Morning Briefing: Capex Overruns Continue to Plague Miners
Welcome to Mining Stock Daily. I’m Trevor Hall.
Today is Wednesday October 25th.
Gold made an interesting move yesterday. During the early hours of the physical markets, the yellow metal remained relatively flat from Monday. But when the COMEX paper market opened, gold was slammed into the 1965 per ounce area, which remains a key level for the metal. But the bears excitement was short lived in the day as buyers began entering the market and moving the price back up to $1986 futures basis. What is more interesting about the move is the relationship with stocks, the dollar and yields yesterday. Stocks began sliding mid-day while longer-dated treasuries were being bought up in force in safe haven demand. The dollar also rose, in tandem with gold, which is a positive divergence from earlier moves this year. Silver bounced around 22.80 per ounce and 23.35 all day, closing at 23.11 per day. That was down about 9 cents on the day.
Both the GDX and the GDXJ are attempting to put high lows in on their charts, which, if successful, would be a powerful statement for the mining sector as a potential trend changer. But all eyes remain on the general stock market and their relationship with the bond market. Despite the buying of longer-dated US Treasuries this week, the general equity big boards remain resilient and held up by the Magnificent 7. All this is happening while gold’s kiss of $2000 remained mostly unnoticed by general investors. However, if gold can continue to hold this very large and powerful green engulfing candle on the monthly chart over the last remaining days of October, the last two months of 2023 very well could signal the gold-fueled animal spirits once again.
We will get to the news from the miners and explorers in a moment, but first a word about today’s sponsor.
This episode of Mining Stock Daily is brought to you by… Arizona Sonoran Copper
Arizona Sonoran Copper Company (ASCU:TSX) is focused on developing its brownfield copper project on private land in Arizona, a tier 1 location. The Cactus Mine Project is located less than an hour's drive from the Phoenix International airport via highway i-10, and with grid power and the Union Pacific Rail line situated at the base of the Cactus Project main road. With permitted water access, a streamlined permitting framework and infrastructure already in place, ASCU's Cactus Mine Project is a lower risk copper development project in the infrastructure-rich heartland of Arizona.
And here’s what you need to know this morning….
SolGold said its strategic Review process has seen it sign over 20 active confidentiality agreements with more than five site visits conducted, with a number of follow-up visits being scheduled. Its work plans for 2024 are funded with no additional financing required in the near-term. Since Scott Caldwell was appointed CEO following the company’s merger with Cornerstone Capital Resources to consolidate ownership of the Cascabel copper-gold project in Ecuador, there has been nearly a 70% reduction in group headcount to 282 in September from 894 in 2022, and consequent reduction in spend achieved. The company said it is advancing and de-risking Cascabel through a development stage exploration permit for early works, permitting and a revised prefeasibility study for a phased development approach to demonstrate a lower risk path for Cascabel with reduced capital intensity. SolGold (LSE & TSX: SOLG) news release
Standard Lithium said it has drilled and sampled the highest confirmed lithium grade brine in North America at 806 mg/L at its East Texas asset in the Smackover Formation, with the brine also showing highly elevated concentrations of potash and bromine. The company said the Smackover Formation represents North America's premier lithium brine asset, with grades comparable to certain resources in South America. Standard Lithium (TSXV:SLI) (NYSE American:SLI) news release
Victoria Gold announced the final set of results from the 2023 exploration campaign at the Raven deposit at its Dublin Gulch camp in Yukon, Canada, where it completed more than 13,200m of systematic fence diamond drilling east of the current deposit. Highlights included 31.4m grading 5.83gpt in hole 200 and 11.7m grading 3.48gpt in hole 196. Victoria anticipates releasing an updated Raven Resource Estimate following the compilation and analysis of the 2023 drill results. Victoria Gold (TSX-VGCX) news release
Talisker Resources signed a non-binding LOI with New Gold to enter into an ore purchase agreement for up to 300,000t of ore from Talisker’s Bralorne Gold project to process at the mill at New Gold’s New Afton Mine in British Columbia. Talisker said the ability to process ore at New Afton provides the opportunity to reduce up front capital expenditure and start up timelines for Bralorne. Talisker Resources (TSX:TSK | OTCQX:TSKFF) news release
Endeavour Silver reported drill results from its Parral project in Chihuahua, Mexico, which show the potential for resource expansion at depth and along strike in the San Patricio area. Since September 2022, the Company has drilled over 6,595m in 22 holes from surface. Highlights included 2.33m grading 508gpt Ag, 0.11gpt Au, 0.45% Pb and 1.60% Zn for 586gpt AgEq in hole 47. The Company plans to continue testing the extension of this system. It said the project is advancing to sufficient scale to support an economic study. It last published a mineral resource estimate on Parral in March 2020. Endeavour Silver (TSX: EDR, NYSE: EXK) news release
Capex overruns continue to dog Teck Resources as it announced its QB2 expansion is expected to cost an additional $600m from its previous estimate due to construction delays. The project will “now” cost $8.6B, as recently as 2019 that number was pegged at $4.7B. The company also withdrew its environmental permit application for the project’s mill expansion after regulators recommended against approving the plan. Submitting a revised application will add 12 months.
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