Copper, iron ore prices surge on signs of quick global recovery

Iron ore prices stayed clear of double digits on Monday on shrinking stockpiles in China, responsible for more than 70% of the world’s seaborne iron ore trade, and persistent fears about supply from Brazil, the globe’s no.2 supplier.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were exchanging hands for $100.45 a tonne on Monday, just off the 9-month highs last week.

On the Dalian commodities exchanges, iron ore futures set a fresh record high of $108.92 a tonne, up more 20% from early April. Dalian launched iron ore futures trading in 2013.

China forges more than half the world’s steel and plants have been ramping up output and sucking in imports at a record pace.

“Steel margins in China continue to trend higher, whilst there are concerns over Brazilian supply, amid the covid-19 outbreak,” commodity strategists at ING said in a note quoted by Reuters.

Drawdowns have brought port stockpiles to just over 109 million tonnes, as of Friday, the lowest since November 2016, according to SteelHome consultancy data.

“We also note that the current recession is different to the usual downturns on various other metrics: the epicenter is in services, not manufacturing”

Bank of America

Copper melt-up

Copper trading in New York jumped more than 2% to $2.4775 a pound ($5,460 a tonne) in afternoon trade, bring the bellwether metal’s gains since its mid-March low to more than 25%.

CNBC reports Bank of America analysts increased their price forecast for copper in 2020 by 5.4% to $5,620 per tonne.

Given its widespread use in industry and construction, the expected contraction in the global economy this year could translate into double digit declines in copper consumption according to BofA:

However, they questioned whether falls in purchases to such a degree were realistic, and suggested that while Western economies may not completely mirror the rebound seen in China, the easing of lockdown measures would likely facilitate a rise in raw material purchases around the world.

“We also note that the current recession is different to the usual downturns on various other metrics: the epicenter is in services, not manufacturing; governments are gearing up to implement remarkable fiscal stimulus packages, reflected in China’s NPC and Europe’s Next Generation EU initiative,” the note read.

…read more

Excellon restarts Mexico operations, stock rises

Excellon Resources (TSX:EXN) announced on Monday the restart of its Platosa and Miguel Auza operations in Mexico, following the government’s decision to declare mining as an essential service.

The company has not reported any cases of covid-19 and there have been minimal cases reported in the surrounding communities, Excellon said in a release.

Excellon also reported production of 523,742 silver equivalent ounces for Q1 2020, a rise compared to 522,261 silver equivalent ounces in Q1 2019. Platosa, Mexico’s highest-grade silver mine, processed 19,042 tonnes.

The company had a net loss of $6.4 million or $0.06/share, compared to net loss of $3.8 million or $0.04/share in the same period of 2019.

The primary contributors to the loss were unrealized foreign exchange losses, unrealized losses from currency hedges and a negative variance in costs of goods sold, company said.

“Our markets are beginning to improve after the extreme swings of recent months in metal prices, currencies and input costs, which significantly impacted our financial results in the first quarter, despite a strong quarter operationally,” Brendan Cahill, president and CEO said in the release.

“Looking forward, the improving gold to silver ratio is positive for the entire precious metals space and the better outlook on industrial metals is particularly positive for Platosa.”

Midday Monday, Excellon’s stock was up 18.7% on the TSE. The company has a C$146 million market capitalization.

…read more

Avino restarts Durango mine, shares up

Avino Silver & Gold (TSX: ASM, NYSE:ASM) announced on Monday it is starting a phased ramp-up of operational activities at its Avino mine near Durango, Mexico.

On May 15, 2020, the Mexican Federal Government authorized the resumption of mining activities as of June 1, 2020, for municipalities that present low or no known cases of covid-19.

“I am very appreciative of the way our team in Mexico handled the difficult challenges faced during the last few months due to the global pandemic,” said CEO David Wolfin in a media release.

It is expected that the ramp-up to production at levels seen prior to March 31, 2020, could take approximately two weeks as the company implements the back to work guidelines, it said.

The Avino mine produced a record 262,238 silver ounces in Q1, the highest quarterly total achieved to date.

Midday Tuesday, Avino’s stock was up 12.5% on the TSE. The company has a C$83.4 million market capitalization.

