Chieftain Chatter
Season 4
Episode 155
Enshittification….
Not so relevant to financial markets but it caught my attention and won the American Dialect Society the Word of the year in 2023 and now appears in the dictionary.
Enshittification is a pattern in which online products and services decline in quality. Initially, vendors create high-quality offerings to attract users, then they degrade those offerings to better serve business customers, and finally degrade their services to users and business customers for their own wellbeing…sounds like a few junior resource companies I know!.
Anyway, back to the real deal, the current rotation thematic has seen a significant switch into smaller cap stocks and cyclicals with the Russell 2000 (RTY) index again reaching fresh highs. The RTY is up in excess of 10% in November and has been consistently outperforming the S & P 500 (SPX) in recent times. The latest US inflationary data surprisingly increased the likelihood of a final rate cut this year from 63% to 70% with headline PCE rising 0.2% for the month and core PCE up 0.3% which was both in line with forecasts. Still looks like a sticky inflationary environment and given some of the Fed comments of late I wouldn’t be surprised if they sat on their hands in the December meeting and wait our see how aggressive Trump’s policy implementation pans out.
The uncertainty of the forthcoming Trump administration has resulted in a wild ride on the gold price with the nomination of his Treasury Secretary Scott Bessent contributing to a more optimistic outlook for the US economy.
Bessent has been a very successful Hedge Fund Manager specialising in macro investment themes and generating exceptional returns by betting on and against currencies, interest rates, stocks and other asset classes around the globe.
He has been charged (probably bad choice of word) with the implementation of election promised policy and is believed to be a steady hand to guide the economy without sparking inflation.
Bessent has encouraged Trump to pursue a “there arrows” policy which includes:
Cutting the budget deficit to 3% of gross domestic product by 2028,
Spurring GDP growth of 3% through deregulation and
Producing an additional 3 million barrels of oil or its equivalent a day.
As a result, both bond yields and the US dollar fell, and gold lost some of its lustre as a safe haven for the immediate short term and equity markets took a liking to the appointment.
Quote of the week….
“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail. Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through, and drugs are pouring into our Country, mostly through Mexico, at levels never seen before. Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America. Thank you for your attention to this matter”. The Tweet Master, Donald J Trump.
On the lighter side….
School of hard rocks…
Wildcat Resources (ASX:WC8) have reported their much speculated maiden resource estimate at Tabba Tabba which came in at:
74.1m tonnes @ 1.0% Li2O
A number between 65m and 75m tonnes has been bandied around for most of the calendar year and should the EV thematic take hold again this will be one of the first projects to attract corporate attention given it’s mining lease status and proximity to Port Hedland.
Although the resource delivered on the high side in terms of tonnes this was due to contributions outside the main Leia pegmatite with resource inclusions from Luke, Chewy, Han and Hutt satellites.
94% of the resource was in the indicated category and there is still scope for further tonnes to be added although, it’s a touch irrelevant at the moment and their $69m cash is almost just as valuable in the current market and should be preserved within reason.
Predictive Discovery (ASX:PDI) announced resource definition drilling from the Fouwagbe target as part of the greater Bankan 5.38m ounce resource.
21 holes were drilled for 2,874 metres with better results including:
16m at 11g/t Au from 159m
15m at 6.5g/t Au from 106m
8m at 2.9g/t Au from 14m
3m at 6.3g.t Au from 21m
The results refine geological interpretation suggesting mineralisation at Fouwagbe is characterised by a series of south-west plunging shoots. (riveting stuff)
Turaco Gold (ASX:TCG) have not surprisingly increased their interest in the Afema Gold Project in sunny Cote D’Ivoire from 51% to 80% from their partner, Sodim Ltd. They were on track to increase their interest to 70% by:
completing a PFS based on a JORC Resource of at least 2moz (within the Mining Permit) by September 2026 - Turaco could increase its interest to 65% via cash payment of US$2.055 million
upon earning 65%, Turaco had a 12-month option to further increase its interest to 70% via cash payment of US$3.75 million.
These terms have been accelerated such that TCG can move to 80% via:
accelerating the above milestone payments (US$5.805) to move to 70%
making an additional US$8.395m payment for an extra 10% project equity
The total consideration is US$14.2m which will be paid 50/50 cash (US$7.1m) and TCG equity (~36.3m shares) with TCG being in a solid cash position with $48m in the bank
There are currently 3 drill rigs operating along Afema shear optimising metallurgical test work plus ongoing regional exploration with plenty of resource upside potential.
Aurum Resources (ASX:AUE) released further exploration drill results from their Boundiali BM tenement in Côte d’Ivoire including:
17m @ 5.90 g/t Au from 273m
29m @ 1.55 g/t Au from 178m
14m @ 3.10 g/t Au from 143m
The first hole listed is the single best intercept achieved to date and is 100m down dip of previously known mineralisation at BM Target 1.
The plan is to continue drilling and they should achieve 50,000m for this calendar year with their 6 owned diamond rigs and a maiden resource estimate for Boundiali should be completed prior to the end of 2024.
AUE still has around $19m cash plus a few scraps from their takeover of Mako Gold (ASX:MKG) which has now gone unconditional.
Spartan Resources (ASX:SPR) received comprehensive regulatory approvals from DEMIRS and the DWER for the mining and processing of underground ores at Dalgaranga, along with modifications to the mill.
The receipt of their mining lease essentially allows them to crank up operations again leaving a smooth ride for any incoming corporate to expand their production profile. In addition, SPR announced further deeper drilling at Pepper and the new discovery south of Pepper that has been named after my colleague “Freak” including:
Pepper:
13.85m at 18.3g/t Au (infill)
16.54m at 1.9g/t Au (extensional)
17.27m at 2.64g/t Au (extensional)
6.29m at 1.83g/t Au (extensional)
4.96m at 0.74g/t Au (extensional)
Freak:
10.26m at 5.37g/t Au
20.95m at 2.70g/t Au
The Freak results are 30m step-out holes from the original discovery hole and remains open at depth and along strike to the south and provide the most probable avenue to adding further ounces.
