Chieftain Chatter
The F.....g clock…
It's that time again for Hedley Widdup’s effin “resources cycle” clock again which has now advanced from 4 to 5 o’clock led by a booming gold price which has not only seen a period of outperformance from gold stocks but also a raft M & A activity on the back of it. This activity has been further enhanced by significant cost inflation of developing a new mine as evidenced by the recent SPR/RMS transaction where Ramelius where not only purchasing a cracking high-grade deposit but an operational treatment facility ready for ore. Now according to Hedley we are just a tick of the clock away from another boom where he expects liquidity to go through the roof again however, he prefaces it by saying “whilst we have seen some strong performances emerge, market conditions remain generally depressed and ripe for deployment of investment”.
Antipodean Capital remain bearish but are starting to wade back into some of the recently discounted precious metals stocks. With US data supporting an uncertain outlook for the economy against the continued backdrop of sticky inflation they provide a raft of data to support the stagflation story in the US. They sight weaker consumer sentiment and slowing residential construction activity that will continue to drive unemployment expectations to recessionary highs. With prices still on the rise without the implications of tariffs being felt yet they believe the US construction market is delivering more completions to an already oversupplied market. They also highlight US consumer sentiment on the slide being down 30% since January to GFC levels and expectations for unemployment suggests two thirds of consumers predict a rise back to GFC levels. This view was further supported by the latest US 20-year Treasury auction which faced weak demand, driving its yield above 5.1% for the first time since October 2023 due to US fiscal concerns while the US 30-year bond yield was also up 12 bps to 5.1%, this marks only the second time since 2007 that the 30-year has topped the 5% level which is a headwind for future growth in the US.
This was the first bond auction held since credit ratings agency Moody’s downgraded the US credit rating on the back of increased government debt and the accompanying interest rate burden. This further emphasises the challenges and uncertainty facing the US economy.
Despite the strong recovery experienced by global markets and in particular the S&P500 there are still many sceptics suggesting markets will have a rocky road ahead. One US Fundie “Eric the Eel” said “This is a warning sign. The US stock market is about to hit a ceiling after a much welcomed rally. A credit-rating downgrade by Moody’s may end up spurring some profit taking by money managers after a massive run for equities the past month.” Another Fundie “Ivan the Terrible” quoted “US Treasury bonds are viewed as the safest investments in the world. When America’s credit rating gets downgraded, the reverberations may potentially be more negative for other countries’ sovereign debt because the US is the benchmark. It remains to be seen how this will affect equity markets in the coming weeks, but there may be caution following the strong stock gains recently.”
Meanwhile, despite calls from Trump for the Federal Reserve to cut rates, a couple of influential Fed officials have suggested policy makers may not be in a position to further lower rates until September. In typical Trump style he blurted "Too Late Powell, a man legendary for being Too Late, will probably blow it again - But who knows???". Meanwhile the Fed officials suggested they are not going to be in an informed position on the impact of “Trump Tariffs” on the economy until they have a few months of impact data. The next 3 Fed meetings are in June, July and September and the pundits are suggesting less than a 10% chance of a rate cut in the mid-June meeting but still pricing in two 25 basis point cuts before year end.
One for the copper bulls with media reports suggesting a reclusive Chinese billionaire who made a shed load out trading gold futures has now turned his hand to the copper market.
He launched into bullion a couple of years ago just prior to the yellow metal surging to record highs and reportedly (Bloomberg) made US$1.5 billion in the process.
With the latest round of global and political unrest he has emerged with the largest net long position in copper contracts on the Shanghai Futures Exchange, leaving him with a long position of some 90,000 tons of copper.
Bian Ximing has a loyal band of followers in China for his Warren Buffett style online musings about his investment philosophies stating, “A good investor must let go of his own ego and be less obsessed, and then choose the right targets and be stubborn,”
“When choosing targets, focus on trends. When implementing projects, focus on timing. When maintaining projects, focus on costs.”
Quote of the week….
On the lighter side….
School of hard rocks…
West African Resources (ASX:WAF) reported some cracking high-grade intercepts from resource definition drilling at M1 South at their Sambrado gold project in Burkina. The program delivered wide zones of high-grade mineralisation beneath the current ore reserves at M1 South underground including:
44m at 25.8g/t
5m at 17.1g/t
5m at 17.4g/t
5m at 24g/t
5m at 9.5g/t
29m at 9.3g/t
These results will be incorporated in updated Resource & Reserve update which is due for release in the third quarter of this year. This could well result in an upgrading of the existing Sanbrado processing facility by adding a secondary crusher lifting hard rock processing levels to 3mtpa for around $25m which could increase production to 250,000 to 3000, 000 ounces putting them well on track to meet or exceed their 500,000 ounce pa target once Kiaka comes online.
