Gold, tin and diamonds

Chinese stock market resumes its free-fall this morning with its second biggest sell-0ff in history. [Zerohedge / Bloomberg]   Having pulled out the stops earlier right to the point of threatening to jail short sellers, do the authorities have any tricks left?

Market crash


Bank of America says the Commodity Supercycle is over and capitulation selling has arrived. [Zerohedge]

Where it came and where it went


Gold speculators go net short gold by 11K contracts by Friday.  [Bloomberg]   That might provide some upside oomph if it starts to look like they’re wrong about continued price declines.


The nickel price can only go up! [Mining.com]  Such touching faith in the significance of LME stocks.  Had a look at the price recently?

Nickel


Things on hold at Donlin Gold. [Petroleum News of Alaska]   The break-even point seems to be $1,200 / oz for this 40M oz project and they have enough cash in the bank ($135M) to sit things out for a while.


No easy way out for diamond producers and polishers. [ehudlaniado.com]  Lowering producer prices could shove some manufacturers into bankruptcy because the value of their rough secures their credit.  Shutting off producers sales or allowing sight holders to continue to refuse goods might be the only options.  Bottom line: diamond retail demand is down and the whole supply chain is feeling the pinch.

Rock and hard place


Soothing words from De Beers CFO to paper over Friday’s announced production cut. [Mineweb]  Aside from financial mumbo jumbo, an interesting takeaway is that they will shut in tailings reprocessing at Venetia and Jwaneng (Botswana) to tighten supply.  This suggests they really do foresee a turnaround before year-end since these might be their lowest cost producers and are likely easier to shut down than a mine.


In the  “Where are they now department”…   Yukon and Nevada explorer Expedition Mining gets into the endoscopy equipment market. [Stockhouse]

endoscopy

Shareholder tested and approved


Rick Rule encourages the Sprottlings. [Resource clips]  And he’d better – especially those who forked over hard cash to listen to this stuff.   He thinks precious metals might turn around this fall if Yellen can’t manage to raise interest rates but he is gloomier about base metals, seeing a 2 or 3 year slump ahead.


How did they do this?  Strongbow completes acquisition of Sleitat and Coal Creek tin projects and a $1M financing. [Junior Mining Network]  It might help that the vendors are Osisko and Ron Netolinsky and that they now control 27% of the company.


Some interest in buying bankrupt Yukon Zinc’s Wolverine Mine. [CBC]  MinQuest says it wants to use the mill to process ore from Fyre Lake (!?).  Private BMC Minerals is working nearby on Kudz ze Kayah and might also have a bid in the works.

Metals and diamonds in the dumps

The metals rout continues….

roller coaster


And the answer is to cut cut cut….

  • Anglo American to shed jobs . [Reuters]  6,ooo of 13,000 “office-based and other non-production roles” (ie. exploration) to go in the next two years and approximately 50,000 of its 150,000 total jobs in the “longer term”.

Lineup


Copper is poised for its worst week since January…. at $2.37 / lb this morning. [Bloomberg]  [Kitcometals]


Words to heed:  Iron ore producer actions provide a template for copper.  [IKN]

What you’re seeing in the iron ore space is what you’re about to see in the copper production sector:
1) A metal controlled by a handful of massive world producers
2) Prices for the metal drop
3) The big producers react by producing more
4) Prices drop further
5) The big producers remain profitable, but smaller and medium sized companies are squeezed to death
6) Exploration stage companies are killed by the price drop.
7) Big producers don’t care, they’re still above cost of production, they keep churning out the production and are rewarded by share price growth on the news of better numbers.
Copper still has a way to drop, people. Get used to the idea.
Has to make you worry about Capstone and Minto…

Diamond producer capitulation:  De Beers to cut output by 1M carats (~3%). [Bloomberg]
Cry uncle

 Chinese demand slump is bad news for lead… a bigger supply surplus. [Reuters] [Kitcometals]  At $0.77 / lb this morning it is the ugly duckling of base metals.

