Saturday, 31 August 2019

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.

With copper priced to perfection in the scenario which is reflecting the end of the world and total collapse in the global economy, it is time for us to revisit the big picture of supply and demand; and McEwen Mining's "sleeping giant" - Los Azules Copper where TNR Gold is holding NSR Royalty on the entire deposit. As you already know, red metal is going green during the Energy rEVolution and there will not be enough of it. 

Goldman Sachs has been talking about "severe deficit" even before the latest escalations in the trade war and the best cure from lower price is a lower price. Nobody will be building new giant copper mines with prices below $3/lb. Supply shocks are imminent and price shocks to follow.

Northstar is providing a very interesting technical view on the potential future outcome for copper in the recent stage of a Mexican standoff in the trade war between POTUS and the USA. Nobody knows the future and total annihilation of the humankind can be one of the very unfortunate outcomes in any investment scenarios. 

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.

Can we have a similar situation with Argentina and Los Azules now? Only the future will tell, but the entry point will always determine the investment outcome and now we have legendary Rob McEwen with his Midas touch involved. Giant copper projects are only far and few between, developments of many are being delayed and as Barron's' is pointing out below:

“They are overwhelming[ly] short copper,” Badiali says. “Everyone is on one side of the boat.... When they have to cover, there will be a ridiculous rally in copper prices.” 

As you have noticed, I am of the opinion that POTUS is extremely motivated to be reelected as the alternative can be not so desirable due to the statutory limitations. Recession will dramatically reduce the chances of the second term. Orchestrated blowing off steam from the frothy markets in order to "reset the bull run" after squeezing all possible rate cuts from FED comes to mind as a strategy. "The Deal" can be a few tweets away after that and even absence of war can be enough for the exhausted algo traders who have never experienced bear markets. A lot of people will mention, that POTUS is playing not only with fire here but with the inverted yield curves all over the globe. They will be on the same side with a lot of very smart people and I can only reply that all metals require an extensive treatment by fire during the refining stage and for this scenario, we have Shotgun Gold in the Alaskan elephant country and a lot of other blog posts here.  

Today you can find for your further DYOR a very interesting update from McEwen Mining on Los Azules Copper development and presentation of TNR Gold Los Azules Copper NSR Royalty Holding.

From McEwen Mining NR:

TORONTO, July 30, 2019 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE:MUX) (TSX:MUX) announces its results for the second quarter and first half ended June 30, 2019 ("Q2" and "H1"). 
... Rob McEwen, Chairman and Chief Owner commented: "... At Los Azules we achieved a critical milestone in the project's valuation by validating a new access route that will provide year round access, rather than the current 4-5 months..."

Los Azules Project, Argentina (100% Interest)
Last year, we identified a critical value-adding milestone for Los Azules - a new low altitude all-year access route (Northern access route). Currently access is only possible 4-5 months of the year. The Northern access route was explored by overland expedition during March 2019 and confirmed to be viable for access and also for the proposed electrical transmission line. Preliminary engineering, cost and schedule estimates are in progress. Work will begin on the road later this year.
During Q2, we continued to advance permitting efforts. We are targeting the submission of the Environmental Impact Assessment by the end of the year and expect the Environmental Impact Declaration to be received during 2020.

From McEwen Mining CC transcript:

Chris Stewart:
At Los Azules our world-class copper project in Argentina, we have budgeted $3 million for 2019 to continue our progressing the project. We’re working on project de-risking from an infrastructure solutions perspective. Looking at the runway design for Los Azules, it is now completed, and we are now moving into the permitting phase. We’ve agreed on a memorandum of understanding with the Port of Coquimbo for the export of concentrate through Chile and into the Pacific Ocean. We also made significant advances on our IAA application for the permit for resource exploitation, and we anticipate submitting the permit in the fourth quarter of 2019 and would expect the environmental impact declaration to be received in late 2020.
Rob McEwen:

At Los Azules, we’ve achieved a significant breakthrough. We have determined that a viable alternative access route can be built and that it would give us year-round access versus the current access of only four to five months. We believe this new route will significantly improve the value of Los Azules and accelerate the opportunity to development. 
Jake Sekelsky
Q: Okay, perfect. And then just lastly a similar question at Los Azules, obviously the approval for the northern access route is a big win for the project, when should we see news on that front, just related to estimated costs and to touch whole economic impacts for that?
Rob McEwen
A: Okay. On cost that would be later in Q3 this quarter. And we expect to start construction before year-end.

BN Americas:

Argentina and Chile ratify commitment to develop sustainable mining

Written by: BNamericas 
Published: Thursday, June 27, 2019

By the Argentine production ministry.

