💼Gold Prices Jump on Positive Fed Signals
CEO.CA Presents the Chairman's Briefing - March 21st, 2024
“I see a great future for gold and silver coins as the currency people may increasingly turn to when paper currencies begin to disintegrate.”
— Murray Rothbard
Metals/Crypto Prices
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In Today's Briefing
Gold
'Subdued,' a good word to describe precious metals trading ahead of the conclusion of the FOMC monetary policy meeting that began yesterday morning and ends later this afternoon (Wednesday, Mar. 20).
Bitcoin is all over the map. Its uptrend is suddenly in doubt. Equity markets remain at nosebleed levels. These markets will be hanging on every word during Powell's presser, attempting to glean the future path and timing of monetary policy.
Market analyst Bloodgood in his latest market report: “Meanwhile, all eyes are on the FOMC meeting tomorrow, especially as the market seems to be reducing its expectations for rate cuts this year. While the consensus for the current Fed rate decision is essentially unanimous – namely that rates will remain unchanged – any comments regarding the future course of monetary policy will send shockwaves through the markets. This, of course, means that taking leveraged positions around the time of the press conference would be even riskier than usual.”
Where the precious metal is concerned, its month-long uptrend is still intact. Note the pennant on the daily chart. A breakout from this pattern could see the metal take out $2200 (details pending).
Some analysts with a bullish bent believe gold will surpass $2500 with central banks exerting the most upside pressure. Concerning general central bank sentiment, the Société Générale stated, “Ahead of the US election and associated risks on the fiscal policy, we find virtue in precious metals” - Gold remains a core asset to hold ahead of U.S. elections - Société Générale.
An intraday (one minute) Au chart after Powell telegraphed three rate cuts...
Copper Uptick
Copper, the soft, malleable metal with superior thermal and electrical conductivity properties, surged to multi-month highs as the market appears to be heading into deficit - Copper surges past $9,000 with supply threats stacking up.
Production concerns in Zambia, which is facing an 'El Niño-induced power crisis,' the recent closure of First Quantum's massive Cobre Panama operation, and Chinese smelters forced to trim output due to a lack of copper concentrate, have pushed prices past $4.00/lb ($9,000/t) as the global megatrends of decarbonization and electrification are beginning to find a whole new gear.
"Stop Giving Lip Service to Permitting" CEO of Copper Colossus Says
"The U.S. government needs to stop giving lip service to permitting," Richard Adkerson told Reuters on the sidelines of the CERAWeek energy conference in Houston - US must improve copper mine permitting process, Freeport CEO says.
Permitting delays are always an issue in getting mines built on the North American continent.
CEO Adkerson again: "The question is, given our political system that we have today and the dysfunctionality of it, how do you go from getting a project verbally accepted to getting actions done?"
Adkerson's successor, Kathleen Quirk, said Freeport is focused on earning the support of people who live near its mine sites as part of its push to boost the copper industry's social license to operate. "We talk a lot about finding common ground. You got to find it. It's going to take out of your economics, but otherwise you don't have a viable business plan if you don't come up with a sustainable solution," stated Quirk.
Antofagasta Secures Funds for Centinela Expansion Buildout
Chile's Antofagasta has secured funding to build a second concentrator at its 70%-owned Centinela copper mine, a move that will boost production by 144,000 tonnes a year - Antofagasta secures $2.5 billion for Centinela copper mine expansion.
Definitive agreements were inked with a number of international lenders, including the Japan Bank for International Cooperation, Export Development Canada, and the Export-Import Bank of Korea.
CEO Ivan Arriaga: “The Centinela Second Concentrator project is a prime example of how Antofagasta can unlock value from its portfolio and our dedication to sustainable and responsible copper production.”
Cu Bump Sparks Junior's
Some of the higher-quality names in the junior Cu space are coming to life. The price action of widely followed American Eagle (AE.V), soon to begin a 15,000-metre drill program at its NAK Project in the Babine copper-gold porphyry district of central B.C has firmed up nicely in recent sessions
Boasting a fat yield of roughly 7%, the shares of Chilean producer Amerigo Resources (ARG.TO) took flight on the heels of the green metal's push past $4.00/lb.
Amerigo produces copper and molybdenum concentrate as a by-product from processing fresh and historic tailings from Codelco's El Teniente mine, the world's largest underground copper mine.
