Monday 31 August 2020

The rEVolution Feeding Frenzy and the Shadow Beneath: Lithium-Ion Batteries and the Next Leap Forward.


Guest Post:

The rEVolution Feeding Frenzy and the Shadow Beneath: Lithium-Ion Batteries and the Next Leap Forward.

Konstantin Klip

Finally, we come to an air abuzz with excitement for battery development and the ever-higher levels of G’s it promises for Electric Vehicles. EV start-ups are already flooded with cash, almost capsizing on the tsunami of crowdfunding and private placement for companies with vehicles not even in production yet. Unfortunately, those investors still paddling to catch the wake seem to have missed the correct timing to truly have a tubular ride.

Or have they?

Take the Oracle of Omaha’s prophesied arrival into the Golden surge; is His entry a late one? Or could it be that the true financial behemoths of our time simply move to an entirely different rhythm, sure-footed on a separate beat entirely when compared to the haphazard feeding frenzy of the Interesting Times we find ourselves in? 

What then are they waiting for when it comes to integrating with the quantified surge of electrification and the critical components & commodities juicing it? What is the potential for Lithium if not the Electric rEVolution? What better timing for copper if not the mass electrification of mobility systems and their support architecture? Could it be that there is an even greater calling for them both, bubbling up just beneath the surface? 

Let’s row away from the shores of speculation, and instead find the facts splayed across the newspapers of today.

2019 has shown us a Europe that has had its energy generation comprised of a greater portion of renewable energy than that of fossil fuels. In 2019, 37.5% of generation came from renewables, 34.3% from fossil fuels and 28.3% from nuclear. As of June this year, wind, solar, hydro and bioenergy generated 40% of the electricity across Europe, while fossil fuels generated 34%. (In the U.S., meanwhile, fossil fuels generated more than 62% of electricity last year, while renewables accounted for less than 18% - growth opportunities abound).

However, this rising mix of renewables causes unique challenges for grid operation in terms of volatility. Wind and solar in particular cause wildly fluctuating levels of energy generated and thus stress the grid in a novel manner. The opportunity for Li-Ion Batteries stems from the fact that as the share of ‘nu-renewable’ (non-hydro/biofuel) energy sources rise, a more flexible system of energy storage is called for to integrate potentially mercurial sources in a reliable manner fit for sensible grid structures. Li-Ion Battery storage systems have the unique ability of being able to quickly absorb, store and re-inject electricity in a timely manner.

In the United States, Federal Electricity Regulatory Commission Order 755 has mandated a separate compensation structure for fast-acting resources such as batteries as opposed to slower-acting, more conventional resources. This incentivises the use of battery storage systems to provide frequency regulation.

As always, the focus falls on California shores, where the state has stolen the claim of largest battery installation in the world from Australia in a battle of who can be the most sustainable of western coasts. San Diego’s Gateway Energy Storage project is about to double its 230-megawatt single-hour capacity by another 250mw. This overpowers Elon’s 100mw pet project in Australia by almost 5x its size.

For all their scope, however, Californian battery installations haven’t kept pace with power plant shutdowns, hence the grim headlines of third world rolling blackouts we’ve all been reading. Imagine the potential for one state alone, then, when it’s reported that as much as 15,000mw will be required to reach the state’s energy plans of 25gw of renewables by the end of the decade. These projects are acclaimed to be a gateway to multiple, large capacity projects projected to come online by the end of this very year. 

Looking out wider, we see Queens of New York installing a 316mw system on the opposite coast. Wider yet - in terms of global potential - an industry report projects that the market for energy storage (Mobility, devices and stationary storage) will increase from the current 164GWh to 3,046GWh just over the next 15 years.

As we read in the World Energy report, the global power sector is indeed undertaking a major transformation. Increasing global recognition of emissions urgency is motivating deep decarbonization efforts across the board of global utility infrastructures. While we see European energy giants benefiting from national policies that are significantly clearer than those found over the pond in the United States, in American states we will see both clean and dirty grids skip a step and scoop up sustainability incentives by playing the renewables card of efficient energy storage. Perhaps there is wisdom in this because it is energy storage, in particular, that is highlighted, again and again, as the keystone of a resilient, stable and reliable grid.

