Poseidon Nickel Targeting 2022 for Nickel Production

COMMODITY CAPERS: Poseidon Nickel (ASX: POS) has three nickel projects Windarra, Black Swan and Lake Johnston all within 300 kilometres of Kalgoorlie in Western Australia that currently host a combined Resource base of around 400,000 tonnes nickel and 180,000 gold.

Most recent activity has centred around the Black Swan project, which Poseidon acquired from Norilsk Nickel Australia in late 2014.

The project comprises the Silver Swan underground mine, the Black Swan open pit and the Black Swan 2.2 million tonnes per annum concentrator with 191,400 tonnes of nickel metal in resource.

A scoping study is currently underway looking at refurbishment and operation of the Black Swan processing plant, examining two processing capacities: the first 150,000 tonnes per annum for high-grade ores using the Silver Swan plant and second 1.1 million tonnes per annum for the lower grade ores using the Black Swan plant.

Poseidon commenced a Resource Definition drilling program at the Golden Swan prospect, within the Black Swan project in April designed to increase confidence in the continuity of the Golden Swan mineralisation to JORC 2012 Inferred and Indicated levels.

The most recent results from the drilling included:

PGSD036
9.8 metres at 4.95 per cent nickel, including 2.95m at 11.1 per cent nickel and 0.56 per cent copper from 216.2m, 0.95m at 14.9 per cent nickel from 216.8m and 0.4m at 15.8 per cent nickel from 217.75m;

PGSD040
18m at 2.74 per cent nickel from 221m, including 2.6m at 4.97 per cent nickel from 222.4m;

PGSD041
4.4m at 2.97 per cent nickel, including 1.8m at 5.48 per cent nickel from 171.6m;

PGSD038
9.1m at 3.79 per cent nickel, including 0.6m at 10.5 per cent nickel from 204.4m, 0.7m at 16.6 per cent nickel from 205m, 5.75m at 2.39 per cent nickel from 247.75m, and 3m at 3.3 per cent nickel from 272m, including 1m at 7.03 per cent nickel from 272.9m;

PGSD039
12.4m at 3.65 per cent nickel from 181.6m, including 6.4m at 5.8 per cent nickel from 181.6m, 0.5m at 16.7 per cent nickel from 181.6m, and 0.45m at 17.7 per cent nickel from 182.6m; and

PGSD049
4.45m at 5.86 per cent nickel from 187m, including 2.1m at 9.3 per cent nickel from 187m, including 0.9m at 15 per cent nickel.

Poseidon interpreted the high-grade results to have confirmed Golden Swan as a high-grade mineralised zone.

Once all the assay results are received, the company anticipates preparation of a maiden resource, hopefully sometime in the September 2021 quarter.

Funds received from a recent $22 million raising have been earmarked for further work at Black Swan and the company’s other projects.

Poseidon Nickel managing director and CEO Peter Harold said the placement supports the company’s continued strategy to build a high-grade nickel inventory at Black Swan and progress the project toward a potential recommencement of operations in 2022.

“The funds raised will be used to continue exploration activities at Golden Swan and across the Southern Terrace, undertake drilling to convert additional Silver Swan mineral resources to ore reserves and complete mining and production studies at Black Swan,” he said.

“Funds will also be allocated to reviewing the exploration potential of our Lake Johnston and Windarra nickel projects.”

 

Email: admin@poseidon-nickel.com.au

 

Web: www.poseidon-nickel.com.au

 

Battery Recyclers Spinout Critical Metal Assets

COMMODITY CAPERS: Two Australian companies, Lithium Australia (ASX: LIT), and Neometals (ASX: NMT), both of which are making advancements in the recycling of lithium-ion batteries, are spinning out battery metal assets to maintain exposure to raw materials.

If the human race operated like a scout troop, it could be mooted that the badge most of us would like to earn, and then wear with much pride, would be that of the ‘Enthusiastic Recycler’.

People, generally, are eager to push their recycling credentials, ensuring their weekly rubbish collection is sorted into correct bins that enable those further up the recycling chain to separate tin cans from newspapers.

The surge in electronic device use and the demand for the advancement of same over the past twenty years has been documented by us and others over and over again in recent times.

What has also been reported throughout this time is the demand for lithium-ion batteries (LIBs) due to their being a major source of portable power.

Again, we have been inundated by boffins from all sides, warning us of the environmental concern LIBs offer, especially since that globally only around nine per cent of spent batteries are recycled, with Australia maintaining its inability to keep pace with global environmental trends by recycling just three per cent, to keep them out of landfill, or more importantly, to recover valuable metals.

“Used batteries have been a problem for decades from a household and industrial waste perspective,” Chris Bolt recently wrote on the greencitizen.co web page.

“While battery technology has changed a lot, even the most advanced rechargeable lithium ion batteries may still contain materials that could be considered hazardous.

“Most people just associate environmental pollution with these types of batteries, but there are other risks you need to be aware of.

“During the end-of-life stage of any modern electronic device, poor handling, storage, and disposal could increase the risk of fire or poisoning.

“Fortunately, lithium ion battery recycling is starting to become a widespread practice (even though it can be difficult to do so).”

Lithium Australia has hung its shingle on supplying ethically and sustainably sourced materials to the battery industry worldwide through the development of disruptive extraction technologies.

The company is operating on its belief that discarded electronic/battery waste may ultimately prove the most cost-effective and environmentally friendly source of critical metals.

LIT aspires to ‘close the loop’ on the energy metal cycle via its principal business units, which comprise its SiLeach® technology that converts mine waste to battery chemicals; and its subsidiary company VSPC Ltd that is an Australian-based company that has developed and patented processes for the cost-effective manufacture of high-purity, nano-scale materials for the lithium-ion battery market.

Neometals has also developed a proprietary sustainable process that recovers critical metals from cell production scrap and end-of-life LIBs.

Neometals has developed a processing flowsheet that targets recovery of more than 90 per cent of all battery materials from LIBs that might otherwise hit land fill.

This recycling process targets recovery of materials from consumer electronic batteries (devices with lithium cobalt oxide (LCO) cathodes), and nickel‐rich electric vehicle and stationary storage battery chemistries (lithium‐nickel-manganese‐cobalt (NMC) cathodes).

Through its recycling joint venture (Primobius GmbH) with German Company SMS group, Neometals aims to make revenue from provision of recycling services, licensing and sale of recovered cobalt, nickel, lithium, copper, iron, aluminium, manganese into saleable products.

This week, both companies informed the progress of the demerger/spinout/sale – call it what you will – of assets to aspiring IPOs.

