Chieftain Chatter
Season 4
Episode 153
Will history repeat…
As highlighted by Canaccord analyst Carey MacRury; in the first 45 days of Trumps 2016 victory the gold price retraced 12% before going on to gain 68% for the remainder of his reign. He acknowledges we are in a vastly different economic environment in the US but continues to see the case for gold remaining robust with rates easing, debt rising and geopolitical tensions heightened. It’s also worth noting that as a result Central Banks have been re-stocking record amounts of gold with China leading the charge and worth bearing in mind that gold price increases are typically associated with rising US debt levels so you can expect to see Central Bank demand remaining strong. After the US dollar, gold is now the largest reserve currency after eclipsing the Euro in value and should Trump’s second term follow the controversial path of his first then hold onto your hat.
The “Trump Trade” continues to roll out with bond yields heading north again as his policy is expected to have further inflationary implications that will be an impost on the economy.
Meanwhile, in the US November mortgage applications slumped back in excess of 10% suggesting the US economy is not out of the woods yet and policy implementation of the Trump agenda (tariffs, corporate tax cuts) are unlikely to become LAW before the end of calendar 2025 if they are indeed passed at all. Meanwhile, inflation data remains sticky in the US suggesting rate cuts may well be on hold for the moment while jobless claims while jobless claims are still running at their lowest levels in a few months suggesting the economy is robust.
Not surprisingly Trump has appointed Elon as head of the new “Slash Regulation” department, so we can expect a clear path for Musk to roll out his entrepreneurial plans and likewise with also appointed Pharmaceutical Guru Vivek Ramaswamy.
The aptly named Dept. of Government Efficiency” (DOGE) not to be confused with Dogecoin (which has coincidentally rocketed 200% in recent times on the back of the Trump victory) is aimed at cutting red tape and unnecessary government expenditure with Trump commenting “Together, these two wonderful Americans will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies – Essential to the ‘Save America’ Movement,” he said while Elon added “This will send shockwaves through the system, and anyone involved in Government waste, which is a lot of people,” No conflict, no interest Elon!
Although the latest round of China stimulus didn’t move the dial, President Xi Ping Pong is believed to be considering cutting tariffs to Greater Europe and Asia to curb the Trump administration’s proposed 60% import tariffs. Officials have provided refinancing relief to local governments to the tune of US$1.4 trillion but failed to introduce any new stimulus measures to counter the impact of forthcoming US import tariffs. However, their Finance Minister indicated further fiscal measures in 2025 would follow, perhaps in line with the Trump administration inauguration. China Economist Duncan Wrigley commented “Policy makers probably saw no need for a robust response to Trumps victory, before he takes office, given the relatively restrained post election market response. Next year is a different matter, but officials will take that as it comes.”
There is obviously many forms the US tariffs may take and once Don assumes office we can expect a great deal of lobbying from the Chinese to soften the blow and recent measures to ease the burden on Chinese homeowners via lower rates should see the Chinese economy reach it’s 5% GDP growth target this year.
Write off the Chinese at your peril as evidenced by Chinese EV manufacturer BYD eclipsing Tesla’s quarterly revenue for the first time and now has Ford in it’s sights to exceed their annual shipments this year.
BYD sold 543,000 EV’s in October alone with domestic demand being assisted by government subsidies encouraging punters to trade in their combusting engine cars in favour of an EV or Hybrid.
The ledger may well be balanced under Pres. elect Trump if he rescinds Sleepy Joe’s US$8.5 billion family incentive scheme to decarbonise.
Back in June 2022, when BYD’s Hong Kong-listed stock hit an all-time high, the Chinese carmaker was worth more than Ford, GM and Stellantis combined. It almost achieved that goal again last month as the US automakers’ woes deepened but didn’t quite get there. With the way sales are trending, it may only be a matter of time.
In a move supported by the new Trump regime Biden has rolled out plans to triple the US nuclear capacity by 2050 which will result in an additional 220 gigawatts of nuclear energy capacity with 35 gigs to be completed by 2035.
According to a White House spokesperson many of the barriers that have hindered nuclear development have been addressed:
Skilled labour shortage
Domestic fuel supply
Regulatory infrastructure
Trump was vocal on his campaign trail in support of new reactors to plug the electricity gap from hungry data centres.
Quote of the week….
“Hard work never killed anyone but is it worth taking the risk?”
On the lighter side….
School of hard rocks…
Turaco Gold (ASX:TCG) announced a new discovery along the ‘Niamienlessa Trend’ within the Afema Project in Cote D’Ivoire which runs for 10 clicks and better results included:
12m @ 6.7g/t Au from 18m
27m @ 2.30g/t Au from 34m
15m @ 2.11g/t Au from 22m
Results are from first pass drilling targeting two sub-parallel anomalies extending for 2 kilometres and 1.6 kilometres each, with further results pending.
