May 16th, 2024 - The Mine Wire

METALS MARKET

Maybe it’s positive we are a day later than usual as Wednesday proved to be a good day for most metals. It was another big week for Copper as it surpassed $5 for a short time on Tuesday. The metal is up 6.85% since last week and is up 14.46% this month and 34.33% on the year. Platinum (8.69%+) and Silver (8.81%+) both had strong weeks. Silver is now up 25.04% year-on-year, beating Gold which is up 20.02% year-on-year.

^{**For our chart above we are taking prices from Tuesday 4pm EST to Wednesday 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.

• 🇦🇺 Lots of news this week out of Australia, including the Federal governments budget (covered in our special report). Additionally, the Government of Western Australia posted a public consultation on its newest regulations under The Fast-Tracking Mining Approvals Strategy. If you are mining in the state, make sure you provide your input. (Government of Western Australia)

• 🇦🇺 A $20 million investment from the Queensland Critical Minerals and Battery Technology Fund (QCMBTF) will allow EQ Resources (EQR) to commence drill testing and trial mining through a reopening of the historic underground mining operations at Mt Carbine Tungsten Mine. (Queensland Government)

• 🇨🇦 The British Columbia government has established an immediate Environment and Land Use Act order prohibiting jade mining activities on new tenures in northwestern B.C. Current tenure holders listed in the order will be able to continue jade mining for five years with enhanced reclamation requirements. The order is due to environmental impact concerns related to the mining activities. The show Jade Fever brought to light the concerns that the Tahltan First Nation had with mining in its territory. (Government of British Columbia) or (CBC) 

• 🇺🇸 President Joe Biden announced a range of tariffs on Chinese goods this week. The tariffs are seen as largely symbolic as they represent a meagre $18bn in imports, a drop in the bucket of U.S. trade. Still, EV tariffs will quadruple to 102.5%, while solar cells and computer chips will jump to 50%. Chinese steel and aluminum will get hit with a 25% tax and some critical minerals that enjoyed a 0% import tax, will now see a charge of 25%. (Reuters)

• 🇺🇸 The U.S. House passed The Mining Clarity Act this week that was voted down the week prior. The difference? Additional representatives from the Republican side were present to vote. The bill responds to a 2022 federal appeals court ruling that restricts mining companies from using federal lands without a documented mineral deposit. (Source NM)

• 🇺🇸 A pair of lawsuits were filed against the Environmental Protection Agency (EPA) this week. The lawsuits are in response to the EPA’s requirement that coal plants slash their emissions by 90% by 2032. The first lawsuit with 24 states participating argues that the EPA is exceeding its authority while the second lawsuit with 22 state participants argues that the changes will have no corresponding health benefits and will cost states and industry a pretty penny. (Wyoming Public Media)

• 🇲🇽 In response to domestic trade associations, Mexico's government revoked its 35% tariff on primary unalloyed aluminum and 20% tariff on primary alloyed aluminum. The duties were only introduced three weeks earlier as part of a larger tariff package. It seems the government was pressured by U.S. trade officials to take action against China. The U.S. believes that China is impacting global prices by manufacturing goods below the cost of production and that steel imported to Mexico is being improperly exported to the U.S. (S&P Global)

• 🇸🇦 Saudi Arabia’s Manara Minerals Investment Co., backed by the Saudi sovereign wealth fund, has hired veteran dealmaker Pierre Chenard as its first permanent CEO. (Bloomberg)

• 🇵🇦 The new Panamanian President-elect Jose Raul Mulino has said that he won’t engage in discussions with First Quantum until arbitrations have been suspended. He also mentioned that any solution would not include a new concession contract, although there may be some flexibility in a temporary re-opening to reduce the overall closure costs. Doesn’t sound too appealing to us, but we are just armchair quarterbacks so to speak. (Globe & Mail)

• 🇪🇨 The Canadian Dimension had an excellent write-up about the history of international arbitration in Ecuador and why 65% of the public voted down referendum Question D on April 22nd that would have had the Ecuadorian State recognize international arbitration once again. It is no surprise that mining companies would have liked to see international arbitration back, particularly given the dynamics in some other Latin American countries. (Canadian Dimension)