Furthermore, the World Energy report highlights my particular belief that the next disruption will be found within modular, grassroots level energy storage solutions as opposed to larger and centralised utility-level systems. Indeed, we see that “modular smaller-scale energy storage solutions are growing at a faster pace than utility-scale”. The report finishes with a comforting;

The inherent value of creative disruption should not be undermined. By acknowledging the reality of ground-level implementation of energy storage projects along with transparency in adapting with the change in physical structures all players will be encouraged to accelerate the deployment of energy storage whilst truly enabling less with more energy.”

Opportunities for market entry are abundant, thanks to the challenge of meeting varied cost and performance metrics for battery storage systems. The key is in the disparity in energy storage requirements. An example is two different scenarios below, battery ‘A’ for an electric vehicle and battery ‘B’ for stationary energy storage. A single system cannot be adapted to meet both sets of requirements. The need for a diversity of battery platforms beyond the current technology and the inability of existing technologies to meet all of the required performance metrics for a given application is a crucial incentive for new market entrants to develop and corner the market concerning a specific niche. 

Why then, having reached the shore of reality, is Lithium as a commodity reacting so haphazardly to what should be its coming of age moment? I would turn to Kirill for comment here:

We could spend a long time discussing why the price of lithium now is an aberration, why it's not reacting at all during a very, very exciting stage of exponential growth in EV sales. What would be more constructive would be to understand what parties are really using this generational opportunity to build their “sugar business” in a time before Mr Buffett will buy his “Coca-Cola” in EV space. 

It is the Chinese that are using the market’s hesitation to embrace the lithium industry for their advantage. Giants like Ganfeng Lithium are not afraid of short term aberrations in the marketplace, they have the discipline and mindset to see the real long term goal of dominating the EV space via control of its bottlenecks. They are building, step by step, the vertically integrated lithium business starting with the raw base materials for it.’

In spite of these setbacks, or precisely because of the opportunity presented by them, what should have been a crucial moment for the lithium market has instead become a strategic moment for China. Sensing weakness in the West’s market failure to adequately react to a falling lithium price,  we start to understand the movements of giants like Ganfeng Lithium in the context of the wider picture I have painted. 

Ganfeng Lithium, in particular, has always taken strategically timed steps to build up its lithium supply base. TNR Gold Corp, in turn, correctly appraised the movements of the first decade and began cozying up to the Chinese giant in 2009. Today, after many years of development and many millions of dollars invested in Mariana Lithium we hold an NSR Royalty on this project under Ganfeng Lithium management. 

TNR Gold is directly plugged into the tubular wake of our times. We do not have to contribute any capital to the development of this project. Analysts, like Dr Ryan D Long, are already applying some of their valuations to our Royalty Holdings

Saturday 29 August 2020

Tesla rEVolution, Golden Cross And $5 Dollar Copper: "Roskill Sees ‘Structural Shift’ In Copper Market On Intense Buying From China".

Will Tesla rEvolution bring us $5 dollar Copper? Not a lot of people are expecting it now. But even less has expected Tesla hitting $2,318 this week. We had already discussed with you how Tesla has supercharged Copper into the Golden Cross

And now we are moving very fast into the $3,000 Gold with Warren Buffett's blessing. Our dear friends at the FED are doing everything they can to help us to get to the $5 dollar Copper. 

Not everyone can live happily on the private island watching their Apple grow, we still need some people to bake those croissants to enjoy the morning breeze. But on a serious note, that stage which we discussed here before - with tanks and people in hazmat suits - is getting dangerously close with growing bloody divergence on every uptick for the stock markets and the number of unemployed. 

FED is throwing in the towel its "Policy of the Strong US Dollar from 1913" and we cannot argue against it. All people have their right to enjoy full employment, 0.01% have their right to enjoy Apple and we are hoping to enjoy here $5,000 Gold and $5 dollar Copper. Now everybody can go home and we all can enjoy the silence.

Northern Miner is providing us with more insights into the recent stage of the Copper market and the road to the global electrification of Energy and Transport industries which is ahead of us. Somewhere on this road, McEwen Mining will strike a JV deal for Los Azules Copper as we have discussed and it will bring new valuations to all parties involved

Higher Copper prices will address all uncertainty related to Argentina and the constant search of its destiny. Even $4 dollar Copper will make a lot of proud of people of San Juan very happy, they all deserve it. Tesla rEVolution is here and The Switch is happening for millions of people now with every new electric car sold. 