Citicorp

Ucore is also investigating a different process for the recovery of rare earths, which is known as molecular recognition technology (MRT), and was developed by IBC Advanced Technologies Inc., a private company. MRT is currently used to recover bismuth, antimony and other metals. It is proven on a commercial scale, but not for the recovery of REEs. Ucore recently announced that it is commissioning a pilot plant for the production of REEs using MRT; lab tests were extremely encouraging. From my discussions with the technical team of IBC, it seems that the company is usually comfortable with only performing lab scale tests before building a full scale plant. However, Ucore has insisted in proving the process at a larger pilot scale before advancing to the construction of a full plant, which in my opinion is prudent given that the REE plant may be a larger plant than the ones currently in operation. The pilot plant results will support the future economic study.

With a successful MRT process for rare earths, there are different business possibilities for Ucore. Ucore could potentially use tailings from other mine and metal operations to recover REEs and/or it could still use the Bokan Mountain deposit in Alaska, which it is still advancing. Bokan has support from the Alaska Senate, which has committed to supporting the project with up to about 70% of the capital costs for an REE processing plant in Alaska, based on Ucore’s preliminary economic estimates.

TGR: Would what happened with Molycorp give the Alaskan government pause on its commitment to Ucore?

LM: On the contrary, the Alaskan government should be more motivated because it could become the domestic source of REEs in the U.S. Now that Molycorp may not be there anymore, I think there’s more urgency.


Stockwatch’s ever hopeful and charitable  Will Purcell on GGL’s raise and plans…

Ray Hrkac’s GGL Resources Corp. (GGL), up one-half cent to 2.5 cents on 6,000 shares, hopes to sell 20.5 million shares at two cents. The $410,000 is needed to maintain the company’s existing activities. None of it, Mr. Hrkac says, will be used to “fund the purchase or pursuit of new business operations and activities.” He also assures investors that none of the cash raised will go to pay management fees. (In other words, Mr. Hrkac and his crew will work for free but shareholders had best get used to them touting the same old mineral plays that ground the company’s stock down to 1.5 cents from a 1995 high of $3.75 despite last year’s 1:5 rollback.) GGL needs $93,000 for annual property tenure payments and it hopes to spend $100,000 on exploration in the Northwest Territories.

Determining where those payments will go is a challenge. GGL’s website lists several projects but their individual pages carry the same terse message: “Under construction.” GGL’s latest quarterly report is a bit more informative. It says the company’s Fishback diamond project, north of Yellowknife, has a target “with the potential to be the largest kimberlite discovery in the Northwest Territories based on the size of the geophysical anomaly.” Mr. Hrkac has been touting that potential for nearly 20 years and GGL tried drilling the big anomaly 10 years ago. He said the test encountered intense alteration and fracturing, so he deemed the test inconclusive and proposed further drilling. Investors found the miss quite conclusive, and they were quick to relieve their portfolios of GGL.

GGL also touts the CH property, south of Lac de Gras, which hosts a cluster of diamond targets defined by indicator minerals and geophysics that “are ready to drill.” Those targets have sat in this ready state for years despite the years of work it took to find them. GGL spent $7-million on the play and Rio Tinto PLC spent another $3-million before it walked away three years ago. Given Mr. Hrkac’s modest exploration budget this year, drilling on CH or any other property seems unlikely.


Someone out there’s still a believer in gold:   TMAC secures $120M credit facility to build Hope Bay. [Marketwired].

Futile predictions and a merger

The hubris of analysts.  In the wake (or midst) of the commodity crash, it’s time to herd sheep and revise the estimates.  Goldman Sachs now says metal prices will be awful for years to come. [Bloomberg]  Copper to reach $2.04 / lb by next year!   But that’s this week’s guess.

Predictions


A better approach is to make your predictions after things have happened:  World Bank says commodity prices to decline in 2015.  [Mining Weekly]  Conference Board of Canada says eonomic outlook for the Yukon is bleak. [Yukon News]

Keep your eye on the mirror buddy.