…read more

Klondike Gold begins drilling in Yukon

Exploration has begun at Klondike Gold’s (TSXV: KG) wholly owned Klondike District property in the Yukon, the company announced Monday.

Diamond drilling is underway with approximately nine holes targeting the Lone Star zone in phase 1. A phase 2 program targeting the Stander zone and a phase 3 program targeting Stander zone extensions are also planned, Klondike said.

A total of 1,210 soils and 65 prospecting rock samples have been collected and submitted for analysis.

In addition, Dulac Mining has commenced placer mining on ground leased from the company at the Upper Eldorado placer property. Klondike retains a 10% production royalty payable in placer gold.

“We are excited after 5 years to transition from district-scale geoscience surveys and exploration documenting gold and structural controls towards detailed testing of spatial and economic parameters of segments within both Lone Star and Stander zones during 2020,” Klondike Gold president and CEO Peter Tallman said in a press release.

The Klondike District project targets gold associated with district-scale orogenic faults along the 55 km length of the Klondike Goldfields placer district. The company has been actively exploring in the region since 1980.

Shares of Klondike Gold jumped as much as 6.6% by midday Monday. The Vancouver-based mining junior has a market capitalization of C$32.9 million.

…read more

IAMGOLD buys Monarch Gold’s Fayolle for $11.5m

Canada’s Monarch Gold (TSX: MQR) is selling its Fayolle property in western Quebec to fellow miner IAMGOLD Corporation (TSX: IMG) (NYSE: IAG) in a cash and share deal valued at $11.5 million.

The Montreal-based company said the transaction will see IAMGOLD issuing $9.7 million in common shares to Monarch and a $0.3 million cash payment once ownership of the asset has been transferred.

IAMGOLD will also give Monarch $1.5 million in cash 90 days after the initial transport of ore from the Fayolle deposit.

Monarch will use the funds to advance its flagship Wasamac gold project, also in western Quebec.

Monarch president and chief executive, Jean-Marc Lacoste, said the move was a “profitable short-term transaction.” It would allow the company to strengthen its financial position without dilution, he said. He also highlighted the potential for appreciation of IAMGOLD shares.

Funds from the transaction will allow the mine developer to advance its flagship Wasamac gold project, also in western Quebec, at a faster pace, Lacoste said.

With proven and probable mineral reserves of 21.46Mt at an average grade of 2.56g/t of gold, the Wasamac project is expected to churn out between 100,000 and 200,000 ounces of gold annually during a 11-year mine life.

Monarch filed a project notice with Quebec’s Ministry of the Environment and the Fight Against Climate Change last November. That’s the first step in the mining permit application process, which generally takes 18 to 24 months.

Eying Glencore’s plant

Monarch signed last month a memorandum of understanding (MOU) with Glencore Canada. The agreement could see the mine developer using the major’s plant near Timmins to process ore from its Wasamac property, also in western Quebec.

“[The MOU] has raised the outlook of our 2.6-million-ounce gold flagship project, which includes 1.8 million ounces of reserves,” Lacoste said.

Monarch is bringing its flagship Wasamac project into production and has been looking at toll milling options in Quebec and Ontario.

Monarch is evaluating an upgrade on part of Glencore’s concentrator as part of a plan that involves shipping ore by rail from the Wasamac property for processing into doré bars. The company is expected to finish the upgrading study by Dec. 31.

If both parties agree the results of the study is in each other’s interests, Monarch and Glencore will then negotiate a toll milling agreement by March 30, 2021.

Monarch would also agree to fund upgrades to the concentrator and any related infrastructure by July 2023.

Potentially, the first carloads of ore from Wasamac could arrive by December 2023.

Glencore’s Metallurgical Site (Met Site), near Timmins, Ontario, was built in 1966 with numerous upgrades performed over the years. With a capacity to process 12,500 tonnes daily, the concentrator currently handles metal ore to produce copper and zinc concentrates.

…read more

How to detect unreliable cryptocurrencies

Researchers at the University of Vaasa in Finland developed a model to detect unreliable cryptocurrencies.

In an article published in the journal Applied Economics, the scholars explore the factors that help predict whether a cryptocurrency, of the thousands currently available, will eventually go bust.

