Monday, 16 September 2019

Oil Is Still Big, Actually, It's Very Big. But Thanks To rEVolution Energy Security Is Not Only About Oil Anymore.




Attack on oil facilities of Aramco in Saudi Arabia reminded us about the importance of oil for the global economy this weekend. All markets are totally hooked up on these events today with oil spiking as high as 20% in futures trading last night and now trading up 10%. Gold is back above $1,500 and any discussions about further potential tensions in the region are followed by the scenarios with oil hitting $100 and gold going to $2,000 very fast.




POTUS is "locked and loaded". It looks like now he will get his rates cuts from FED for the "plan A" with some kind of deal with China coming next. I do hope that "plan B" - "regional war" will be avoided. After all these events are traded by all sides involved, the very important questions will come to the boardrooms all around the globe. Energy supply is still very highly concentrated in literally most flammable regions of the world. What can be done about it to really address the energy security in the long term? The solution will be the tide of billions of dollars coming from funds who will be divesting from oil and increasing allocations to the Energy rEVolution.




Thanks to Energy rEVolution, we all do not have to be hostages of this bloody side of oil business any more. The technology is here. Collapsing costs of solar and wind provide the solution for real energy security with distributed power generation. Cheap lithium batteries change everything. Elon Musk and Tesla made electric cars possible. Now we are entering into the mass market stage of The Switch - when literally millions of people will be buying electric cars.




As we have discussed, the lithium market and juniors involved are so much hated now that it deserves a second look for all contrarians at heart. As always, do your own research and you will have to pick up the winners. You can find my posts on the links which can help you.




Lithium technology will power electric cars for years to come, but who can cross the desert now, when juniors are starving for capital and even majors are struggling with direction during the short term "glut of lithium" in China? Who will deliver 1M tonnes of lithium LCE per year starting in 2025? Who can afford to raise the needed capital and make this jump in the expansion of production facilities from 320,000 tonnes of LCE in 2018? I think that it will be safe to say that top lithium names will be the answer. Companies like a giant from China Ganfeng Lithium already have supply agreements with Tesla, BMW and Volkswagen. They have the staying power not only to survive lower lithium prices but further consolidate the market, as we have been discussing before.




Ganfeng Lithium continues its commitment to Argentina and has celebrated the closing of its $160M additional investment into Lithium Americas JV in September. TNR Gold holds NSR Royalty on Mariana Lithium project which is being developed by JV with Ganfeng Lithium as the operator and does not have to contribute any capital for the development. Ganfeng is expecting pre-feasibility and feasibility studies to be completed this year. Below you can find more information for your research.





Building The Green Energy Metals Royalty Company: TNR Gold Investor Presentation April 2019.





"Kirill Klip, Executive Chairman of the Company commented, "We are very pleased to see that Ganfeng Lithium is advancing the Mariana Lithium project in Argentina towards further pre-feasibility studies. The Mariana Lithium preliminary economic assessment ("PEA"), as announced in our news release of January 28, 2019, was the first PEA on the project that provided a potential value for the total NSR Royalty from Mariana's life of mine cashflow. TNR Gold does not have to contribute any capital for development of Mariana Lithium and our NSR Royalty does not depend on the size of ILC's share in Mariana Lithium. The 1.8% Mariana NSR Royalty is an important part of TNR Gold's portfolio. The essence of our business model is to have industry leaders like Ganfeng Lithium as operators on the projects that will potentially generate royalty cashflows to contribute significant value for our shareholders."





Building The Green Energy Metals Royalty Company: TNR Gold Reports On Mariana Lithium Royalty Holding - Giant From China Ganfeng Lithium Advances The Project In Argentina.



(From the published in March 2019, Ganfeng Lithium's 2018 Audited Annual Report.)

As always, all readers must read carefully all disclaimers, do their own due diligence and study audited reports of all companies involved in Mariana Lithium project in their entirety. Now we can discuss what we know from the published Ganfeng Lithium's 2018 Audited Annual Report in March 2019, that Ganfeng is expecting pre-feasibility and feasibility study of Mariana Lithium project to be completed in 2019. And ILC has announced in its Audited 2018 FS which was published on April 30, 2019, that Ganfeng decided to propose a budget for Mariana Lithium Project of $10 million dollars for the first 6 months of 2019. Earlier this year Ganfeng has invested an additional $160 million dollars in the Lithium Americas in order to advance their Cauchari-Olaroz lithium brine projects in Argentina. The development of Mariana Lithium Project in Salta can benefit from all R&D and learning curve of Ganfeng's development with Lithium Americas in Argentina and, hopefully, avoid the costly mistakes of other lithium brine operators.



