Mining companies often have their hands full with multiple projects spanning locations in different regions, countries, and sometimes continents. This can create complications for operations, but if the company has the right management and operational experience, having a variety of projects on the go at the same time can be a serious benefit. 

Typically driven by low commodity prices, large mining companies are beginning to shift away from project diversification to focus on their best projects to increase competitiveness. By doing this, many companies believe that it will allow them to compete more effectively in specific sectors and make the most of what they have. While this can be effective for some, having a range of projects complementing each other, while maintaining focus on one or two flagship projects has proven to be a successful format for others. 

Having a portfolio of projects is also necessary so that holdings are sufficiently diversified and exploration does not have to stop when one project is not moving forward. While it is good to have many projects, focus is also necessary for the proper and effective execution of any mining strategy. For a company like Solaris Resources operating in the Americas, a diversification strategy has been beneficial for their exploration and production efforts, but they have been able to balance this with a particular focus on one mine. 

Flagship Status

The Warintza Mine in Ecuador discovered by David Lowell has been the flagship project for Solaris since its inception, and exploration and development has been focused on there for some time now. With the news of the added drill holes and capacity coming, the company is preparing to double down on that success while bringing out the best in the work being done there with ESG principles and particular zero-carbon project planning. 

Getting Everyone Involved

The emphasis on consultation, local employment, educational practices, and ESG principles has made Warintza not just the flagship of the Solaris portfolio, but an example in the industry of how things can be done the right way while ensuring stakeholder success at every level. Prior to beginning work on the site, thorough consultation was done with the Shuar Nations of Warints and Yawi, to establish trust and transparency from the outset. In any long-term effort, starting off on the right foot is essential. This consultation process ensured that the project would get off to a good start while maintaining open communication with the local community. Transparency was also ensured by acquiring full permitting, and no Administrative Silence was allowed. 

Considering the diversity and robust mining infrastructure, Ecuador is perfectly placed to complement the company’s work and extensive employment opportunities have been extended in the local and surrounding communities. The project is bringing jobs to the area while making everyone feel good about the work they are doing. The result is a community that understands the impacts and benefits of the project, was involved with the planning, and is able to directly benefit from its success. This win-win approach is not just good messaging, but part of the operational ethos of the company for the project, and has helped the company deliver transparency, education, and inclusion from the start. 

History

The mine itself was discovered by David Lowell in 2000 but was largely dormant since 2001. At the time, Ecuador was a frontier jurisdiction with no commercial mining industry. Things began to change in 2014 when the government shifted its policy in the wake of the collapse of the oil sector to encourage mineral development. The change was fuelled by Lundin Gold acquiring the Fruta del Norte project, 45 km south of Warintza, and developing it in a socially and environmentally responsible manner. This improved sentiment toward mining development and created conditions for Solaris to successfully restart a dialogue with the communities surrounding its Warintza Project in 2018. After extensive dialogue with local and surrounding communities, the root causes of conflict were resolved, and by mid-2019, an innovative CSR program was instituted. By the time 2020 rolled around, the company had signed an Impact and Benefits Agreement with community stakeholders after a government-sponsored prior consultation process, and Solaris Resources was able to restart exploration on the project in earnest. 

Looking Back

When tracking the company’s progress, it might be helpful to do so by following the trajectory of the stock over the past 8 months. After listing as a spin-out of Equinox Gold, Solaris’ mission began to explore and develop the Warintza Project in Ecuador. Once results started to come in, a pattern began to emerge:

1. July 18, 2020: Solaris lists at $1.50.
2. August 10, 2020: SLS-01 returned 567m @ 1.0% Cu-Eq effectively extending mineralization to depth below historical drilling, averaging 200m and improved upon the estimated resource grade of 0.56% Cu. Price: $2.43.
3. September 28, 2020: SLS-02 returned 660m @ 0.97% Cu-Eq which confirmed further extension of higher-grade mineralization relative to historical drilling. SLS-03 returned 1,010m @ 0.71% Cu-Eq and collared 426m east of the first two holes, and further improved upon depth-extent of known mineralization. Price: $4.30.
4. November 23, 2020: Three drill assays (including the first campaign at Warintza West) included SLS-04 returning 1,004m @ 0.71% Cu-Eq, SLS-05 returning 918m @ 0.5% Cu-Eq, SLS-06 returning 884m of 0.50% Cu , further extended mineralization relative to historical depth. Price: $5.72.
5. January 14, 2021: SLS-07 returned 1,067m @ 0.60% Cu-Eq, bottoming in mineralization beyond the 150m depth of the corresponding historical hole, and SLS08 returned 454m @ 0.62% Cu-Eq both effectively extending mineralization to the north and northeast. Price: $6.59.
6. February 16, 2021: SLSW-01, the first hole drilled at Warintza West, returned 798m @ 0.31% CuEq (0.25% Cu, 0.02% Mo, and 0.02g/t Au), extending mineralization to Warintza West. Price: $6.90.
7. February 22, 2021: SLS-10 returned 600m @1.00% Cu-Eq, SLS-11 returning 668m @ 0.57% Cu-Eq), SLS-12 returning 736m @ 0.74% Cu-Eq, and SLS-13 returning 462m @ 1.00% Cu-Eq. Price: $7.27.
8. March 22, 2021: SLS-14 returned 922m @ 0.94% CuEq, SLS-15 returned 1,002m of 0.60% CuEq from near surface, SLS-16 returned 958m of 0.77% CuEq from near surface, extending mineralization between east & west. Price: $8.70.

Contrary to the common narrative of many miners that list and consistently lose value as their discovery efforts return less than expected or nothing, the company’s story appears to be the exact opposite based on the eight-month period they have been a public company.

Moving Forward

The project has turned out exceptionally well for the company, and last month Solaris made it clear that it wants to expand on the success it has had so far by doubling the rig count and beginning to drill new holes, all while maintaining that commitment to the community and the ESG principles the project was planned with. The company’s press release highlighted some of the recent impressive results from the 20,200 metres that have been drilled so far at the mine:

• Three additional holes at Warintza Central, as detailed below, have returned long intervals of high-grade mineralization, with the highest grades starting from the surface, and extending mineralization between the eastern and western drilling and stepping out to the southwest.
• SLS-14 was collared on the western side of Warintza Central and drilled into an open volume to the east, returning 922m of 0.94% CuEq¹ (0.79% Cu, 0.03% Mo, and 0.08 g/t Au) from the surface, including 850m of 0.98% CuEq¹ (0.82% Cu, 0.03% Mo, and 0.08 g/t Au), significantly extending the limits of mineralization.
• SLS-15 returned 1,002m of 0.60% CuEq¹ (0.52% Cu, 0.01% Mo, and 0.04 g/t Au) from surface, including 694m of 0.67% CuEq¹ (0.57% Cu, 0.02% Mo, and 0.05 g/t Au) within a broader interval of 1,229m of 0.56% CuEq¹ (0.48% Cu, 0.01% Mo, and 0.04 g/t Au), stepping out to the southeast and extending mineralization to depth.
• SLS-16 returned 958m of 0.77% CuEq¹ (0.63% Cu, 0.03% Mo, and 0.06 g/t Au) from near surface, including 486m of 0.84% CuEq¹ (0.70% Cu, 0.03% Mo, and 0.07 g/t Au), extending mineralization between the eastern and western drilling at Warintza Central.
• To date, 20,200 metres have been drilled at Warintza Central in 25 holes of which results have been reported for 16; drilling is ongoing with six rigs currently operating and increasing to 12 by mid-year

Source: Solaris Resources

Each project has built on the success of the last, and as they expand, each step continues to pour more fuel into a tank driving the company from one milestone to the next. Not only do they stand to benefit from the expansion of the project, but from all of the future compounded gains from the Warintza mine. Drilling thus far has generated significant value for the company and stakeholders involved at every level, and with more drilling to come, one has to assume that the compounded results of that work will reflect positively on the company and stock for the foreseeable future and beyond. Lately, the stock has been balancing between $8 and $10, but with this range being tested frequently with changes of 10% or more in a single daily session, it seems investors are ready for a price above $20 or $30 now.

With the recent insider-buying activity from Solaris Chairman Richard Warke and a management team that has invested over $100M in less than a year in both private placements and on the open market, the Solaris story is proving to be a powerful one. The company has seen its share price reflect its significant progress in a very short amount of time, and it seems that the potential for moving forward is also driving much of the vigour from investors.