Initial drilling has only tested the top 80 metres or so from surface with predominately oxide mineralisation intercepted, with confirmation of broad mineralisation extending into fresh rock.
Afema has the advantage of a granted mining licence and a growing multi-million ounce gold resource, surrounded by highly-prospective exploration tenure, which is set to deliver the next wave of gold discoveries.
Three drill rigs are now operating at Afema, with the arrival of a second diamond rig together with RC drilling continuing.
Under siege Minres (ASX:MIN) woes continued announcing that the Bald Hill operation will be transitioned to care and maintenance as the lithium price remains in the dunny.
Mining has ceased immediately and processing will follow with a final shipment in December meaning guidance of 120,000 to 145,000 tonnes of spodumene concentrate will be in the range of 60,000 tonnes.
On the flipside MIN did announce a resource upgrade for the deposit to 58mt’s at 0.94% Li2O, and that when conditions are right the operation could return to full production in 4 to 6 weeks. The shut down comes as no surprise and reflects producer attitudes across the board which will culminate at an inflexion point for us all to fall back in love with lithium again.
Delta Lithium’s (ASX:DLI) plan B until the lithium market re-emerges is proving to be a very credible alternative with drilling at their Mt Ida gold project continuing to produce the goods with extensional drilling at Baldock. The current resource at Mt Ida stands at 6.6m tonnes @ 3.5g/t Au for 752,000 ounces with Baldock contributing the bulk (4.8m tonnes @ 4.4g/t Au for 674,000 ounces) and this program is aimed at growing that resource. Thus far Stage 1 of drilling has returned:
2m @ 9.3g/t Au from 83m
1m @ 6.5g/t Au from 197m
5m @ 4.7 g/t from 38m
2m @ 4.1g/t Au from 31m
1m @ 9.3 g/t Au from 140m
1m @ 8.8g/t Au from 308m
The program consists of four stages and 35-000-40,000 metres including RC and diamond drilling plus regional across the greater Mt Ida package including Kestrel and Golden Vale which host the balance of the resource inventory.
Genesis Minerals (ASX:GMD) updated the market with a raft of drill results from their various operations including:
Gwalia underground down dip results included:
7.2m @ 60g/t Au
13.5m @ 9g/t Au
6.4m @ 13g/t Au
11m @ 9.2g/t Au
4.2m @ 38g/t Au
Admiral results will feed into the immediate mine plan:
19m @ 8g/t Au
13m @ 6.2g/t Au
5m @ 20.1g/t Au
14m @ 5.2g/t Au
Hub Open pit results down plunge successfully identified the high-grade plunge at depth:
5.3m @ 8.8g/t Au
3.4m @ 5.5g/t Au
2.8m @ 6.9g/t Au
They also completed resource definition drilling at Aphrodite to plug the gaps in the 1.7m ounce deposit with testing for new parallel structures which identified a new lode 450m to east with an intercept of 6m at 6.6g/t Au.
WA Resources (ASX:WA1) has lost a bit of steam of late but are powering ahead with their resource definition drilling with the latest round of results continuing to confirm the quality of the resource at the Luni Niobium project in the West Arunta WA.
Better results included:
19m at 2.4% Nb2O5 from 32m
25m at 4.4% Nb2O5 from 34m
21m at 2.1% Nb2O5 from 55m
12.2m at 2.0% Nb2O5 from 58m
34.0m at 1.5% Nb2O5 from 39m
24.3m at 3.1% Nb2O5 from 46m
19.0m at 2.7% Nb2O5 from 35m
75.0m at 1.9% Nb2O5 from 30m
Their 200m tonne resource has an average grade of 1% Niobium with further results due and a resource upgrade expected to follow in the first half of next calendar year.
Additional metallurgical test work is on-going, with results expected over the coming months. Separately, WA1 continue to progress environmental baseline studies.
Following a disappointing quarterly production report due to a number of operational issues during ramp up Paladin Energy (ASX:PDN) announced it’s much anticipated FY2025 production guidance. They are now guiding towards 3 to 3.6 million pounds of production versus 4 to 4.5 million pounds previously and cost guidance was withdrawn and the stock was smoked by 25%. This was despite the recent quarterly highlighting the operational issues had been addressed including achieving recoveries of 87%. However, the main issue here is the low grade in the stockpiles and the lack of water delivery and PDN has not yet been able to fill its on-site water storage, which will happen during the November shutdown. PDN will complete a planned shutdown in November to allow for improvements and operational upgrades and If revised guidance is met, we expect PDN to be cashflow positive in FY2025. They remain confident that they will get to their target run rate of 6 million pounds per annum by the end of next year and they have US$55m in cash, and US$55m in available debt funding.
Liontown Resources (ASX:LTR) revealed a revised 2.8mtpa mine plan with a focus on higher margin ore at reduced costs. This action will result in reduced development and fixed costs and around 38,000 less development metres between FY2025 to 2030.