Lithium Australia brought the market up to speed regarding its sale and Joint-Venture terms with ASX-aspirant Charger Metals.

With its listing expected on July 8, Charger Metals has exercised an option to acquire a 70 per cent interest in Lithium Australia’s Coates, Lake Johnston and Bynoe projects.

The Coates project is in the Western Yilgarn nickel/copper/platinum group elements belt, close to the recent Julimar discovery of Chalice Mining (ASX: CHN) in Western Australia, to which the JV believes the Coates project exhibits very similar geology.

The second endeavour is the Lake Johnston project, near Southern Cross, again in WA, which is considered prospective for lithium, gold and nickel and has outcropping lithium (spodumene) pegmatites.

Thirdly is the Bynoe project, near Darwin in the Northern Territory, which the JV has declared prospective for lithium and gold and close to recent discoveries of both commodities.

“Lithium Australia retains significant exposure to raw materials through its equity in Charger, as well as its free-carried project interests,” Lithium Australia managing director Adrian Griffin said.

“The latter potentially provide access to raw materials that the Lithium Australia group of companies can further process.

“Charger Metals’ specialised expertise will expedite a focused exploration effort, leaving Lithium Australia to concentrate on its core business: the ethical and sustainable supply of energy metals to the battery industry and the development of a circular battery economy.

“We eagerly await exploration outcomes at the Coates, Bynoe and Lake Johnston projects.”

Neometals’ rational is similar to that of its battery recycling chum declaring the anticipated listing of Widgie Nickel will enable development of the Mt Edwards nickel field allowing it to focus on its core battery materials projects.

The Mt Edwards project is near the small township of Widgiemooltha, south of Kalgoorlie and west of Kambalda in Western Australia.

The project spans approximately 50km of strike length across the Widgiemooltha Dome, which is a world class nickel sulphide camp that hosts more than seven historical nickel mines with a new mine, Mincor Resources’ Cassini operation, recently commencing production.

Neometals proclaimed its intention to demerge the Mt Edwards nickel project into a dedicated nickel exploration and development company on the back of a week of announcements that saw the company increase the global Mt Edwards project Mineral Resources to 10.215 million tonnes at 1.6 per cent nickel for 162,510 tonnes of contained nickel across 11 deposits.

“The demerger and return of our Mt Edwards asset offers existing Neometals shareholders the opportunity to realise the inherent long-term value of this exciting development story in a discrete, nickel focussed corporate vehicle,” Neometals managing director Chris Reed said.

“Widgie Nickel has a number of very exciting deposits located on the Widgiemooltha Dome, a world class nickel sulphide camp that has hosted more than seven historical nickel mines and hosts Australia’s newest high-grade nickel mine being developed less than a kilometre from our southern tenure.

“These assets are highly deserving of their own time and attention, and the recent metallurgical results from just one of the deposits that revealed high grade palladium reporting to concentrate demonstrates just some of what can be achieved with a dedicated focus.

“Widgie Nickel is strongly leveraged to both the world economic recovery and the electrification of transport which will drive increasing product demand from both the traditional steel and lithium battery sectors.

“The Neometals Board considers it is the best outcome for shareholders that a new, independent entity is established to devote the technical, human and financial resources that the Mt Edwards Project deserves.

“We are excited by what Widgie Nickel can achieve with the assets.

“A capital reduction and in-specie distribution to Neometals shareholders will provide a direct level of participation in a new nickel-focussed business, while Neometals remains focused on the Lithium-ion Battery Recycling JV (Primobius GmbH), the Scandinavian Vanadium Recovery Project and the Barrambie Titanium Project.”

 

TO READ THE FULL LITHIUM AUSTRALIA ANNOUNCEMENT: CLICK HERE

 

TO READ THE FULL NEOMETALS ANNOUNCEMENT: CLICK HERE

 

 

 

 

Gascoyne Resources and Firefly Resources to Merge into New, Bigger and Better Murchison Gold Entity

COMMODITY CAPERS: At the 2020 Diggers & Dealers Forum there was much excitement centred around the big gold merger between Saracen Mineral Holdings and Northern Star Resources with the new entity to become the owner of Kalgoorlie’s Super Pit operations.

At the time, Northern Star boss Bill Beament suggested there could/should be more gold company mergers, a reasonable call considering the current climate for gold and the price being generated thereby.

In the lead up to annual Kalgoorlie gabfest, Gascoyne Resources (ASX: GCY) and Firefly Resources (ASX: FFR) appear to have taken Beament’s advice on board by announcing this week the two companies would be merging.

In the announcement informing the ASX of their intentions, the two companies declared the merger will, “combine two gold companies with complementary assets in the Murchison region of Western Australia, unlocking a number of synergies by leveraging Gascoyne’s gold mining expertise and available processing infrastructure at Dalgaranga, for the benefit of Firefly’s highly prospective suite of assets including its flagship Yalgoo gold project, which is located only 110km by road from Dalgaranga.”

In an associated conference call, Gascoyne Resources managing director and CEO Richard Hay explained that regional consolidation of tenure around Dalgaranga had been a clear part of the company’s strategy since it gained re-instatement to the ASX back in October last year.

“This transaction – or this merger – is a major step forward for Gascoyne in accelerating our strategy to increase mine life, increase production profile, and build and grow our Resource inventory, and very, very importantly, is the exploration upside of the combined companies between Gascoyne and Firefly,” Hay said.

“Firefly’s Yalgoo gold project is highly complementary with Dalgaranga.”

In the During the same call, Firefly Resources managing director and CEO Simon Lawson – who will ultimately join the Gascoyne Board as a non-executive director, declared his Board had recommended unanimously in favour of the merger proposition.

“The Board believes there is many reasons to support this merger,” Lawson continued.

“Obviously, there is significant exposure at Yalgoo, and we are leveraging investment of over $100 million in infrastructure at Dalgaranga.

“Gascoyne is the logical owner of the Yalgoo gold project, and we will be working very strongly with the team at Gascoyne to complete the merger over the coming months.”