Potential

The company’s current market cap sits at just below $1 billion, and any breakthrough could mark a psychological shift in how the company is perceived as a result of the value generated by the Warintza project in particular. Solaris has ongoing discovery drilling that is aimed at discovery potential in 2021, meaning big news for the company may lie ahead with any discoveries this year. The Warintza Project has proved that the company’s efforts are being well-spent in the past year and that work has taken the company further than ever before. 

Although progress has been made, with the expansion of the project and the focus on expanding at the same time, the company may be looking at future valuations several times greater than current levels only taking into account current rates of return. If the new drill holes and discovery plans continue at this pace or better yet accelerate, the future of the project and the company will be very bright indeed. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

North America is one of the top-producing mining regions in the world, and right now the focus on metals used for technology and battery production is a key focus for miners. One of the miners taking advantage of this key area is lithium chemical company Piedmont Lithium. Piedmont’s focus is their eponymous project, the Piedmont Lithium Project, in North Carolina. Located in one of the premier regions in the world for lithium exploration, it is 100% by the company and features unique and favourable geology, and a location with easy access to infrastructure, power, R&D centres for lithium and battery storage, and major high-tech population centres. 

In-Demand

This project is aimed at making Piedmont a strategic domestic supplier of battery-grade lithium hydroxide and other chemicals to the growing electric vehicle and battery storage markets in the United States. Their ambitions have recently been matched by the market when their recent public offering worth US$122.5 million was closed last week. 

The proceeds will be used to continue the development of Piedmont’s fully-integrated spodumene-to-hydroxide project in North Carolina. The infusion of capital will allow the company to move forward with its plans at a faster and more effective pace going forward. This will also help them advance their 25,000-metre drill program, for which Piedmont expects construction to be completed in 2022. For now, a mineral resource update is expected in April, and the company plans to complete infill drilling by August. 

The company will also be keeping its eye on Sayona Mining, an emerging lithium miner in which Piedmont Lithium plans to invest strategically. The proceeds from the public offering will be used to fund those strategic investments, and allow the company to expand its portfolio with Sayona’s projects in Quebec, and Western Australia. 

Elon Musk’s Deal Book

Tesla is everywhere right now, and not just in the media. Elon Musk’s electric vehicle maker agreed to a deal with Piedmont Lithium that will have them doing business together for up to 10 years, with the option to extend the contract for another five years. Piedmont has agreed to supply Tesla with high-purity lithium ore mineral, to supply the vehicle-maker with about a third of its planned 160,000-tonnes-per-year spodumene concentrate from its deposits in North Carolina. 

The future is bright not just for this deal because Piedmont delivers on its promises and timelines, it will pave the way for more partnerships like this in their target markets of the electric vehicle and battery storage industries. 

The Stock

Piedmont Lithium (PLL) has attracted positive coverage and the stock’s 950% run in the past 7 months seems to be just the beginning. The stock’s momentum has held steady, and this is an optimistic signal to the street that investors have a lot to gain in being a part of Piedmont’s story. The deals they are making directly with the leading electric vehicle maker are proof that they can operate in the industries they are targeting. 

With a market cap of nearly US$900 million, the company could break through the billion-dollar-valuation mark sooner than later, and this has the stock at the top of mining watchlists. For now, it will be a wait-and-see position for the company as they build out their flagship project and continue to invest in and acquire new projects from other companies. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

Elon Musk’s Tesla is the industry leader not only for electric cars but for autonomous driving. Tesla also produces its batteries at Gigafactories (manufactured by Panasonic), innovating on battery technology while manufacturing batteries to use in its own products. Lithium-ion batteries are the preferred choice for Tesla, and these batteries have been chosen for some very specific reasons. 

The Leading Choice

Li-ion has higher power, small size, and this power density allows them to store more energy for use in electronic devices and components from smartphones to transmitters. The popularity of li-ion batteries has also driven the metals used to make the batteries (copper and nickel) to greater popularity, taking the mining companies extracting and processing them along for the ride. 

Miners To The Rescue

Musk knows this and has even publicly called on nickel miners to bring him a clean production plan to meet his companies’ demands now, and in the future. A few companies have answered the call, and Tesla will have its eye out for more options, but there may be a key player on the other side of the planet that Elon Musk may have overlooked: Tsingshan Holding Group.

Supply and Demand Concerns

The trade war between China and the US had investors and the mining sector generally concerned, but with that largely behind us, nickel miners can focus on the road ahead. That road, it seems, is paved with the opportunities of the electric demand driver with seemingly limitless horsepower. 

To meet the demand of battery makers and electric car manufacturers like Tesla and traditional car companies entering the space, nickel mining is ramping up, and some of the biggest international players like Tsingshan are entering the game.

A Behemoth Enters The Ring

It’s not clear who David is in this scenario, but one thing is certain: Tsingshan Holding Group is Goliath. The company is already a major miner and processor of nickel ore, converting it to nickel pig iron to feed its stainless steel mill. While maintaining its stainless steel projects, Tsingshan will also use a different processing route for their proposed 50,000-tonne per year battery-materials plant. Tsingshan will supply the nickel and process it to nickel hydroxide intermediates made to be converted to nickel sulphate. This is the final nickel form of choice for lithium-ion battery makers. 

Supply Changes Mean Price Changes

Having such a major player enter the nickel space at this scale will spell trouble not just for nickel miners around the world and particularly in the Asia-Pacific region, but nickel prices in general. Tech companies and battery manufacturers will continue to scoop up more nickel every year, so what remains to be seen is whether supply can ever really outstrip the massive and exponentially increasing global demand for nickel. 

Other Risks Loom

Research into lithium-ion batteries and the underpinning technology is another main risk to nickel prices and producers in the coming years. Researchers at the Georgia Institute of Technology are looking into new cathode and electrolytes to replace the expensive metals and traditional liquid electrolyte with lower-cost transition metal fluorides and a solid polymer electrolyte, cutting the need for transition metals like cobalt and nickel out of the process.

Typically, the transfer of lithium ions between an anode and cathode (made of lithium), is facilitated by transition metals such as cobalt, nickel, and manganese. This new metal fluoride and solid polymer electrolyte system would reduce the need for those metals, cutting into the industry’s plans. 

The Future Approaches

The research conducted now aimed at developing new and improved battery technologies may bring innovations that change the needs of the battery manufacturing industry and the technology industries that buy so many of their products. Electric car manufacturers like Tesla will continue to look for the best options for their cars, the technology in them, and their bottom lines, and if a better, denser, and long-lasting battery technology presents itself, then the industry is likely to shift in that direction. 

For now, the industry, traders, and investors are waiting to see how things play out on the research side as new technologies continue to be researched and eventually developed for use. In the meantime, Elon Musk may want to look into Tsingshan Holding Group if he hasn’t already; he might just find the reliable nickel mining and processing partner he’s been looking for. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

As far as investment managers go, Cathie Wood is both an outlier and an insider. She runs a $60 billion dollar firm, Ark Investment Management, and while the fund has been a smaller player in past years, the firm has AUM of over $60 billion as of February 2021. Her rapid growth comes on the heels of a growing popularity and a willingness to ride trends that passive funds would not be willing to take advantage of. 

Ark’s focus is ETFs, giving her the structure and reputation to manage the portfolio actively, and in full transparency. The firm, and Wood in particular is known for her bold and confident convictions, and she’s on the record as a contrarian on a number of investment opinions. ARK has gone from being an arguably middling player in 2020 to being the seventh largest exchange-traded fund issuer in the $5.9 trillion industry. This time last year, Ark was managing $3.6 billion in ETF assets.

Growth Is Not Over

With fresh inflows of cash, comes the need for fresh ideas, and at this unrelenting pace, Cathie Wood is moving to generate as many ideas as possible. Recently, she’s had some opinions about the red-hot markets and where there might be a bubble. While consensus in some circles seems to be that equities are overvalued and verging on or already sitting in bubble territory, Wood has some other ideas. 

Two big takeaways from a recent interview were her view that it is fixed income that is in a bubble, not equities, as equity outflows have been quite consistent since 2008/2009 and that money has been flowing into the fixed income space for some time. The other was that contrary to there being a bubble, she sees healthy equity growth ahead. Her take? Massive stimulus, positive profit expectations, and copper will drive growth for 2021 and beyond. 

The Insider

Cathie Wood knows a thing or two about mining, and tech metals in particular. She has a track record of picking innovative companies for her $28 billion ARK Innovation ETF that is up more than 24% YTD. The ARK Autonomous Technology and Robotics ETF is up 29% so far this year, proving her knowledge and skill in the tech sector is not just a fluke. 