The reduced production rate will require a reduced fleet which should reap up to $100m in cost savings and deferrals with the flexibility to expand should market conditions support this. Unit operating costs (FOB) are expected to be in the range of $775 to $855 per dmt (SC6)
LTR provided an October performance update highlighted by:
203,000dmt’s milled and spodumene concentrate production lifting 25% month on month to 25,000dmt.
Plant availability rising to 91%; and recoveries lifted to 52% heading towards targeted level of 65%
22,000 dmt’s shipped in October and same scheduled for November
Debottlenecking has commenced with Lycopodium.
Like it’s peers this is a responsible course of action in the current environment with the flexibility to ramp up at the appropriate juncture and LTR retains $263m of cold hard.
Speculation regarding the detention of three Resolute Mining (ASX:RSG) executives continues to mount as the dispute with the miliary controlled Mali government lengthens. The executives including CEO Terry Holohan had attended in country negotiations in good faith with the Mali tax and mining authorities in hope of concluding a settlement. RSG has announced they have agreed to pay the government around US$160m in back taxes with US$80m paid and the balance to follow in the coming months. Although Resolute indicated the claims against the firm are “unsubstantiated,” and that “The company is continuing to work with the government on a resolution.” The nation’s junta has been pushing firms with operating gold projects to come to the negotiating table, after adopting legislation last year that increases the state’s share of economic benefits from mining projects. Allied Gold Corp. and B2Gold Corp. have recently announced agreements that will govern the future operations of their Sadiola and Fekola projects in the country. They will pay about $116 million and $204 million respectively to the state under the deals, according to company statements.
Who’s shaking the tin…
Rox Resources (ASX:RXL) - $27m at 14cents
Native Mineral Resources (ASX:NMR) - $19.398m at 4 cents
Metal Hawk (ASX:MHK) – $2.5m at 20 cents
Kore Potash (ASX:KP2) - $ 1.3m at $0.0014
Altech Batteries (ASX:ATC) – $4m at 6 cents
Oceana Resources (ASX:OCN) - $1.2m at 2.2 cents
Iris Metals (ASX:IR1) - $8m at 25 cents
Benz Mining (ASX:BNZ) - $4m at 22 cents
Ronin Resources (ASX:RON) – $461,500 at 13 cents
Viking Mines (ASX:VKA) - $2.39m at $0.009
A site visit to…
Capricorn Metals (ASX:CMM) Karlawinda operation…
In keeping with the boys ‘low cost’ mentality, that has driven the success of this team and previous incarnations over the past 30yrs, they had clearly requested the cheapest plane available from the Skippers Aviation fleet and so its came to pass that my 6ft 2 in frame spent a solid 2.5hrs with my knees up around the throat. We arrived on site to a balmy 40 degree day and after a cup of International Roast it was down to business. Paul Criddle, the relatively new COO went through a quick preso - a couple of interesting stats that even my simple brain could understand.. reconciliation is within 2% after producing 350koz and generating $465m in operating cashflow and $396m in actual cash - I mean wow they have actually done what the feasibility stated !!!. The expansion from 4mtpa to 6.5mtpa is a no brainer with the reserves increasing to 1.4moz. The expansion will cost $120m to build a new stand-alone 2.5mtpa plant and increase production to 150koz pa with AISC of $1,700/oz. A trip to the viewing platform at the pit gave a great overview of the pit and the passion on display from the operators in terms of moving dirt required and the relationship with Macca Ltd was clearly evident. Back for a quick bite, where no expense had been spared with delicious pork rolls with some members of the group gorging themselves on 5 of them (isn’t that right JB ?) and discussion turned to Mt Gibson and what this can deliver. An imminent reserve upgrade to incorporate all the drilling could see reserves push past the 2moz mark which really puts it in a league of it’s own. The perennial bug bear of permitting was discussed with CMM hopeful this will be done in the 1st H CY’25. A 5mtpa operation producing 155koz pa for >11yrs at an AISC of $1,450-1,550/oz for a capital cost of $260m makes this a compelling development proposition – especially when you consider it's being done by a team with an outstanding track record of executing and delivering projects to feasibility estimates. A recent $200m raise has given them more than enough moolah to build this plus the cashflow from Karlawinda. Interestingly, some high grade intercepts beneath the current planned open pits point to a potential underground operation with hits such as 14m @ 12.85 g/t Au from 208m, 16m @ 9.4 g/t Au from 267m plus it has the luxury of time to fully integorate this opportunity. A gold pour is always a highlight and a lovely 15kg bar was produced. There is nothing like a physical reminder of higher gold prices. Many years ago, at Carouse Dam we held a 20kg bar which was worth ~$1m - this time a 15kg bar was worth $1.8m. It was time to squeeze back into the sardine can of a plane which was made bearable by some ice cold refreshments.. A terrific site visit run by the best in class operators - me thinks in two years’ time we will look back and go ‘Gee it was cheap prior to Mt Gibbo’s permitting’.