The Mining Mongrel: April Review (Part 2)

Featured Image: Ironridge Resources' drill team

Continuing on from previous last week, the metals and mining sector has seen more of the same, with few new changes to mine closures or government shutdowns. The most dramatic pace in the market has been Uranium, with supply having significantly being impacted with the restrictions in Namibia, the 4th largest producer, and companies such as Kazatomprom and Cameco closing operations.

As a result Uranium prices spiked rising from the lows of $16/lb up to $32/lb and rising, with a total gain of 11% on the week. With many Uranium analysts projecting future price rises with supply dropping of, could this be the beginning of a new Uranium bull market up to the highs of >$50/lb. Copper prices have also seen a nice bump, as they gain 4% on the week due to supply disruption and the fact that Chinese inventories are down, and Trumps announcements about relaxing restrictions.

Regarding the bulk commodities, high grade iron has become significantly more attractive, as Chinese steel plants keep up a high demand and seaboard transport limited.

Oil this week saw an even further hit to the price, plunging 20% over the week despite the historic OPEC cut to historic production. This is due to traders remaining unconvinced that such a cut will offset the lack in demand, despite US storage being quoted at 60% capacity.

Miners

• Antofagasta post there 2019 Annual Report.

• Rio Tinto announce their Q1, 2020 production results. Notably capital expenditure for 2020 will be pushed back to 2021-22.

• Hummingbird announce their Q1, 2020 production results. Au poured was down by 3,610oz from Q4, 2019 and AISC was up by $36/oz in the same period, showing some impacts of corona affecting the west African Au producer.

Producing precious metal producers continue to outperform all others mining stocks, with generalist investors moving back into the sector looking for safe havens as well as gold being the general flavour of the month. However, with major base metal producers closing and demand from china starting to pick up, we may be seeing movements back into the Cu, high grade Fe and Sn space again.

Investment and Royalty Companies

• Metal Tire put out results from two of their investments:

• Sandfire resources have put out results from their resource drilling program, with high grade intercepts of 18m @ 5.2% Cu and 124g/t Ag from 77m.

• Cobra Resources during their early stage exploration, have intercepted during drilling at Schwable project, 6m @ 8.39%Cu, 3.52% Zn, 30 g/t Ag, 0.14% Co, 3.1 g/t Au from 49m.

• Trident Resources have gone into suspension after entering a definitive purchase agreement of a 1.5% royalty of the Koolyanobbing Fe ore operating in WA for a staged payment of A$7m. Last year the royalty payment was of A$731k, where as production is scheduled to increase over 2020.

• Power metals have moved into a conditional agreement with early stage exploration company Kavango Resources for 51% of their Ditau REE project in Botswana for £150k payable through issuing of shares @0.1p.

In general royalty and investment vehicles have done particularly well this week, having little or no direct exposure to high costs of care and maintenance activates, but with exposure still to inflating commodity prices.

Junior Explorers

• Armadale Capital announce the stepping down of non-executive director Gerrard Hall having taken the project through to DFS.

• Greatland Gold push through the 6p level. With the maiden resource at Havieron, planed for the end of the month predicted to exceed 10m oz of Au with credits of Cu, investors are speculating an early buyout agreement by Newcrest for the project.

Interest this week has been in Fosterville South (FSX), who have listed this week on the TSX. With ground next to the Fosterville gold mine, one of the worlds highest grade and lowest cost operations, the stock price has rocketed. Looking at ECR Minerals, the next-door neighbours to both projects and natural comparison to FSX. Could a re-rating be in order?