Bullish on Elon Musk

In a March 3rd Reuters article about her interview on Benzinga’s YouTube channel, Cathie is noted to be bullish on Tesla for the time being and seemingly far into the future. Her view is that the company founded and headed by Elon Musk is a leader for the autonomous vehicle space, and as such she’ll be keeping the company in her Ark Innovation fund’s portfolio. Tesla accounts for roughly 10% of the fund’s portfolio, proving her confidence in the electric-vehicle maker and its CEO Elon Musk.

Red Metal On Fire

Her overarching view on tech and innovation continues when it comes to metals, as she selects it as one of her top areas for growth this year. Wood’s focus on the tech industry and electric vehicle makers gives her the insights into what those companies and industries will demand over the coming years, including valuable metals like copper. 

The red metal has been on a tear lately, benefitting miners around the world, and as demand increases for copper from tech companies, parts suppliers, and battery makers, copper miners will be increasing production while reaping the rewards of the higher prices. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

The mining industry is in a contest with the environment, and the industry and investors are demanding more every day. Implementing zero-carbon policies and approaches to mining from the get-go, making sure the projects are carbon optimized and planning from the beginning with a zero carbon emissions footprint is the new standard. 

What the Experts Say

Climate watchers aren’t the only ones paying attention to the seismic shifts in the race to zero-emissions. Philanthropist Bill Gates is also sounding off on the need to get to zero as soon as possible. In his new book “How to Avoid a Climate Disaster”, he lays out all of the ways that private industry, governments, and the mining and energy industries need to come together to bring the current global emissions level of 51 billion tons of greenhouse gases to zero.

He writes: “There are no realistic paths to zero that invol

ve abandoning these fuels completely or stopping all the other activities that also produce greenhouse gases (like making cement, using fertilizer, or letting methane leak out of natural gas power plants). Instead, in all likelihood, in a zero-carbon future we will still be producing some emissions, but we’ll have ways to remove the carbon they emit”. 

Bill understands that from now on, businesses, governments, and miners will need to balance their profitable production with zero-carbon strategies like buying offsets and using carbon capture to bring emissions to “net-zero”. 

Business

Companies around the world will need to change equipment, processes, and where they get their energy from to accommodate the shifts in energy policies and expectations from investors. Producing and selling isn’t enough anymore when the need to have a zero-carbon strategy for all projects is the new normal. 

Governments

Policy is the best way to make large-scale changes, and governments in countries both rich and poor will need to set the standards from the top. Unfortunately, it is very difficult to make a new policy, but changing current policies that are outdated and selected for the needs of the past is a great first step. 

For Miners

The global mining industry is a behemoth that allows everything to function. Without the mining industry and the copper it produces, the device you’re reading this on would not exist. Miners now have a priority for stakeholders to implement strong ESG (environmental, social, and governmental), from the start. Zero-carbon strategies are expected in the planning stages of projects to include a comprehensive plan for how a project is going to honour important environmental commitments. 

Clean Metals

The electric vehicle industries and many other consumer sectors are looking for zero-carbon metal solutions and they want them now. While many countries have set 2050 time frames for their climate goals, the mining industry is set to make those changes within the decade, beginning with the first steps over the past few years.

Especially with metals that are preferred sources for powering the clean energy changes like nickel or copper, a commitment to net-zero carbon production is the commitment that investors are looking for from companies now. 

Strategies and Offsets

To both protect the environment, consumers, and any stakeholders involved, companies are now calculating the CO2 emissions in tons per kilogram of a metal mined. Having their carbon footprint quantified takes it out of the abstract and into a solvable problem. To produce metals for an electric vehicle battery pack, for example, a certain amount of emissions will be assigned per ton of copper or nickel and an offset or strategy needs to be implemented to achieve a net-zero objective in the process that includes mining, milling, and processing. 

Shovels and Trolleys and Hydroelectric, Oh My!

There are a few tools being put in place to reduce the carbon footprint of mining, including electric rope shovels, trolley trucks, hydroelectric electricity instead of diesel fuel, and the deposition of waste rock and tailings during the mining process. By using electric rope shovels and trolley trucks that use electricity instead of diesel fuel emissions are lower for both extracting and transporting mined materials.

Just changing from diesel to electricity for the trolley trucks as well as during the deposition process reduces carbon emissions significantly. Hydroelectric electricity and other clean energy sources will help in the mining, milling, and processing steps of the projects, and companies that implement these steps from the start of the project are having great success in maintaining those clean energy solutions. 

Management Driving the Initiative

Often implementing these steps from the get-go of an initial project planning means including leadership that understands the strategies. Companies like BHP Group have implemented leadership changes to do this in the past and many companies have officers well-versed in the needs of zero-carbon projects to implement their approach to project planning from the start.

Another leader in planning projects with a zero-carbon strategy is Solaris Resources. The copper miner with projects in Ecuador at the Warintza mine is starting off on the right foot for their existing and new project plans by implementing production and operational strategies to achieve zero carbon projects right from the start.

For the company’s Warintza Project in Ecuador, Vice President of Projects Chad Wolahan will be leading the company through the Preliminary Economic Assessment (PEA). The assessment will require technical studies and a review of engineering practices along with the economic assessment of the project. By taking a big-picture perspective for this project, companies like Solaris can implement global best mining practices aimed at reducing or eliminating carbon footprints right from the start of a project. 

The Warintza project is a prime example of a full-spectrum zero-carbon approach to projects. To power the project, Solaris connects to a hydroelectric grid, uses electric transport for the movement of materials, and ensures efficiency at every stage of the project by using autonomous technologies. All of these strategies will create a cohesive zero-carbon project that satisfies all stakeholders. 

With the assessment expected to be completed in early 2022, the Warintza project is a prime example of the need to get ahead of the curve and start projects with a zero-carbon approach instead of waiting for regulations or rules to be imposed later

Daniel Earle, President & CEO of Solaris is driving the process along with Mr. Wolahan: “Warintza benefits massively from the excellent infrastructure surrounding our project in Ecuador, including a road connection to the highway network, and access to the national power grid supplying abundant, low cost, renewable hydroelectric power. We intend to maximize the benefits of this in eliminating emissions through the electrification of our rolling fleet, materials movement, and processing solutions. Our intention is to employ industry best practices in emission reduction to help meet global climate goals towards a more sustainable future.”

Zero-Carbon Is the New Normal

As the mining industry starts new projects and overhauls existing ones, the benefits will trickle down to stakeholders in the communities they operate in, and to investors who trust that management has their eye on the ball for this critical operational area. Investors looking for embedded ESG (environmental, social, and governmental) principles in projects will also prioritize the companies with managers like Chad Wolohan to lead miners like Solaris Resources and BHP Group that do this best. 

Business and philanthropic thought leaders like Bill Gates note that now, not in a few decades is the moment for change. The mining companies that do this best will come out on top over the long run. 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

 

Electric car lithium battery pack.

It’s going to sound like a slogan by now, but lithium is the future. The metal’s most important use is in rechargeable batteries for electric vehicles, but the applications go so much further. Lithium-ion (Li-ion) batteries are the most popular battery being made today. Research and development teams are scrambling to increase lithium-ion battery density so device manufacturers, car companies, and anyone making an electric-powered product can take advantage of this technology. 

Lithium is also used for producing optics, glassware, ceramics, HVAC systems (lithium chloride), lubricants (lithium stearate), pharmaceuticals (lithium carbonate), armour plating, aircraft, trains, and bicycles (lithium alloys). While the use case everyone is talking about and the one that will be the most important for the next decade is battery technology, lithium is not limited to tech use and has applications in every industry. 

Batteries 

Energy storage is now one of the most important areas of industry and innovation as the world moves to an electrically-powered model to accommodate developing technology and environmental concerns. The batteries of old were heavy, filled with chemicals, and didn’t hold a charge for very long periods. Lithium-ion batteries have changed all of that. 

Li-ion batteries can be recharged hundreds of times and are more stable than other types. Their energy density is higher, voltage capacity is higher, and they have a lower self-discharge rate than other rechargeable batteries. It’s no wonder everyone is scrambling to create the best batteries.

Battery Competition

At the dawn of the microprocessor, the industry raced to see who could get the most processing power out of the smallest and most efficient chips. This led to some of the legendary tech companies we have today like Intel and AMD, as they raced each other to see who could put together the best product faster. This competition brought out the best in the industry and gave us the computers, tablets, and smartphones we have today.