(From the published on April 30, 2019, ILC's Audited 2018 FS.)






LEGAL DISCLAIMER

Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.





Thursday, 12 September 2019

QE Is Back And Gold Is Back Jumping Above $1,500.



QE is back and Gold is back jumping above $1,500.

ZeroHedge reports: "ECB cuts 10 bp, QE restarted at Euro 20B pace. ECB introduces a two-tier system for reserve remuneration. The ECB lasted 9 months without QE." 

The flood gates are wide open. I guess that we can relatively safely assume that we all know the direction from here by now.  






Please, do not forget to do your own research and you will have to pick the winners.





Here are latest maps from Northstar to help us with navigation.





Gold In The Alaskan Elephant Country: The Northern Miner - Top-10, Canada-based Precious Metals Developers.





The Northern Miner presents top-10 gold and silver metals developers based in Canada. This is another brilliant presentation after "Canada's Top 10 Royalty and Streaming Companies" and I highly recommend you to visit the Northern Miner website and follow them on twitter. Today we have another opportunity to have a look at the Donlin Gold project in Alaska. The magnitude of this "arguably the most important gold project in the world" has already propelled Novagold Resources to the number one place in this rating by The Northern Miner.




You will find a lot of news and discussions these days about gold which is breaking out of its consolidation after six long years when a lot of gold bugs have literally died out and industry has changed dramatically. Yesterday, gold went vertical and was ripping through $1,445 consolidating its advance in the breakout pattern.




We have addressed this tectonic shift in the financial world in-depth as well as here. Gold is rising with the coming tsunami of the record amount of debt with negative rates. Not only gold bugs are talking about it but institutions like pension funds are facing very sobering reality when we are not discussing the return on the invested capital, but the return of that capital.



Quite suddenly for a lot of people, they have the realisation that gold provides something precious that the growing pile of negative-yielding debt doesn't. Wealth preservation. Gold was dismissed by so many before "because it does not provide yield." So now, compared to the negative rates of return even on some junk bonds, it does. The manager of the largest hedge fund in the world, Ray Dalio, is calling gold as safe heaven in this paradigm shift for markets. Now we are in a very good company: Central Banks and billionaires are buying gold.




Below you can find more information about the Gold Reserves Crisis which is explained very vividly by McKinsey. Now you can better understand the place of Donlin Gold among the gold deposits in the world. Development of this 39M oz giant will build a major mining camp on the US soil and will bring life and infrastructure to the whole south-west part of the great state of Alaska. TNR Gold is advancing Shotgun Gold exploration near Donlin Gold mining district and is looking for the strategic partner to grow together in "The Alaskan Elephant Countryin the USA.





Trade Wars, Gold And Billionaires: Gold Price Going To $1,700 Soon Says Billionaire Paul Tudor Jones - Bloomberg.



Gold is banging on the $1350 door and the breakout above this resistance area can bring the fireworks before 4th of July this year. With all market observations of the extreme valuations, it is important that people who can move the real money in order to address these dislocations of capital will join our happy early investors' crowd. We are in a very good company now with our observations about the all-time low valuation for gold adjusted for 1980 consumer purchasing inflation formula.




It is interesting to note that among gold bulls and other fellow billionaires Thomas Kaplan is sighted as well:

"Jones comments also follow recent bullish sentiment from other billionaires. Last month, Thomas Kaplan, chairman and chief investment officer of Electrum Group, said in an interview with David Rubenstein on Bloomberg Television that he could see gold prices rally as high as $3,000 to $5,000 within a decade."

Electrum Group is the major shareholder of Nova Gold which is developing the Donlin Gold project with Barrick Gold in the great state of Alaska.