The first factor is the performance on the Initial Coin Offering or the the first day coins are made public. According to the researchers, coins achieving the most long-term success also had the best first-day performances.

The study shows that 79% of all defaulted cryptocurrencies are developed by anonymous developers. Yet, 58% of new coin developers choose to remain anonymous

The second factor is a coin’s pre-mining activity which takes place prior to the ICO launch. The study’s findings indicate that even if excessive pre-mining doesn’t necessarily guarantee failure, it raises suspicions of a potential bait-and-switch – often referred to as ‘pump and dump’.

The third factor is developer anonymity, meaning that most defaulted cryptocurrencies are created by anonymous developers.

The fourth factor is rewards and supply matter, as there appears to be a correlation between longevity and two other factors: lower minimum rewards and coin supply.

“This [last] result is rather puzzling when considering how critical coin mining is to the sustainability of any cryptocurrency,” the experts said in a media statement. “Specifically, without mining, a cryptocurrency network could not be maintained.”

To reach these conclusions, scholars Klaus Grobys and Niranjan Sapkot examined all available 146 Proof-of-Work-based cryptocurrencies that started trading prior to the end of 2014 and tracked their performance until December 2018. They found that about 60% of those cryptocurrencies were eventually in default.

“Our study is a first attempt to reveal potential links between factors that could relate to coin success or failure,” Grobys said in the release. “The links that we established in our study are not necessarily causal and much more research needs to be done on this issue.”

…read more

Gold price rallies on Trump’s China remarks

(Updated with US President Donald Trump’s latest announcement)

Gold price rallied on Friday to its highest in a week as US President Donald Trump’s made his official response to the new national security law imposed on Hong Kong approved by Beijing a day earlier.

Spot gold climbed 0.6% to $1,730.03 per ounce by 4 p.m. EST, on pace for a monthly gain of 3%. Gold futures for June delivery also rose 1.0% to $1,730.60 per ounce on the Comex in New York.

BMO Capital Markets has also lifted its long-run gold price forecast to $1,400 per ounce, a 16.7% increase over their previous forecast. In the nearer term, BMO analysts forecast gold prices to average $1,732 per ounce this year, representing a 5% increase.

BMO Capital Markets has lifted its long-run gold price forecast to $1,400 per ounce, a 16.7% increase over their previous forecast

Meanwhile, Wall Street indices fell lower, while the dollar touched its lowest in over two months, as uncertainties begin to kick in surrounding the latest political rift between the world’s top 2 economies.

“Markets are now strictly focused on the two largest economies and what is likely going to be a long drawn out battle,” Edward Moya, a senior market analyst at broker OANDA, told CNBC.

“You’re going to continue to see safe-haven demand (for gold) because the uncertainty over how the US-China tensions are going to play out is extremely high,” he added.

On Friday afternoon, President Donald Trump held a news conference to address China’s security measures on Hong Kong, where he revoked the city’s special customs status and imposed sanctions on officials in both mainland and Hong Kong governments.

He also announced that the US will officially cut ties with the World Health Organization for the agency’s actions during the early stages of the coronavirus pandemic.

“Even with many economies reopening, the economic status is still quite weak. So with this new geopolitical tension it means the recovery in many parts of the world can take longer, which could lift gold prices,” Bank of China International analyst Xiao Fu told CNBC.

In other precious metals, silver climbed 2.8% to $17.85 an ounce, en route to its best month since August 2013. Both palladium and platinum also saw gains of 1.8% and 1.6% respectively.

…read more

Codelco profit down 85% despite output increase

Codelco profit down 85% despite output increase

Chile’s Codelco, the world’s largest copper producer, saw profit nosedive in the first three months of the year as prices for the metal dropped to an average of $2.49 a tonne in the same period compared to $2.72 a year earlier.

The state-owned miner reported an 85% decline in profit to $54 million, in the first quarter of 2020, even though production climbed 6% to 361,000 tonnes.

Lower costs — they fell 2% to $1.327 per pound of copper were not able to offset the slump in prices either.