Batteries are in a similar stage now as the world is paying attention to the companies that are looking to provide us with energy storage solutions that have become necessary for the modern economy. The result is a race to produce the lightest, most powerful, densest, and longest-lasting battery possible. The result? Lithium-ion batteries continue to get denser and more powerful, allowing us to store more energy for longer periods for use in our devices, cars, and even homes. 

The competition happening now is driving innovation forward faster than ever before, and batteries are getting pretty good. You can now buy an electric car from Elon Musk’s Tesla with a range to take you from Toronto to Montreal with a quick recharge on the way, and all without worrying about running out of juice because of a denser and more powerful lithium-ion battery.

You can charge your smartphone from 0% to 100% in about an hour thanks to lithium-ion batteries and fast charging technology. Once you have your battery charged, it will last you the whole day, and then some. The batteries we have now are so good that they can store energy for homes to use as a backup in case of emergency. 

Products installed in homes can store energy so that when the main electricity lines go out, the battery can power a home instead. Paired with a solar roof, a home can generate, store, and use its own electricity without ever pulling from the grid. All thanks to lithium-ion batteries.

Mining Competition

The competition to develop and produce the best and most batteries has driven another area of the industry just as fast: production. Battery-makers and innovators can’t get their hands on enough lithium and demand is soaring as car manufacturers, tech companies, and battery innovators continue to race each other for supremacy. 

As a result, lithium prices have continued to rise exponentially, particularly in China due to the heavy demand for lithium-ion phosphate batteries that it seems every industry is clamoring for. This has been great for lithium miners, and most analysts and industry watchers agree that the driving forces for lithium demand are only getting started. According to Deloitte’s Electric Vehicle Trends, EV sales are forecast to grow from 2.5 million in 2020 to 11.2 million by 2025, and to 31.1 million by 2030. Lithium demand from the car industry alone is expected to drive prices at a steady rate for the next five years, and rising prices will benefit every company mining the tech metal.

Last year, in the middle of an economic crisis, lithium continued its drive higher, and the domino effect that has had for 2021 is a supported and stable lithium price for the first quarter. This is expected to continue for the rest of the year and positions miners for comfortable gains through the next 12 months. 

Off to the Races

Where there is smoke, there is fire, and miners are scrambling to compete for the lucrative lithium market. As big as it and the demand for lithium are now, this is still the infancy of the lithium mining boom, with decades of expansion to come on the backs of the electrification of the global economy. 

The Long Haul

This is just the start of a race that is sure to be a marathon instead of a 100-yard dash. Companies are only just gearing up for higher production of energy storage solutions, and the starting line is only just being crossed. Look back to the early days of Intel, AMD, or Apple, and imagine getting on the ground floor of those investments. 

As the microprocessor race has done before, the battery technology race will create an industry driving the fundamental needs of multiple other industries, as everything from transportation and logistics, to technology companies, and down to manufacturing and heavy industry require energy storage solutions. 

Key Players

The best of the best are throwing their efforts into mining lithium to match the demand coming at them now, and down the line as growth continues. Some of the top lithium miners right now include Galaxy Resources, Piedmont Lithium, Jiangxi Ganfeng Lithium, and Albemarle.

Galaxy Resources

Australian lithium miner Galaxy Resources has quite possibly given investors the most unexpected ROI in the industry over the past year. The share price return of 202% over the past 12 months is impossible to ignore, and although profits remain in progress, revenue continues to grow and prospects are bright. The Australian government has also shown a willingness to support this growing industry, by developing a 10-year roadmap for critical minerals to lower dependence on China for raw materials used in electronics and advanced manufacturing, like lithium.

Piedmont Lithium

Another Aussie miner focused on lithium, Piedmont is currently focused on establishing an integrated lithium business that will convert lithium resources found in the region into a critical component for electric vehicle manufacturing in the United States. The company’s mission statement makes it clear that they are setting themselves to capitalize on a specific area of demand (EVs) over the next decades, and they are sure to be a top pick for investors looking for exposure to the emerging and expanding demand. 

Jiangxi Ganfeng Lithium

This Chinese company is a giant in the lithium mining space, and both manufactures and sell lithium products in Mainland China, Hong Kong, the rest of Asia, the EU, North America, and in many other regions. Jiangxi is poised to be the dominant player taking advantage of the growing export market for lithium as they consistently eat up more market share every year. 

Albemarle Corporation

Mining lithium, bromine, and catalysts, this US company has a foothold around the world and competes toe-to-toe with Jiangxi Ganfeng Lithium. They have been a top lithium miner for some time now, and a favourite for mining portfolios around the world. With a market cap of $17.54 billion at the time of writing and a steady dividend, Albemarle only stands to benefit from the growing demand for lithium from every market segment they serve.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above. 

The company’s focus on the Warintza mine continues to pay off, and so expansion is in the works for six new rigs by mid-2021. 25 holes comprising 20,200 metres drilled are producing reported results for 16 of the holes so far, also included in the latest press release. Here are a few of the highlights from the release:

• Three additional holes at Warintza Central, as detailed below, have returned long intervals of high-grade mineralization, with the highest grades starting from surface, and extending mineralization between the eastern and western drilling and stepping out to the southwest.
• SLS-14 was collared on the western side of Warintza Central and drilled into an open volume to the east, returning 922m of 0.94% CuEq¹ (0.79% Cu, 0.03% Mo, and 0.08 g/t Au) from surface, including 850m of 0.98% CuEq¹ (0.82% Cu, 0.03% Mo, and 0.08 g/t Au), significantly extending the limits of mineralization.
• SLS-15 returned 1,002m of 0.60% CuEq¹ (0.52% Cu, 0.01% Mo, and 0.04 g/t Au) from surface, including 694m of 0.67% CuEq¹ (0.57% Cu, 0.02% Mo, and 0.05 g/t Au) within a broader interval of 1,229m of 0.56% CuEq¹ (0.48% Cu, 0.01% Mo, and 0.04 g/t Au), stepping out to the southeast and extending mineralization to depth.
• SLS-16 returned 958m of 0.77% CuEq¹ (0.63% Cu, 0.03% Mo, and 0.06 g/t Au) from near surface, including 486m of 0.84% CuEq¹ (0.70% Cu, 0.03% Mo, and 0.07 g/t Au), extending mineralization between the eastern and western drilling at Warintza Central.
• To date, 20,200 metres have been drilled at Warintza Central in 25 holes of which results have been reported for 16; drilling is ongoing with six rigs currently operating and increasing to 12 by mid-year.

Source: Solaris Resources

The company continues to push forward and the focus on the Warintza mine is still paying off. As new holes are drilled and new rigs are installed, capacity and production stand to increase. With the added capabilities of the additional holes, 2021 reports are sure to both impress and please investors, both current and future.

Warintza 

The Warintza mine in Ecuador has been a focus for the company from the start, and the expansion shows how committed the company is to the success of the project. Backing it up is the news of the expansion of the drill holes, and the doubling of the rig count by the middle of the year. 

Solaris’ commitment to increasing the value of the mine brings to mind the potential down the road for generating a profitable sale to another company. Rio Tinto’s 2018 sale of 40% of its stake in the Grasberg mine (the second-largest copper operation in the world) on the island of New Guinea was a taste of what is possible when a productive and valuable project is developed well. Selling its 40% stake to PT Indonesia Asahan Aluminum for USD 3.5 billion gave the company a massive influx of capital and an incredible return for investors in the stock.

As the mine develops and more resources are both poured into the project and extracted from it, Solaris will benefit from the dual tailwinds of their investment and the rising price of copper. 2021 is sure to be a productive year for the company’s flagship project. 

A silver stone.

When you think of junior mining companies, what comes to mind? A small business exploring and waiting for their big discovery before finally starting production? Maybe an organization without large capital commitments, land, or other assets? This might be true of most junior miners but is so far from the mark for Honey Badger Silver, that one has to wonder why they are even considered ‘junior’ in the first place.

Honey Badger has shown it can produce year after year and judging by their financial reporting since 2018, you can get the idea that they know where to focus their efforts. The Canadian company has created a strategy centred around a large mine in the Historical Thunder Bay Silver District in Ontario, Canada. Their land position of 16,800 hectares in the region is the dominant one and allows them to take advantage of some of the most productive silver-bearing veins of the Rabbit Mountain group of deposits. Nothing is holding the company back, and competition is thin, to say the least. 

