Chieftain Chatter
Season 5
Episode 159
The Human Headline…
It doesn’t fill you with confidence that our US Ambassador Kevin Rudd is responsible for defending us against Trumps 25% tariffs on steel and aluminium imports. In 2020 Krudd tweeted that Trump is “the most destructive president in history”. The Marbles appointed representative rubs a lot of people up the wrong way (meself included) with his sheer swarminess before even opening his gob. Trump promptly responded to Rudds comments suggesting he was “not the brightest bulb.”
The EU promptly responded and have threatened “firm and proportionate countermeasures” on the new tariffs which take effect from March 12th. EU member states have already approved levies of up to 50% on €4.8bn of US imports and could quickly take a final vote to impose them. The products would include bourbon whiskey, Harley-Davidson motorcycles, motorboats and some steel and aluminium.
As usual, detail was scant on his import tariffs on steel and aluminium which would again hit Canada and Mexico and for context the US buys significant quantities of steel and aluminium from Canada and lesser, but still notable, volumes from Mexico. Shipments from Canada accounted for 56% ($9.5 billion) of aluminium imports and 32% ($11.2 billion) of steel inflows in 2023, according to data from Morgan Stanley.
The corresponding figures for Mexico were 2% ($686m) and 15% ($6.5 billion), respectively. While China sells the US about $5 billion of steel and $500 million of aluminium last year. It is unclear whether China would face a double tariff hit following the already announced 10% imposition.
Meanwhile, speculation continues that the Chinese are seriously considering several stimulus measures with two key meetings coming up in March seen as the most likely catalyst for further measures to be implemented.
Although the initial 10% tariffs announced by Trump on certain goods were at the lower end of what was threatened and open to negotiation. This is likely to give the Chinese authorities added confidence to implement their expansionary measures should “trade war” fears subside.
While the media focus has been on Trumps executive orders the Fed’s next move on interest rates has taken somewhat of a back seat.
That was until Federal Reserve Chairman Jerome Powell presented to Congress last week and highlighted they will take their time implementing rate cuts with the economy performing above expectations . “We’re in a pretty good place with this economy. We want to make more progress on inflation. And we think our policy rate is in a good place, and we don’t see any reason to be in a hurry to reduce it further,” Powell told members of the Senate Banking Committee. This view was well supported by the latest round of CPI numbers blowing out to a 0.5% (month on month) rise which is the highest level since April 2023 for an annual inflation rate of 3%.
With traders positioning themselves for tariff implementation and Chinese stimulus becoming a reality the copper price has rebounded strongly by 15% this year already to around US$4.60 per pound.
Furthermore, last week we saw a pronounced weakening of the USD index, which slid following the decision to delay tariffs on Mexico and Canada and in response to a number of weaker than expected US labour market data points. The price arbitrage between the COMEX and the LME ballooned to an all-time high as traders continued to price in the implementation of copper import tariffs to the US. It was all going along swimmingly until the Chinese announced they were looking to boost their domestic resources by 10% and utilise recycled copper more efficiently. According to a ministry notice they will encourage foreign investment to build processing factories in China, encourage copper smelters to increase imports of copper and promote AI in the copper industry.
While on commodities, any hint that lithium prices are on the rebound received a blow following reports CATL (The world’s largest electric vehicle battery manufacturer )and Lopal will re-start their lithium refinery following its closure in September 2024. Their lithium carbonate refinery is expected to produce about 3,500 tonnes this month will only add further pressure on prices, which have slumped almost 90% since late 2022 on oversupply and slower than expected growth in EV demand. “It has been a bit tricky [to understand] why this battery giant would resume their lepidolite mine at the price close to the level when they suspended,” a UBS analyst pencilled. UBS expects lithium prices may lift in February and March as China’s demand growth continues to outpace supply, even with CATL resuming production. However, in the second quarter, lithium prices could drop with additional supply coming online and a mixed demand outlook.
In Canaccord’s monthly strategy piece they continue to highlight a market correction is nigh, however the extent of a potential pullback will be limited and the remainder of the year will deliver positive returns. As outlined above earlier the US economy is remaining remarkably resilient and talks of a recession have faded into the background (for the moment). Corporate profits in the US are still outperforming on a quarterly basis and unemployment remains in check. The S&P 500 has delivered stellar returns in the past couple of years, and should they continue to avert a recession and deliver a soft landing then this may well be repeated. In the latest round of reporting in the US in excess of 65% of the S&P500 companies have reported with 75% delivering above consensus results and EPS are up 12.5% which is well ahead of expectations.
Quote of the week…
“He makes a fishes bum look elastic” A colleague describing a frugal associate.
On the lighter side…
School of hard rocks…
Firefly Metals (ASX:FFM) continue to produce the goods with another round of impressive results from their Green Bay copper project.