A global surplus of the metal may weigh further on Codelco. The glut is expected to get worse over the next 18 months as market disruptions have created greater uncertainty in the factors affecting supply and demand for the metal, the International Wrought Copper Council (IWCC) said this week.

At the end of March, the Santiago-based copper giant had to partially or fully suspend some third-party services, both in projects and operations. The measure aimed at keeping low numbers of employees amid the coronavirus pandemic. The measure affected around 30% of contractor workers.

“Foot on the gas”

Chief executive Octavio Araneda emphasized the company had “it’s foot on the gas” in terms of a sprawling 10-year, $40 billion mines overhaul.

Codelco, which hands all its revenue over to the state, has already finished one of its most ambitious projects — the $5.6 billion conversion of its giant Chuquicamata open pit mine into an underground operation.

Ongoing major mine overhauls include a $5.5 billion new level at the El Teniente underground mine, the company’s largest and the world’s no. 6 by reserve size, slated to begin operations in 2023.

Source: Codelco’s presentation.

It also involves converting the El Salvador mine to an open-pit mine from underground operations. The $1 billion project, known as Rajo Inca, is expected to extend the productive life the mine by 40 years and increase output by 30% from current levels.

In April, however, the company began ramping up operations. The same month, it raised $800 million worth of bonds to boost its cash reserves and face market uncertainty.

In the copper giant’s pipeline of so-called structural projects there is also the $1.3 billion expansion of the Andina mine. The operation accounted for roughly 11% of Codelco’s output in 2018.

Codelco operates seven mines and four smelters, all in Chile. Its assets account for 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output, with 1.8 million tonnes of production.

…read more

Northern Dynasty’s Pebble project scores as EPA steps back

Northern Dynasty raises $10 million to further develop mine in Alaska

Northern Dynasty Minerals (TSX: NDM) appears to be back on track towards obtaining final permits for its proposed massive copper-gold mine in Alaska after the US Environmental Protection Agency (EPA) declined to subject the project to water pollution restrictions evaluations, which have effectively stalled the project since they were outlined in 2014.

The move reduces the likelihood of a potential confrontation with the Army Corps of Engineers over the company’s proposed Pebble copper-gold-silver mine, near Bristol Bay in southwest Alaska.

The move paves the way for a positive federal license decision this summer, which would allow Northern Dynasty’s subsidiary to begin building the mine

It also paves the way for a positive federal license decision this summer, which would allow Northern Dynasty’s subsidiary — Pebble Limited Partnership — to begin building the mine.

Pebble scored a big win last year after the EPA scrapped the proposed restrictions on mining operations in Bristol Bay, which prevented the project’s consideration.

The agency also issued a letter saying the project “may” result in substantial and unacceptable impacts to aquatic resources. Such observation was a specific step in a sequence established to deal with inter-agency disagreements over Clean Water Act permits.

Yesterday, however, it issued new a letter downplaying the possible loss of streams and other wetlands the project might cause.

Christopher Hladick, the agency’s regional administrator for Alaska and the Pacific Northwest, wrote to the Alaska district engineer, Col. David Hibner, that the EPA still had concerns about the plan. The worries include the fact that dredging for the open-pit mine “may well contribute to the permanent loss of 2,292 acres of wetlands and… 105.4 miles of streams.”

Northern Dinasty is calling it “another indication of positive progress for the project.”

“Our core principle has always been for the project to be done in a way that does not harm the fishery or water resources in Bristol Bay,” it said.

Opponents to the mine say EPA’s new stance makes a potential veto on the Army Corps of Engineers’ dredge and fill permit less likely.

They noted that the agency and other key agencies have raised concerns the Corps has yet to address.

“There are still many substantive issues with the project proposal that have yet to be resolved,” Bristol Bay Native Corp. vice president, Daniel Cheyette, said in a statement.

Checkered past

Pebble’s development has been shrouded in controversy and delays, including the EPA’s decision in 2014 to propose restricting the discharge of mining waste and other materials in the area.

Criticism prompted the Vancouver-based company to submit a new, smaller mine plan that includes lined tailings, and discard the use of cyanide in the gold extraction process.

There are currently four operating mines and four late stage development projects in Alaska. (Map courtesy of Northern Dynasty Minerals.)

