As the countdown begins to Christmas holidays, at least here in North America, resource investors will be taking measure of their portfolios — likely with a stiff drink in hand. Many will not like what they see. Mining stocks, along with most commodity prices, have taken a precipitous slide over the past 12 months, with a number of macroeconomic factors and negative supply-demand equations playing into the cloudy picture.
Casting our minds back to a year ago, we recall that the most pressing issue on the minds of investors was how the United States was going to avoid a “fiscal cliff.” At that time, gold was still hovering around $1,750 an ounce. While that issue was resolved, albeit amid considerable hand-wringing among US politicians, it wasn’t long before mining was plunged into the next crisis: gold. In April, the precious metal jumped off its own fiscal cliff, falling $200, or 13 percent, in just two sessions to land at $1,361 an ounce. It was the biggest one-day drop for gold in 33 years, and it spooked resource investors like no event in recent memory. Other metals followed suit, including silver, platinum and palladium. The reason for gold’s sudden drop has never been made abundantly clear, but most observers blame bullion banks for taking a massive short position in gold that caused a ripple effect among gold traders, effectively cratering the price.
Since the April catastrophe for precious metals, both gold and silver have been buffeted by oscillations by the US Federal Reserve over whether or not it will partially withdraw or “taper” its $85 billion a month stimulus package designed to keep interest rates low and avoid the US economy going into recession.
A recent report by PwC shows that silver has earned the dubious distinction of being 2013′s worst-performing metal. As Silver Investing News reported, the white metal began the year at about $32 per ounce, and by July had sunk to $18 or so — a drop of around 40 percent, and miles away from the white metal’s inflation-adjusted record of just below $50 in 2011.
Copper, the usual bellwether of worldwide economic health, has not fared much better, starting the year around $3.70 a pound and now sitting just above $3.30 — a fall of roughly 40 cents, or 8 percent. Growth in copper has been sluggish due to slower economic growth in China — the metals’s largest consumer — along with lagging demand from other primary buyers, the Eurozone and the United States.
All told, it’s been a challenging year, to put it mildly, for mining stocks, as investors fled resource equities in search of safer sectors and higher growth. As proof, look no further than the S&P/TSX Global Mining Index (INDEXTSI:TXGM), which is showing a year-to-date loss of 24.1 percent.
However, it was not all bad news in 2013; some companies still managed to raise financings, make acquisitions and advance their exploration projects. Here are 10 mining stocks that weathered the storm and netted investors some healthy returns:
1. TerraX Minerals (TSXV:TXR); current price: $0.40; year-to-date gain: 788.8 percent; 52-week high: $0.69.
TerraX Minerals is a Canadian gold explorer focused on its recently acquired Northbelt gold property, covering a 13-kilometer strike about 15 kilometers north of Yellowknife, Northwest Territories. Nearby gold deposits include the past-producing 6.6-million-ounce Giant and 5.5-million-ounce Con gold mines. TerraX’ stock started climbing in September when the company announced assay results from Northbelt that included 13.07 grams per tonned gold over 6.87 meters, 67.69 g/t over 2 meters, and 11.69 g/t over 6 meters, near surface. The company also announced a non-brokered private placement of $765,000 in November.
2. Nevada Clean Magnesium (TSXV:NVM); current price: $0.06; year-to-date gain: 333.3 percent; 52-week high: $0.11.
Nevada Clean Magnesium is aiming to become a low-cost producer of high-grade magnesiummined from its Tami-Mosi property in Nevada. In October of this year, Nevada Clean and Norwegian company ScanMag formed a joint venture partnership to produce magnesium for the North American and European industrial markets. Under the terms of the agreement, Nevada Clean and ScanMag negotiated a 51-49 percent ownership split of the Tami-Mosi property, with ScanMag paying Nevada Clean US$5 million, in return for Nevada Clean taking a 5 percent equity stake in ScanMag. Nevada Clean’s three-month stock chart performance shows a whopping 550 percent gain.
3. Atlatsa Resources (TSXV:ATL); current price: $0.55; year-to-date gain: 292.8 percent; 52-week high: $0.61.
Atlatsa Resources is a platinum group metals company with four assets in the Bushveld Igneous Complex of South Africa, including the producing Bokoni mine. Upward movement in the stock price coincided with an announced restructure plan in July, whereby the company sold shares and hived off a portion of its Ga-Phasha property to Anglo American Platinum (OTCMKTS:AGPPY). The restructure netted Atlatsa US$171 million from the property disposition and $76 million from the share issue, and reduced its debt by 75 percent.
