Cameco Makes a Statement on the Uranium Market

Welcome to Mining Stock Daily. I’m Trevor Hall. And I’m Paul Harris.

Today is Wednesday, February 9th. 

After a big rise in price Monday, the rally in gold and silver followed through with another nice move higher Tuesday. Gold moved up US$6 per ounce, settling just below $1,827 after hitting $1,830. Silver, which was given a 25 cent ride down to as low as $22.77 per ounce early morning Tuesday shot up like a SpacEx rocket to as high as $23.26 before settling at $23.19, up 17 cents from Monday. 

The Mining Stock Journal said it's a good sign that Monday's big move in the sector continued on Tuesday. The newsletter said that Friday's Commitment of Traders Report showed an unusually large decline in the Comex bank short interest in gold contracts and an even bigger decline in the hedge fund long position. Silver also saw a big decline in the bank short position that was accompanied by a similar reduction in the hedge fund long side. Historically this open interest pattern precedes a big move higher in the sector. 

The mining stocks continued to show signs of life, with the GDX rising 1.28%, led by silver stocks. The Mining Stock Journal noted that the GDX has risen 8% in the last seven trading days. Right now there's a bullish move in the sector underway that has garnered zero notice from the mainstream media.

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And here’s what you need to know this morning….

Vista Gold announced the results of their feasibility study for the Mt Todd gold project in the Northern Territory of Australia. At a $1,600 gold price, the project holds an after-tax NPV of almost $1 Billion and an IRR of 20.6%. There has been a 19% increase in proven and probable mineral reserves, now estimated to be 6.98 million ounces of gold at a cut-off grade of 0.35 g Au/t. With a 16 year mine life, Mt Todd projects to have an all-in sustaining cost of $928 per ounce. Vista Gold’s President, Fred Earnest, stated in the news release that these results will appeal to many potential partners, investors and lenders and allow the company to evaluate a broad range of development alternatives for Mt. Todd. Vista Gold trades on the NYSE American and the TSX with VGZ. News Release

OceanaGold expects its gold production to jump 70% over the next three years as its Didipio operation in The Philippines ramps back up. The company also expects to incur a non-cash post-tax impairment of US$102 million including an impairment of $181 million due to increased costs at its Haile operation in North Carolina, USA and an impairment reversal of $79 million to fully reinstate the carrying value of Didipio. The company provided a three-year outlook which sees gold production rising to from 445,000 to 495,000oz gold and 11,000 to 13,000t copper in 2022 to 580,000 to 620,000oz gold plus 12,000 to 14,000t copper in 2024. OceanaGold trades on the TSX and ASX under OGC. News release

Apollo Silver announced a maiden resource estimate for the Waterloo and Langtry silver properties, collectively referred to as the Calico silver project, in San Bernardino, California in the USA. The project has an inferred resource of 58.1 million tonnes grading 89 grams per tonne for 166 million ounces contained. Within this is a high-grade subset of 15.9Mt grading 139g/t for 71Moz contained, using a US$23/oz silver price assumption. Apollo Silver trades on the TSXV under APGO and on the OTCQB under APGOF. News release

Andean Precious Metals updated the mineral resource estimate for its San Bartolome silver mine in Bolivia to include stockpiles of previously crushed and sorted material at the fines depositional facility which will serve as a primary input in the upcoming life-of-mine expansion study. The updated measured and indicated fines resource is 10.2 million tonnes grading 50 grams per tonne silver and 0.12% tin for 16.2 million ounces silver and of 11,930 tonnes tin contained, within a broader project resource of 27.5Moz. San Bartolome expansion work is focused on the development of flowsheets to produce silver doré and tin concentrates from the fines. Andean Precious Metals trades on the TSXV under APM and on the OTCQB under ANPMF. News release

Still with silver, Honey Badger Silver announced more channel, chip and rock sample results from its Plata silver property in Yukon, Canada. Highlights from rock samples included 16,887 grams per tonne silver, 0.18g/t gold, 67.99% lead and 0.83% zinc in the P1 zone and 7,950g/t silver, 1.55g/t gold, 57.66% lead and 0.99% zinc in the P6 zone. Trench and chip sampling highlights included 4,300g/t silver, 46.4% lead and 22% zinc over 1m at the P2 zone. The company said the sampling confirms the occurrence of extremely high-grade silver over an extensive area, associated with two distinct mineralizing events. Honey Badger Silver trades on the TSXV under TUF and on the OTCQB under HBEIF. News release

Cameco announced theri 2021 financial results this morning, including a 50% increase to their 2022 dividend aligned with 70 million pounds of long-term contracting and improving market fundamentals. The company reported fourth quarter net earnings of $11M but an annual net loss of $103M. But the financials comes with a twist. In 2021, Cameco wa operating at about 75% below productive capacity, which they admit came at a significant cost to their business. The company stated that by 2024, they plan to be operating at about 40% below productive capacity and it will remain their production plan until there are further improvements in the uranium market and more in-ground inventory under long-term contracts are secured. Starting in 2024, it is Cameco’s plan to produce 15 million pounds per year at McArthur River/Key Lake, 40% below the annual licensed capacity of the operation. At that time, they plan to reduce production at Cigar Lake to 13.5 million pounds per year, 25% below its annual licensed capacity, for a combined reduction of 33% of licensed capacity at the two operations. Cameco trades on the TSX with CCO and on the NYSE with CCJ. News Release

That concludes today’s morning briefing.

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