Chieftain Chatter
No man's land…
Markets remain in limbo despite rebounding off their recent correction lows, but the uncertainty still remains and hence we can still expect to see short term volatility. According to DoubleLine CEO Jeffery Gundlach (who manages a few squillion) the recession risk now sits in 50-60% territory. The Fed went on full alert last week by leaving rates unchanged and lowering growth expectations but raising it’s outlook for inflation and essentially suggesting stagflation is a real risk. In their latest “dot plots” release 4 members of the FOMC are expecting no cuts this year (up from one in December). Despite this overall, they are still forecasting two rate cuts this calendar year and hence Gundlach is de-risking portfolios and diversifying away from the US via opportunities in Europe and emerging markets. This all probably makes sense given on the one hand you have Trump trying to cut the US deficit in half (overdue) and on the other the EU is trying to double theirs.
Trade wars continue to dominate the rhetoric, however, there has been speculation The White House are progressing negotiations with certain countries about mutually lowering tariffs ahead of the April 2nd reciprocal tariff deadline. The eye for an eye tariff threats maybe open to negotiation especially with those countries having a trade surplus (Australia) with the US. In the case of India, a report suggested that the rate India charges on US imports is already 10% higher than the US levies on Indian goods (mainly curry) and therefore at risk. The US Treasury Secretary Scott Bessent has indicated that on April 2 countries will be given a “number” that the US believes best represents the tariff that should be imposed but this is then open for discussion in order to avoid a “tariff wall”. Bessent does not priorities share market stability commenting…
“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy. They’re normal. What’s not healthy is straight-up, that you get these euphoric markets, that’s how you get a financial crisis. It would have been healthier if someone had put the brakes on in ’06-’07. We wouldn’t have had the problems in ’08. So, I’m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation, and energy security, the markets will do great…. I can tell you that if we’d kept on this track, what I could guarantee is we would have had a financial crisis…. I’ve studied it. I’ve taught it. And if we had kept up at these spending levels, that everything was unsustainable…. So, we are putting the, we are resetting, and we are putting things on a sustainable path”. Fair call Scotty!
The Copper price has marched back up to US$5 per pound following further confirmation China will continue to stimulate consumption of the metal. The government unveiled a special action plan to raise incomes, stabilise their property market and spur copper demand to offset the impact of US tariffs. Copper prices and stock markets responded positively to the announcement of the eagerly anticipated fiscal stimulus plan by Chinese authorities, which is intended to lift the nation’s struggling domestic consumption. The package is an essential catalyst to transition China’s economic model away from investment and export-led growth which has historically been prone to overcapacity and susceptible to growing international trade protectionism and move the Chinese economy towards a more sustainable domestic consumption growth.
China produced some more encouraging economic data prints for Jan/Feb including:
Retail sales up 4.0% year-on-year,
Industrial production up 5.9% vs. 5.3% forecast
House Price index -4.8%, up from -5.0% in the previous month
Fixed asset investment up 4.1% vs. 3.6% forecast
These are promising signs that the Chinese economy is stabilising, and their 5% GDP targets are realistically achievable.
While on China, EV manufacturer BYD revealed a new charging system that will allow them to charge almost as fast as it takes a regular car to refuel. There new battery and charging system was capable of providing 470 kilometres of range in 5 minutes with the new technology to be available for re-sale next month. This could be a significant boost for the EV sector as charging times have been a major criticism that has inhibited sales and promoted hybrids as a more desirable alternative. The speed is substantially superior to Tesla’s current supercharger offering which can add 275km’s of range in 15 minutes however Tesla’s global charging network is significantly more established with 65,000 charging points around the globe. The next step is to provide charging infrastructure to support the new charging technology which BYD has pledged to roll out. The first new BYD models to benefit from ultra-fast charging can achieve speeds of 0-100km in two seconds and will retail for around A$90,000 when they become available next month.
Totally off topic but probably a lot more interesting than “tariff talk” was the news that a US consortium consisting of tech and real estate investors had agreed to purchase the Boston Celtics for a staggering US$6.1 billion.
The transaction is the largest for any NBA franchise or any sporting team for that matter eclipsing the deal for the Pheonix Suns in 2022 worth US$4.1 billion and the US$6.05 billion paid for the NFL’s Washington Commanders in 2023.
Quote of the week….
After years of being held captive by environmental extremists, lunatics, radicals, and thugs, allowing other countries, in particular China to gain tremendous economic advantage over us by opening up hundreds of all Coal Fire Power Plants, I am authorizing my administration to immediately begin producing energy with BEAUTIFUL, CLEAN COAL” DJT tweet.
On the lighter side….