Reasons given for the merger by the two entities includes:

• Strategic consolidation of the higher-grade Yalgoo (Melville) Mineral Resource is within haulage distance of Dalgaranga;

• Firefly’s Melville gold deposit at Yalgoo contains a shallow, from surface, Mineral Resource of 196,388 ounces at 1.45 grams per tonne gold (0.7g/t Au cut-off) and located 110km by road from the Dalgaranga production hub;

• Approximately 80 per cent of the Melville Mineral Resource estimate currently sits in the Indicated category (156,753 ounces at 1.47g/t gold with a 0.7g/t Au cut-off);

• Opportunities to optimise the Dalgaranga mine schedule given the presence of higher-grade ore at Yalgoo which will serve as valuable blending material at Dalgaranga in the future; and

• Potential for mine life extensions at Dalgaranga through the integration of Yalgoo ore, with enhanced potential to unlock the full value of the existing Mineral Resources at Dalgaranga and Yalgoo of 845,000 ounces.

“The integration of high-grade Yalgoo ore in our production plan moving forward has excellent potential to extend mine life, reinforcing Gascoyne’s position as a key gold producer in the Murchison region,” Hay said in the combined ASX announcement.

“Furthermore, the merger with Firefly will consolidate approx. 1,200 square kilometres of the Yalgoo and Dalgaranga greenstone belts under single ownership, significantly enhancing the exploration upside potential with over 100 high quality targets.

“Any discoveries can quickly be brought into production at Gascoyne’s high quality, low cost Dalgaranga processing plant.”

In a steak knife, but wait there’s more moment, it was announced that, in conjunction with the Merger, Gascoyne and Firefly have agreed the terms of a demerger of the lithium rights over the Yalgoo project area as well as the Paterson copper-gold project and Forrestania gold-lithium project which is intended to be acquired by a newly incorporated wholly owned subsidiary of Firefly to be named Firetail Resources Limited, along with the lithium rights over certain tenements at the Dalgaranga project.

“Firefly shareholders will hold approximately 32 per cent of the merged entity, with the transaction providing an opportunity for immediate value realisation at an attractive premium,” Lawson said in the combined ASX announcement.

“Through their holdings in the enlarged Gascoyne, Firefly shareholders will stand to benefit from the re-rating that we would expect to flow from the creation of a larger gold company with an increased mine life and enhanced production profile.

“In addition, they are intended to benefit from the proposed demerger of our copper-gold and lithium exploration assets through Firetail Resources and receive an in-specie distribution in this exciting new energy metals focused company.”

 

TO READ THE FULL ANNOUNCEMENT: CLICK HERE

 

 

Electric Vehicles and Batteries – The Chicken and Egg of Critical Metal Future

COMMODITY CAPERS: Every commodity-based conference needs an industry expert to provide participants with confidence and this week’s Paydirt Battery Minerals Conference did not disappoint.

Roskill principal analyst Allan Pedersen provided the energiser bunnies in the room plenty of optimism with his look at future supply and demand numbers for battery raw materials.

Hitting on a routine any number of industry analysts have delivered in recent times, Pedersen homed in on the global electric vehicle (EV) market and its upcoming contribution to the suite of battery metals and what he believes is in store.

So, which is the real catalyst for the raw material future?

EVs will be manufactured in big numbers to meet gubernatorial expectations, while lithium-ion batteries will be manufactured in even larger numbers for use in other applications.

“It is no secret that the outlook for the electric vehicle industry and the associated supply chains are very promising,” He declared.

“Last year the total number of vehicles sold globally declined 21 per cent year on year while sales of electric vehicles increased 42 per cent year on year.

“The growth is partly driven by consumer sentiment, financial incentives such as increased scrap values for older cars when buying a low emission car, as well as potential penalties imposed on OEMs (Original Equipment Manufacturers) if they fail to lower the total emission profile of their fleet.

“In China incentives have included easier access to vehicle permits and the ability to use electric vehicles seven days a week where ICEs (Internal Combustion Engines) have been limited to six days a week.

“This in turn pushes OEMs to increase the number of electric models available to consumers which then increases the choice of models the consumers can buy, and the demand spiral has been kicked off.”

The big winners, of course, will most likely be lithium-ion (li-ion) batteries with manufacturers and users alike having already spent large amounts of dollars to bring their development to the current stage being unlikely to relinquish their investment by developing any new, replacement technology just yet.

“We forecast that demand growth for battery capacity will be slightly higher than growth seen in electric vehicles as the battery size in cars will also increase,” Pedersen observed.

“Overall, we forecast the growth for battery capacity to be 23.5 per cent between 2020 and 2030 to reach 2.47 terawatt hours by 2030.

“On top of the strong growth forecast in the automotive segment, we are also forecasting strong growth in stationary energy storage and motive products.

“Our forecast shows that demand by 2027 from non-electric vehicle segments is forecast to be higher than total demand today.”

So, what does all this mean for each commodity that contributes to the make up of a lithium-ion battery?

According to Pedersen EV growth and other factors will drive lithium demand leading to an increase in lithium of 19 per cent per year between 2020 and 2030.

The demand for lithium carbonate is expected to stay strong at 17 per cent per year, however the strongest growth will be in lithium hydroxide where Roskill predicts growth of 27 per cent per year until 2030.

It is thought that supply of lithium compounds will keep up with demand until the middle of the decade when a supply deficit is forecast to occur.

Unfortunately, with the current lack of enough new lithium discoveries, this deficit is anticipated to grow unless additional capacity is found and brought on stream.

Nickel has raised its head above the battery parapet of late, however much of its demand is still expected to come from stainless steel, which in 2020 accounted for 72 per cent of primary nickel demand.

With the battery interest taking a toll, this looks to be hitting more around the 57 per cent mark by 2020.

To put things in perspective, batteries accounted for six per cent of primary nickel demand in 2020 and by 2030 this will be hitting around 28 per cent.

“With the growing demand for cathodes based on high nickel chemistries the demand for suitable nickel sulphate is forecast to grow significantly,” Pedersen said.

“Demand for nickel sulphate from lithium-ion batteries is forecast at 25 per cent per year between 2020 and 2030.

“While supply is set to increase in the coming years it is possible a supply deficit could happen in the segment suited to batteries and new feedstock types and processing routes need to be considered.

“These will obviously need to be economical as well as sustainable.”

Cobalt has become the poor cousin of the battery metal family of late with constant rumours of a synthetic replacement being developed.

Mostly the phasing out of cobalt is to assuage investor concerns of the main supply coming from questionable mining and labour operation in the Democratic Republic of Congo.

Nonetheless, Roskill identified that although the intensity of use of cobalt across battery applications is forecast to decrease, total units required will still increase sharply driven by the growing market size.

Mining in the DRC aside, cobalt demand over next decade is still forecast to largely be boosted by the EV uptake and steady growth in portable electronics industry.

