Base Metals Weekly Round-Up: Metals Dive on Inflation Fears

Base metals across the board took a plunge this week, partly affected by growth in the US dollar on the back of comments from US Federal Reserve Chair Jerome Powell.

While most metals started the week on an upward climb (the exception being lead, which trended downward all week), weekly highs found on Tuesday (April 30) came to a quick plunge by Wednesday (May 1). Though the Fed chair left interest rates unchanged, comments about slowed inflation being potentially caused by “transitory factors” took a hit on commodities.

Nickel, which peaked at US$12,355 per tonne on the London Metal Exchange (LME) on Tuesday, plunged to US$12,120 by Thursday (May 2). Copper was a similar story, as it reached a high of US$6,441 per tonne on Tuesday to nosedive to US$6,213 by Thursday on the LME.

Zinc also felt the heat this week as it climbed to a high of US$2,934 per tonne on Tuesday, only to plummet to US$2,831 by Thursday on the LME. While lead saw its strongest price point on Monday (April 29) at US$1,946 per tonne, it also fell prey to the volatility felt across the market this week, closing Thursday at US$1,858.50 on the LME.

As for iron ore, the commodity managed to remain stable through the week as it made small, yet consistent, gains in its daily closing price. On Friday (May 3), the metal hit a small snag as it dropped 3.69 percent to US$90.27 per tonne as of 3:15 a.m. EDT.

Base metals top news stories

1. Havilah Gets US$100 Million Boost for Iron Ore, Copper Assets

In what the company calls a “transformational capital injection,” Havilah Resources (ASX:HAV) has entered a share subscription agreement with Simec Mining to receive up to US$100 million for work program funding.

A member of the GFG Alliance, Simec’s contribution to Havilah will see the latter receive enough funding for work programs at its Maldorky, Grants and Grants Basin iron ore assets, along with the Mutooroo copper deposit and its nearby prospects in South Australia.

The transaction will bring a staged equity investment of US$50 million and an additional US$50 million in conditional or discretionary funding. Havilah will receive the funds over an anticipated three year period as the work programs push the company’s assets to completed definitive feasibility study status; the contribution may also fund exploration as well as corporate and administration costs.

2. MinRes to Boost Koolyanobbing Iron Ore Output

In a quarterly report released Tuesday, Mineral Resources (MinRes) (ASX:MIN,OTC Pink:MALRY) said that it has developed plans to boost production rates at its Koolyanobbing iron ore operation in Western Australia’s Yilgarn region.

The asset, acquired from Cleveland-Cliffs (NYSE:CLF) by MinRes in August 2018, almost immediately began production ramp up upon joining MinRes’ roster; it reached its nameplate capacity of 6 million tonnes per year after less than three months.

MinRes saw its first train loaded with iron ore from the operation leave for the Port of Esperance in November 2018, with the company’s first shipment set for four weeks later.

3. Metals X Launches Reset Plan for Nifty Copper Operation

After not seeing the operational success it had hoped for, Metals X (ASX:MLX,OTC Pink:MLXEF) announced Wednesday that it is launching a “reset plan” for its Nifty copper operation.

When the company acquired the asset in 2016, Nifty showed potential through a notable resource, previously installed infrastructure and “significant geological upside.” However, according to Metals X, the asset has underperformed due to poor execution, inadequate planning and legacy issues.

The company has reviewed the asset over the last several months, leading to a two phase reset plan to increase production and resolve the asset’s former issues. Phase 1, which is already ongoing, has a focus on mine planning, developing new production areas and improving underground infrastructure.

In other base metals news

After months of squabbling, Hudbay Minerals (TSX:HBM,NYSE:HBM) finally reached a settlement agreement with shareholder Waterton Global Resource Management on Friday. The agreement saw a mutual decision between the two companies on 11 nominees being elected to Hudbay’s board of directors at an upcoming shareholder meeting scheduled for May 7.

In the land down under, Venture Minerals (ASX:VMS,OTC Pink:VTMLF) locked down an offtake agreement with Prosperity Steel for iron ore from its Riley mine. The deal will see Prosperity buy 100 percent of Riley’s product for the first two years of iron ore production; the offtake is based on reserves of 1.8 million tonnes at 57 percent iron.

This week also saw Canadian miner Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF) extend the strike length of massive copper sulfide mineralization at the Kamoa North Bonanza zone, part of the company’s Kamoa-Kakula asset in the Democratic Republic of Congo. Assays from the drilling confirmed copper grades of up to 18.48 percent over 13.6 meters in the new area.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.