Speculation suggested and has been confirmed that Adriatic Metals (ASX:ADT) are in discussions with Toronto listed Dundee Precious Metals (TSX:DPM). ADT have also confirmed they have agreed to lift their kilt to give Dundee access to limited due diligence information and the usual bullshit that they cannot confirm a resulting bid will follow. Obviously, talks are at an advanced stage and ADT shares spiked 25% as a result giving the dual listed LSE company a market capitalisation of in excess of $1.4 billion or about a third of Dundee. Adriatic produces copper, gold, lead, silver and zinc from recently developed mining operations in Bosnia and Herzegovina and hosts a 15 year mine life with a global resource base of 20.9m tonnes @ 153 g/t Ag,4.3%Zn, 2.8%pb,1.1 g/t Au, 0.4% Cu and some of that antinomy. The company has an extensive portfolio of under explored ground with multiple green and brownfield targets.
Antipa Minerals (ASX:AZY) have updated their Minyari resource to 53m tonnes @ 1.48 g/t Au, 0.8% Cu, 0.43g/t Ag and 0.02% Co which results in:
2.5m ounces of Au
84,000 tonnes of Cu
666,000 ounces of Ag; and
13,000 tonnes of Co
The upgrade has added approximately 100,000 ounces of gold and the total inventory reflects a total gold equivalent resource of 3m ounces of which 66% sits in the indicated category. The resource highlights the potential for scalable open pit and underground mining operation with significant scope for upside being open along strike and at depth. Antipa’s Managing Director, Roger Mason, commenting “Minyari’s development potential cannot be understated. It’s strategic proximity to Greatland Gold (LSE: GGP) Telfer gold-copper-silver operation and the Havieron development offers a clear analogue for what a future production scenario could look like. In other words, can GGP please come and make us an offer to put us out of our misery, so we don’t have to develop this bloody thing.
Brightstar Resources (ASX:BTR) released results from a recent 6,100m underground RC drilling program completed at its Yunndaga deposit, part of its Menzia Gold Project. Significant results received from infill and extensional drilling include:
16m at 8.03g/t Au from 220m
13m at 4.7g/t Au from 167m
11m at 3.3g/t Au from 215m
12m at 2.3g/t Au from 156m
BTR plans to commence a second phase of drilling at Yunndaga in June, which will target resource extensions at depth and further infill potential underground mining areas. The Yunndaga deposit hosts a current MRE of 3.4m tonnes at 1.4g/t for 156,000 ounces. A September 2023 Scoping Study outlined 61,000 ounces at 2.91g/t of potential production inventory. Drilling at Yunndaga has confirmed wide, high-grade zones within key parts of the existing resource. A further drilling program planned in June will look to further grow and upgrade the resource, ultimately targeting an ore reserve for the deposit.
Gorilla Gold (ASX:GG8) reported a new discovery (Jambo) of a parallel structure at Lakeview some 200 metres to the north of the main mineralised King Kong trend with the first hole hitting:
12m @ 9.2g/t from 60m
Jambo was interpreted from magnetics with the structure running over a strike of in excess of 1km. King Kong has now been drilled over 1.2km’s of strike and remains open in all directions with magnetics indicating a strike length in excess of 2km’s. Although Jumbo is the first east-west–oriented parallel structure to be tested more than 10 structures have recently been identified and will be tested in the coming weeks and months. Importantly Jambo was a blind discovery interpreted from geophysics, however most of the other 10 structures coincide with historical workings along with rock chips significantly lifting their prospectivity. GG8 still has $36 million in cash at the March quarter with 3 drill rigs currently active at Lakeview and another 3 rigs from Mullwarrie scheduled to move to Lakeview.
It’s all well n good New World Resources (ASX:NWC) getting taken out, but we now have the dilemma of where to next to gain some quality copper exposure. The well of opportunities is fairly dry unless you move up the exploration risk curve or are prepared to pay a premium for one of the few existing producers left. So, it was with mixed emotions when NWC entered into a trading halt for a change of control transaction which emerged with a SID (Scheme Implementation Deed) with Central Asia Metals (LSE:CAML) to acquire 100% of the shares on issue for 5 cents per share cash. The deal has the support of the board in the absence of a higher offer and represents a healthy 80% premium to their last closing price of 2.8 cents. Central Asia Metals is a base metals producer with two operations in Kazakhstan and North Macedonia producing copper, zinc, and lead. This is now complemented by NWC’s Arizona copper resource of 14.2m tonnes @ 3.8% Cu for 543,000 tonnes copper (equivalent).
Emerging minerals sands hopeful Peak Minerals (ASX:PUA) have followed up their recent rutile discovery with results from 29 holes at the Minta Rutile Project in Cameroon with all holes intercepting and ending in mineralisation. Better results included:
3.1m @ 8.4% HM
1.2m @ 8.5% HM
6.8m @ 2.8% HM
3.5m @ 5.0% HM
3.3m @ 3.4% HM
The results confirm a strike length of 28 km’s and lie adjacent to their recent discovery hole of 4m @ 1.05% rutile which had an average rutile content of 63.2 pussent although the rutile content of these recent holes is still to be confirmed. Results exclude any contribution from the coarse >1mm rutile oversized mineralisation, which is yet to be assayed, and presents as a potential grade uplift and in addition assays from more than 300 holes are still outstanding. So far, they are ticking the scale and grade box so future results will be closely monitored.