“With LFP (lithium iron phosphate batteries) taking a larger part of the market and high nickel battery chemistries aiming to reduce the cobalt needed, it does not eliminate the need for cobalt all together,” Pedersen said.

“Strong growth in EV numbers will drive demand for cobalt going forward.

“Roskill forecasts cobalt demand to increase seven per cent per year between 2020 and 2030.”

Governments, particularly those of the democratically elected variety, care about what voters consider important, which means they will eventually arrive at the global de-carbonising table with policies that support the evolution of the EV industry.

This will result in driving strong global demand for critical raw materials with batteries leading the Critical Raw Materials way.

“Governments are putting in place policies to not only ensure that there is sufficient raw material available for targets to be met but also that these materials are ethical and the supply security is in place to ensure that any geopolitical events will not jeopardise these targets,” Pedersen concluded.

 

 

 

 

 

 

Drill Rigs Keep Spinning Across WA

COMMODITY CAPERS: Here at The Roadhouse, we often hear from companies of the difficulties they encounter trying to source drilling rigs to enable them to carry out exploration.

Our curiosity landed us on the webpage for the Western Australia Department of Jobs, Tourism, Science and Innovation, which delivered some sobering information.

We all know WA punches above its weight in terms of the Australian economy.

According to the Department, in 2019-20, WA achieved resource sales valued at $172 billion, making it a leading global resources precinct with a substantial global share of production for major and strategic commodities.

In 2019, WA’s share of global resources production included:

59 per cent of lithium, 32 per cent of iron ore; 29 per cent of garnet; 13 per cent of LNG; 12 per cent of rare earths; 12 per cent of zircon; 11 per cent of alumina; 11 per cent of diamonds, 6 per cent of gold; 6 per cent of nickel; 5 per cent of ilmenite; 4 per cent of cobalt; and 4 per cent of salt.

Not bad for a jurisdiction that boasts just 0.03 per cent of the global population.

“Western Australian mining operators have developed this scale of production capacity with a small population base through local development of leading technology, services and equipment,” the Department of Jobs, Tourism, Science and Innovation said.

“Western Australia is the global leader in autonomous and remote mining operations.”

This is where things got interesting.

The department provided a quick inventory of large-scale mining equipment across the state.

To produce the above-mentioned figures the industry is currently using just over 400 operating autonomous haul trucks across iron ore and open cut gold operations with more than 150 autonomous haul trucks to be added to the fleet.

The figure that raised The Roadhouse eyebrows was that there are only 48 autonomous drilling rigs in operations at mine sites.

Little wonder then, companies are screaming for rigs at a time when money is abundant and the global thirst for commodities constantly on the rise.

To exemplify what we mean, we took a random sampling of drilling underway across the state.

 

KAIROS MINERALS (ASX: KAI)

Kairos Minerals has just completed a program of reverse circulation (RC) drilling at the company’s 100 per cent-owned Roe Hills project, located east of Kalgoorlie.

The drill program comprised 20 holes testing high-priority gold and nickel targets at the Caliburn, Talc Lake and Black Cat prospects.

“We’re really excited to now have this drilling program complete, with the results expected to provide an important assessment of the high-priority gold and nickel targets at Roe Hills,” Kairos Minerals executive chairman Terry Topping said.

“We expect to receive assay results within the next six to seven weeks, however visual analysis of the RC chips indicates plenty of exciting potential, particularly at the Black Cat prospect where we can see broad zones of significant sulphides.”

If you think drill rigs are in short supply, try counting the number of lab analysts that are needed to keep up with demand.

Kairos indicated it would no be waiting at least six weeks for the results of this program to hit its inbox.

Undeterred, the company is now moving the rig to its other project, the Mt York gold project in the Pilbara, where current Mineral Resources stand at 873,000 ounces of gold.

That means transporting the rig from Kalgoorlie to the Pilbara, a trek that most other jurisdictions would no doubt consider outrageous.

MOHO RESOURCES (ASX: MOH)

Moho Resources announced the commencement of diamond drilling at the Crossroads prospect, located in the WA Wheatbelt and about 22km west of the Edna May gold mine.

The Crossroads prospect is part of Moho’s Burracoppin gold project, which is subject to a 70:30 Joint venture with IGO Limited.

The four-hole coring program of approximately 600m has been designed to follow up mineralisation the company encountered in its January 2021 RC drilling program.

“Moho is again fortunate to have secured West Core Drilling to undertake our maiden diamond drilling program at the Crossroads prospect,” Moho Resources managing director Shane Sadlier said.

“We are particularly looking forward to identifying the orientation of structures controlling the gold mineralisation intersected in the recent RC drilling program, and to then apply these findings to subsequent exploration programs.”

The program is partially funded by the WA Government as part of its Exploration Incentive Scheme to test a potential Intrusive-Related Gold mineral system at the Crossroads prospect.

 

 

PM Morrison Embarks on Critical Metals Learning Curve

COMMODITY CAPERS: It may have been dragged kicking and screaming to the beachhead, but the Morrison Government has finally, and publicly, dipped its collective toe in the critical minerals sector waters.

The government recently announced a policy it declared would leverage, “Australia’s world-leading critical mineral and resources sector to create more jobs and economic opportunities for manufacturing businesses with the release of a new ten year plan”.

The Morrison government’s use of the term “new” in release of the new road map policy does have something of a hollow ring about it, especially given his now embattled Defence Minister spoke to the Federal Government’s efforts of championing the critical minerals sector at the New World Metals Conference in Perth in November 2020.

At the time, Reynolds highlighted its inclusion in the 2020 Federal Budget, garnering support for a new critical minerals processing capability in Australia.

“This is part of the $1.5 billion modern manufacturing strategy,” Reynolds declared.

“This strategy recognises identifies critical minerals processing as a national manufacturing priority, and this funding will build on Australia’s natural competitive advantage in this space.

“Additionally, in response to industry feedback, the government has announced significant reforms to the Northern Australia Infrastructure Facility, something that I know will be most welcome to many of you today.

“The fund has been extended by five years to 2026.

“Steps are also being taken to turbo-charge the investment program, making it easier for projects to receive funding.

“The Federal Government is taking these steps to support the industry’s development and to make it absolutely clear to overseas investors that these projects are strategically important to the Australian government, that they are viable, that they are worthy of investment, that the Morrison government means business.”

The minister highlighted the need for the industry to create supply chains that are ethical and sustainable, indicating that Australia now has an opportunity to demonstrate to the world our credentials as an extractives partner of choice.

She signalled the development of a National Ethical Certification Scheme by the Critical Minerals Facilitation Office was underway, which will help to progress this.