Some of the Cu micro's are on the move too. Take Freeport Resources (FRI.V), which just dropped a positive headline concerning its Yandera copper-gold-molybdenum project, located in Madang Province, Papua New Guinea - Freeport Commences Discussions with Strategic Partners for Yandera Copper Project, One of the World's Largest Undeveloped Copper Projects.
Lithium Related
In last week's Briefing, we noted how an 80%-plus 'spectacular' lithium price bust appears to be grounding out as spot lithium carbonate prices in China have rebounded to their highest level since December. Li pricing has always been vague, lacking the transparency of other commodities that trade on the global arena.
Albemarle, the world's largest producer of the battery metal, has announced it will conduct a series of auctions on the Metalshub digital trading platform to "explore price discovery while ensuring a fair and transparent process for all customers" - COLUMN-Albemarle looks to shed more light on lithium pricing: Andy Home.
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Concerning the collapse in lithium prices over the last year, the industry asks: 'Just how reliable an indicator are those prices?' Albemarle's decision to conduct a series of online auctions suggests it thinks the lithium industry could do better.
This first "bidding event" will be held on Mar. 26. On the block: 10,000 metric tons of spodumene ore.
While on the Subject of Global Decarbonization and Electrification Megatrends
Net zero by 2050? Not bloody likely. This, according to Bain & Company which surveyed over 600 industry executives to get a better read on their views concerning energy transition, new technologies, investment opportunities, and where they see the greatest challenges for decarbonization - More energy and natural resource executives expect world to reach net zero by 2060 or later as it gets more difficult to generate returns.
Bain & Co's survey shows an increasing percentage of industry execs expect the world to reach net zero by 2060 or later—with 62% sharing this sentiment in 2024 versus 54% in 2023.
Joe Scalise, head of Bain & Company’s Energy and Natural Resource practice: “This year’s survey found that energy and natural resource companies have not dampened ambitions for their transition-oriented growth businesses. However, customers’ willingness to pay is a growing issue, as is the ability to generate adequate return on investment (ROI) in energy transition-oriented projects. As a result, companies are focusing on projects with a viable ROI path. Clearly, the longer the executives are at the front lines of the energy transition, the more sober they are getting about the transition’s practical realities.”
LAC Gets $2.2B Loan from Big Brother
Lithium Americas (LAC.TO) announced receipt of a conditional commitment loan of $2.26 billion from the US Department of Energy (DOE) to finance the construction of a processing facility at their Thacker Pass project in Nevada - US government to lend Lithium Americas $2.26 bln for Nevada's Thacker Pass mine.
Geared to reduce dependence on supplies from China, the loan will expedite the buildout of a processing facility adjacent to the Thacker Pass mine—a mine expected to produce an initial 40,000 tonnes of battery-grade lithium carbonate per year.
Expected to create approximately 1,800 direct jobs during its three-year construction phase (360 anchored jobs over its 40-year mine life), initial construction began last March after the company won a long-running and complex court case against conservationists, ranchers, and Indigenous communities.
Once the loan closes, expected later this year after final environmental reviews, Vancouver-based Lithium Americas said it plans to start major construction, a process that will take three years. The mine's first phase is expected to produce 40,000 metric tons of battery-quality lithium carbonate per year, enough for up to 800,000 EVs.
Lithium Americas aims to extract lithium at Thacker Pass from a large clay deposit, which has never been done commercially. The project is expected to run at full capacity in 2028, targeting 80,000 metric tons per year. To extract the lithium from that clay, the company will need to import sulfur to make sulfuric acid. As part of the mine construction, Lithium Americas plans to build a rail terminal roughly 60 miles (97 km) from the mine site to import sulfur and other materials.
General Mining Market News
Muddying the Waters at Fenn-Gib
Though this isn't exactly triggering major price shocks, it's a trend that's likely to gain momentum as disgruntled shareholders blame management for lackluster trading, especially now that the underlying metal is carving out new all-time highs.