Full Speed Ahead

The investment comes with the added benefit of funding an expansion of the exploration of the company’s Thunder Bay silver portfolio and for general working capital purchases. Production increases should follow as well, returning the investment to Sprott’s pocket as well as anyone who is wise enough to jump in with him. 

Investors Agree

Beyond management holdings and those buying shares piece by piece, high-profile investor Eric Sprott is also all-in on Honey Badger Silver. A new placement from the investor going all-in on junior mining companies of $1 million is the ultimate vote of confidence from an investor who knows exactly what he’s doing. Investors buying shares now can only be learning from the smart money now and will be able to reap the rewards down the line when it continues to rise.

Making Room

Sprott’s decision to add $1 million to a $3 million placement prompted Honey Badger Silver’s chairman Chad Williams to voluntarily reduce his subscription to the stock, according to him, to, “accommodate high demand from other investors”. He now holds 9.9% of the company, undiluted. 

In Good Company

Honey Badger Silver is in good company when it comes to those chosen to be a part of Sprott’s investment portfolio. Going beyond institutions, he placed his faith in another top miner last year, First Majestic Silver. The investment was for 5 million shares worth $78 million, proving that when you know the answer, your portfolio will surely follow. 

Buying Up Property

Honey Badger isn’t slowing down, as made evident by their March 15th announcement that they have acquired three advanced silver-focused properties located in southeast and south-central Yukon, Canada. The acquisition will help the company diversify its property portfolio and begin producing in multiple regions of the country. The expectation is that the acquisition will close on or before April 30, proving that the company is ready to continue its expansion and put its capital to good use. 

Looking Down The Road

Looking into the future is impossible, but forecasts are made a lot easier by extrapolating from current trends. Let’s take a look at how it’s going so far. The stock has touched all-time highs, acquisitions are en route, and the company is well-capitalized to continue its production and expansion. If the trends of the past few years continue, Honey Badger stock is only at the bottom of a very long upward trend, and even shareholders with relatively small stakes stand to benefit from any more wins. 

Although the company is a junior miner in name, it operates like a seasoned and much bigger player, controlling and exploring 100% of one of the most valuable silver properties in the country (and the world). Clearly that isn’t enough for Honey Badger Silver, who we will continue to follow closely.  

Soon to be introduced to the market, Collective Mining is the newest miner you’ve never heard about but should have. In fact, it isn’t as new as it seems. Collective has a top-notch team of seasoned operators at the helm coming over from Continental Gold (Sold for C$2 billion in March 2020). Coming together to start new projects with ESG principles at the forefront of the company’s guiding philosophy and operational standards, this team is highly specialized in recognizing early-stage exploration projects with world-class potential. 

Collective Mining, responsible for discovering and building the largest gold mine in Colombia, is poised to bring their unique blend of environmental, social, and governmental expertise into action for their San Antonio and Guyabales projects. 

Results Coming Soon

With a new 5000 metre drill program beginning this month, initial results are anticipated in May/June, giving investors, both current and potential, something to be very excited about. The company is creating new strategic partnerships with key agricultural-focused groups in Caldas to deliver on many of the promises made in the ESG arena. 

A Collaborative Approach to Mining

The name of the company makes it immediately clear that this is a company built on the foundations of collaborative and inclusive management, and a collective commitment to the values that investors prioritize for both stakeholders and investors. They accomplish this by working with local groups and planning projects that benefit the local mining community, minority groups, local development projects, and investors. 

This approach to their projects fits well with the developed Colombian economy hosting ancillary mining services, agriculture, and tourism industries. The entire Colombian economy and country stand to benefit as a strategic alliance across a myriad of industries works with Collective Mining to build strong and profitable porphyry gold, copper, molybdenum projects. 

San Antonio and Guayabales

Collective’s property in Colombia consists of two key projects – San Antonio and Guayabales – that comprise a historical and current gold endowment of more than 10 million Ozs on contiguous property. Despite having more than 500 years of mining history, the district never consolidated until the company brought their vision to the region. 

With a mining friendly jurisdiction, no security issues, and access to the site and necessary infrastructure, operation of these prime projects is sure to bring in the kind of production they are aiming for. Plans are to extract porphyry gold, copper, and molybdenum from a newly-identified large-scale source at the sites. After thorough exploration costing more than $10 million historically (inflation adjusted), Collective is ready to scale up and mine the rewards of their patience.

Stay Tuned

As Collective Mining gears up to go public through a reverse takeover of shell company POCML5 in the second quarter of 2021, investors will be eager to get in on the action when shares are available. Until then, it’s time to get informed and stay updated on the company’s projects and plans, and how they plan to bring the benefits of their management team from multibillion-dollar Continental Gold. 

Based on the team’s previous history, the market is likely to welcome Collective Mining’s public offering with open arms, and a healthy valuation to boot.

As one of the most important metals on the market, copper is a closely watched commodity. Coronavirus impacted supply and demand dynamics heavily over the past year for the red metal, creating upward price momentum benefitting producers, as well as volatility for traders to profit from. Copper’s supply is not the only factor driving the price. 

It’s Electrifying!

The electrification of global supply chains and products means that copper is more in demand than ever. Metals used for electric products quickly replacing those of the fossil-fueled variety are growing in use and demand faster than anything else. Lithium, cobalt, and particularly copper stand to benefit the most from the ramping up of battery production and the increased investment in R&D for the sector. The trend will be a powerful driving force for the price per ton of this valuable metal throughout the entirety of the next decade and beyond.

The End is Not in Sight Yet

If governments follow through with proposed plans for greater electrification of large economies in the developed world, copper prices would inevitably climb to a level that prompts miners to invest in new production. Mark Hansen, chief executive officer of the trading house Concord Resources Ltd. said in an interview with Bloomberg that, “People need to be aware of the potential for a changing paradigm in terms of pricing. In copper, the market is not yet pricing in the addition of potentially millions of new tons of copper demand over the coming decade. It simply doesn’t happen at $10,000. I would predict that if all those circumstances come true, we really need to see $12,000 copper to bring the market into balance and properly incentivize new production.”

East vs. West

The driving demand for copper will be the electrification of the car industry, energy storage, 5G networks, and much more. The narrative for copper is quite bullish under the conditions laid out in bold government and private industry plans, and producers in western countries in particular stand to benefit immensely from these trends. Smelters in China face shrinking profit margins for processing raw ore into refined metal, making production less attractive as copper treatment charges (an indicator of refining margins) continue to rise. Demand is expected to rise outside of China, allowing western producers to pick up the slack and reap the rewards. 

However, if governments fail to implement plans for green-stimulus spending, it could throw a wrench into the works for copper producers and the market. Still, worries are limited as supply is at its tightest in years for some areas of the physical copper market. The metal is just below the record of $10,190 (per ton) set in 2011 and continues to climb as bets on an economic recovery and tighter supplies pull investors into the mix. 

Double-Sided Demand

Importers continue to demand more copper by the month, in particular, China which is still the world’s largest importer. Government spending pivoting around infrastructure has bolstered demand along with tech necessities and clean energy production and storage products. Vehicle electrification commitments continue, with buy-in from consumers, manufacturers, and even governments. The first round of eco-rhetoric barely made a dent, but the movement is underway at long last. On Feb. 11, Reuters reported that the European Automobile Manufacturers’ Association has said the EU should target one million charging points for electric vehicles by 2024, and three million by 2029 to support the electrification of the car industry in Europe.

Elon Musk – Sending Out An SOS

Tesla is by far the biggest seller of electric vehicles (EVs) in the world’s largest economy. When Elon Musk speaks up about mining for the metals needed for his cars, the industry listens. His public call to produce more nickel, cobalt, and copper efficiently and in an environmentally sensitive way was received with open arms by one Toronto-based miner, Canada Nickel Co. After Musk put out the open call for a “giant” contract to anyone who could get the job done, the company took him up on the offer, even betting it can be done carbon-free. 

The project will likely be set up in Northern Ontario where it can take advantage of cleaner hydro-electric power to mine the metals so important to Musk and the EV industry in general. Producers across the board in North America will continue to ramp up production and as exploration continues to meet the high demands and expectations of the car industry, copper firms like Solaris Resources, Freeport-McMoRan, Codelco, and Glencore stand to reap the rewards. 