“We all know that this industry presents a great opportunity for Australian industry, and particularly so for Western Australia,” Senator Reynolds said in conclusion.

“It’s now time for you to do what you do best, and to work together to grow this industry.

“I can assure you I will continue to champion the credentials of this industry, domestically and globally.

“But we all have to work together to achieve this common outcome.”

Dubbed: The Resources Technology and Critical Minerals Processing road map, the government claims this new policy will show businesses how to capitalise on Australia’s access to the resources that will be used in developing and manufacturing new technologies.

Morrison’s launch also included the announcement of a $1.3 billion Modern Manufacturing Initiative that is opened to help manufacturers scale-up production, commercialise products and tap into global supply chains.

“Manufacturing businesses and jobs will be central to our National Economic Recovery Plan as we build back from the COVID-19 recession,” the Prime Minister said.

“Our $1.5 billion Modern Manufacturing Strategy… (is) focused on growing our entire manufacturing sector.

“Our Modern Manufacturing Initiative will help position Australia as not just a global leader in the resources sector but also in the manufacturing of the technology used, as well as turning the raw materials into value-added products.

“Today’s funding will help unlock investment from industry to help build manufacturing capability and competitiveness in Australia’s resources sector while taking advantage of a significant global growth sector.

“This investment and this Roadmap will support jobs across Australia, particularly in our resource rich regions like the Hunter, Western Australia and Central Queensland.”

As eager as Morrison is to display his critical metals attributes, he has to take a third place behind a lot of daylight and his Federal Minister for Defence, whose presence at the 2020 New World Metals Conference displayed a much deeper understanding of the industry.

Reynolds eagerly presented her credentials as a card-carrying, “long-term advocate” for the Critical Minerals and Rare Earths industry to conference delegates.

The minister explained how a couple of years ago she had travelled to South Africa to attend the Indaba mining conference where she had a revelation regarding the need to, “kick start a lithium industry” in Australia.

“And we need to do that right here in Western Australia,” she stressed.

“Batteries are required in everything we use today, and there is certainly no sight of that demand slowing down.

“And as we all know; it is not just lithium.

“Electric vehicle and battery manufacturers are also securing sources of minerals, materials, and components to meet this demand.

“From mining to refining, to production and assembly, Australia must now maximise our opportunities in this rapidly developing industry.

“I believe in the potential of this sector, and I also recognise its strategic value to our nation.”

Senator Reynolds recalled how in 2018 she led a delegation to Canberra to raise awareness of the critical minerals industry, accompanied by other parliamentarians and diplomats.

Even back then the ideas of how important it is to develop secure global supply chains, “free from monopolisation and a range of market risks”.

“Globally, the supply chain challenges of COVID-19 have brought this issue into further sharp relief,” Reynolds continued.

Morrison’s critical metals urgency may be seen, by the more cynical amongst us, to be a way of shoring up votes in marginal regions, however, he could also be responding to noises from the European Union, which although naming Australia amongst countries it believes need to pull more weight in carbon reductions, it is also realistic in making space for Australian producers of Critical Raw Materials to enter its realm.

Turn on your wireless any morning of any day and you can be guaranteed the news bulletin will include a pseudo finance report that keeps you up to date with current iron ore and gold prices.

Although these commodities are at present important to the Australian economy, especially during the past year, these reports are not as ‘up to date’ as they possibly could be.

They may lead the pack; however, gold and iron ore are being dogged by a new batch of minerals that are becoming more and more important to daily life.

Although some of the political class like to claim otherwise, reducing carbon emissions and energy consumption are important to the survival of the planet – and some political careers.

Unfortunately, it is the latter of those lives that provide the impetus to do anything about carbon emissions and energy consumption, but at least it is on the agenda, albeit in perfunctory terms for now.

Modern technology is constantly shifting up a gear as it challenges old-time thinking to achieve the reduction in carbon emissions and energy consumption demanded by a growing demographic.

The technologies that are emerging and developing to help reduce carbon emissions and energy consumption rely, to a high degree, on Critical Raw Materials.

Modern technology such as: wind generators – these use permanent magnets made from rare earths and boron; solar panels – their manufacture a reliability relies on indium, gallium, silicon, and boron; batteries for energy storage and electric mobility – the old energy market stalwart lithium, joined by cobalt, natural graphite, and silicon.

New technologies rely more on Critical Raw Materials than the technologies they replace, and the use of specialty materials will only increase as material science advances.

Speaking via video at the 2020 New World Metals Conference in Perth, the Ambassador to the Delegation of the European Union to Australia, Dr Michael Pulch said the Critical Raw Materials that are used in modern-day technology are essential for our daily lives and for the economies of tomorrow.

“Rare Earth Elements being used in night vision goggles for our defence forces to the lithium in my plug-in hybrid car to the germanium in the smart phone on my desk,” Dr Pulch said.

“These materials – often taken for granted – are both economically important and vulnerable to supply disruptions.”

Dr Pulch informed the viewing audience that the European Commission had adopted and action-planned on Critical Raw Materials.

The actions of the Commission presented the EU a list of Critical Raw Materials, as well as ten actions to make Europe’s supply of raw materials more resilient and sustainable.

“The Critical Raw Materials list identified thirty materials with both the highest risk of supply, and economic importance for Europe,” Dr Pulch continued.

The Commission’s first action was to implement the creation of the European Raw Materials Alliance, charged with the objective to secure supply by diversifying the EU’s sources of raw materials from resource-rich countries, such as Australia.

The Alliance hopes to strengthen the resilience of the EU’s value chains, which are vital for many industrial ecosystems.

Its formation follows the model of previous industrial alliances – such as the European Battery Alliance by bringing together industrial actors, and EU Member States to get projects off the ground.

“The Alliance’s first mission will be to build an open, strategic economy for the rare earths and magnets value chain as they are essential for electric car and wind turbine manufacturing,” Dr Pulch explained.

The formation of the European Raw Materials Alliance provides the opening of a new market for Australian companies operating in the space.

Currently, the EU relies heavily on imports from third countries, and it would be no surprise to discover China being one of the major trade partners, in fact it is where the EU gets 98 per cent of its rare earth elements.

“The Alliance can help the EU forge new partnerships with third countries, such as Canada, and Australia, as well as better integrating interested African countries into European value chains,” Dr Pulch said.

“Initially, companies from third countries that agree with the aims of the Alliance will be able to join.”

That Australia is on the invite list to the EU alliance party was made evident recently when companies were invited to be part of a video conference of European Union and Australian leaders with the President of the European Commission.