"Chile, June 26, 2019 - Argentine and Chilean authorities have ratified their cooperative ties and advanced on mechanisms that facilitate the development of mining projects, within the framework of the meeting of the administrative commission of the treaty on mining integration and complementation between the two countries.
The work teams of the administrative commission of the treaty are formed, in the case of Argentina, by the secretariat of mining policy of the production and labor ministry, headed by Carolina Sánchez, and by the directorate of economic relations for the Americas, part of the foreign affairs ministry, led by Gustavo Infante. On Chile's side was the mining undersecretariat, led by Pablo Terrazas; and the foreign affairs ministry, assistant deputy secretary, ambassador Ricardo Rojas.
The work agenda included topics of common interest such as the strengthening of the permanent working group on safety and environment, with a focus on the development of policies that encourage investment in new mining projects along with the best practices for the development of responsible mining and care for the environment.
The authorities worked on the additional specific protocol (PAE) at Vicuña and Filo del Sol and received the legal representative of the applicant company who highlighted the benefits that the PAE Vicuña implied for the project throughout the exploration stage. McEwen Mining was awarded the PAE for the Los Azules mining project, approved by Argentina and Chile, to facilitate mining activity between both countries. The representative of the company stressed the importance of the treaty in terms of logistics coordination and the competitiveness that this generates for the company.
Likewise, the guidelines of an internal procedure were established to unify approval in the border areas between both countries through the early intervention of the mixed boundary commission.

The objective of the mining treaty between Argentina and Chile is to promote physical integration and economic cooperation. In this sense, both countries are committed to work on border facilitation with the objective of promoting the development of the mining sector, enable access and exit from the areas of operations from both territories and allow the use of natural resources, inputs and infrastructure as established by the teams of technical specialists."

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

In a news release dated February 21, 2019, McEwen Mining Inc. ("McEwen Mining") stated: "Our focus is on delivering near-term production growth from our projects in the United States and Canada, and on advancing Los Azules." The statement gives TNR confidence that McEwen Mining is keen to move the Los Azules project forward. 
In addition, McEwen Mining stated the following on its 100% owned Los Azules project: "We spent $6 million at Los Azules during 2018. The activities performed were mainly technical site investigations and environmental baseline monitoring work, to advance permitting efforts. We are currently investigating a new access route to the project that, if developed into a road, could provide year-round access to Los Azules, greatly accelerating the potential development of the project and reducing operating costs. Our 2019 exploration budget for Los Azules is $3 million." 
McEwen Mining's press releases and website material appear to be prepared by "Qualified Persons" (as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")) and the procedures, methodology and key assumptions disclosed by McEwen Mining are those adopted and consistently applied in the mining industry, but no Qualified Person engaged by TNR has done sufficient work to analyze, interpret, classify or verify McEwen Mining's information, nor to determine the current mineral reserve or resource or any other information referred to in their press releases. Accordingly, the reader is cautioned in placing any reliance on these disclosures. 
The Company holds a 0.36% royalty on the net smelter return ("NSR") royalty of the entire Los Azules copper project in Argentina. TNR summarized the PEA results in a news release issued on October 10, 2017."


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


Copper Prices May Take Off as Supply Tightens

By Myra P. Saefong

"Copper recently touched its lowest price level in more than two years, reflecting investors’ worries about muted economic growth and the temperamental trade dispute between the U.S. and China.

As supplies of the red metal tighten, however, analysts think commodities traders could overcome concerns about the economy, prompting copper prices to move higher.
“The current stagnant-to-declining copper price is accurately reflecting a slowing global economy,” says Brent Cook, an economic geologist and co-editor of the newsletter Exploration Insights. “The numerous central bank [interest] rate cuts support this conclusion as well.”
Copper futures settled at $2.544 a pound on Aug. 5, the lowest for a most-active contract since June 2017, according to FactSet data. Prices for the metal had dipped below $3 in June of 2018 as tariff threats heated up; copper hasn’t been able to trade above that level since.
“Copper was in a steady two-year bull market right up until the trade war escalated,” says Matt Badiali, senior research analyst at Banyan Hill Research, adding that the current troubles with copper are more about global economic woes than China’s impact on copper.
Sentiment for copper, however, could turn bullish because demand fundamentals show strong support for higher prices, Badiali says. Basing his estimates on reported figures, Badiali thinks that the world will need to produce 5 million metric tons of copper per month by 2030—about 2.5 times more than it will produce this year—in order to meet projected demand from the electric-vehicle industry.

World refined copper is expected to see a deficit of about 190,000 metric tons in 2019, with that deficit widening to 250,000 metric tons in 2020 as refined production lags behind usage, according to an International Copper Study Group report released in May. 
With an increase in the world’s population and climate change, demand for base metals will grow because they are environmentally friendly, says Stan Bharti, CEO of Forbes & Manhattan, a private merchant bank focused on the global resource sector. “Demand for electronic cars will only keep demand high for copper as the cars become more mainstream.”
“Delays in production from the large Oyu Tolgoi underground copper/gold mine in Mongolia” suggest a potential supply risk for copper concentrates, says Joe Mazumdar, an economic geologist and co-editor of Exploration Insights.
An Aug. 9 U.S. Commodity Futures Trading Commission report showed net positions for large speculators in U.S. futures markets at minus-58,400 contracts as of Aug. 6, according to
“They are overwhelming[ly] short copper,” Badiali says. “Everyone is on one side of the boat.... When they have to cover, there will be a ridiculous rally in copper prices.” 
For investors, the safest way to play the copper market is through giant mining companies such as BHP (ticker: BHP), Southern Copper (SCCO), or Rio Tinto (RIO), says Badiali, who lists the first two of those stocks in the Real Wealth Strategist newsletter’s suggested portfolio.
Copper’s real driver will be “the adoption rate of alternative energy and electric vehicles,’’ he says. “If the trend is real, then we are watching the birth of an epic bull market in copper.” 

No comments:

Post a comment