Base Metals Weekly Round-Up: US Copper Gets Cash Splash

This week in base metals, copper projects in Arizona and Nevada have had a whole lot of money spent on them while around the world the trade war is gnawing away at numbers both in profits now and growth forecasts for next year.

This week the quarterly reports dried up and mining companies got back to drama, financing and talking up their projects.

Around the world, Brazil is absorbing the news that Jair Bolsonaro is its new president, the mid-terms in the US are grinding ever closer, BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) has ‘trimmed’ US and China growth forecasts due to the trade war while Fortescue Metals (ASX:FMG) appears to have gone the other way, with its CEO saying she’s confident the trade war won’t dent iron ore demand.

Looking at prices, copper had a poor few days, falling from US$6,258 on Monday (October 29) down to US$6,068 by Thursday (November 1) — a loss of 3 percent, while nickel continues to plumb new depths for the year, reaching US$11,550 a tonne by Thursday — a far cry from its high of US$15,745 hit in early June.

Base metals top news stories

In the news for base metals this week, it was clearly a good week for American copper investment, with Excelsior Mining (TSX:MIN) announcing it had secured US$75 million for an Arizona project while Hudbay Minerals (TSX:HBM,NYSE:HBM) snapped up Mason Resources for a Nevada project.

1. Excelsior Flies High with US$75-million Deal for Gunnison Copper

Phoenix-based Excelsior Mining has announced that it has all the required funding to kick-start its Gunnison copper project in Arizona, having completed the permitting process earlier in October.

In its Wednesday (October 31) release, Excelsior revealed it had secured US$75 million in financing with Triple Flag Mining Finance through a US$65-million copper streaming deal and US$10 million in a private placement — news which saw the company’s shares bumped up by over 11 percent in Toronto.

According to the company, the US$75 million is enough to cover all capital expenditures and working capital requirements related to the start-up of Gunnison, which envisages the project would produce 125 million pounds of copper per year (or 56,700 tonnes) — a capacity that would be reached by year seven of mine production as forecast in the 2017 feasibility study.

2. Hudbay Pays Healthy Premium for Mason Resources

The Ann Mason copper deposit in Yerington, Nevada is soon to have new management, with Canadian miner Hudbay Minerals announcing it has decided to acquire the project’s current owner Mason Resources (TSX:MNR) for C$31 million.

Hudbay already owned 14 percent of Mason Resources, and announced it would be acquiring the 86 percent remaining for C$0.4 per share, which Hudbay said was “an attractive premium to recent Mason trading.”

There’s a touch of drama to this story, as the announcement came only a week after 7-percent shareholder of Hudbay, Waterton Global Resources, announced it was requisitioning a special shareholder meeting “for the purposes of considering an advisory resolution with respect to certain potential transactions”— no doubt to reiterate its demands that Hudbay declare a moratorium on material acquisitions until it started performing better.

3. Xanadu Grows Kharmagtai Copper Estimate by 400 Percent

Xanadu Mines (TSX:XAM,ASX:XAM) has boosted the resource estimate at its Kharmagtai project in Mongolia’s South Gobi region by 400 percent in contained copper and 249 percent in gold.

The increase has seen Kharmagtai’s resource estimate jump to 598 million tonnes (Mt) containing 1.9 Mt of copper and 4.3 million ounces (Moz) of gold. That compares with the project’s 2015 maiden resource estimate of 203 Mt containing 1,500 million pounds of copper and 2.2 Moz of gold.

Moving forward, the company’s focus has shifted to completing a scoping study, which is expected to be finished during Q4 2018.

Following the scoping study’s completion, Xanadu will be looking to add the recently discovered Zaraa and White Hill West deposits (both part of Kharmagtai) to its global resource base.

In other base metals news

So far this year, nickel has proven to be the most resilient of the base metals, avoiding the carnage wrecked upon fellow metal zinc — but according to reports this week it may be vulnerable thanks to a Chinese company known for disrupting markets — Tsingshan, which was reported to be looking to build a plant in Indonesia to process lower-grade Asian ores into battery-grade metals.

Meanwhile, the CEO of Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) said this week that the mining industry would need to reinvent itself in order to be an industry of the 21st century. Speaking at the International Mining and Resources Conference (IMARC) in Melbourne, Jean-Sebastien Jacques said that thinking about the legacy of mining was important at a time when protecting air, water and land mattered more than ever.

The trade war is starting to bite more than commodity prices, with BHP CEO Arnaud Balhuizen saying at the same conference in Melbourne that his company would be trimming its 2019 growth forecasts due to the lose-lose nature of the global trade war.

This week BHP also announced it would be handing out US$10.4 billion in goodies to shareholders through a buy back, the culmination of the promise it would hand over proceeds from the sale of its onshore US assets.

Nyrstar (EBR:NYR) is clearly suffering due to the low, low zinc prices reported in September. The Belgian company reports that its third-quarter profits dropped by 74 percent due to low zinc, high energy prices and rising mine operating expenses. Poor investor sentiment is not helping.

