden. If we were young and single we’d be on the next flight! (Sverigesradio)

• 📉 The Financial Times writes that London has fallen behind New York, Toronto and Sydney as companies seek higher valuations and deeper liquidity. The overall market capitalization in London is reported to be $272bn while the other three cities all have market capitalizations over $325bn. Further, companies on the London Stock Exchange (LSE) have raised less than a quarter of those listed in Sydney & Toronto. With better valuations in the United States and a stronger focus from investors in Australia and North America on mining, the LSE is at risk of losing future listings. (Financial Times)

• ☣️ The conversation takes a look at the Krugersdorp gold mine waste in South Africa and two options to help clean up acid mine drainage which includes uranium, arsenic, cadmium, chromium and mercury. The authors suggest two options to remediate the sites. The first option is phytoremediation which is a process of growing plants on top of solid pollution and allowing them to absorb toxins through their roots, removing them from the environment. The other leverages anaerobic prokaryotic microorganisms which are a type of bacteria which when mixed with the acid mine drainage, remove all the metals and the sulfate from the waste. South Africa's national mineral research organization Mintek, says this is all possible, but funding is needed. (The Conversation)

• 🔆 Fortune 500 energy company Vistra Energy engaged McKinsey & Co. to develop a machine learning model (AI) to improve the efficiency and emissions of the coal-fired Martin Lake Power Plant in Rusk County, Texas. Result? The plant ended up running 2% more efficiently after 3 months saving $4.5m annually and 340,000 tons of abated carbon. Due to this, it was rolled out to 26 additional plants which resulted in $23m in savings. (Power Engineering) or (McKinsey)

• 🌊 The U.S. Department of Commerce’s National Oceanic and Atmospheric Administration announced that the Gulf of Mexico’s “Dead Zone” was the 12th largest on record in 38 years of measuring. The dead zone is an area of low to no oxygen that can kill fish and marine life and was approximately 6,705 square miles in July 2024. While run-off from the Mississippi river is considered a major factor, scientists haven’t quite pinpointed the reason for large variability in size and distribution of the dead zone year-to-year. (NOAA)

• 🪙 Do you have your own Airbnb? Well watch out for this new one. Apparently one host had to put a “no crypto-mining” policy for tenants after one guest installed 10 mining rigs that racked up a $1,500 USD electricity bill in just three weeks. Apparently, it was cheaper for them to rent the house than it was to pay the electricity bill and they told the host that they made a cool $100,000 USD over those three weeks. (Protos)

• ☄️ Congratulations to Canadian start-up Perceptive Space which raised $2.8m USD. The startup is leveraging AI to predict “space weather” which rocket launch providers, satellite operations and aviation companies rely on. Currently, this information is supplied mainly by governments using inaccurate, older modeling techniques. How important is this? In 2022, SpaceX is said to have lost 38 or 40 satellites where space weather was a driver. How do we invest? (Techcrunch) or (BetaKit)

• 💋 We wouldn’t be The Mine Wire without something saucy that is completely unrelated to the world of mining. Check out Reuters “OnlyFans Exposed”! Apparently some purveyors of OnlyFans assumed that the adult model they were chatting with, was really the model. Turns out most of the models hire “chatters” to impersonate them online and entice subscribers into tipping and making additional purchases for explicit content. Now, we personally think customers who think they are chatting with the real deal are quite naive, but nonetheless, there is now a class-action lawsuit in the District of Illinois, claiming deceptive practices. Make some popcorn before reading this one. (Reuters)

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