First, in the early hours of Mar. 19, this: MUDDY WATERS INTENDS TO RECONSTITUTE BOARD OF DIRECTORS OF MAYFAIR GOLD CORP. Carson Block, Founder and Chief Investment Officer of Muddy Waters: "The conduct of the Board has raised serious concerns that we believe must be addressed promptly. For example, repeated delays on a number of key objectives appear to have been met with uncertainty about how to proceed. This has eroded our confidence in the ability of the Board to set realistic goals, establish key strategic targets and align management with those outcomes. In addition, we have significant concerns regarding the excessive distribution of options, which we have repeatedly raised with the Company. We further understand that over the past few months, the Board has resisted granting a seat on the Board to one of the Company's largest shareholders, raising concerns regarding entrenchment, which is antithetical to our belief that key shareholders of issuers are entitled to board representation absent clear evidence that they will not act in the best interests of the company."
Then, shortly after, this retort from Mayfair: Mayfair Gold Responds to Announcement by Muddy Waters Capital of Intention to Reconstitute the Board of Directors.
Muddy Waters’ statement that it has sought to resolve this matter privately and amicably is factually incorrect. Instead of taking the Board up on yesterday’s offer to participate in the Recruitment Process and engage in a constructive dialogue, Muddy Waters has chosen to launch a costly and value-destructive proxy contest.
Further to Mayfair's retort: Nevertheless, in keeping with the Company’s respect for shareholder input, the Board indicated its willingness to consider Mr. McLean’s candidacy as part of its current Recruitment Process, provided Mr. McLean submit a directors’ questionnaire and participate in an interview with the Board. The Board also offered to meet with Muddy Waters to address their vague and unclearly articulated concerns, either with or without the presence of the CEO. Let's hope they play nice now.
Congo Rebels Block Trade Routes
The world’s tantalum supply is under threat as armed rebels in the eastern Democratic Republic of Congo have encircled a key trading hub - Congo Rebels Block Trade Routes, Threatening Supply of Key Metal.
M23, a rebel group apparently backed by neighboring Rwanda, has blocked trade routes to the city of Goma and is helping to smuggle tantalum from some of the country’s richest deposits, according to the Congolese government, military officials, and United Nations experts.
“They’re taking it to Rwanda,” likely through Virunga National Park, Lt. Col. Guillaume Ndjike Kaiko, a regional spokesperson for Congo’s military, said in an interview in Goma, the lakeside capital of North Kivu province that borders Rwanda. Rwanda’s government denies the accusations.
Greenpeace Faces Expulsion
After claims that Greenpeace disrupted a research expedition in the remote Pacific, it stands to be ejected from the UN body overseeing controversial plans to begin deep-sea mining - Battle over deep-sea mining heats up.
While Greenpeace says the incident in question was a peaceful protest aimed at protecting a pristine ecosystem, The Metals Company accuses them of being "anti-science."
These latest international talks continue an ongoing effort to decide what rules should apply to companies that want to collect minerals from the abyssal plain, one of the deepest parts of the ocean. The ISA has said it aims to have rules in place by 2025.
The mining companies that intend to extract these critical (green) metals from the ocean floor and these green activist groups both claim to act in the planet's best interests.
Hits Of The Week
Weighing as little as one gram, the beans — and other forms of gold jewelry — are increasingly viewed as the safest investment bet for young Chinese in an era of economic uncertainty. It’s part of a larger consumer trend for all things gold — from bullion to beans and bracelets — that has gripped the mainland - Gold Beans All the Rage With China’s Gen Z as Deflation Bites
Quebec-based Dundee Sustainable Technologies is slashing leaching time and extracting more gold without using toxic cyanide in a new process geared for mining’s future. The trademarked process, called Clevr, uses a 2% bleach solution in leaching kinetics, the chemical reaction that separates gold from ore, to release gold within a couple of hours versus 36 hours or more in traditional cyanide leaching - Dundee’s cyanide-free tech cuts gold leaching time by 90%
Northern Dynasty Minerals (TSX: NDM) (NYSE American: NAK) said on Friday it has filed two separate actions in the federal courts challenging the US government’s actions to prevent the company from building a mine at its Pebble project in Alaska - Northern Dynasty takes EPA’s Pebble veto to court
The businessman at the center of an alleged $600 million nickel fraud is struggling to pay £330,000 ($418,920) in legal fees, in a sign that his finances are under increasing strain - Alleged $600 Million Nickel Fraudster Can’t Pay His Legal Bills
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Great insights in the briefing! Remember, navigating economic shifts requires resilience - echoing Warren Buffett, it's about being fearful when others are greedy. 🌟📊 Let's stay adaptable!