Musk’s Tesla Roadster Isn’t The Only Thing Headed Straight for Outer Space

When SpaceX sent a Tesla sitting on top of a rocket, everyone sat up and paid attention. Copper’s current moment has arrived and will have investors, traders, miners, and everyone using the metal on high alert as it shoots for outer space as well. For now, copper’s price seems to be unbounded by any technical price limitations due to the heavy fundamental favour of supply and demand dynamics in play. For now, copper’s rocket ride should continue with plenty of fuel still sitting in the tank. 

 

Solaris Resources had a big day yesterday (March 17th), as the share price shot up in the final hours of trading. As volume rapidly increased, anyone holding the stock saw their position become over 9% more valuable almost instantly. With volume being far outside the average range, we are beginning to see the Solaris team’s efforts bear fruit as investors expand their appetite for the stock. 

Jacqueline Wagenaar, Vice President of Investor Relations for the company, commented, “We believe the increase in share price performance is the market reflecting a lack of sellers and ongoing buying demand from recognition of the outstanding drill results from the Warintza copper project in south-eastern Ecuador, in a structural bull market for copper where new projects are scarce.”

The signal this sends to anyone watching the stock is that investors have more confidence than ever in their new projects like the Warintza mine in Ecuador, and prospects in the immediate and distant future will continue to propel earnings far above their current positions. While the stock is pricier than it was a day ago, if the confidence implicit in yesterday’s buying remains steady, the stock will remain a great buy no matter what the price is. 

Any pullback will be seen as a buying opportunity from now on, and with the added attention, Solaris will have no trouble convincing the street that portfolios will be well served with some SLS in it. 

While the past had seen the environmental activist as the primary driver of awareness and action toward socially conscious profit, society and investors are now demanding greater transparency and commitment to the social, economic, and environmental impact of sectors such as mining. The environmental, social, and governance (ESG) factors integrated into investment analysis and portfolio construction offer long-term performance advantages while offering funds and managers the opportunity to meet the new demands of their clients.

ESG portfolios are not just window dressing for investor pitches, but a serious and growing investment strategy. The idea is to build value beyond the standard compliance expected of companies. ESG portfolio managers look for a synergy between economic performance and social progress that combine in the right way to benefit the companies they invest in and all other stakeholders. Generating value this way requires companies to leverage shared value principles, innovation, analytics, digitization, and strategic and evidence-based solutions to deliver efficiency and competitiveness while balancing the socioeconomic impacts of projects.

Investor expectations continue to mount, and while mining companies may have used the ESG factors as a way to build greater social capital, there is growing and irrefutable evidence that prioritizing these factors builds value over the long term. Mining companies must still focus on delivering shareholder value, which is why some of the ESG initiatives planned often have trouble getting off the ground. Some companies have struggled to justify investing in non-revenue-generating activities in the past, like community infrastructure projects and sustainability initiatives.

As investors get serious about mining companies’ commitment to environmental remediation, energy efficiency, diversity, health and safety, and the fair treatment of community stakeholders and employees, organizations heavily dependent on investment funding must shift their values and operations to meet those expectations. Failing to do so could mean difficulties both financial and reputational. In a world where image matters more than ever, this would be a critical misstep that any company should avoid. 

Deep Dive Disclosure

Investor demands for the prioritization of ESG factors have meant that companies are facing greater demands for deeper disclosure from mining companies. When a vast majority of the world’s largest cobalt, copper, lithium, manganese, nickel, and zinc mining companies were found to have faced various allegations regarding human rights and the infringement of land rights – a tracking tool was launched that lets investors and other stakeholders trace allegations made against those companies. 

Greater accountability on top of the more in-depth disclosure investors now expect from mining companies has forced the change that may have been unwelcome in the past. Still, the benefits have outweighed the costs as more capital flows into mining companies getting ESG right, and investors continue to expand their ESG portfolios. 

Beyond Compliance

Investors have made it clear “that they will not advance funds unless companies can demonstrate a meaningful and measurable commitment to the principles so much of society holds dear. This causes mining companies to consider not only threats to public trust but also potential threats to investor trust”, says Dr. Leeora Black, Global Mining & Metals Value Beyond Compliance Co-Leader, Deloitte Australia. 

Earning Trust

For companies to gain trust with investors, they need to integrate and embed these principles into the mainstream of business rather than segregating them to a “charitable works” area managed by a small department, make social issues part of their strategic decision-making process, and address big issues by placing enmeshing their importance into their projects.

Natural Integration

Instead of creating a different department to pay lip service to ESG principles, companies now need to integrate these principles into their business at every level. Separating them and relegating them to a special section of their investor reports is not cutting it anymore. Investors want to see that it is a regular priority and not something to be trotted out when it suits the company. 

Make ESG Decisions

Making important social issues part of companies’ strategic decision-making process is a key element in attracting investors these days. Fixing problems as they arise when communities or other stakeholders complain isn’t enough. Companies should be proactively considering and discussing ESG principles in their day-to-day operations and taking into account those factors as they would costs or risks.

Of Equal Importance

Enmeshing the importance of ESG principles into the foundations of the projects a company is managing is the best way to show investors and the world that the social issues that are important to everyone are just as important as shareholder value. By tying those principles directly to the improved production and financial health of the company, companies can put their message forward through their work and not just their presentations. 

Andrew Lane, Mining & Metals Leader, Deloitte Africa, explains: “When companies make portfolio choices, they traditionally look at a range of factors—such as the assets, geographies, intrinsic value, shareholder value, and risks associated with these investments. But beyond those factors, they should think about the societal impact of their decisions by asking if their investments can also make the impact that society expects of them.”

Who’s Doing It Well?

The rise of the importance of ESG principles for miners is not lost on those that are performing best. The top producers and explorers are not just putting their best foot forward in their work, but how they do their work as well. Some of them even win awards for their commitments. 

First Majestic (TSX:FR)

First Majestic Silver Corp. has put together an operation that fulfills all of its ESG promises and coordinates their projects with a sense of responsibility to the communities they operate in, and the countries hosting their work. The company has accomplished that by winning the 2021 Socially Responsible Business Distinction Award for all three of its mines in Mexico.

First Majestic operates three mines in Mexico with the San Dimas Silver/Gold Mine, Santa Elena Silver/Gold Mine, and La Encantada Silver Mine. Located in the states of Durango, Sonora, and Coahuila, respectively, the mines have been steadfast producers for the company, and have received this award more than a few times before. The San Dimas operation received the Award for the tenth consecutive year. The company isn’t just cleaning up to look good; this is the modus operandi at First Majestic.

Solaris Resources (TSX:SLS)

Solaris’s willingness and large-scale commitment to responsible and sustainable mining, while serving the communities it operates in, the health and safety of its people and the environment means that it will also benefit from investors’ increased appetite for clean energy, and the decarbonization trend sweeping the industry. With the recent announcement out of Ottawa that Canada is aiming to achieve net zero emissions by 2050, industries are ramping up their efforts to achieve those goals both at home and abroad. The appeal of a company taking care of their people, the environment, and their bottom line all at the same time is now a necessary selling point for any mining company today and in the future. Solaris is already ahead of the curve and is being rewarded for those commitments.

Collective Mining

To understand this company’s ethos, simply look to the name. Collective Mining’s “collective model” means they aim to work hand-in-hand with stakeholders to build a strong and mutually beneficial future. Their focus on ESG principles has created a principled approach towards the environment, sustainability, and governance. Their rapidly expanding copper-gold-molybdenum porphyry exploration is being advanced with those principles embedded in the project in the mining-friendly department of Caldas in Colombia. Collective’s approach to their operations has been socially-beneficial and geared towards the ESG goals that investors prize so much from the beginning. Their company and projects are sure to benefit from this well-executed foresight.

Redefining Value Now, and For The Future

Defining the concept of value as perceived by stakeholders including governments, host communities, employees, and investors should also include the principles that the mining community now shares with society. The priorities of the environment, community integration, grassroots collaboration, diversity, health and safety, and even water management are deeply important to investors who look for companies to deliver value to all stakeholders in order to contribute to the value received by shareholders. Investors will continue to keep their eyes peeled for the companies doing it best. 

Mining companies have responsibilities. They need to produce, explore, acquire, and generate value for shareholders all while being responsible in the way they conduct their business. First Majestic Silver Corp. has put together an operation that fulfills all of its promises, and coordinates their projects with a sense of responsibility to the communities they operate in, and the countries hosting their work. The company has accomplished that by winning the 2021 Socially Responsible Business Distinction Award for all three of its mines in Mexico.