Keep your eye on the mirror buddy.


Newmont lowers production costs in tandem with declining gold prices. [Bloomberg]   Given how much of their production is Nevada based (and unhedged against the almighty buck), this is an achievement.


Platinum producers are refusing to shut in production:  expect lower PGE prices.  [Bloomberg]


Run – don’t walk – away from tin. [Bloomberg]  … or at least from bonds issued by tin miners.  Another analyst call that might be wrong:  maybe tin is breaking trend?

Tin


The “Drama of Discovery” in diamond mining. [Resource clips]  … in which the Zimtu machine declaims about how wonderful and rare it is that diamonds are occasionally discovered in core.   Not a peep about clients: Prima Diamonds, Arctic Star Exploration, Strike Graphite Diamonds….


Things aren’t just crappy up North either:  Exploration down by $100M in Ontario and the number of claims has dropped by half. [CBC]


Kennady Diamonds drills 92 m of kimberlite at Kelvin (and  2 x 3m at Faraday 2). [Junior Mining Network]

Mr. Evans added:  “Drilling at the Faraday 2 kimberlite has been focused on delineating the lower portions of the pipe which inevitable results in shorter kimberlite intersects than previously reported. Based on the results to date it appears that the Faraday 2 kimberlite is changing direction from the SE to NW strike so far delineated over 240 meters.”


From the Basin..  Lakeland Resources and Alpha Exploration to get hitched. [Junior Mining Network]  Fission-Dennison 0.2! ..another Howe Street Hillbilly Wedding. For paper.  And Lucas Lundin is not the father in law.

Sign


Some go it alone:  GGL Resources to raise $410K.  [Canadian Financing Bulletin]


TerraX starts their summer 6,000 m drill program near Yellowknife. [Marketwired]


New innovative exploration technology spreads across the North. [Yukon News]   On Ground Truth and their drilling systems.   They’re hoping to expand outside of the Yukon – which would be a wise move these days.

Green stuff

Green Alaskans go for a cruise. [Juneau Empire]  Get in touch with the land and hear about nasty BC mines about to despoil everything.


It’s Energy and Mines Minister Meeting time – the 72nd annual.   [Mining Weekly]   Somewhere down the list, the Mining Association of Canada has asked…

“government to help juniors to secure access to capital, suggesting that fiscal incentives be adopted and enhanced to sustain grassroots mineral exploration to maintain the pipeline of projects that could become mines.”
spare a dime

 

Mostly grim metal price news

And in morning metal price news…

  • And the little guys may already be there. [Reuters]   GFMS asserts that 76% of producing mines are in the red at $1100 US.   But – as the article points out – that includes a lot of discretionary expenditures including the first to go:  Exploration.

Doom & Gloom

 


So – diamonds!   Maybe things are better of there?

  • Alrosa takes it in the chops. [Mining.com]   Sales are down by 22%, mostly on declining volume in a buyers strike.  And prices declined 3% in the last quarter and 6% in the first half of 2015.

First Quantum completes mapping and MT surveys at Kiska’s Copper Joe property in the Alaska Range. [Kiska Metals].    This is  FM’s second bet in Alaska; they also recently started drilling on Millrock’s Alaska Peninsula property.


Rockhaven metallurgical test results are in… and they sound good. [Junior Mining Network]  Recovers 95% of the gold and 91% of the silver from the Klaza Project in a locked cycle flotation test.

Copper and VG

How low can the TSX-V go?   Well…  At least 617 in the wake of the commodities rout. [Stockwatch]

TSX-V


Copper producers keep churning the stuff out despite declining prices.  [Reuters]  GFMS at Thomson Reuters estimates that average net cash costs per pound fell in the first quarter to $1.67 / lb because of weaker currencies (relative to the US buck) and lower energy costs.   They think production will be shut in and projects mothballed if prices hit $2.29/lb (we’re in the mid $2.40’s this morning).    The average rube might conclude that prices aren’t going up anytime soon but that’s why you need to consult an experienced metals analyst.  Like say Salman Partners who will tell you that the bottom is in and prices are bound to rise soon. 