School of hard rocks…
First Quantum Minerals (FQ:TO) ongoing stoush with Panama authorities over the potential re-opening of their massive Cobre Panama Copper operation seems to be moving in the right direction following FQ suspending it’s arbitration case against the Panama Government paving the way for renewed negotiations. You may recall the President recently visited the site which raised hope that the $10 billion operation maybe re-started, however their still remains strong environmental and political opposition and the President indicating he won’t negotiate with First Quantum until it drops arbitration proceeding. Keeping in mind the mine accounted for about 5% of Panama’s total GDP and the Panamanian President (Mulino) recently authorised FQ to export 121,000 tonnes of copper concentrate that had been stockpiled and indicated he’d address the mine operation issue next week “God willing”.
Ramelius Resources (ASX:RMS) waited till their share price tanked before launching a predominantly scrip bid for Spartan Resources (ASX:SPR). Under the terms of the binding deal SPR shareholders will receive 25 cents in cash plus 0.6957 RMS shares which represents a look through valuation of $1.78 for SPR or about a 10% premium. The deal which has the support of the SPR board is reliant on 75% acceptance and if successful SPR shareholders will own 39.5% of RMS. SPR’s Simon Lawson will join the RMS board as an NED and Deputy Chair. The merged group will have a market cap. of $4.2 billion and $500m in net cash after paying out $267m to SPR shareholders. Dalgaranga plugs a significant production gap for RMS which was highlighted in their Mt Magnet mine plan update and paves the way for them to become a 500,000 ounce per annum producer.
Source: RMS, Argonaut Research, March 2025
What will S. Lawson do next? Well, an obvious candidate maybe The Gorilla Gold (ASX:GG8) where he is an NED and has a few sheckles invested.
GG8 has hit the ground running in it’s short life and has announced further drill results from its Lakeview and Sovereign prospect at Comet Vale.
14m @ 7.2 g/t Au from 122m (Lakeview)
96m @ 2.5 g/t Au from 125m (Lakeview)
13m @ 5.1 g/t Au from 191m Sovereign)
4m @ 5.5 g/t Au from 168m (Sovereign)
Drilling would appear to be delineating a high-grade zone of mineralisation at Lakeview which is open at depth and results warrant an additional RC rig.
Wide spaced drilling at Mulwarrie has intercepted new gold lodes including:
7m @ 8.5 g/t Au from 188m
4m @ 2.7 g/t Au from 28m
4m @ 3.3 g/t Au from 80m
These results have extended Mulwarrie by 100m at depth, discovered a new lode and extended the mineralised footprint 100m to the South.
Perhaps stay in trading halt and raise the maximum amount of loot you possibly can!
Lotus Resources (ASX:LOT) has signed an additional offtake agreement for 600,000 lbs of U3O8 from Kayelekera from 2026-2029 with a North American power utility.
Pricing is a fixed US$ price based on a published long-term price (currently US$80 per lb) less a small discount with a fixed price escalation in line with inflation.
LOT now has contracts for about 3m lbs of product from next year following the recent agreement with Curzon for 700,000 lbs under a “take or pay” contract.
LOT reconfirmed they remain on time and budget for first production in 3QCY25with expectations suggesting they will produce 6.5mlb’s in total over the 2026-2029 period.
Gold Road Resources (ASX:GOR) blamed mill issues on a weaker production forecast for the first quarter of the calendar year and guiding production of 70,000-73,000 ounces. Two conveyor belts failing and maintenance work on the primary crusher are to blame specifically. Mining has now cranked up to an annualised material movement rate of 72mtpa. Full calendar year production guidance has been maintained at 325,000-355,000 ounces at an AISC of $2,400-$2,600 per ounce. So, to achieve a mid-range annual production rate of 340,000 ounces they will need to produce 85,000 ounces per quarter and the bottom line will be ably assisted by an “off the charts” gold price. Also worth keeping in mind GOR will be a significant beneficiary of Northern Star Resources (ASX:NST) takeover of De Grey Mining (ASX:DEG) which if they cash in their NST chips is worth in the order of $850m so, perhaps a special dividend could be coming shareholders way.
Not surprising the giant came out and squashed the minnow with Fenix Resources (ASX:FEX) bid for CZR Resources (ASX:CZR) being gazumped by Robe River joint venture partners Rio, Mitsui and Nippon Steel (rather formidable opposition)
The conditional offer from the consortium at asset level for CZR’s Robe Mesa iron ore project is offering $75m for the project which is equivalent to 32 cents a share. FEX had offered 0.85 of a FEX share for CZR shareholders and this follows the Chinese offering $102m last year which fell over at FIRB level. FEX will potentially receive a small break fee of $650k for their troubles but a distant second prize!
West Africa Resources (ASX:WAF) released a scoping study for the underground development of Toega, which sits about 13km from the Sanbrado processing facility. The maiden underground resource for Toega is 4.9m tonnes @ 3.5g/t Au for 560,000 ounces and remains open at depth. The underground mine has the potential for a 7-year life delivering an average 81,000 ounces in years 2 to 6 or 72,000 ounces per annum over the life of mine @ $1,950 AISC
Pre-production capital is estimated at US$42m and the potential exists to run around 1mptpa open pit feed through the Sanbrado mill which could add an additional 50,000 ounces per annum by adding a secondary crusher for about$40m. This all suggests Sanbrado could be producing north of 300,000 ounces per annum taking annual production to 500,000 ounces (Upon Kiaka development completion) of unhedged production within 5 years.