The EU recognises the need to establish more importation links with global markets for all raw materials, not only those identified as critical and to diversify supply in a sustainable way.

“Partnering with countries, such as Australia, which are committed to the same values of socially and environmentally sound sourcing, is one way of achieving this,” Dr Pulch continued.

“Developing partnerships requires a solid framework and a clear mandate.

“The EU and Australia have a common commitment to fair and undistorted trade investment in the raw materials sector.

“It is in the interest of both parties to explore our synergies.”

The EU has acknowledged Australian commitments to lead an ethical, secure and environmentally sustainable supply of critical minerals, including processed materials, which is good for all parties concerned as the EU has stated it will be looking to source Critical Raw Materials with the lowest possible greenhouse gas and environmental footprint.

“Equally, the extraction and production of these materials need to respect the surrounding communities and their culture,” Dr Pulch declared.

“The European Union’s action-planned on Critical Raw Materials includes research on more environmentally friendly methods of extraction and processing.

“Australia has already signalled interest in linking up on our research activities.”

 

Thou Shalt Not COVID Thy Neighbour’s Economy

COMMODITY CAPERS: The world economy has endured COVID-19 like a pimply-faced teenager encounters puberty.

Both enjoyed an 11-year growth spurt that suddenly stopped, giving time for reflection on where they are now, and what clothing they are likely to wear until they have to contend with a middle-age spread.

When COVID-19 hit the headlines economists and predictors of fiscal fortunes recognised there was bound to be some reversal of prosperity, however after 11 years of growth, nobody was as prepared for what was to come as they thought.

True, we had been through the Global Financial Crisis (GFC) of 2008/9, but that was a man-made crisis, from the office-bound finger tips of greedy financial types, all of whom had a reasonable idea of what they may be getting us into, and had sound Plan Bs in place to ensure they would bounce back – again – as they had the time before and the time before that.

The ‘Global’ moniker attached to the GFC was also misleading as it was truly a first world affliction, while COVID-19 has truly hit on a global scale, having no discrimination of social standing nor Gross Domestic Product.

Australia weathered the stormy GFC seas thanks mainly to mainland China and its infrastructure drive, a policy that is still contributing to sustained high prices for the bellwether commodities of iron ore and gold.

COVID-19 may be influencing current iron ore pricing, but up until it struck, Australian producers were enjoying a buoyant run pre-pandemic that was fuelled by the misfortunes of global competitors, mainly Vale in Brazil and the collapse of the Brumadinho tailings dam, which made it difficult to re-rail operations.

It has been reported that Vale is back in the game, hitting export numbers of 5 million tonnes per week, however to keep the Brazilian government happy pressure is mounting to increase those figures to six million tonnes per week.

The Department of Industry, Science, Energy and Resources, Commonwealth of Australia Resources and Energy (DISER) had forecast Australian iron ore export earnings to top $100 billion in 2019-20, and in its recent March Quarterly Report suggested this, “appears to have been achieved”.

The iron ore price recently hit US$120 per tonne driven by demand, mainly from China, and tightness in the medium grade fines segment.

Gold has also been making the most of global pandemic-related panic, which was recently pointed out by good friend of The Resources Roadhouse, industry analyst Gavin Wendt.

Wendt opined that although mainstream media sought to correlate gold’s rise with the Covid-19 pandemic, just like iron ore, it too had its origins of ascent well before the outbreak reached the airwaves.

He dated the start of the latest gold run way back in 2015, when the gold price was sitting around US$1,050 per ounce.

Cries of industry joy were again heard in 2018 when gold hit around US$1200 per ounce.

Looking at gold’s recent peak of around US$2,050 per ounce, Wendt calculated gold to have almost doubled in price over the past five years, and is up by two-thirds over the past two years alone.

“Gold’s ascent began five years ago, with interest rates low and question marks beginning to be asked about the world economy,” Wendt explained.

“Interest rates were kept low during and subsequent to the GFC, as a means of accelerating and maintaining economic growth, but have never been allowed to return to ‘normalised’ levels.

“There are inherent dangers in keeping interest rates too low for too long, as they create asset bubbles and lead to artificially high equity markets, as investors chase returns.”

Gold has long been a safe haven, physical gold that is, which in times of strife, in the form of gold bars, or bullion, as it is known to its friends has been the way people have protected their wealth.

They buy it, store it, and every now and then take it out and look at it, then put it away again, if not in the shape of bars, perhaps as jewellery, either way the physical stuff traditionally been more favourable than paper, be that money or shares.

Until recently, that is, when the most renown of all investors, Canadian wunderkind Warren Buffet forked out US$564 million for a stake in Barrick Gold Corporation.

It’s not known for certain whether he was aware that Barrick had sold its stake in the Kalgoorlie Superpit, but Buffet was not setting a trend, but merely following one that had been kicked off by Australian fund manager, David Paradice, who was followed down the golden adit by London-based compatriot, Michael Hintze.

Have they all read the gold tarot cards correctly? Only time will tell, but safe to say such big investments from such big players can only encourage others to follow suite.

Nickel prices were already on the swing in 2019, way before COVID-19 had emerged from a Chinese wet market.

In the second half of 2019, the metal was shifting between US$10,400 and US$18,600 a tonne, averaging US$13,900 a tonne, thanks mainly to uncertainty from Indonesia’s planned nickel ore export ban.

Prices fell in early 2020 hitting a market low of US$11,055 per tonne, until July when a major boost in the shape of Tesla boss, Elon Musk appeared, who openly pleaded with nickel miners around the world to pull their collective fingers out.

“Any mining companies out there, please mine more nickel,” Musk pleaded.

“Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally sensitive way.”

The market reaction was similar to the rally Musk set off in 2017 for tin when he expounded on the virtues of that particular commodity in the production of modern gadgetry.

This time he spoke nickel and the spot nickel price reacted accordingly, rebounding to US$13,460 per tonne on the London Metals Exchange.

“Given its exposure to China’s stainless steel and electric vehicle (EV) production, there is wide consensus that nickel is one of the best placed base metals to rebound as the world, and particularly China, starts to recover economically from the COVID-19 pandemic,” DISER said.

Regardless of your analyst of choice, most predict a rise in the fortunes of nickel in coming years with some 1.1 million tonnes earmarked for use in the production of 30 million Electric Vehicles (EVs) by 2030.

That rise is anticipated to be shared by copper, of which around 4.1 million tonnes is expected to be used in making our roads cleaner and quieter.