• 🇨🇩 The Democratic Republic of the Congo and the IMF reached an agreement on the final part of their $1.5b loan deal. This will result in the IMF disbursing the final tranche of $200m. The IMF noted that there is a need for the government to properly manage funds from a revised mining deal with Sicomines. (Reuters)

• 🇨🇩 In a different matter, The Democratic Republic of Congo's government lifted a suspension order this week on a copper and cobalt operation majority-owned by China's Zijin Mining Group. The mine was shut while officials investigated mineral products returned from South Africa due to overly high radiation levels. (Reuters)

• 🇮🇷 🇳🇪 Le Monde newspaper reported that clandestine negotiations between Iran and Niger have been taking place. The topic? The purchase of uranium which apparently originated from mines operated by the French group Orano in Arlit, northern Niger. (NCRI)

• 🌍 Speaking of Niger, the Fraser Institute, a Canadian policy think tank, just came out with its Annual Survey of Mining Companies. This year’s report ranks 86 jurisdictions around the world based on their geologic attractiveness (minerals and metals) and government policies that encourage or deter exploration and investment. Guess who came in last place? Yup, Niger. All of the top 10 jurisdictions were located in Australia, Canada and the United States, specifically: 1. Utah, 2. Nevada, 3. Saskatchewan, 4. Western Australia, 5. Quebec, 6. Manitoba, 7. Arizona, 8. Northern Territory, 9. Newfoundland & Labrador and 10. Ontario. (Fraser Institute)

SPECIAL REPORT BY S&A STRATEGIES

AUSTRALIA’s 2024-2025 BUDGET HIGHLIGHTS:

On May 14th, the Albanese government in Australia presented their 2024-2025 budget. The government touted the fact that the country has returned to budget surpluses faster than any other advanced economy in the world. In the 2022-23 year, Australia posted a $22.1b surplus and is now projecting a $9.3b surplus for 2023-24. High commodity prices and increased corporate and personal income tax revenue lifted the nation to a surplus.

Despite the back to back surpluses, the government is planning to go into deficit over the next 4 years to battle the impacts of inflation while trying to boost the economy. The reduction in commodity prices, such as Iron Ore and Coal, is also having a negative impact on projections. The government is expecting deficits in the next four years of:

• 2024-25 - ($28.3b)

• 2025-26 - ($42.8b)

• 2026-27 - ($26.7b)

• 2027-28 - ($24.3b)

So what are the key programs for the mining/resource sector? Below are the larger programs that are new and were announced as part of the budget:

• Resourcing Australia’s Prosperity - $566 million for Geoscience Australia to deliver an expanded precompetitive geoscience initiative aimed at mapping the entire continent. The Budget also commits $448.7 million over 11 years to continue the Landsat Next Satellite Project with the US Geological Survey.

• Critical Minerals Production Credit - The Government will offer a 10% Production Tax Credit for critical minerals projects, aimed at making Australia more cost competitive after the US, Canada, China and Indonesian introduced similar incentives. The program is worth $7b and applies to the 31 listed critical minerals. The incentive won’t kick in until 2027-2028, so it won’t help some areas like Nickel, that are dealing with immediate price shocks and anti-competitive behavior.

• Common-User Facilities - $10.2 million for pre-feasibility studies to develop critical mineral common-user processing facilities to enhance Australia’s capacity to process critical minerals, sovereign capability and economic resilience

The Australian government has had numerous large announcements of funding over the past months related to the funding of specific projects. This AusIMM Bulletin Article covers many of the recent investments in a summarized format.

Quotes in Response to the Budget:

From the Minerals Council of Australia: “At a time when Australia grapples with decaying productivity and looming long-term structural fiscal deficits, the Government is imposing regressive policies on the sector that dampen the investment growth critical to achieving our economic potential. Unfortunately this Budget only scratches the surface of what is needed to ensure the Australian minerals industry remains competitive.”

The Official Opposition, the Liberal Party of Australia, called the budget “a big-spending, big-taxing con job.”

