Good morning investors,
We’ve seen this movie before, but the sequels seem to be popular: Commodities are getting clobbered to start the week as the U.S. dollar surges higher in anticipation of an interest rate hike.
Copper – down 1.4% to $2.06/lb (down more than 20% YTD)
Nickel – down 4.8% to $3.76/lb (down more than 35% YTD)
Zinc – down 1.7% to .69/lb (down more than 20% YTD)
On the positive side, the election of a pro-business government in mineral-rich Argentina should lift long-term prospects – if not the short-term share prices – of mining companies active there.
And if you need some lithium to lift your spirits – the energy metal is also used to treat depression – Mexico-focused Bacanora Minerals (BCN-V) has it in spades.
The Calgary-based company announced a 300% increase in its indicated mineral resource at the Sonora lithium project, to 5 million tonnes of lithium carbonate equivalent. Bacanora also has an inferred resource of 3.9 million tonnes of LCE.
The updated resource comes out of a 16-hole, 3,934-metre drill program and will be used in a preliminary feasibility study scheduled to land in the first quarter of 2016.
Also on the lithium front, expert Joe Lowry has weighed in on Quebec developer Nemaska Lithium’s MOU – announced last week Thursday – that would see a $12-million upfront payment from Johnson Matthey Battery Materials.
In an article entitled Does Nemaska Matter?, Lowry concludes: “If I was pressed for an answer I would say the factors of resource location and quality combined with execution risk in employing new technology will make Nemaska a footnote in the history of lithium.”
Also on the alternative energy front, Alaska-focused Graphite One Resources (GPH-V) has appointed NovaCopper CEO Rick Van Nieuwenhuyse to its board of directors.
Van Nieuwenhuyse’s extensive Alaska experience should help Graphite One develop its large flake graphite deposit near Nome, Alaska.
Flake graphite is a key ingredient in lithium-ion batteries, and demand is expected to surge as Tesla builds out its Gigafactory in Nevada and more electric vehicles hit the streets.
And despite the bloodletting in the industrial metals, exploration and development continues among companies with that rarest of commodities – cash – to advance their projects.
One of those is Robert Friedland’s Ivanhoe Mines (IVN-T), which announced this morning that its deal to sell part of the Kamoa copper project to China’s Zijin Mining is on track.
Ivanhoe is selling a 49.5% interest in the holding company that owns Kamoa – one of the world’s highest-grade undeveloped copper deposits – to Zijin for US$412 million in an agreement first announced in May. Kamoa is located in the Democratic Republic of Congo, which had expressed concern about the deal before its interest in Kamoa was increased from 5% to 20%.
The news release stated that “constructive and cordial negotiations between Ivanhoe Mines, Zijin and senior DRC government officials in recent weeks have established an agreed course of action to develop the Kamoa Project.” The deal will be done on or before Dec. 8, Friedland said.
Kamoa has an Indicated resource of 739 million tonnes grading 2.67% copper, containing 43.5 billion pounds of copper, and an Inferred resource of 227 million tonnes grading 1.96% copper, containing 9.8 billion pounds of copper (at a 1% copper cut off).
Robert Friedland also remains involved on the exploration front through his HPX investment in Cordoba Minerals (CDB-V), which is launching a 3,000-metre drill program at its San Matias copper-gold project in Colombia.
Diamong drilling will focus on the Alacran property, located about 2 km southwest of Cordoba’s Montiel discovery. The drilling will test strike and vertical extensions of mineralization in the central and northern parts of the property, where prior drilling returned 188 metres of .71% Cu and .25 g/t Au and 128 m of .84 Cu and .45 g/t Au.
Cashed-up Yukon project generator Strategic Metals (SMD-V) announced this morning it is renewing its share buyback program – a decision that generated some chatter at CEO Chat.
Some were critical of the move to spend money buying back shares: @low-ball said the news was done for optics and that Strategic should “spend (its money) in the ground.”
@PamplonaTrader responded: “if a company can issue shares when there is demand and buy it back when there isn’t, that is prudent management of share structure. Moreso if shares are trading at cash value or less.”
Related reading: A Strategic explorer with low downside | CEO.CA
Join the conversation and hear from high-level analysts, newsletter writers and armchair quarterbacks in real time at CEO Chat, the investment conference in your pocket.
Author owns shares of Strategic Metals. The work included in this publication is based on SEDAR filings, current events, interviews, and corporate press releases. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. The views expressed in this publication and on the CEO.CA website do not necessarily reflect the views of Pacific Website Company Inc., publisher of CEO.CA. NovaCopper and Cordoba Minerals are sponsors of CEO.CA, which makes CEO.CA biased in its coverage. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read more on each of these companies at www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.