Zenyatta Ventures made significant progress this year on its Albany hydrothermal graphite deposit in Ontario, Canada, which was reflected in its stock performance. The run in the stock started in May when Zenyatta announced assay results showing the first drill hole intersected 360.8 meters of graphite from 49 to 409.7 meters, yielding an average grade of 5.1 percent carbon — the widest zone of graphite mineralization intersected at the deposit to date. Zenyatta in December announced the much-anticipated initial resource estimate at Albany, showing 25.1 million tonnes of indicated resources grading 3.89 percent carbon, and inferred resources of 20.1 million tonnes graded 2.2 percent carbon.
5. Barisan Gold (TSXV:BG); current price: $0.23; year-to-date gain: 142.1 percent; 52-week high: $0.23.
Barisan Gold is focused on gold and gold-copper properties in Indonesia’s Aceh province. In mid-July, Barisan restarted exploration drilling at its Upper Tengkereng porphyry prospect. The company mobilized a drill rig and started drilling in late August after the Ramadan holiday. It planned to drill up to 3,000 meters, targeting high-grade zones intercepted in Hole UTD-002. In November Barisan said it intersected 262 meters of 1.0 percent copper equivalent in the first hole of its drill program.
6. Reservoir Minerals (TSXV:RMC); current price: $5.48; year-to-date gain: 127.3 percent; 52-week high: $5.50.
Reservoir Minerals has a portfolio of 8 exploration licenses including gold, silver, copper, lead and zinc exploration in Serbia. It is also developing a portfolio of projects in West Africa, targetting greenstone belts that host gold and iron ore mines. The most recent news from Reservoir Minerals is an update on its drill program at the Timok project in Serbia, a joint venture with U.S. copper producer Freeport McMoRan (NYSE:FCX). Highlights included 166 meters grading 11.29 percent copper equivalent and 128.7 meters grading 8.41 percent copper equivalent.
7. Lucara Diamond (TSX:LUC); current price: $1.43; year-to-date gain: 116.6 percent; 52-week high: $1.69.
Lucara Diamond is a new diamond producer whose key assets are the Karowe mine in Botswana and the Mothae mine in Lesotho. Lucara had an exceptional year for diamond discoveries. In January the company announced it recovered two more rare blue diamonds from its Karowe mine, and then, three months later, a 239.2-carat stone from Karowe was revealed. The good news didn’t stop there for Lucara, with the announced recovery of a 257-carat diamond in September, bringing to 47 the number of diamonds in 2013 that were larger than 50 carats, and 14 bigger than 100 carats.
Saint Jean Carbon, formerly Torch River Resources, is an exploration company focused on becoming a pure-play lump graphite enterprise. The company has acquired graphite properties in Quebec and Sri Lanka. Saint Jean Carbon’s two most important projects are the Walker mine lump graphite project in Quebec and the Han Tal lump project in Sri Lanka. Metallurgical test results from the past-producing Walter mine showed 99.1 percent carbon, prompting the company to look at better defining the scope of the deposits. At Hal Tan, an NI 43-101 technical report is expected in the next few months.
North Arrow Minerals is identifying diamond exploration opportunities in Canada. Key projects include the Qilalugaq and Pikoo projects currently under option from Stornoway Diamond (TSX:SWY), the Lac de Gras project, a joint venture with Dominion Diamond (NYSE:DDC,TSX:DDC), and the Redemption project optioned from Arctic Star Minerals. In October North Arrow closed a $5.4 million financing, followed by a high microdiamond count at its Pikoo project in Saskatchewan.
Solid Resources, a Canadian junior focused in Spain, is advancing the Cehegin iron ore mine and applying for an exploration permit at its Alberta-1 tin-tantalum-lithium property. In October, Solid formed a joint venture with a subsidiary of Glencore Xstrata (LSE:GLEN) to develop the Cehegin mine, under which Glencore would be granted a 20 percent interest and Solid would retain 80 percent. Glencore Xstrata would also purchase the entire production take from the iron ore mine.
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