"Since investing roughly US$70 million to acquire a 28 percent stake in Novagold Resources Inc. in 2009, American billionaire Thomas Kaplan and his Electrum Group of companies have taken a keen interest in some of the more intriguing mineral exploration companies and projects in Alaska and across Canada's North. 
Kaplan, an Oxford-educated historian that began investing in natural resources in the 1980s, knows that gold has served as a currency throughout mankind's written history and believes the precious metal continues this role in society today. 
"Gold is not a commodity, it is a currency with the longest known provenance we have – actually gold and silver," he asserted in 2011. "And, that is extremely important because when you start looking at something no longer as a commodity but as a currency, you have to really assess; what is that market, is it deep enough to give people the opportunity to play?" 
Kaplan believes the gold market is not deep enough, which is one of the reasons he invested in Novagold, a Vancouver, B. C.-based junior that owns 50 percent of the 39-million-ounce Donlin Gold project in Alaska. 
"To us, Novagold is the right story at the right time," Kaplan, Novagold's chairman, penned in the company's 2018 annual report. "It represents a once-in-a-lifetime opportunity to make the very lowest risk/highest reward trade in gold." 
While Kaplan is an outspoken advocate for gold, investments made by private equity funds managed by Electrum go beyond the precious metal to include junior mining companies exploring for nickel and platinum group metals in the Yukon; zinc and copper in Alaska and diamonds in Nunavut. "Electrum Group funds strategic exploration." North of 60 Mining News"



We have discussed in depth the McKinsey's Gold Reserves crisis and you can find this analysis on my blog. According to McKinsey: "Reserves by major Gold companies have declined 26% from 2012 and now below 2007 levels." M&A will be only part of the solution for some companies as it only redistributes the same Gold reserves, we need new discoveries and new elephant projects coming online just to address the gap between growing demand and available supply.




Barrick Gold is developing together with NovaGold 40MOZ giant Donlin Gold in Alaska - "arguably the most important Gold project in the world." So where will you be looking for the new elephants? Maybe in the Alaskan Elephant Country. 




Barrick Gold received crucial permits to advance Donlin Gold now and this new developing mining district in the US can make the promise of "Gold In the USA" providing stable supply feasible again and it can become that solution to "The Gold Mining Reserve Crisis" McKinsey is talking about:
"The Company's strategy with the Shotgun Gold Project is to attract a partnership with one of the major gold mining companies. TNR Gold ("TNR") is actively introducing the project to interested parties," commented Kirill Klip, Executive Chairman of TNR. "We may be at the beginning of a great discovery. There is a clear path on how to move this project forward using the geological and geophysical research currently available to target drilling to expand the resource and form the basis of a preliminary economic analysis. The next step is to acquire a partner that shares our vision and recognizes the growth potential and value to be added to the Shotgun project over time."




Gold In The USA: Kirill Klip GEM Royalty TNR Gold Presentation May 2019 - Gold In The Alaskan Elephant Country.






LEGAL DISCLAIMER

Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.





Gold In The Alaskan Elephant Country: TNR Gold Shotgun Gold Presentation April 2019.





"The Company's strategy with the Shotgun Gold Project is to attract a partnership with one of the major gold mining companies. TNR Gold ("TNR") is actively introducing the project to interested parties," commented Kirill Klip, Executive Chairman of TNR. "We may be at the beginning of a great discovery. There is a clear path on how to move this project forward using the geological and geophysical research currently available to target drilling to expand the resource and form the basis of a preliminary economic analysis. The next step is to acquire a partner that shares our vision and recognizes the growth potential and value to be added to the Shotgun project over time."






LEGAL DISCLAIMER

Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.





  

The Northern Miner:

Top-10, Canada-based Precious Metals Developers.

