7th January 2022
Happy new year everyone, and welcome back to the Friday Round-up for 2022! The Spotlight staff have taken a well-deserved rest over Christmas and New Year, but we can’t resist the impulse to bring you the best junior mining and market news for too long. 2021 continued in the theme of 2020, with uncertainty, lockdowns and worries over The Virus dominating headlines around the world, including those in the mining industry. We’re all hoping for a very different year this year, so I thought that to kick things off for 2022 I’d take a look at some of Spotlight’s favourite metals: what their markets have been doing recently, and what we might be able to expect in the near-ish future. As ever, please remember that we are not investment or financial advisors; this is for your interest and you shouldn’t buy, sell or hold based on information in this newsletter. With that being said, let’s start with everyone’s favourite metal:
GOLD: The price of the yellow stuff was up and down in 2021, and it’s currently hovering around the middle of its range from last year. There were multiple factors pulling its price in different directions towards the end of the year, which I covered in a bit of depth in this article if you’d like to read more. Gold’s status as a safe-haven investment is still in full effect, with worries about inflation in addition to the general state of the world at the end of 2021 making it more appealing, and skyrocketing Covid cases in many countries are now supporting it from that perspective. On the other hand, a strong US dollar makes gold less attractive for overseas investors, and hawkish December minutes from the US Federal Reserve released on Wednesday indicate that the dollar could get stronger as the Fed looks at tightening monetary policy sooner than predicted. All in all, it seems that neither a bonanza year nor a massive price drop are on the horizon for gold, but that depends on any surprises that 2022 might hold.
COPPER: I’ve written at length about copper this year, especially in relation to political shake-ups in its two biggest producers, Chile and Peru. Both countries saw the election of left-wing governments last year, which miners certainly feared would make their operations more difficult and expensive. Expanding on that theme, extensive ongoing protests against mining in Peru have gone so far as to delay and shutter some operations, with the new government caught in the middle: trying to appease its rural, Indigenous base on one hand and not tank the economy on the other. Chile, meanwhile, saw strikes or the threat of strikes across many of its important copper mines in 2021. On these issues, at least, there’s reason for cautious optimism in the coming year; both governments seem to be trying the slow-and-steady approach to negotiations, with ample caution and apparent awareness of the significance of the copper industry for their economies. But whether the copper price will be riding high in 2022 also depends on other factors, most notably the potential for falling demand from China, the world’s most voracious consumer of base metals, as it looks to implement carbon-reduction goals across its economy.
BATTERY METALS: There was a lot of starry-eyed optimism about our green future in the battery metals market in 2021, which isn’t necessarily a bad thing, but at some point there will probably be a reckoning for issues like the over-valuation of Tesla stock that could have an effect on the prices of these metals. Overall, however, the future looks good for battery metal prices. The supply of lithium is already lagging behind demand to some extent, with spotty investment in new resources having the potential to exacerbate this issue in the medium term if electric vehicle and battery storage demand increase at the rates that analysts are predicting. Cobalt and nickel also had a strong year in 2021, and their prices could be buoyed by supply complexities; the ethics of much of the world’s cobalt supply are fraught, with enormous reliance on unregulated artisanal mining in Africa, and the world’s largest supplier of nickel ore, Indonesia, shut down export of the unrefined commodity last year. New investment in battery metals sources will be an area of interest in the new year for us at Spotlight.
URANIUM: We always watch uranium stocks closely here at Spotlight, and the big news for the fuel right now is large-scale protests that have turned deadly in Kazakhstan, which produces some 40% of the world’s supply. While there hasn’t been any disruption to uranium supply (yet), uranium prices spiked this week on fears that it could come, and the share prices of producers outside Kazakhstan also jumped. Depending on how long these protests roll on and their ultimate outcome, this story could dominate the uranium price for much of 2022. That could drive prices even further up from highs last year, when September saw a shot in the arm for uranium, which had been languishing since the Fukushima disaster in 2011. That jump came largely from huge buy-ups from the new Sprott Physical Uranium Trust, which is betting hundreds of millions on the future going nuclear.
IRON ORE: You’re reading a newsletter written by an Aussie, which means I can’t leave out this backbone of our island economy. The iron ore price was the very definition of a rollercoaster in 2021, setting records and then plummeting. This behaviour was driven by several factors, with China, as always, at the forefront. The Evergrande debacle hit demand for steel in the enormous Chinese construction industry, and the effects of that are still being felt. Additionally, China is looking to make a good impression with the Winter Olympics, meaning that steel production has been curtailed to ensure clear skies. Loosening of those restrictions once the games are over could see a rebound in the price, though China is aiming to curb emissions in the longer term too. On top of that, production in iron ore giants Australia and Brazil was exceeding targets left and right in 2021, meaning that oversupply was and continues to be an issue. Overall, I wouldn’t count on the red stuff to set any price records this year.
Around the Traps
A great step for Guanajuato Silver (“GSilver”, TSXv:GSVR, OTCQX:GSVRF), who have just announced that it will start processing third-party silver and gold mineralised material, in addition to ores from its El Cubo and El Pinguico mines, at the El Cubo plant. The new stock will be processed separately from the company’s own material, and it has signed a contract with another local miner for 4,000 tonnes.
Great news from Sun Summit (TSXv:SMN, OTCQB:SMREF) about their Buck property in British Columbia. Drilling in the autumn intersected multiple high-grade, vein hosted gold zones, as well as plenty of bulk-tonnage style, breccia-hosted and disseminated gold. The mineralised system remains open in all directions. Read the news release here.
Excellon Resources (TSX&NYSE:EXN, FRA:E4X2) has started the year pro-actively with an update from its Platosa Ag-Pb-Zn mine in Mexico, as well as exploration activities across the company. Stay tuned for our Project of the Week on Monday, where we’ll be taking a close look at Excellon’s hugely exciting Silver City project in Germany!
Moneta Gold (TSX:ME, OTCQX:MEAUF, XETRA:MOP) has announced some very promising metallurgical results from its flagship Tower Gold project in Ontario, where it is working towards a PEA once resource expansion has been defined. For more information on the company and project, have a look at the video below!
Warrior Gold (TSXv:WAR) snuck in a private placement just before Christmas, raising $200,000 for the company. The company will use the funds for exploration on its exciting projects in the Kirkland Lake area of Ontario, including its 100% owned Goodfish-Kirana property.
Kodiak Copper (TSXv:KDK, OTCQB:KDKCF, FRA:5DD1) has published an informative annual investor letter with handy information about its current operations and plans.
That all from me today, I hope your new year has started well, dear readers!
- Jane Lockwood