In the base metals space this week: Lundin Mining has a second go at the hearts of Nevsun shareholders, Q2 reports are coming out thick and fast and INN chats with legendary independent speculator Lobo Tiggre.
Base metals continue to trade down as trade war fears become set in stone, with loss of jobs in the US now a talking point and continued tensions between the US and its closest traditional allies.
Copper fell below US$6,000 a tonne for the first time in 12 months, and is now trading at US$5,981 after starting the week at US$6,142, a fall of 2.62 percent.
Lead has continued its journey down as well after a slight recovery at the end of last week. While lead started this week at US$2,182, it lost 4.12 percent of its value and finished the week at US$2,092 a tonne.
The talked-about battery metal nickel wasn’t free of the fall either, falling 3.36 percent from US$13,675 a tonne to US$13,215. Nickel now sits about where it was valued at the start of 2018, with much of the gains since then undone.
Base metals top news stories
On Monday (July 16), Lundin Mining put out a press release declaring its intent to have another run at Nevsun Resources, a fellow Canadian company with a key copper-gold asset in Serbia—the Timok copper-gold project— that Lundin wants to get its hands on.
The proposed offer, which is yet to be formally made values Nevsun at C$1.4 billion, less than the C$1.5-billion offer revealed in May.
“Lundin’s number is going in the wrong direction,” Nevsun CEO Peter Kukielski said while speaking at the Sprott Natural Resource Symposium in Vancouver this week.
Lundin’s formal offer will materialise “on or about July 27,” and the market is watching.
2. Q2 report time
If you hadn’t noticed, it’s quarterly report time for Q2 2018, and miners are diligently pumping out their production reports.
The big miners all have fun news to share, with Brazil’s Vale (NYSE:VALE) boasting the May truck strike was inconsequential to its well-oiled machine, with the company reporting it pivoted to alternative transport modes to maintain production over the quarter.
Anglo American (LSE:AAL) credited copper and metallurgical coal with maintaining solid production growth over the quarter, which saw declines in thermal coal and nickel production while everything else was up.
Not to be left out of the party is BHP (ASX:BHP, LSE:BLT, NYSE:BBL), which also proudly posted record iron ore, copper and coal production, with iron ore up 3 percent.
In the last of a series of three articles, INN spoke with legendary rock kicker and stock picker Lobo Tiggre on his take on risky jurisdictions.
Tiggre said really there was no such thing as a truly safe jurisdiction, and that the political climate all over the globe can have an effect on share values.
“Remember when Quebec decided to raise taxes on mining a few years ago, dropping it out of the top rankings in the Fraser Institute’s ranking of mining jurisdictions? Or in any Canadian province when the New Democratic Party wins, or in the US when the Democrats win?”
There’s no crystal ball for knowing how to predict unrest anywhere though—so just go do your homework on whatever project takes your fancy.
“What getting your boots on the ground does is give you a feel for whether the discount on a scary jurisdiction is overdone, or if the confidence in a safer jurisdiction might be ill-placed. That’s hard to tell without getting out there and speaking with the locals—preferably on your own, without management around, or official translators.”
In other base metals news
In other news, Escondida is an ongoing headache for BHP, with the Chilean government declaring it just wants the uncertainty to end.
Also in South America, Argentina released a mining census with details about the 1,500+ mining companies operating there that collectively generated US$1,329 million for their hard work.
In Canada, the much-maligned Mount Polloy copper mine is currently hamstrung by ongoing strike action —mining activities there have been suspended for over seven weeks over an impasse on collective agreements with unionized workers.
Atlas Iron (ASX:AGO) is also after a conclusion to the battle between mining giants over its future, with its board encouraging shareholders to accept the current offer from Gina Rinehart’s Hancock Prospecting for the iron ore miner.
Meanwhile, MOD Resources (ASX:MOD) has bought out its joint venture partner for the T3 project in Botswana, and now is the full owner of the copper project.
In Serbia, the government is seeking investors for its RTB Bor copper mine and smelting operations, which according to Reuters is debt-laden and suffered severe neglect during the Yugoslav Wars of the 1990s.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.