Canadian gold and silver juniors are leading project advancement at home and abroad, as precious metals exploration and development enjoy boom times again. 
The following are the top-10, Canadian-headquartered precious metals companies that are developing projects but not yet in commercial production, ranked according to market capitalization in early July. Royalty and streaming companies are not included in the list.
1. NOVAGOLD RESOURCES
$2.38B market cap
Vancouver-based Novagold Resources’ (TSX: NG; NYSE-AM: NG) flagship project is its half interest in the large but remote Donlin Gold project in southwestern Alaska, which is a fifty-fifty joint venture with Barrick Gold (TSX: ABX; NYSE: GOLD).
Donlin Gold is one of the world’s largest undeveloped gold deposits, boasting measured and indicated resources of 541 million tonnes grading 2.2 grams gold per tonne for 39 million contained oz. gold, plus 92 million inferred tonnes grading 2 grams gold per tonne. (The measured and indicated resource includes 505 million tonnes of proven and probable reserves at similar grades.)
The latest updated feasibility study of Donlin Gold envisions an open-pit mine that would produce 1.5 million oz. gold annually in the first five years of operation, and 1.1 million oz. gold per year over a 27-year life.
For 2019, Novagold says it expects to spend US$13 million to fund its share of expenses at Donlin Gold, and US$11 million for general and administrative costs.
It says its goals for 2019 include: advancing Donlin Gold toward a production decision; maintaining an effective corporate social responsibility program; promoting a strong safety culture; and safeguarding the company’s treasury, with cash and term deposits totalling US$157 million as of May 31.
A year ago, Novagold sold its half stake in the Galore Creek copper project in northern B.C. to Newmont Mining for US$275 million, with the resulting funds directed to Galore Creek. Teck Resources owns the rest of Galore Creek."


Wednesday, 11 September 2019

Red Metal Goes Green During Energy rEVolution: Growing EV Infrastructure To Drive Copper Demand For Decades Says Wood Mackenzie.



We have discussed recently the geopolitical forces which are shaping the short term outlook for copper. POTUS is facing a very delicate and fragile situation in the global economy with a very tired bull market in general equities which is weathering the twitter storms during the trade war with China against the USA. The very smart idea of resetting this very extended bull market in the 2020 election cycle by blowing off extra steam can backfire if the global economic engine continues to choke on the dry economic data showing early recession signs and inverted yield curves all over the globe.




FED is coming "very unwillingly" to the rescue, as usual, and all BIS club of Central Bankers is easing again in concert even after "the end of globalisation era". After very sobering August the floodgates are wide open increasing money supply in order to keep markets going. China is cutting reserves rates for banks in order to stimulate the economy before October celebrations and ready to fight before the deal can be reached.




As we have discussed previously, you can always find all the bad news which are being discussed by very smart people on the wires. I do not know what to do in the very sad case of total global mutual annihilation and the coming end of the world. Even our Shotgun Gold project will not bring us enough joy if hungry people will be chasing tanks on the streets. In all other cases, we can return and review our brave case for the entry point in copper investment stories. Please do not forget to do your own research and you will have to pick the winners. 




Wood Mackenzie report reminds us about the big picture for copper demand during Energy rEVolution:

“The amount goes up as the size of the vehicle increases. For example, a fully electric bus uses between 11 and 16 times more copper than an ICE passenger vehicle - depending on the size of the battery and the actual bus,” he said. ““By 2040, we predict that passenger EVs will consume more than 3.7Mt of copper every year. In comparison, passenger internal combustion engine (ICE) vehicles will need just over 1Mt. If we look at cumulative demand, between now and 2040 passenger EVs will consume 35.4Mt of copper – around 5 Mt more than is required to meet current passenger ICE demand.”

We have addressed the huge coming gap between this demand and the available supply of copper in our previous posts. Today let's have a look at some chart providing potential evidence of the "green shoots" in the global economy reflecting the unleashed global stimulus impulse. 






A lot of people are talking that copper on the chart above signals that the worst is yet to come to the global economy and gold must go down in order to bring this Copper/Gold ratio in line with historical averages. My brave scientific thesis is that we are in the reset stage for the global financial system and gold will consolidate closer to $1,500 level than $500 now before reaching the new all-time high in US Dollar. 




In this version of our distorted by Energy rEVolution universe copper will have to catch up with gold snapping back like a coiled spring. Flood of liquidity and search for the real economic growth in the age of negative rates will drive Energy rEVolution and copper demand for years to come. Nobody will be building new giant copper mines which are needed to address the "severe deficit" as Goldman Sachs puts it, with copper prices below $3/lb.




This brilliant chart from Macro Charts is showing some positive movement in Copper/Gold ratio which is turning up. Further improvement in the copper price above $2.6/lb must confirm it as gold was recently in the correction mode sliding from $1,557 to just below $1,490.