Metals analyst

… $4.00 /lb in 2016 for sure.


Cue the hype:  Skeena’s Spectrum is underway and Tommy Humphreys is striking up the band. [Mining.com]  They don’t have an orebody yet, but it’s never too early to run metallurgy. [Junior Mining Network]   Wonder if the stock will pop with 264M shares outstanding?

balloon


Here’s a press release for the times…     Strike Diamonds says the SK forest fires are a big winner for the company.[Stockhouse.com] … because they won’t have to do assessment work but can still keep their claims….

“Strike Diamond stands with the Government of Saskatchewan in recognizing the gravity of the forest fires impacting Northern Saskatchewan,” stated Ryan Kalt, Chairman and Chief Executive Officer of Strike Diamond in a news release during a short trading halt.  “Our thoughts are with the affected communities and we commend the resilient spirit of the people of Saskatchewan and first responders.”  Kalt added, “We believe the leadership displayed by the Government of Saskatchewan in ensuring that the mineral exploration industry minimizes its footprint during this sensitive period of time is well-founded. Moreover, we wish to acknowledge the Government of Saskatchewan’s exemplary commitment to public safety.”

and why all this guff?  Well…

The timing couldn’t have been better for Strike, which holds the largest publicly traded mineral tenure position in the Pikoo region. 

It’s wonderful when crass self-interest and public spirited concern coincide.


Goldstrike finds VG in multiple drill holes at Plateau in central Yukon. [Junior Mining Network].   In the past VG on surface didn’t translate into boomer grades in drill holes but maybe things will be different this time….

Goldstack

Hit it with some strong acid


New Nadina and Kettle River to merge. [Junior Mining Network]     Could this free up some money for diamond exploration on their joint custody LDG property?

the merger


Peregrine provides an update on the Chidliak bulk sample. [Junior Mining Network]   They put it on a boat …

It's cheaper this way.

It’s cheaper this way.


Kiska sells Whistler to Brazil Resources. [Brazil Resources]     Second time this has been sold this year.   Hopefully this time for sure.

A long way from Rio

A long way from Rio


Transition Metals’ partner Nunavut Resources Corp. (KIA in drag) puts up $320K for a 300 km VTEM survey at their Fire Shear project.  [Transition Metals]   Sounds like our kind of partnership.

Dirty deeds and gold

Screw the prospectors: Yukon Zinc wants to cut off their royalty payments. [Yukon News]

Yukon Zinc’s legal counsel explained in a letter to the men’s lawyer that “in order to enhance the prospect for profitable future operations at the mine, the company is seeking to eliminate as many of these overhead expenses as it can.” It also stated that “disclaimer and termination of all royalty agreements… may be necessary to complete a favourable transaction” with potential buyers or investors.

And with a wave of their hand, they will make is so.

Creditor protection does allow companies to break contracts if it will help them restructure, according to Jonathan Williams, the geologists’ lawyer. However, he believes his clients have an “underlying right in the land” that should prevent Yukon Zinc from being able to disclaim their royalties.  He also said contracts cannot be broken if doing so would cause economic hardship, which he argues would be the case for Baknes and his colleagues.  “It’s unlikely they’ll be able to generate a lot of revenue between now and their retirement,” he said. “Frankly, I think it’s very unfair what they’re trying to do here.”

And from the dutiful receiver (PricewaterhouseCoopers) who executed this:

 “This is the first time I’ve seen something like this,” he said. “It hasn’t been done before and there’s a question of whether it can be done. The story has yet to be written on this.”