Primero Mexico

First Majestic’s recent news of the Jerritt Canyon Gold Mine in Nevada is taking up a lot of bandwidth in the industry, as the company has gained an important stake in the production at the mine. While this will be watched closely through 2021, the company’s operations in Mexico are also starting the year off on the right foot. 

First Majestic operates three mines in Mexico with the San Dimas Silver/Gold Mine, Santa Elena Silver/Gold Mine, and La Encantada Silver Mine. Located in the states of Durango, Sonora, and Coahuila, respectively, the mines have been steadfast producers for the company, and have received this award more than a few times before. The San Dimas operation received the Award for the tenth consecutive year. The company isn’t just cleaning up to look good; this is the modus operandi at First Majestic. They have proven that they are fully committed to putting Mexico first while balancing their other responsibilities to shareholders.

A Top-Down Culture

Keith Neumayer, President and CEO of First Majestic, has accomplished something year after year that most companies are only striving for, commenting: “I am proud of First Majestic’s commitment to positive and long-lasting impact across the communities where we work. Social management is a core tenet of the company and it is continually ingrained in our operations. Being recognized by CEMEFI and ALIARSE emphasizes our daily focus on creating opportunities for social, economic, and environment development. This Award is proudly shared with the communities where we work.”

Cemented Status

The Award comes at a time when socially and environmentally responsible mining companies are being prioritized in some of the largest institutional portfolios. The company’s proven track record with its operations in Mexico have cemented First Majestic’s status as a leader in this space, further proving that this commitment is much more than just window dressing. With its newest mine acquisition in the US, it will already have the systems and policies in place to implement the Award-winning strategies that have worked so well in the past in other countries.

Which way will it go? The question on every investor’s mind is particularly important for a company that seems like it could go either way with Griffin Mining. A company with solid fundamentals and production, with a focus on their Caijiaying Project is subject to the complications of mining zinc in a country that can swiftly change laws and the rules on a dime. So far, there have not been any issues, and China’s efforts at controlling the COVID-19 pandemic within its own borders have been beneficial to every producer in the region. The lack of restrictions as the country continues to open up has been good for the domestic economy and everyone doing business within their borders. 

What It’s Lead To

Griffin has not had to cut back on production and with the rising price of zinc at a tailwind pushing their bottom line along, the future seems bright. With the stock price climbing slowly and sitting around $140 right now, investors continue to wonder whether the time is right to buy. 2021 has been a good start for the stock and has climbed from a start at $117 to the current price consistently over the past two and a half months. The momentum that good news and good numbers have had for the stock means it has been able to creep up to near the all-time high of $159 a share. Investors are watching this level as an idea that it has the momentum to keep climbing higher and create a longer-sustaining leg up. 

Solid Fundamentals

Taking emotion out of it, Griffin does well when taking into account some important financial and technical measures of quality and momentum. Investors know that high-quality stocks are resilient, consistent cash-generating businesses that compound returns over time for all stakeholders beyond equity-holders. The long-term commitment to their Chinese operation has meant a focus on quality and commitment to the project beyond extraction and into the development of exploration projects. 

The stock has largely reflected investor sentiment related to this focus on quality, and the strong momentum in the price and the company’s earning is a good indicator of a positive trend that may continue. As a stable, growing company that often accelerates in sales and earnings, Griffin has a strong and consistently improving financial history with no signs of accountancy or bankruptcy risk. The company is not just an explorer with hopes of future profit, but a reliable producer creating shareholder value and stakeholder value where they operate. 

Leading the Market

The company has built solid momentum in a few key areas, like the share price and earnings growth. It is trading close to its 52-week high and is outperforming the market. The market tends to vote with dollars, and the stock often reflects the performance of the company. One can gather a lot of insights by looking at the price history, particularly in the past four to five months. Shares have seen a 167.8% return relative to the market over the past 12 months. Market volatility like what was seen over the past year can be a major drag on momentum, but if the stock is strong (like this one), it is quick to recover (like it has). 

The good times are rolling for Griffin Mining right now, and so relative to historical prices it may seem expensive. In good times companies often are, but in volatile markets, like we are likely to continue to see, some chances may come along to buy the stock at cheaper prices. However, if the stock breaks through the 52-week range at the top end, investors can count on consistent returns for years as momentum continues to build and the company continues to be rewarded for its performance.

Safe Bet? Stay Vigilant

Finding good companies and stocks that return profits year after year is a difficult task, but Griffin Mining has made it simpler. While these factors don’t guarantee future returns and some areas of concern still linger, the quality and momentum of this zinc miner are proving to be resilient and gaining momentum every week. The company looks set to be one to watch. 

2020 saw some of the most complicated operating conditions for the mining industry ever, but the subsequent economic recovery brought important and profitable changes for one particular new listing on the Toronto Stock Exchange. While Solaris is not new to the industry, the listing on the TSX is, and they couldn’t have timed it better. With copper prices rising, the decarbonization and electrification movements gathering speed, and a flood of new money in the markets, Solaris couldn’t have picked a better time to become a public company. 

It’s Raining Copper

Copper mining has been fraught with worry over an impending shortage, which Solaris has hedged against with a portfolio of exploration properties picked by the late David Lowell. The former Solaris consultant and strategic partner was known as the greatest copper explorer in the past century. Lowell helped develop the porphyry copper deposit model alongside John Guilbert in the early 1960s. This model is still dominant today and is implemented for something like 60% of the world’s copper supply. The company started with the best and is in just the right position to make their projects shine with a red tinge.

Around the World in Multiple Projects

Solaris’s portfolio includes projects in Ecuador, Peru, Chile, and Mexico. As projects get off the ground and start to expand, the market has noticed the ambition of the company and management to scale up quickly. The potential scale of the projects is hard to find these days, as most of the newer generations of projects are a fraction of the size of the projects in the existing supply base. 

The company has shown not only promise, but proven success and a stable track record to make it a good investment. The share price has grown significantly since its market debut in mid-2020 but remains a value buy because of the massive potential of its projects. Solaris currently remains focused on its flagship project, the Warintza Mine in Ecuador. This rich mine is a high-grade open-pit resource with a 5km by 5km cluster of outcropping copper porphyries. Of course, this copper project will remain the focus but there is also untested gold potential waiting in the wings.

Bringing Big Value…

Solaris is managed by Augusta Group, an incredible value-creating company that boasts annual returns of up to 308% (from the Solaris IPO and subsequent gains in the stock price) in 2020 on current projects, and returns of up to 12,960% on past sold projects. Having such a reliable and profitable partner gives Solaris the advantage they need to pull ahead in the sector. Their strong strategies and valuable projects paired with the formidable management both internally and from Augusta Group gives them the instant advantage over competitors even though they have only been a public company for less than a year.

The company is worth keeping on a watchlist for the growth and discovery potential, and investors have already begun paying attention to this aspect of the business. Investor appetite has not waned since the 2020 IPO, and as activity continues to pick up and production scales up, the stock will continue to be a good buy even as the price doubles or triples. The value of a sub-$10 stock with the potential for scale on so many exclusive and lucrative projects should not be overlooked, and so far investors have been rewarded by their eagerness to own a piece of this company. Trading around $7 at the time of writing, it is within an affordable range for investors across the spectrum from retail to institutional, and is likely only the beginning of a steady climb upward.

…And Keeping It Green

Solaris’s willingness and large-scale commitment to responsible and sustainable mining, while serving the communities it operates in, the health and safety of its people and the environment means that it will also benefit from investors’ increased appetite for clean energy, and the decarbonization trend sweeping the industry. With the recent announcement out of Ottawa that Canada is aiming to achieve net zero emissions by 2050, industries are ramping up their efforts to achieve those goals both at home and abroad. The appeal of a company taking care of their people, the environment, and their bottom line all at the same time is now a necessary selling point for any mining company today and in the future. Solaris is already ahead of the curve and is being rewarded for those commitments.

As more news and reporting are sure to come down the pipeline, we will make sure you can stay updated about all of it right here on MiningFeeds. 

Gold giant Kinross Gold (TSX:K) announced financial results last month for its fourth-quarter and year-end 2020. Investors are pleased with the company’s net earnings of $783.3 million (62 cents a share) in 2020. The Toronto-based company nearly doubled its net adjusted earnings in 4Q2020 with a boost from higher gold prices to $335.1 million (27 cents a share), compared with $156 million (13 cents a share) in 4Q2019.

Tough Times

Kinross was able to capitalize on a strong gold price despite 2020 being a unique and challenging year for everyone in the industry. In the middle of one of the most challenging years for the mining industry, Kinross had a free cash flow of more than $1 billion. 