The following few charts are showing that we have some "green shoots" to report about already which are pushing up through the trade war headlines. China credit impulse is leading by 12 months normally the global manufacturing PMIs. Cutting the reserves rates for banks in China will work through the system and relaxed investment rules for foreigners can bring some liquidity searching for positive returns as well.




Frank Holmes is pointing out that after his previous warning about the sluggish global PMIs readings China PMIs beat expectations in August. This data must be confirmed with further normalisation in September. I will leave the rhetorical question of whether any data from China can be trusted at this stage. We can all talk ourselves in the global recession as well.





The chart above is representing Global Monetary Policy Stimulus which is leading Global Manufacturing PMIs by 8 months normally.





The chart showing 40% of the probability of a recession in the US is keeping FED awake at night reading POTUS tweets which are demanding to pump money into the system. It should remind you also that every investment thesis must be proven right before you can make any money but on another side, you can hardly cross any river without entering the water. 





The charts from brilliant Northstar and Nicholas Winton are showing that we can be now at that magical entry point into the best copper stories you can find in case if the annihilation of the global economy will be postponed again.





Energy rEVolution And The Big Picture For Copper During A Mexican Standoff In The Trade War Against The USA: Barron's - Copper Prices May Take Off As Supply Tightens.




"Always do your own research - I do not honestly know how to prepare to that sad end. In all other potential cases, I can only point out to my personal experience of making the best investments by buying when "blood was almost literally on the streets" like with Tenke Mining starting my acquisitions at CAD 40 cents during the civil war in DRC and following Lukas Lundin with his motto: "politics will change, resources in the best projects will stay". Later, Lukas made a lot of investors of Tenke Mining very happy during his buy out by Lundin Mining at CAD$20 dollars. I have followed him and found TNR Gold many years ago - now we have Los Azules Copper NSR Royalty among our other assets and building The Green Energy Metals Royalty and Gold Company."





Tesla Energy rEVolution And The Golden Age For Copper: Kirill Klip GEM Royalty TNR Gold Copper Presentation May 2019.







LEGAL DISCLAIMER

Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.





Kitco:

Growing EV Infrastructure To Drive Copper Demand For Decades Says WoodMac.

"Growing fears of a global economic slowdown continue to weigh on the copper demand, but one research firm sees potential growth as demand grows for electrical vehicles.
Although electrical vehicles (EV) demand more copper, Henry Salsibury, research analyst at Wood Mackenzie, noted that the potential infrastructure growth is a bullish factor for the base metal.
In a report released Monday, Salsibury said that more than 20 million electric vehicle charging stations are expected to be deployed globally by 20230, consuming 250% more copper compared to 2019.
"As it stands, range anxiety – worrying that a battery will run out of power mid-journey – is a key psychological barrier standing in the way of more widespread EV adoption,” he said in the report. “One way to address this is to roll out more charging infrastructure. As this happens, more connections to the electrical grid will be required and more copper will be needed as the network expands.”
According to the research firm, coppers physical properties make it the best base metal to conduct electricity and accommodate the higher temperatures common in electric vehicles. While aluminium is the closest alternatives, aluminium cables need to have a cross-sectional area that is double the size of any copper equivalent to conduct the same amount of electricity, the company said.
"Copper is a cornerstone of the EV revolution. At the heart of the electric vehicle, it is used throughout because of its high electrical conductivity, durability and malleability,” Salsibury said. “The need for copper is even more significant when it comes to charging stations and supporting electrical grid infrastructure.”
Along with meeting growing infrastructure demand, Salsibury noted that electric vehicles consume about three times more copper than internal combustion engines (ICE). 
“The amount goes up as the size of the vehicle increases. For example, a fully electric bus uses between 11 and 16 times more copper than an ICE passenger vehicle - depending on the size of the battery and the actual bus,” he said. ““By 2040, we predict that passenger EVs will consume more than 3.7Mt of copper every year. In comparison, passenger internal combustion engine (ICE) vehicles will need just over 1Mt. If we look at cumulative demand, between now and 2040 passenger EVs will consume 35.4Mt of copper – around 5 Mt more than is required to meet current passenger ICE demand.”
The report comes as copper prices struggle to find momentum after falling to a two-year low at the start of the month. September high-grade copper prices last traded at $2.5815 a pound, down 0.29% on the day.