The Mining Report: Australian mining shares had a great July. Was that a one-off or indicative of a trend?
Luke Smith: July tends to be good because the fiscal year-end for most personal investors in Australia is June 30, so there is tax-loss selling up to that date. That said, this July was better than average. The gains slowed down at the end of the month, but we've seen a liftoff again from the middle of August. Hopefully, this trend will continue, and we'll see the revival of Australia's small-resources sector.
TMR: Asian countries such as China and Indonesia are moving toward added-value mining. What implications does that have for Australian mining?
LS: Indonesia is a large supplier globally of tin, nickel and pig iron. The decrease in tin from there is counteracted to some degree by Myanmar becoming a tin producer overnight. The decrease of Indonesian nickel has already been positive for Australian nickel producers and explorers and the nickel price on the London Metals Exchange.
"Syrah Resources Inc. owns the Balama project, which contains close to 1.2 Bt with about 10% total contained graphite."
TMR: Newcrest Mining Ltd. (NCM:ASX), Australia's biggest gold miner, has suffered a lot of bad news lately, including a $2.5 billion ($2.5B) write-down and a class action suit. To what extent do its woes mirror that of Australia's gold industry as a whole? Continue reading "Five Aussie Companies with Cash Flows, Low Costs and MOUs" →
The Mining Report: The Toronto Stock Exchange (TSX) global index dropped 50% during the past year. Where is the silver-gold lining in this cloud?
Joe Mazumdar: Financing risk for the junior mining sector was highly elevated, to say the least, in 2013 and remains a source of uncertainty in 2014. To reduce the risk of financing a project, we seek projects that generate double-digit returns in the current pricing environment. We also look for management teams with the technical capacity to not only build and operate a mining project, but also to successfully execute the business plan, which includes permitting the project and attracting good personnel. We want to mitigate the technical and execution risks inherent in a project by selecting these management teams. As senior management cannot mitigate all risks such as geopolitical and financing risk, we seek projects in manageable jurisdictions where the management has appreciable relevant experience. Another key is that the underlying asset requires a manageable or "bite-sized" upfront capital requirement. Continue reading "Seven Gold and Uranium Juniors with Near-Term Growth You Can't Ignore" →
The Mining Report: How are the fundamental challenges facing the global base metals markets likely to play out in 2014?
Joseph Gallucci: There are several long-term issues that impacted copper and the other base metal spaces in 2013, and those long-term issues will persist for the foreseeable future. Allow me to explain the basics via a few examples:
Indonesia recently stopped the export of intermediary products, such as pig iron nickel. The country's leadership is increasingly practicing resource nationalism by restricting mining firms to in-house processing and to shipping only finished products. It is also unsettling that Intrepid Mines Ltd. (IAU:TSX; IAU:ASX) lost control of its project this year to an Indonesian partner!
In terms of supply chain disruptions in 2013, Grasberg and Bingham Canyon were two of the biggest issues, but we are still well below the annual average of a 5% supply disruption. This year has been an anomaly and quite low in that regard. Supply chain disruptions will definitely pick up going forward and they are impossible to predict.
For problems with mining infrastructure, Chile was the hot button. It has port access and infrastructure issues, and there are still no power agreements in place for many of Chile's mining development projects. These types of long-term issues will continue to impact the base metals sector into the future.
TMR: Were declining ore grades an issue in 2013? Continue reading "Zinc or Swim: Do Base Metals Have a Future?" →