Back to Rio and Jean-Sebastian Jaques (he’s been busy), who told Bloomberg this week that China was proving to be very resilient in the trade war environment, with its economic machinery “working very well.

Finally, Nevsun Resources (TSX:NSU) announced that its suitor, Zijin Mining (HKEX:2899) has cleared another hurdle as it moved towards acquiring the Canadian company.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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A growing supply deficit pushed palladium to US$2,892 per ounce this week before a mild correction forced values lower.

A growing supply deficit pushed the palladium price to US$2,892 per ounce this week before a mild correction forced values lower.

Shortages of the autocatalyst metal are expected to reach a five year high this year, a factor that will likely add more upside in the months ahead.

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Supported by a declining US dollar, gold maintained the gains it made at the beginning of May to sit above US$1,800 per ounce this week.

Gold maintained gains made at the beginning of May to sit above US$1,800 per ounce this week.

A drop in the US dollar pushed the yellow metal to the US$1,840 range before concerns over rising inflation and a potential interest rate increase muted gains.

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The other precious metals were also in the green and moving higher to start the month. Meanwhile, copper hit an all-time high.

The gold price was on an upward trend this week, ultimately breaching the important US$1,800 per ounce level for the first time since February 22.

After slipping to US$1,735 to end the second month of the year, gold values struggled to gain momentum in March. As headwinds from 10 year Treasury yields and the US dollar dissipated, concerns over inflation mounted, allowing the yellow metal to edge higher through April.

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Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

cannabis plant layered with German flag graphic
Dmytro Tyshchenko / Shutterstock

Catch up on some of the biggest news of the week for the cannabis investment world.

Three political parties have formed a coalition in Germany, leading to a new government, and it has promised cannabis reform in the European nation.

Meanwhile, a popular cannabis retailer confirmed consumers will now find its products available for delivery on the Uber Eats mobile application in Ontario.

Keep reading to find out more cannabis highlights from the past five days.


Coalition of parties promises forward-looking cannabis policy

Germany, a country with comprehensive and elaborate medicinal rules for cannabis, is in a time of transition as a new government is set to begin to take over after 16 years of Angela Merkel.

Olaf Scholz, the proposed next chancellor of Germany, leads a three party coalition that will become the country's governing body. As part of its promises, talk of adult-use cannabis regulation has now gained even more momentum. A report from MJBizDaily quotes a German policy document that shows the coalition's stance:

"We are introducing the controlled distribution of cannabis to adults for consumption purposes in licensed shops. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors."

However, despite the promise and excitement, it remains to be seen how these ideas will be applied since no formal regulations have been drafted or approved yet.

Canadian cannabis retailer partners with popular delivery app

Tokyo Smoke, a cannabis retail operator in Canada owned by Canopy Growth (NASDAQ:CGC,TSX:WEED), announced a collaboration agreement with Uber Canada (NYSE:UBER) whereby cannabis consumers will be able to use the Uber Eats app to order products before they visit stores.

While the app won't let consumers get cannabis delivered to them, this new method opens the doors to more dynamic ways of buying cannabis.

"As a market leader in innovation and a platform used by so many Canadians, we believe this is the ideal next offering that can be done safely and conveniently on the Uber Eats app," Mark Hillard, vice president of operations with Tokyo Smoke, said in a press release.

A report from the Canadian Press indicates Ontario is considering allowing dispensaries to have delivery and pickup options made available to consumers permanently. The province allowed some of these purchasing options at the outset of the COVID-19 pandemic, but then removed them.

Lola Kassim, general manager of Uber Eats Canada, said this new end-to-end experience will provide consumers with responsible access to legal cannabis products.

Cannabis company news

  • Organigram Holdings (NASDAQ:OGI,TSX:OGI) issued financial results for its Q4 2021 period. In its report, the company notes a net loss of C$26 million despite a 22 percent uptick in net revenue to C$24.9 million. Beena Goldenberg, the newly appointed CEO of the firm, is encouraged by the market share position earned by the company, which said it became the fourth biggest producer in Canada during the reporting period.
  • Halo Collective (NEO:HALO,OTCQB:HCANF) confirmed the decision for Akanda, its spinoff company focused on international cannabis opportunities, to begin trading on a US exchange. "The number of shares to be offered and the price range for the proposed offering have not yet been determined," the company told investors in a press release.
  • High Tide (NASDAQ:HITI,TSXV:HITI) announced the acquisition of 80 percent of NuLeaf Naturals, a CBD product wellness developer, for an estimated US$31.24 million. The deal includes a three year option clause for High Tide to complete a total acquisition. "As international markets open up and as export regulations evolve, NuLeaf's cGMP-certified facility positions us to take advantage of the global CBD business opportunity," Raj Grover, president and CEO of High Tide, said.
  • Humble & Fume (CSE:HMBL,OTC Pink:HUMBF) released the financial report for its first 2022 fiscal quarter to shareholders and the market. "As the legal cannabis market in North America continues to mature, Humble remains agile and focused on providing a leading solution for brands to scale quickly and retailers to focus on their customers," Joel Toguri, CEO of Humble, said.

Don't forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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