Hot off the success of Santana Minerals (ASX:SMI) Norm Seckold has rolled out his next play in the land of the (nervous) sheep vending a package of gold projects into ASX listed junior Uvre Mining (ASX:UVA). Via a $6m vend UVA is acquiring Otagold which owns the Waitekauri gold project as well as raft of other projects across NZ. Their flagship project Waitekauri covers 58km2 and is a mere 8kms west of Oceana Golds Waihi Mine which hosts some 10m ounces. UVA which requires a new name raised an additional $4m at 8 cents as part of the deal to fund exploration and Stormin Norman will join the board as an NED.
Regis Resources (ASX:RRL) provided a resource and reserve update underpinned by Duketon and Tropicana consisting of resources of 7.5m ounces and reserves of 1.7m ounces. This was a 9% increase in the global resource number and an 11% increase in reserves with mine depletion being offset by reserve increases at both Duketon and Tropicana. Thanks to Tanya Plibersek the McPhillamy's reserves of around 2m ounces has been removed from any calculations. On the exploration front they highlighted a target of 9-18m tonnes at 2.3-2.9g/t for 800,000 to 1.3m ounces at Garden Well; and 4-6m tonnes at 2.2-2.8g/t for 300,000-550,000 ounces at Ben Hurr. Tropicana drilling also continues positively, including high-grade extensions at Boston Shaker and new mineralisation at the Cobbler underground target.
A trip down memory lane…
Anvil Mining (ASX:AVM) – High Grade Congo Copper
There is nothing like cleaning out the old files as we prepare to move to the new office for a little trip down memory lane... I came across my Anvil Mining Site visit presentation February 2007. WowWee... if you wanted high grade Cu, this was the place. Dikulushi mine located in the ‘Democratic’ Republic of the Congo. The open pit mine had a resource of 2mt @ 8% Cu with initial production of 13kt of Cu and 9moz of Ag via a HMS/DMS very simple plant. Capital cost to build this US$6.2m – that is not a typo... the boys – Bill Turner, Mike O’Sullivan etc did this. Mike lived in a sea container for a year before moving into a tent with his family. They couldn’t raise equity so took on a US$5m loan from RMB bank which charged them a ‘modest’ 6.25% NSR… needless to say they, made a shed load but as Bill would always say ‘they were the only bank/fund to back us’. They then expanded the plant with ball mill and flotation to increase production to 20kt of Cu and 1.8moz of Ag at a capital cost of US$7.5m. It was then time to go underground. I remember taking a very smart client (g’day Doddy!!) there who ended up buying AVM because we went to the stockpiles with ROM ore grading 5-15% Cu, low grade <5% Cu and high grade >20% Cu. They applied this HMS process to a 2nd project to the Kula tailings which had a resource of 200kt @ 4% Cu, however, in the first year it ran at 7.6% Cu. The reason we were there was AVM had acquired the Kinserve project from the DRC state mining company. Whilst there was a historical resource, drilling from AVM returned some incredible intersections including 85m @ 9.5% Cu in the oxide, immediately followed down hole by a sulphide zone of 272m @ 3.2% Cu. Drilling expenditure in 2006 of US$3.2m increased the resource by 350% to 1.58mt of contained Cu @ 3.9% Cu .. now that is efficient use of shareholders’ funds!! Development of a 1mtpa HMS plant and EAF furnace for US$35m to produce 23-25kt of black copper was approved. This was built but ultimately superseded by a 60kt SX-EW Cu pa plant. So, what eventually happened to AVM? Well, it certainly was a journey – after making >US$100m in NPAT in 2006, the GFC struck at exactly the wrong time as AVM was building the Kinservere SX-EW process. Dikulushi and Motushi tailings project were both put on care and maintenance and AVM went into survival mode. This included slashing the workforce from 2,200 to 360. The DRC govt was also trying to negotiate a larger % of project interest for the state with the massive Tenke Fungurume project the key one. It completed a capital raising in May’09 at $1.15/sh to raise $35m, having peaked at >C$20 and eventually did a deal with Trafigura for debt and equity of $200m to complete the Stage 2 Kinserve build. Things settled down in country, AVM survived and finished building the 60kt SX-EW plant, producing Cu cathode in 2011. In late 2011, Minmetals, a Chinese company bid C$8/sh cash valuing AVM at C$1.2bn – not a bad return from the $20m company that first came across my desk in 2001. It was a fascinating journey; in terms of geology there was nothing like it and the drive and determination from Bill and the team to get things done against all odds was a testament to their entrepreneurial and pioneering mining spirit. This preso survived the cull