The Business Council of Australia said, “The Federal Budget has taken some positive steps towards making Australia more globally competitive and the Business Council calls on the Government to use this momentum to go further by improving investment fundamentals to lift productivity.”

MINING MATTERS FROM AROUND THE WORLD 🌎

• Anglo American (AAL.L) laid out a plan to refocus its efforts on energy transition metals, which means selling off its coal, nickel, diamond and platinum mining assets. The company rejected BHP’s 2nd offer of $43b and will instead try to fend off the takeover. As part of its plan Anglo will keep its South African Kumba Iron Ore business. With the sharks circling, there may be some drama left yet. (Reuters) 

• Glencore (GLNCY) received $11m from the Canadian government’s decarbonization incentive program, which will be used to replace diesel-powered machinery with battery-electric powered equipment at the Craig Mine in Onaping, Ontario. (The Sudbury Star)

• Novelis (NVL), the world’s largest recycler of Aluminum, has filed with the SEC this week to raise up to $100m in an initial public offering. It is expected that the raise will exceed $1b. The company is currently owned by India’s Hindalco and in the 12 months ended March 31st, 2024, had $16.2b in revenue. (Renaissance Capital)

• Junior Canadian Miner Red Pine Exploration (RPX-X) accused its former CEO, Quentin Yarie, of manipulating data on hundreds of gold assays over the past decade. Further, they’ve explained that their current resource estimates for their Ontario project are no longer valid. Not surprisingly, the stock is down over 60% since the news. (Globe & Mail)

FIRST QUARTER EARNINGS

• Kinross (KGC) beat expectations in the first quarter, whereby revenue increased to $1,081.5 million, compared with $929.3 million during Q1 2023. The 16% year-over-year increase was primarily due to increases in gold equivalent ounces sold and average metal prices realized. The stock is another darling this year, up 35.70% year-to-date. (Kinross)

• Lundin Gold’s (LUG) earnings missed analyst estimates, coming in with $233m in revenue for the quarter, down from the year prior. However, earnings per share at $0.77 were in line with expectations. The company’s stock is up 23.80% this year, riding the gold wave like many others. (Lundin Gold)

• Hudbay Minerals (HBM) reported first quarter earnings of $525m up from 295.2m a year prior. Copper production totaled 34,749 for the quarter, up from 22,562 a year earlier, while gold production was 90,392, up from 47,240 in the same quarter last year. The market reacted positively with the stock seeing a 14%+ gain on the day. The stock has been a rocket ship in 2024, up 86.16% so far. (Hudbay Minerals)

• Nutrien (NTR) generated net earnings of $165m and an adjusted EBITDA of $1.1b in the first quarter of 2024, down from the same period in 2023 primarily due to lower net fertilizer selling prices. Sales were down 12% year-on-year with sales coming in at $5,389m. The stock is up 9.12% the past month, but is still trading far below its all time high’s in in 2022. (Nutrien)

• B2Gold (BTG) reported revenue of $461.4m down from $473.6m a year earlier. This resulted in net income of $39.75m down from $85.97 a year earlier. Still, earnings beat analyst expectations and the stock has seen a nearly 10% gain since. With that said, the stock is still down 7.67% year to date and down 29.49% the past year. Time to buy? (B2Gold)

• Pan American Silver (PAAS) reported revenue of $601.4m in Q1. Revenue was up 54% year-on-year largely due to additional revenue from new mines, due to the acquisition of Yamana Gold in March 2023. Adjusted earnings came in at 0.01 cents per share which beat analyst estimates. The stock is up 33.58% so far this year. (Pan American Silver)

• Wheaton Precious Metals (WPM) generated revenues of $297m in the first quarter, up 38.4% on a year-over-year basis. The gain was driven by a 31% increase in Gold Equivalent Ounces (GEOs) sold. The stock is up 18.06% so far this year. (Wheaton Precious Metals)