Antipa Minerals (ASX:AZY) have attracted a bit of attention of late with Greatland Golds (GGP:LSE) share price on the march following the acquisition of Newmont’s Telfer and Haveron operations and speculation that GGP will ultimately want to own 100% of Mingari.
I can’t see any great rush given GGP are going to have their hands full bedding down the US$ 475m purchase and are not looking to list on the ASX until mid-next year. Telfers declining production profile results and significant excess capacity could potentially be filled by Havieron and Minyari (100% AZY) among other nearby projects. AZY recently released follow up results from Minyari Dome Gold-Copper Project in the Paterson, WA where they discovered new zones along the GEO-01 prospect including:
23m @ 2.8g/t Au from 77m
32m @ 2.4g/t Au from 140m
This was an extension of previous intercept of 40m @ 1g/t Au from 26m.
Rio Tinto (ASX:RIO) recently paid $17m for AZY’s 32% interest in Citadel, leaving AZY with a healthy $23m odd in cash to keep belting away.
Newmont Mining (ASX:NEM) have continued their divestment of non-core assets with the sale of Éléonore gold operations in Northern Quebec for US$795m in cash to Dhilmar. (diversifying away from tea!)
The transaction is expected to be completed early next year and takes total proceeds including recent sales to US$3.6 billion which is greater than their original target of around US$2 billion.
Recent sales include:
$475m from the sale of the Telfer operation and Newmonts 70% interest in the Havieron project;
$1billion from the sale of the Akyem operation;
$850m from the sale of the Musselwhite operation;
$795m from the sale of the Éléonore operation; and
$527m from the completed sale of other investments, including the sale of the Lundin Gold stream.
The Company is focused on completing the sales processes for it’s remaining North American non-core assets, which are expected to conclude in the first quarter of 2025.
It wasn’t all a bed of roses for the gold sector with Yandal Resources (ASX:YRL) reporting further results from drilling at its Siona Prospect, part of its Yandal Gold Project in WA which lies 70 odd clicks south of Jundee.
10 holes were completed for 2,200 metres of drilling testing 500m of strike with results received to date including:
107m at 1.0g/t Au from 96m
35m at 1.0g/t Au from 122m
80m at 1.0g/t Au from 67m
True widths are probably more like 30 meters which is why the market marked the stock down so aggressively.
Assays remain pending for several holes drilled along the 400-500m strike length and the drill program has been extended with $9m in available cash as at late November.
Who’s shaking the tin…
Orpheus Uranium Limited (ASX:ORP) - $1.66m at 3.5cents
Carnaby Resources (ASX:CNB) - $18m at 31 cents
Ionic Rare Earths (ASX:IXR) - $1.65m at $0.007
Encounter Resources (ASX:ENR) - $15m at 35 cents
Adavale Resources (ASX:ADD) - $1m at $0.0025 (plus 1:1 option)
Legacy Minerals (ASX:LGM) - $3m at 15 cents (plus 1:2 option)
Perpetual Resources (ASX:PEC) - $1m at 1.4 cents
Great Southern Mining (ASX:GSN) - $2.5m at 1.7 cents
Peako (ASX:PKO) - $1.8m at $0.003 (plus 1:1 option)
Western Yilgarn (ASX:WYX) - $400grand at 2 cents (Xmas party)
Everest Metals (ASX:EMC) - $3.9m at 11 cents
Aguia Resources (ASX:AGR) – $1.5m at 3.6 cents
Manuka Resources (ASX:MKR) - $1m at 3.5 cents
Macro Metals (ASX:M4M) - $4m at 1 cent
Albion Resources (ASX:ALB) - $2m at 4.5 cents
A coffee with…
David Southam, Executive Chairman, Cygnus Metals (ASX:CY5)
If you want to go for a quick coffee do not go to the Jaffle Shack… second time in a week it took 25 mins to get a lukewarm long mac. After discussing whether there had been anymore unfortunate golfing accidents via the remote buggy cart we got down to business. In October CY5 announced a merger with Dore Copper Mining Corp whose key asset was the Chibougamau Copper Gold project located in Quebec. The project has a current resource of 10.8mt @ 3.5% Cueq plus a 900kt processing facility. The district has a long history of mining, having produced over 945kt of Cu and 3.5m ounces across 16 mines. In 2022 Dore completed a PEA with the key findings that the project could support annual production of ~23kt of Cu equivalent for 10yrs (peak production of 40kt of Cueq) at an average AISC of US$2.24/lb with capex estimated at C$180m. Based on a copper price of US$3.75/lb and gold price of US$1,820/oz the project would deliver a pre-tax NPV8 of C$367m or after tax of C$193m – so this is a good start. What excites the CY5 team is the exploration upside with a number of high grade intersections outside the current resources including results such as 5.9m @ 26.4% Cu from 115m, 8.4m @ 9.9% Cueq and 4.5m @ 16.8% Cueq from 138.6m. Due to the fragmented ownership of the tenements only 5% of the data is in digital format and old EM data etc. so the plan is relatively simple for CY5 and outlined below. As part of the deal CY5 raised $11m at 7.2c which was swamped and the stock promptly doubled once it came back on. The deal is slated to go through in mid Dec and after that we expect the drill rigs to start turning. The CY5 team comes from the same stable that have had recent success in FFM and ASL and hence have good market support so it’s not hard to see that in a years’ time and with exploration success, the stock can be multiples of the current price.