This rEVolution will require a lot of Copper and giants like Los Azules can deliver it for many years to come. TNR Gold holds NSR Royalty on the entire Los Azules Copper project and below you can fund more information for your research. Stay safe, buckle up and enjoy your journey.

"TNR also holds a 0.36% NSR on the Los Azules Copper Project, located in San Juan Province of Argentina. The Los Azules Project is owned 100% by McEwen Mining Inc (NYSE:MUX) and is expected to be the 26th largest copper mine in the world once it reaches production. 
A PEA at the project completed in September 2017, demonstrated a post-tax NPV8 of US$2.2bn with a post-tax IRR of 20.1%. Based on the PEA figures the mine is expected to generate average revenue per annum of U$953mln, which could generate around US$3.5mln a year to TNR over 37 years."

Now investors can do their own research and start putting the different pieces into their own valuation puzzle. Rob McEwen has prepared Los Azules to the potential major JV deal in the copper space. 

Agreements between Argentina and Chile are signed in order to advance the Los Azules project and the new road is being under feasibility study. The new approach by Rob McEwen which he has articulated in order to jump-start the development is making a huge difference for any potential partners:

"McEwen Mining conference call, Robert McEwen -- Chairman and Chief Owner
Happy to. We had past discussions with a senior base metal producer. What we were looking for was recovering part of the cash we put in. We were looking for $100 million upfront that the partner would advance the project to feasibility and then into production and we would continue with an interest of 20% or 25% of the property going forward."

Needless to say that any potential deal will bring the new valuation drivers for all parties involved: McEwen Mining and TNR Goldas the project will be moving into the feasibility and construction stage. Development of Los Azules will provide enormous economic benefits for San Juan, which is ready to support this kind of responsible mining business for the benefit of proud people of Argentina. I have been calling Argentina the potential Energy Power House for many years, it can finally coming all together now."

Northern Miner:

Roskill sees ‘structural shift’ in copper market on intense buying from China

"Copper was once again approaching the psychologically important US$3 per lb. level on the back of falling inventories, booming Chinese demand and pandemic hit supply from South America, the U.S. and Africa.

On Aug. 26, Copper for delivery in December trading in New York jumped 1.5% to US$2.9965 per lb. ($6,605 a tonne) in afternoon trading, bringing gains in 2020 to more than 7%, and 50% since the Covid-19 lows struck in March.

A new report from Roskill suggests the rally in copper, which has surprised many with its speed, has further to go.

Jonathan Barnes, associate consultant for copper at the London-based metal and minerals research firm, says while the effects of Covid-19 could decrease world consumption of the metal by 3%-4% this year, the drop in mine output and scrap flows has been greater.

This is most visible in the fall in inventories around the world.

Globally, total visible stocks, which include those on exchanges and bonded warehouses in China, fell by 40% from March through July to below 600,000 tonnes. LME warehouse inventories are at 13-year lows.

China is responsible for more than half of the world’s copper consumption, and the country is buying copper at record-setting rates.

“China is importing more refined metal from nearly every country suggesting a structural shift, not a temporary change,” says Barnes. 

“If you are looking for signs of panic buying, you can find evidence of that in China – total Chinese stocks represent less than two weeks’ consumption at current rates of use.”

In the rest of the world, where demand has dropped by much more relative to China, stocks represent only one week of consumption.

The lack of available scrap – imports are down 50% in the first half – after Beijing delayed new importing rules, has forced the Chinese buyers to replace secondary sources with cathode, further driving down visible inventories.

Roskill estimates a 300,000-tonne shortfall in imports of secondary materials — scrap, ingots and granules – into China from January to July.

Barnes believes global scrap flows may not normalize until the first quarter of next year, but would depend on new rules in China.

Roskill’s sources have not been able to confirm that China’s State Reserve Bureau has been buying up strategic stocks of copper, “but if they were, they probably would have done so earlier, when prices were much lower,” Barnes says.

Disruptions to mine supply could be between 750,000 to 1 million tonnes in 2020, with eight out of the 10 largest miners recording lower output during the first half of the year.

China’s concentrate imports are down year on year, while sourcing anodes from the central Africa copper belt is also hitting roadblocks.

Barnes says China’s two-year restocking cycle is rising in amplitude as the country’s dominance in the copper market increases, and he expects an 11.5% rise for the full year in copper imports.