The miner was finally able to move forward with the project’s permitting process after Donald Trump assumed as President of the US.

For decades, explorers and developers have been attracted to resources-rich southwestern Alaska, known for …read more

Inca One to launch online bullion store

Canada’s Inca One Gold (TSXV: IO) announced that it will launch an online bullion store so that collectors and investors can purchase gold directly from the company.

In a press release, the gold producer said its bullion store will initially offer 1-ounce gold coins and will add additional products, including silver options in the future. The inaugural Peruvian-themed coins will be stamped and minted by Inca One.

Inca One expects the online bullion store to provide increased margins from direct sales

“Upon the onset of the global pandemic, Inca One recognized the immediate need for precious metal investors to purchase gold and silver bullion. As a result, the company views this as an ideal opportunity to begin selling its gold and silver directly to the retail bullion investor,” the media brief states.

“We will be offering bullion from Peruvian small-scale miners who have had their ore processed at one of our facilities.”

Inca One operates two, fully-permitted, gold ore processing facilities in the Arequipa region of southwestern Peru. Chala One is a mineral processing facility with a permitted capacity of 100 tonnes per day, and Kori One is a gold ore processing facility featuring a carbon-in-leach gold circuit, with a maximum permitted capacity of 350 tonnes per day.

…read more

Wesdome Gold Mines announces PEA for Kiena mine complex in Quebec

Wesdome Gold Mines (TSX: WDO) has released a preliminary economic assessment (PEA) for its wholly-owned Kiena mine complex, about 15 km northwest of Val-d’Or and 100 km east of Rouyn-Noranda in Quebec.

The PEA estimated a mine life of eight years producing an average of 85,931 oz. of gold annually at cash operating costs of $374 per oz. and all-in sustaining costs of $512 per ounce.

The early stage study forecast an initial capex of $35 million and a payback period of 1.7 years. At a base case gold price of $1,532 per oz., the study demonstrated an after-tax net present value at a 5% discount rate of $416 million and an internal rate of return of 102%.

“We’re pleased with the results from the PEA, which shows the potential for a low-cost mine with low capital costs and a relatively short payback period,” Duncan Middlemiss, Wesdome’s president and CEO said in an interview. “Furthermore, as we’ve already built and operated the mine previously, we believe the PEA provides a conservative estimate.”

Kiena produced around 1.75 million oz. of gold (12.5 million tonnes grading 4.5 grams gold per tonne) between 1982 and 2013 before the mine was put on care and maintenance.

Core samples from the Kiena Deep A zone.
Photo Credit: Wesdome Gold Mines.

The 65-sq.-km. mine complex has a 2,000 tonne-per-day mill and tailings facilities, and nine shafts including the 930-metre Kiena shaft.

The project contains indicated resources of 2.83 million tonnes grading 8.67 grams gold per tonne for 788,100 oz. contained gold and inferred resources of 2.92 million tonnes grading 8.51 grams gold for 798,100 oz. of gold. The PEA was based on resources from the A, B, S50, VC and South zones.

Since the resource was issued in September 2019, the company has completed an additional 47,800 metres of drilling in 164 new holes and these will be included in an updated resource estimate in the fourth quarter of this year.

The company started its 2020 drill program in February with eight drill rigs and plans to drill 75,000 metres from underground and 10,500 metres from surface. But the program was suspended in March due to the coronavirus pandemic. Drilling resumed on May 11.

Core samples from the Kiena Deep A zone. Photo Credit: Wesdome Gold Mines.

Before the work program was suspended, Wesdome completed 45 holes (7,045 metres) in the Deep A zone. Highlights included hole 6599, which intersected 3 metres grading 108.2 grams gold starting from 244.5 metres downhole.

“We’re very excited at what we’ve seen so far,” Middlemiss said. “Our intention with the program is to convert the resources from the inferred to the indicated category, and we hope to have this completed at the beginning of the fourth quarter.”

Exploration drilling will focus on the up-plunge potential of the Deep A zone as well as resource expansion at depth.

The company plans to complete a prefeasibility study on the project by the first quarter of 2021 and then make a production restart decision.

“Our strategy is to maximise throughput from the high-grade Deep A zone and to …read more