Everybody goes to court on August 14.   Bought to you by the same nice company caught trying to hide money from creditors while bankrupt.  [CBC]

Dirty tricks


Wanna-be asteroid miner Planetary Resources “deploys” their first space craft for a 90 day mission. [Mining.com]  They sent their gizmo up on the last ISS  resupply flight and astronauts recently turfed it out of the airlock.  It’s going to “validate several core technologies, including avionics, control systems and software.”   Wow!  Like obey commands in space and stuff – how cool!

Meanwhile back on earth, at the company’s head office in Redmond, WA , scientists are perfecting the most critical component of the space mining system…

The Hype Machine

The Howe-o-Vac Hype Machine


Gold bugs get exterminated as gold futures hit $1,130 on Friday – a 5 year low. [WSJ]

Gold Bugs

 

And last night, someone in Hong Kong dumped $2.7B in gold ETFs, briefly dropping the price by $50/ounce.    [Zerohedge]

spot gold

But you know, up in our little corner of the world, things don’t look so bad….

Gold in CDN$


Things in the rough diamond market are … well… rough.  [Polishedprices.com]

Sentiment in the rough market took a further hit, following the De Beers July sight, as some sightholders said up to 70% of the goods were rejected. The sight was estimated to be around $145 million, from around $450 million put on sale by De Beers. There was talk that Alrosa was considering skipping the August sight all together and selling to the Russian state agency Gokran. The De Beers sight contrasted with news in the secondary market that Russia’s Grib sold well during the past week at its tender, which totalled $30 million. Grib reportedly sold 70% on offer and prices were estimated to be only marginally lower, according to industry sources. Lucara’s large stone tender totalled $68 million, which included a 341.9 carat Type IIa diamond and which sold for US $20.55 million. A 269.7 carat diamond sold for US $16.54 million. Gem Diamonds were also said to be doing well in the larger sizes at their tender. Rough prices overall are considered to have come down 7-8% in the last month.

Paul Zimnisky’s index is perhaps a better benchmark – prices are down 10% YoY.  [paulzimnisky.com]

Rough prices


Got time on your hands with the market down?  Want to hear the latest on Yukon geology, gold and mining?  Anywhere near Dawson in early August?  Well – you’re invited to Dawson Rocks.  [Yukon Geological Survey]

Dawson

Party like it’s 1898.


Copper North starts their $900K program at Carmacks Copper. [Marketwired]


You’ll miss us when we’re gone: Mining industry is facing a big succession crisis.  [Reuters]  Boomers are leaving and the lost generation from the post-Bre-X downturn aren’t there to fill the gap.  The problem extends from the C-suite down to the engineer level.   A memorable quote from Benjamin Cox:

We have an industry where our core skill is eating our own seed corn.

retired

Yukon gold news

Gold is having a bad morning, down $30 / oz.  Not to worry however – it’s just the trend.

Gold


Stefan Ionnou’s ways to ride the next zinc and nickel waves. [The Gold Report]

wipeout


Kip Keen tells us that trading on the TSX-V is slow in the summer. [Mineweb]   Guess what? It’s as slow this year as last year.  Sounds slow in the news room too.

Bored


Millrock shows us how to do the “prospector generator model”. [Stockhouse]   It’s amazing how a raise and an option can turn your life around; things weren’t so rosy last winter when everybody was taking pay cuts.    And to top it off … First Quantum has started drilling  their Alaska Peninsula project. [Junior Mining Network]


Geologists find a 0.94 carat diamond in the core from Faraday 2. [Resource clips]  Nicely timed after yesterday’s ho-hum PR on results from the bulk sample.


Klondike Gold announces their summer program is under budget and a month ahead of schedule. [Klondike Gold].   Which is good because they might need cash to get through another cold hard Yukon (or Vancouver) winter.


Golden Predator announces a convertible debenture financing to pay for bulk sampling at 3 Aces.  [Junior Mining Network]   Pays an eye-watering 20% interest rate and entitles the bearing to purchase up to 10% of its face value in gold at C$500 / ounce.   But… it’s better than trying to sell stock in this market.