The country has a structural copper market deficit, and it restocks whenever LME prices appear attractive. Moreover, says Barnes, China can take a long term view and use tomorrow what it does not need today.

Roskill expects trade data to show another bumper August for imports, despite being a seasonally muted month for shipments.

The copper price will likely rise further towards the end of 2020, Barnes says, and the current environment has strong parallels to the rebound in the copper price after the global financial crisis.

Copper hit a low of US$1.32 per lb. in January 2009, then surged to US$3.55 by April 2010, on its way to an all-time high of US$4.58 (more than $10,000 per tonne) in February 2011.

— This article first appeared in our sister publication,"

Monday 24 August 2020

Gold In The USA, Alaskan Elephant Country. "Warren Buffett's Silver Purchase Helped Make Thomas Kaplan A Billionaire. His Gold Bet Is An Even Bigger Boon: "I Owe Him Two!"

Thomas Kaplan is connecting the dots with Business Insider for the recent major events for all Gold mining industry. Warren Buffett has paved the way for more mutual funds, the insurance industry and pension funds to allocate a larger share of the equity portfolios to Gold. This tectonic shift will be starting from... 0.77% this summer! This is why we have been discussing here that fireworks will continue this year for our Gold sector even after the 4th of July:

"Buffett's Berkshire revealed a $564 million stake in Barrick Gold, despite the investor being one of gold's most famous detractors. Barrick owns 50% of Donlin Creek, a gold deposit in Alaska.

The project's other owner? You guessed it — NovaGold.

"The fact that Buffett has chosen Barrick means more eyes will be focused on Donlin," Kaplan told Business Insider.

"For me, this is as important news — and actually more financially rewarding — than when Buffett anointed silver as investible again and removed forever the stigma associated with silver investment that remained since the Bunker Hunt era," he continued.

"Lightning has now struck twice," he added. "Now I owe him two!"

Warren Buffett Dumps Goldman Sachs And Buys Barrick Gold: Investors Are Coming Home - Gold In The USA, Alaskan Elephant Country.

Gold is not Gold Bug’s religion only anymore. Investors are coming home. Gold is Real Money. Warren Buffett dumps Goldman Sachs and buys Barrick Gold. We have another piece of the puzzle put in place. The full circle. A lot of very smart people will explain to you what it all really means now. I will add just a few points relevant to our journey. 

You have one more answer helping with your questions and explaining my very brave dream: to build TNR Gold using the best Warren Buffett principles, to build The Green Energy Royalty Metals and Gold Company like an investor would do for other investors to join. Now you can better understand why I put Gold and Warren Buffett in the same sentence many years ago. 

Negative Real Interest Rates change everything. Gold is shining bright in the MMT Age. Time is a function of Energy. Money is compressed Energy. Gold is Real Money. There is nothing really esoteric at this stage - welcome to the Gold Genius Club. Now Warren Buffet revealed his $564 million membership. Eric Sprott has explained to us that the best Gold mining companies are literally printing money with expanding margins following the record high Gold prices. 

Frank Holmes presented to us his case on why money managers cannot ignore Gold mining companies anymore. Funds are coming in Gold mining stocks chasing the rising cash flow yields in the MMT Age of Negative Real Interest Rates. The best Gold mining companies generate rising cash flow yields. Gold mining companies’ margins and cash flow yields are growing with the growing pile of negative-yielding debt, which is pushing the Gold price higher. Gold is the ultimate hedge. 

The best Gold mining companies become wealth generators. As Mark Bristow, CEO of Barrick Gold puts it: “Self-funded Insurance Policy.” Now more money managers, including insurance companies and pension funds, will be allowed by their Boards to allocate funds to get at least some Gold exposure. A lot of them just cannot buy Gold, but they can buy Gold miners. Mainstream financial media is talking already about Gold as the real hedge and the only one which can substitute bonds in the “model portfolios” in the MMT Age. 

This coming tsunami of funds seeking the increased allocation to Gold will be meeting the... 0.57% of Gold share in the global equity portfolios! This is why we were talking about real fireworks this year after the 4th of July: 

"My dear Friends, we are here. Unimaginable events are happening. Not only our small worlds are affected, but we have a collectively shared manifestation on a global scale. If you read this, you can have a glimpse into my world. But you will see yours. Each of us will have to decide for ourselves, where we are going to live. Which Universe we will choose.  
We are here. Gold has hit all-time high intraday at the US $2,078, new all-time high weekly close is at the US $2,035, and the new all-time high monthly close is at the US $1,976"

Alastair Macleod provided us with his insights into the game of music chars going in the Gold market. There is no Gold in “paper gold” - there is only paper. With Warren Buffett moving in, we will see very soon who is swimming without trunks in that “paper gold”, the tide is coming out with every physical delivery now. 