While balancing the restrictions and complications in operations, the company still met its original guidance for the ninth consecutive year and was able to declare a quarterly dividend of 3 cents per share for 4Q. While the company saw lower production for the quarter with 624,032 ounces down from 645,344 ounces in the 2019 quarter, the results were not hit significantly and investors responded well to the news. 2020 production hit nearly 2.37 million attributable gold equivalent ounces compared with 205 million ounces in 2019. The company has excelled at maximizing operations and surpassing guidance even with consistently lower production in 2020.

Strong COVID-19 Risk Management

Management clearly has its eye on the ball and implemented operational and financial support to manage COVID-19 risks. The company implemented “…rigorous measures to keep our employees safe, maintain business continuity and support local communities,” Kinross President and Chief Executive Officer J. Paul Rollinson said in the earnings teleconference. He went on to thank employees worldwide for meeting the challenges. 

With strong leadership during the challenging year, Kinross put together a comprehensive and efficient plan for managing the risks of the pandemic while continuing to maintain productivity and earnings. The company provided roughly $6 million in 2020 toward community efforts geared toward combating COVID-19 in areas where they operate mines. Some of the loss in revenues was a result of the extra costs and investments related to operations during the pandemic, but being able to balance those costs with successful mining operations puts Kinross in the lead for the industry for 2020.

A Bright 2021

The company made it clear that they are looking ahead to 2021 and beyond with optimism and forward-thinking production plans. In its exploration update, the company planned to spend $6.5 million on Bald Mountain Mine for exploration. The company will focus on drill testing targets identified in 2020 to look for deposits that may be converted to mineral resources later, turning some of the seeded work from last year into gains for the company in 2021. 

$6 million in additional funds set aside for exploration at Round Mountain Mine, the first gold ounces produced at the Gilmore Project in January of this year, completed construction on the project on time and on budget, and spending of $120 million for all projects in 2021 is sure to build on last year’s performance. 

A Pass With Flying Colours

The stock trades at $8.38 as of writing and has climbed steadily over the last 12 months. While the gains have been attractive, it is the consistent dividend and profitable performance of the company that still makes this an attractive investment. With even bigger plans for the company looking ahead to the bright side of 2021, Kinross Gold has its finger on the pulse of the operations and is in fantastic health.

Franco-Nevada is a diamond in the mining industry, as a steady and profitable royalty and streaming company. In a world of low yields and interest rates, investors are hard-pressed to find the kind of returns that will make them look at their RRSP with pride. Chasing returns also carries significant risk, which Franco-Nevada controls for by not operating mines, developing projects, or conducting exploration. 

Low-Risk, Reponsible Management

The company instead focuses on managing and growing the company’s portfolio and streams, giving them exposure to commodity price optionality and a perpetual discovery option over large areas of profitable and geologically prospective real estate. This low-risk, steady, and high-reward business model is a counterbalance to the hit-and-miss strategies of many other mining companies. The company has limited exposure to many of the risks associated with operating companies because of its capital-light business model. This nimble operation strategy allows it to pivot to new projects, mines, and even supporting the industry when needed. The company engages in exploration efforts as part of advancing a property in advance of taking on an investment. This due diligence is necessary as the company relies on the industry operating responsibly to both reduce risk, and honour the royalty and streaming agreements they make. 

By The Numbers

With the stock price sitting at over $109, the company is more expensive than many of its peers, but this is an investment that gives more than it takes, just as it should be. Their portfolio of precious metals like gold, silver, and platinum group metals, oil, gas, and natural gas liquids allows them to give investors a dividend yield of 0.90%. With an operating margin of 28.18% and a return on equity of 5.18%, this is one of the rare mining companies that consistently turns out results investors can be pleased with. With zero debt, and a fully equity-funded balance sheet, not only are the paper stats solid, but the bottom line fundamentals are strong enough to keep buying the stock as it gains. 

Their recent announcement of a US$0.26 per share dividend to be paid on March 25th, 2021 to shareholders of record on March 11th, 2021 was welcomed warmly by investors. Analysts are estimating 15% growth for 2021, and as the company gears up to report 4Q2020 earnings on March 10th, investors eagerly await a sign that all is well with this steady performer. Whether 2021 will shape up to be as good a year for Franco-Nevada as 2020 was is still yet to be seen, but with restrictions lifting, business activity picking up, and an optimism in the air, new projects and mines will continue to need the company’s services, bringing more dividends for shareholders quarter after quarter. 

Dividends Keep Padding Portfolios

We will continue to watch the dividend payout ratio, as the company must balance paying out less in dividends than it earns; the opposite would make the dividend unstable. Franco-Nevada paid out 74% of its earnings to investors last year, an average level for most businesses, and nothing they need to worry about adjusting. Dividends also used just 27% of the free cash flow it generated, leaving a comfortable margin to continue paying a dividend throughout 2021. As long as earnings don’t drop precipitously, the dividend looks to be stable and is covered by both profit and cash flow. 

*This story will be updated on March 10th after the earnings report.

 

1.   Please click here now. The disappointing price action in gold (against the dollar) is mainly related to the perceived rise in real interest rates.

2.   Please click here now. It’s unfortunate that the US government and the Fed use indexes of inflation that the average citizen can’t relate to at all.

3.   For the average person with minimal savings, rising debt, questionable job security (if they have a job at all), and skyrocketing prices of the items they need for daily life…

4.   The 1.4% inflation rate used by the government is a very bad joke.

5.   It’s equally unfortunate that institutional money managers focus on these “out of touch” inflation indexes.

6.   If money managers used “common man” inflation gauges, they would now be buying gold maniacally rather than selling it somewhat aggressively.

7.   America’s inflation indexes are about as useful for the average person as a rotary phone, but because money managers move substantial funds in and out of gold based on these indexes…

8.   All gold bugs need to stay professional in their actions.  A major focus on the weekly chart is very important.

9.   On that note, please click here now. Double-click to enlarge what I consider to be the most important gold chart in the world.

10.   There’s no point flailing away trying to call “final lows” or “big tops” in the gold market.  Building sustained wealth is all about buying into weekly chart support zones and selling into weekly chart resistance zones.

11.   The buying and selling can be tweaked by using a couple of solid technical indicators like my 5,15 moving average series and 14,5,5 Stochastics.

12.    Market sentiment is also important.  Market rallies in gold rarely begin before most analysts and investors are 100% sure the price is going lower.

13.   On significant price reactions, professional investors feel roughly the same way that amateur investors do (demoralized), but they are able to essentially “bet against themselves”; they buy even though they are sure the price is going lower.

14.   When the gold price arrives at a support zone defined by a previous low, like it did at $1767 last week, investors can buy with a stoploss.  This strategy ensures there is no significant damage (emotional or financial) if the price continues to move lower.

15.   When the price breaks a low, it can fall quite quickly, creating a panic.  Investors need to be prepared to manage that type of market.

16.   In contrast, as gold dips into a strong support zone defined by previous highs, I encourage investors to buy there with no stoploss.  Core positions can be accumulated, mainly because… gold is money!

17.   For a big picture view of gold, please click here now. Double-click to enlarge this monthly chart.  Back in 2013-2014, I told investors to prepare for a huge “head” to form in the coming years, a head of what promised to be a gargantuan inverse head and shoulders bull continuation pattern.

18.   That head formation played out majestically, and as gold rallied from $1045 towards $2000 I urged all gold bugs to prepare for a “right shoulder build”… a process that could and likely would take several years.

19.   That right shoulder building process is in play now, and it’s likely to continue for some time.

20.   For a short-term view of the action, please click here now. Double-click to enlarge this daily gold chart.  I’m a buyer of gold and related items at $1671, but for gold to regain its positive “mojo”, the price needs to rise above $1760 (former support that may be turning into resistance now) and above the minor high at $1820.

21.   What about the miners?  Please click here now. Double-click to enlarge this weekly GDX chart. 

22.   The H&S toppish action is mildly negative but that’s balanced with the support at $30 (the current price) and at $26.

23.   Please click here now. Double-click to enlarge.  While gold miners swoon during the gold bullion shoulder build process, investors who want immediate satisfaction may want to look at some crypto miners like “No Jive Hive”, which I carry in my blockchain newsletter portfolio.

24.   For crypto, the action is hot and heavy right now.  For gold, the big picture means investors need patience, but everyone should be ready to buy bullion at $1671, for some potentially awesome upside rally time fun!