A double-edged sword of COVID-19 and a general pessimistic world economic outlook conspired early in 2020 to bring copper prices down to their lowest levels since 2016 at US$4,620 per tonne, since then it has fought back to be knocking around the US$6,000 mark.

Australia’s recent fall in mined copper production, around 4.6 per cent, has not been directly due to any COVID-19 issues, but has been more in line with the closure of two Western Australian mines – the Nifty and Golden Grove mines.

Production from South Australia also fell with the closure of Hillgrove Resource’s Kanmantoo operation and the changing of ore bodies at Oz Minerals’ Prominent Hill mine.

Zinc prices have not had a fun time during the pandemic and have been predicted to remain so for the duration of 2020.

According to the boffins at DISER, zinc prices should enjoy a modest rise of around 3.1 per cent to US$2,055 a tonne over 2020 to 2022.

Australia’s zinc production is expected to gain traction increasing from an estimated 1.3 million tonnes (in metallic content terms) in 2019–20 to 1.6 million tonnes in 2021–22, however DISER forecasts Australia’s zinc export earnings to decline from $3.5 billion in 2019–20 to around $3.2 billion in both 2020–21 and 2021–22 based on an appreciating Australian dollar, despite increasing production and rising prices.

Lithium continues to be a conundrum wrapped up in onion clothing having suffered due to a COVID-19 induced slump in global automotive sales globally.

Whether it has been needed or just because they can, China upped its imports of lithium carbonate by a whopping 544 per cent year-on-year for April 2020 and up 284 per cent for the four months, January to April 2020, on a year-on-year basis as it cashed in on falling prices to place large lithium orders.

China also increased its imports of lithium hydroxide by 262 per cent, month-on-month for April as trade reopened after the COVID-19 outbreak.

Throw in an offtake agreement or two the country inked during COVID-19, and one would have to assume its appetite for lithium remains strong.

South Korea was not to be outdone and increased importation of lithium carbonate by 28 per cent month-on-month in April, again as trade resumed post the COVID-19 outbreak.

Although we in Australia are yet to see any substantial uptake in the electric vehicle market, at least not until prices come down to generate interest, sales elsewhere are healthy enough.

This resulted in DISER to predict, “global lithium demand to rise from 258,000 tonnes (lithium carbonate equivalent) in 2020 to around 414,000 tonnes by 2022 as car plants in Germany and China commence production and ramp up, after being slowed down by COVID-19”.

“Electric vehicles sales are forecast to drop by 18 per cent in 2020 due to the effects of COVID-19,” DISER said.

“Global electrical vehicle sales slumped by 44 per cent for the March quarter, but were offset by stronger European sales based on emissions restrictions due to come into force on 1 January 2021.”

If an unwinner were to be declared at this time it would be Australian LNG exporters with prices falling to record lows.

As countries have knuckled down to contain COVID-19 there has been a proportionate drop in gas and LNG demand across global power, industrial and transport sectors, which has increased the over-supply of LNG, thereby resulting in weakened prices.

How long we have to wait for these markets to rebound is anybody’s guess, however with vaccines rumoured to be closer to becoming an actual thing, countries will again be looking to kick-start their economies and spot and contract LNG prices will once again be on the rise.

According to DISER, Australia exported some $47 billion of LNG in 2019–20, a figure way down on the previous year, in fact 4.6 per cent lower than 2018–19.

Australia’s LNG export earnings are forecast to fall back sharply again in 2020-21 by 26 per cent to $35 billion.

“Oil prices are a key sensitivity for Australian LNG export earnings, and there is substantial uncertainty underpinning the outlook for oil prices,” DISER said.

COVID-19 and the inability of OPEC+ countries to play nicely have resulted in wild fluctuations of oil prices throughout 2020, although this instability has abated since May 2020 that still suggests a high degree of uncertainty in the short-term.

“This uncertainty presents significant risks to the outlook for the Australian commodity sector,” DISER explained.

“Although Australia is not a major oil producer or exporter, almost three quarters of Australian LNG exports are sold under oil-linked long-term contracts.”

It has to be of little surprise that China is mentioned throughout – and in most economic analysis – as the country is an important trade partner to most others.

However, a significant factor to be included in any global economic equation has to be the probability of a Donald Trump re-election.

When elected in 2016, Trump had his sights on a trade war with China, and the upshot is that for the majority of 2019, Australian trade with China was negatively affected by tensions with the US.

This wasn’t helped by our own Prime Minister rattling the Chinese COVID-19 cage by calling for an investigation into the pandemic spread.

Since then there has been a Sino challenge to the import of Australian barley, beef, and most recently wine.

Although these commodities don’t lend much to the omnipotent Chinese infrastructure build as those we dig out of the ground, they do reflect how the country’s elite wish to enjoy the western things in life.

Trump, if you will pardon the pun, is the Joker in the pack and his possible re-election could extend the ongoing trade tensions that were in place before we all caught the nastiest of colds.

How Will Lithium Supplies Meet Forecast Demands?

GUEST COMMENTARY: Many equity market and lithium industry analysts have seized on recent statistics for lithium supply and demand as indicative of long-term market trends. By Adrian Griffin managing director of Lithium Australia.

They see the rapid increase in hard-rock production, combined with a slower-than-anticipated uptake of electric vehicles (EVs), as a sure sign that the sky is about to fall in on the lithium price.

This position has led to forecasts of a glut in supply that will send the value of lithium, and the chemicals produced from it, tumbling fast.

Closer examination, however, reveals this to be far from the truth.

If global demand for lithium-ion batteries grows beyond the pundits’ wildest expectations, which it seems it may, then conventional sources of lithium supply simply will not cope with demand.

How then might ‘infinite’ lithium supply be achieved?

Unconventional sources will have to fill the gap.

But how, and when, such sources will be exploited are the fundamental questions.

The answers to those questions are not yet clear, as the sector remains captive to misinformation, misinterpretation and misunderstanding.

Culpable are corporates and governments – large and small – jockeying for a larger slice of what is anticipated to be a very large pie, the next global industry.

For example, while ‘experts’ debate the rate of uptake of lithium-powered vehicles, China fiddles with its EV subsidies.

Already, converters of spodumene – a common mineral rich in lithium – struggle to cope with adding capacity or planning future expansions. Yet we are told there is an oversupply of spodumene concentrates.

These are short-term aberrations, but as legislative changes pre-empt the banning of internal combustion engines around the world, it is apparent that any perceived oversupply of lithium may actually be short-lived.