Toega Underground resource showing mineralisation in pretty colours…
Those investors who took up the recent Austal (ASX:ASB) placement at $3.80 have been rewarded with South Korean diversified industrial giant Hanwha emerging with a 9.9% interest after hoovering up 41.2m shares at $4.45.
Hanwha has also sought FIRB approval to advance their holding to 19.9% of ASB and said it wants to become "long-term strategic partner with Austal in developing Australia’s defence industry capability".
“Hanwha’s position as a global leader in smart shipbuilding will provide Austal access to capital, international relationships and operational and technical expertise which can accelerate the development of Austal’s business and in turn, enhance Australia’s sovereign defence capability, at a time when this capability is more important than ever”. Hanwha’s previous overtures to the ASB board fell on deaf ears as it was feared sensitivities around US Defence contracts were not complimentary and the bid of $2.825 was insufficient (which proved correct)
Cygnus Metals (ASX:CY5) have revealed further strong infill results from their Chibougamau Copper Gold Project in Quebec, in particular results for Corner Bay included:
7.3m @ 3.1% CuEq from 492.2m (2.7% Cu, 0.5g/t Au and 9.7g/t Ag)
3.7m @ 2.7% CuEq from 390.4m (2.5% Cu, 0.2g/t Au and 8.5g/t Ag)
2.5m @ 3.2% CuEq from 572.5m (3.0% Cu, 0.1g/t Au and 10.9g/t Ag)
Corner Bay, which is the primary deposit at Chibougamau, has an Inferred Resource of 5.9m tonnes at 3.6% CuEq of which 2.7m tonnes @ 2.9% CuEq is in the Indicated category.
Meanwhile drilling at the new near surface Colline target returned:
8.6m @ 2.3% CuEq from 95m (1.9% Cu, 0.3g/t Au, & 19.0g/t Ag)
7.2m @ 1.5% CuEq from 269.4m (1.3% Cu, 0.2g/t Au & 6.7g/t Ag)
Colline is completely outside existing mineral resources, sits less than 4km from the Chibougamau Processing Facility and highlights the potential to grow the high-grade Chibougamau Resource.
Drilling with two rigs is ongoing while follow up downhole electromagnetics (DHEM) is being utilised to define follow up targets.
Who’s shaking the tin…
Not many…
Minerals 260 (ASX:MI6) - $200m at 12 cents
Aquirian Limited (ASX:AQN) - $3m at 26 cents
New Murchinson Gold (ASX:NMG) - $16.5m at 1.3 cents
Kaiser Reef (ASX:KAU) - $25m at 14 cents
Many Peaks Minerals (ASX:MPK) - $ 6.22m at 35 cents
Haranga Resources (ASX:HAR) - $6m at 5 cents
A coffee with…
Duncan Hughes, Chief Development Officer at Bellevue Gold (ASX:BGL)
We have known Dunc for at least 15 years when he was on the sell side as an analyst with RFC Ambrian, GMP and then Bell Potter before taking the leap into the murky corporate world as IR/BD at GOR for almost 7 years before joining BGL a month ago. As an analyst he was very good and thorough –nice probing questions and on the BD side we have always found him to be a straight shooter. So, with gold prices continuing to reach all-time highs we thought it was appropriate to go through the list of producers, rounding back on ones that are trading well off their year highs. Bellevue Gold certainly fits this bill, trading at a 36% discount to its high of $2.10 reached in May’24. As one broker said ‘BGL is peak hate at the moment’. Whilst it’s ramp up issues have been well documented – slower than forecast which combined with a debt position of $200m to the silver donut saw BGL raise $150m @ $1.55/sh in July last year. Whilst couched as a growth raise – increasing production to 250koz by FY’28 but they also repaid $100m of debt. In early Jan they announced the Dec Q production result which was below the Sept Q and revised FY’25 production number but still maintained the 2nd H could produce ~90koz – the old 2nd H club!! - it didn’t stop the price getting belted to $1.00/sh. So, all eyes will be on the Mar Q production with most analysts around the 35koz mark before increasing to 50koz in the June Q as higher-grade stopes are bought online. It felt like free cash generation would be minimal, if any in this Q as growth capex plus delivery into some out of the money hedges plus the zero cost collars meant little production is likely to be delivered into spot prices. However, the June Q, if they can deliver ~50koz should see some reasonable cash generated with 20koz delivered to spot with the balance into the hedge book. For us, it’s all about looking forward and the classic inflection point where the company turns from being a cash consumer to a cash generator. With a site trip pencilled in for early April we suggest the company’s confidence in meeting 2nd H guidance must be reasonable. Our gut feel was we have time, but the gut has been wrong many times in the past so it should be a pretty interesting month or three for the BGL team and to see whether ‘peak hate’ moderates to a bit of love.