• We couldn’t cover everything this week, but there were lots of earnings and we likely missed some in our list below, but companies like Sprott Inc. (SII), Peabody Energy (BTU), McEwen Mining (MUX), Fortuna Silver Mines (FSM), Wesdome (WDO.TO), Aurubis AG (NDA.DE), IAMGOLD (IMG.TO), Equinox Gold (EQX), K92 Mining (KNT.TO), Dundee Precious Metals (DPM.TO), Orla Mining (ORLA) and Lithium Americas (LAC) all reported Q1 earnings. (Do you have a $1b market cap and want to make sure you are covered in future earnings? Send us a sweet note and tell us how wonderful we are at the Mine Wire)

MINING BITS

• 🐯 That tweeted picture above caused GameStop to rise 74.40% on Monday with several halts to trading. Who tweeted this picture? Roaring Kitty, a.k.a. Keith Gill, the guy behind the GameStop short squeeze in 2021. It was his first tweet in 3 years, and the image with a man sitting forward with a controller in his hand is known as “locking in”. We may be in for a hell of a meme stock week. (brobible)

• 🇰🇷 In South Korea, Miniature gold bars (0.1 grams to 1.87 grams) are flying off the shelves, or well from vending machines. The country’s largest convenience store chain, CU, has been collaborating with the Korea Minting and Security Printing Corporation (KOMSCO) to offer customers mini gold bars. 1 gram bars selling for 113,000 won, sold out within 2 days. More than 75% of the bars were bought by people in the 30’s and 40’s. Gold bar sales are up 27% year-on-year in the country. (CNBC)

• 🇸🇻 El Salvador has mined nearly 474 bitcoins since 2021 thanks to a volcano-fueled geothermal power plant, bringing the government’s holdings to 5,750 bitcoins. The coins are worth roughly $354m at current prices. The holdings are roughly worth 1% of El Salvador’s GDP so they better be praying to the crypto gods! (Reuters)

• 🇿🇦 South Africa has won a legal claim over $43m worth of treasure retrieved from World War II shipwreck, the SS Tilawa. The ship left Mumbai in 1942 and was carrying nearly 1,000 passengers as well as 2,364 bars of silver bullion. The ship was torpedoed by the Japanese navy, near the Seychelles Islands on its way to South Africa, killing 280 and sinking the silver for over 80 years. Read more about Argentum Exploration’s discovery, the fight with South Africa and the court case here - (Financial Times).

• 🇪🇸 Researchers in Northern Córdoba discovered 3 ingots measuring 45 centimeters long and weighing between 24 and 32 kgs. The bars are from the 1st century A.D. and two of them had the marks “S S” referring to the Societas Sisaponensis, a mining company originally from La Bienvenida. (Phys.Org)

• 🔆 Scientific American takes a look at hydrogen and an explanation as to why large deposits have shown up recently in places like Albania, France and Mali. For ages, scientists didn’t believe large hydrogen deposits were likely, despite historical cases suggesting the opposite. Now trailblazer companies are drilling, sometimes supported by old data, to hit that hydrogen bonanza! (Scientific American)

• 🎈 Meanwhile, Popular Mechanics takes a look at the recent Helium discoveries in Minnesota and the race the regulate extraction. Helium, essential for things like MRI’s, is in short supply on earth. Minnesota may have the largest deposit on the planet, but the State has no regulations around extraction. As such, the House of Representatives has just passed a bill that would put a 2 year moratorium on extraction while the state figures out regulatory and environmental processes. The bill is now headed to the state senate. (Popular Mechanics)

• 🧨 Urgewald, a German environment and human rights NGO that focuses on financial institutions, put out a report on coal financing among countries and banks. Their report shows that a majority of funding comes from China while 92% of all funding comes from 7 countries (China, USA, Japan, Canada, India, Indonesia & UK). (Report Here)

• 🇬🇧 Hundreds of retired miners marched outside Parliament in order to campaign for a change to their pension fund. Under a deal struck in 1994, when British Coal was privatized, the government takes 50% of profits generated by the pension in return for underwriting it. Miners say this is unfair as older retirees are living on 80 pounds a week and further, argue the government hasn’t paid a penny into the fund. (BBC)

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