But back to Barrick Gold and why "Investors are coming home", as Thomas Kaplan, Chairman of NovaGold put it? We have Peak Gold. Gold miners need new new “Elephant” projects to replenish the declining resource base. They need new giant projects just to keep Gold production at the same annual rate. 

In his recent interview on CNBC, Mark Bristow has acknowledged that even if the Barrick Gold’s official Gold price is still $1,200 for all planning purposes, “they are using now $1,500 as the indication for a mid-term time horizon.” It will not escape your attention that nobody will be buying out Barrick Gold, probably, this year, but they will have to buy themselves something big and promising. Who will be talking the Gold price up going into the M&A market as the buyer? All recent developments around NovaGold, which we have discussed in great detail with you here, are pointing us to the brave scientific question for a pure curiosity pleasure at this stage. Who will buy NovaGold first in the fight for the solid lead as the number 1 Gold mining company in the world? Will it be Newmont Mining or will Mark Bristow conclude the “unfinished business” of the previous unsuccessful buy out attempt and will finally bring Donlin Gold “back home”? In the world moving super crazy fast into the $3,000 Gold as a new normal, for me, this is just a question of time now. Nor Barrick Gold neither Newmont Mining can afford to lose Donlin Gold to each other without a walk over effectively from the race for the crown of the world’s top Gold miner. 

I must warn you again, as usual, that all my brave positive affirmations and dreams are based solely on my personal observations of public information available in the market and I do not have any other insider information. Always do your own research and now you can better understand another layer of my previous post. TNR Gold had its first double from a multi-year base. There could be some people who bought a ticket on our ship just by chance and who are not sure about the destination. Our journey involves very significant Risks of travelling, particularly nowadays, even if we are going to the amazing, possibly, even exciting opportunities. For all those who are not sure that they can hold the waves and withstand the seasickness, thank you and it will be much better for you to disembark now. 

Nobody knows the future. We will be moving into the stormy waters again. I already know that I would like next to visit the very nice beach spot marked as a "10" on the map. There could be two more doubles potentially from here after very hard work with the sails and after a lot of blisters. In my very personal vision, we do not need anything really groundbreaking and dramatic, apart from very hard work and execution of the strategy which we discussed in details here, in order to really enjoy our journey and finally to get to the “50 cents” Party at the “Club 55”, just to bring sweet memories. But then it’s again: it is all my positive affirmations and “Never buy anything you cannot hold.”

Barrick Gold has Warren Buffett now and we have Shotgun Gold for your due diligence study below. “Investors are coming home.”

"Our Team at TNR Gold is wishing all the luck to our shareholders at NovaGold in the next stage for the development of Donlin Gold and we hope this exploration program will demonstrate that exploration and mining business can be done safely in the US even now. On our side of the great Alaskan Elephant Country, Shotgun Gold is ready for a major Gold mining Company to join our Story

It was tough, but we used our "staying at home time" wisely. Auditors gave us the clean bill of health, Q1 MD&A and Financials are filed and I have finally received my newly acquired block of shares after closing our final tranche of the private placement. Read more.

Please always read legal disclaimer. There is NO investment advice on any Kirill Klip feeds and blog. Always consult a qualified financial adviser before any investment decisions. 
Do Your Own Research.

Business Insider:

Warren Buffett's silver purchase helped make Thomas Kaplan a billionaire. His gold bet is an even bigger boon: 'I owe him two!'

  • Warren Buffett helped Thomas Kaplan become a billionaire when he bought 130 million ounces of silver in the late 1990s, just before Kaplan listed his silver-mining company.
  • The Berkshire Hathaway CEO has done the natural-resources investor another favor by taking a stake in Barrick Gold last quarter.
  • Barrick co-owns the Donlin Creek gold deposit in Alaska with NovaGold, which counts Kaplan as its chairman and largest shareholder.
  • "Lightning has now struck twice," Kaplan told Business Insider. "Now I owe him two!"