10.7m @ 12.2% CuEq (9.0% Cu & 3.9g/t Au)
17.3m @ 7.4% CuEq (7.0% Cu & 0.4g/t Au)
12.5m @ 4.2% CuEq (1.8% Cu & 2.6g/t Au)
2.3m @ 12.4% CuEq1 (8.2% Cu & 4.9g/t Au)
Drilling on the northern margins of the resource returned consistent Footwall Zone mineralisation:
58.2m @ 3.1% CuEq (2.4% Cu & 0.7g/t Au)
FFM continues to hammer away with four rigs underground, another being mobilised and a sixth conducting surface drilling.
St Barbara Mines (ASX:SBM) have indicated they intend to “spin off” their Atlantic Gold Operation by either sale, vend-in or demerger.
The Atlantic Gold Operations has 1.4m ounces in reserves and 2m ounces in resources, with significant upside potential due to production ready infrastructure and exploration opportunities. SBM believes the value of the project will be maximised under a TSX listed company with a locally based leadership team in place to navigate stakeholder negotiations. This would mean Simberi becomes their primary focus where they plan to expand production via completion of their expansion project which is expected to produce north of 200,000 ounces per annum by FY2028.
It seems negotiations between Barrick Gold Corp (TSX:ABX) and the Mali government have reached a stalemate with no resolution in sight.
The government is seeking a settlement payment in the order of $200m plus compliance with their mining code which came into force in 2023.
Barrick is believed to be seeking a payment plan, but talks have been suspended and their gold operations remain on hold in country. Meanwhile the government is holding 3 tonnes of Barricks gold and 4 employees as an insurance policy until such time a deal is finalised.
Regis Resources (ASX:RRL) are believed to be rattling the cage for a shot at acquiring the $2bn Ravenswood gold mine that is up for sale from EMR Capital and Golden Energy.
In what is believed to be a hotly contested process from both local and offshore miners the first round bids for the Townsville based Queensland asset are due later this month. Not surprising there is a long list of potential cashed up gold miners running the ruler over the project not to mention elevated appetite from investors to plough into a chunky capital raise.
Ravenswood produces around 200,000 ounces of gold annually and the joint venture partners have reportedly spent close to $800m upgrading the mines infrastructure and tripling production over the journey.
The EMR Capital led a consortium purchased Ravenswood in 2020 from Resolute Mining (ASX:RSG) for around $300m in upfront and deferred payments. RSG lists a receivable of $50m in their most recent annual report along with a deferred debt of $62.2m which will come in if a sale is crystalised.
Local boat builder Austal (ASX:ASB) has been awarded a $265m-$275m contract to build a 130 metre high speed passenger ferry for Swedish mob Gotlandsbolaget (got land n boats or something like that!)
This will be the largest vessel constructed by ASB and will feature a world-first combined cycle propulsion system using gas and steam turbines, enhancing efficiency, and supporting decarbonisation efforts.
The “Horizon X” cat will have a capacity for 1,500 passengers, cargo, and 400 vehicles and will be constructed at the Philippines shipyard using "green aluminium" (they paint it!) to reduce emissions. Construction will commence in April 2026 with completion expected in mid-2028.
Gold minnow Javelin Minerals (JAV) released results of their maiden drill program at the Coogee Project near Kalgoorlie since they recently acquired the project. The latest round of drilling intersected some high grade shoots outside the existing resource including:
5m @ 14.22 g/t Au from 143m and 4m @ 1.91% Cu
10m @ 4.55 g/t Au from 91m
7m @ 6.42 g/t Au, 2.54% Cu from 108m
4m @ 2.22 g/t Au from 80m
The Coogee Resource currently stands at 3.65m tonnes at 1.08 g/t Au totalling 126,685 ounces of gold and 1.01m tonnes at 0.41% copper containing 4,133 tonnes of copper. Esteemed boondy kicker Brett Mitchell quoted via Chat GPT “This is a fantastic start to our exploration program at Coogee. We are focused on Coogee because we saw the potential for it to become a near term WA brownfields exploration success story. “This view was underpinned by the established presence of a large mineralised system, the current resource, the geology and its location next to the world-class St Ives gold camp.”
Emerald Resources (ASX:EMR) have upgraded reserves and resources for their 100%-owned Okvau Operations in Cambodia.
Okvau reserves now sit at 14.5mt’s @ 1.5g/t Au for 700,000 ounces which is an increase of 143,000 ounces with the underground resource yet to be converted into reserves.
Overall resources increased marginally to 16.2mt’s @ 1.9g/t Au for 1 million ounces.
Production and Cost guidance have also been updated for the balance of FY2025 and FY2026:
March quarter 2025 – 25,000-30,000 ounces @ $1,750-1,900/oz AISC due to higher waste stripping and mining lower grades)
June quarter 2025 – 25,000-30,000 ounces @ $1,440-1,600/oz AISC
FY2026 – 110,000-125,000 ounces @ LOM $1,540/oz AISC
Wildcat Resources (ASX:WC8) updated the market that their PFS at Tabba Tabba Lithium Project is now 50% complete and their DFS is running in parallel. WC8 are looking at a staged expansion option with throughput rates of between 2.2mtpa and 4.5mtpa. Of equal importance 75% of the met. test work is now complete, and they have previously released recovery rates of 79-84% to produce a 5.5% Li2O spodumene concentrate. All good news and definitely one of the better projects out there for a number of reasons (granted mining tenure, close to port,$63m in bank to name a few) but the market couldn’t give a flying rats crack until lithium prices climb out of the dunny.
Pilbara Mines (ASX:PLS) warmed the market to their forthcoming half yearly result announcing an underlying EBITDA of between $71m to $75m for a net loss of $5m to $7m.
When you include investments in the lithium hydroxide joint venture and mid-stream demonstration plant joint venture the first half EBITDA comes in the range of $45m to $49m for a loss of $68m to $71m.
This includes a non-cash $16m reduction in the carrying value in PLS’ call option to increase its stake in the JV from 18% to 30% (due to a lower price forecast); and PLS’ share of the 1H net loss after tax ($22m). It also includes mid-stream plant construction costs of $24m.
Who’s shaking the tin…
Cosmos Metals (ASX:CMO) - $1.57m at 1.5 cents (plus 1:4 option)
Europen Lithium (ASX:EUR) - US$22.5m at US$5.00
Strata Minerals (ASX:SMX) - $1.28m 3 cents
Advance Metals (ASX:AVM) - $1.52m at 4.4 cents
Titanium Sands (ASX:TSL) - $500k at $0.004
OD6 Minerals (ASX:OD6) - $1.17m at 4.5 cents
Forrestania Resources (ASX:FRS) -$360k at 1 cent
Firetail Resources (ASX:FTL) – $3m at 6 cents
Koonenberry Gold (ASX:KNB) - $2m at 3 cents
Miramar Resources (ASX:M2R) - $1.8m at $0.003 (plus 1:1 option)
Pioneer Lithium (ASX:PLN) - $1.62m at 20 cents
Winsome Resources (ASX:WR1) - $5.5m at 36 cents (plus 1:2 option)
Tivian (ASX:TVN) - $9m at 10.5 cents
Asara Resources (ASX:AS1) – $2.3m at 2.2 cents
Sipa Resources (ASX:SRI) - $1.75m at 1.3 cents (plus 1:2 option)
Q Mines (ASX:QML) - $ $6m at 4.5 cents
A meeting with…
Luke Cox (CEO) of Caprice Resources Ltd (ASX:CRS)
Is there anything better than new high grade gold hits on an active mining lease, just north of a project that was recently taken over by a mid-cap gold producer with two operating mills in close proximity?. And so it came to pass that our favourite marsupial broker (Wallabi) organised a meeting with Luke to discuss his hits from the Island Gold project. Luke only joined the company in August after a board stoush with the focus on the West Arunta and getting native title clearance to commence work. In the interim, Luke, a geologist, walked the ground at the Island gold project which is literally just off the Great Northern Hwy and only 60km to Mt Magnet. He liked what he saw ; Banded Iron formations, brecciated quartz veins, alluvial workings etc so just before Xmas he got Topdrill to drill 10 holes into a couple of prospects with initial results released on Wednesday. Six of the holes came back with some cracking intersections including 28m @ 6.4 g/t Au from 114m, 27m @ 3 g/t Au from 48m (same hole) 15m @ 4.6 g/t Au from 112m and 12m @ 3.9 g/t Au from 90m. Luke went into a lot of detail about the structural setting but in a nutshell; mineralisation is found where cross cutting structures (shear zone) cut across the banded iron formation and the gold mineralisation drops out – words like en echelon vein sets, reef style high grade quartz lodes etc were bandied around but being a failed geologist, I looked for analogues and fortunately there is a recent one with the Musgrave’s (MGV) Break of Day project just 12km to the south. MGV defined a 1moz gold resource along the Lena shear but importantly a high-grade subset of 372koz @ 10.4 g/t Au was defined at Break of Day. MGV was taken over by Ramelius Resources (RMS ) in 2023 who have just started to mine this at a lovely open pit grade of 7.36 g/t Au. In a raging gold market, CRS shot up ~160% with some 266m shares traded and value of $15m on the day which was more than its prior market capitalisation… you don’t see that too often!!. It has managed to hold onto these gains with ‘only’ 140m traded on Thursday, giving it a market capitalisation of ~$30m. It has another 20 holes in the lab to finish its phase 1 program with results expected in the next couple of weeks and then plans another 5,000m program. Current cash is around $1.5m and so whilst they do need to raise at some point, I get the sense he wants to wait and see what the second phase will bring. Often this is a high-risk strategy but with further exploration success this could be multiples. One to put on the watch list.