Taking a longer-term view, some 3.5 million tonnes of lithium carbonate equivalent (a common measure of value employed in the lithium industry) will be required annually just to power the EVs needed to meet the legislative requirements in place from 2030 or thereabouts.

Factor in growing demand for lithium for energy storage and electronic goods and it becomes harder and harder to realistically envisage current and planned lithium operations meeting that demand.
So, where will the ‘new’ lithium come from?

Current mining expansion will not meet lithium demand longer term.

As mines mature, production will dwindle.

New mines targeting lower grades can fill demand gaps, but alternative sources of lithium may prove more attractive as genuine supply shortages put pressure on conventional production.

As Earth’s ‘throwaway society’ matures and (hopefully) develops a culture of custodianship for the planet, recycling will replace new materials as the preferred source of supply.

When the market matures to the point of product saturation, with continual expansion no longer required, demand for – and the recycling of – lithium will synchronise.

If that does occur, newly mined material will only be necessary to top up that regained through recycling.

Unfortunately, such a scenario seems a long way off, and if global population continues to increase by around 1.07 per cent a year (82 million people) it may never be realised.

In the meantime, an exponentially increasing demand for lithium will have the industry scratching its collective head about new sources of supply.

So, what might some of those sources be? Options include the following.

Seawater;
Geothermal and oilfield brines;
Spent lithium-ion batteries;
Lithium clays;
Spodumene tailings; and
Lithium micas found in pegmatites and greisen.

Let us explore each option.

Seawater contains lithium in very low concentrations (approx. 0.17 parts per million).

Due to the large volumes of water that would be required, evaporation ponds will not work commercially.

Also, seawater contains many other dissolved minerals, so traditional separation technologies would involve not only huge energy consumption but also fouling of the filtration media or regenerants.

If the recovery issues for seawater can be resolved, its commercial advantages will centre on location and its ubiquity.

In fact, exploiting seawater as a source of lithium could resolve much in the way of political uncertainty and security risks and in so doing enhance sustainability.

Geothermal and oilfield brines have been much studied, but their low lithium concentrations present processing challenges and, with oilfield brines, the expense of pumping from great depths. Japan and NZ have achieved geothermal brine success, but key US efforts have not.

In the UK, hot springs in old mine workings have been found to contain lithium and this potential source is being investigated.

Spent lithium-ion batteries – worldwide, enthusiastic adoption of lithium-ion batteries in huge quantities is causing great environmental concern, since once depleted most end up in landfill.

Presently, only nine per cent are recycled.

In Australia, the figure is less than three per cent.

Right now, smelting is the main means of recovering the metals these batteries contain, but the lithium is usually lost in flux or off-gas.

Research into lithium recovery through condensation of the off-gas from such smelting is currently underway, as is the development of more efficient recovery processes that will make recycling of lithium-ion batteries a potentially significant new source of lithium (as well as other energy metals).

Lithium clays, while low-grade compared to conventional hard-rock lithium deposits, are garnering attention.

Mexican deposits have been metallurgically assessed and future production from the region is anticipated.

Other lithium clay deposits – including in Nevada – contain both lithium and boron, but recovery from such deposits remains very energy-intensive.

Spodumene tailings – given the ways in which spodumene mineral separation circuits perform, and how commercial concentrates are produced, most pegmatite orebodies offer a relatively low lithium yield in terms of tonnes of ore mined.

Conventional conversion processes are energy-intensive and feed rates dependent on relatively coarse particle size, so much of the fine spodumene is discharged to tailings.

Emerging processing technologies, however, can improve recovery rates for both coarse and finer particles, thereby limiting waste and utilising material previously considered unsuitable for conventional lithium processing.

This represents a great industry opportunity.

Lithium micas are the world’s most abundant lithium minerals.

Lepidolite in particular is commonly associated with tin, tantalum and tungsten mineralisation.

When those elements are mined, vast quantities of lithium micas are currently discharged as waste.

Given that extraction and some processing costs are already covered, lithium mica waste streams become an obvious target for lithium production, but further processing innovation is required.

Adrian Griffin is managing director of Perth-based, ASX-listed lithium disruptor, Lithium Australia NL (ASX: LIT), which is building a business that integrates all aspects of the lithium supply chain, the aim being to ‘close the loop’ on the energy-metal cycle.

Adrian is available on 0418 927 658.

 

Australian Commodities In The Spotlight

COMMODITY CAPERS: According to the nation’s chief economist the prices of Australia’s major resource commodities have hit seven-year highs.

However, the news isn’t all good with prices most likely to drift lower due to less demand and growing supplies.

The Roadhouse takes a quick look at what our number one bean counter has to say about the fortunes of some commodities.

IRON ORE

The chief anticipates the iron ore price averaging around US$67 a tonne in 2019, mainly due to the supply shock suffered from the aftermath of the Vale Brazilian dam collapse lifting prices in the first half of 2019.

The impact of lower supply will be good for domestic producers, if the weather holds, and will be partly offset by weaker demand for seaborne iron ore, stemming from a slight decline in steel production in China.

Stronger seasonal steel production should support high iron ore prices through the middle of 2019.

Key risks to the outlook for the iron ore price include the trajectory of Chinese import demand, as well as a potentially larger than expected decline in Brazil’s production.

URANIUM

Uranium prices have been on the rise of late, increasing to an average of US$28.90 a pound in January, a healthy premium to its low point of US$18 a pound in November 2016.

Most of the increase took place in the second half of 2018, but prices continued to lift in early 2019.

“Very large inventories of uranium are still held around the world, and this is expected to act as a check on the recent price surge,” the chief said.

“However, prices are still expected to rise slowly, as pressure on inventories builds over time.

“A substantial number of projects were postponed or cancelled during the record run of low prices, which could lead to a prolonged supply crunch in the years to come.”

GOLD

Our economist indicates that gold prices are projected to rise by around 2.1 per cent in 2019, to an average US$1,326 an ounce (real terms).

This is to be driven by higher investor demand for gold as a safe haven asset.

Slower economic growth is forecast across all economies, both advanced and emerging.

With further interest rate rises in the US either delayed or unnecessary, the greenback is likely to weaken modestly, removing a key hurdle to higher gold prices.

“Over the five-year outlook period, gold prices are projected to rise around 1.6 per cent a year (real terms), to US$1,428 an ounce in 2024, supported by slowing economic growth in some major economies, weakness in world equity markets, and declining mine supply after 2020,” the chief said.

COPPER

Copper prices demonstrated signs of strength early in 2019, after a long period of decline during the latter half of 2018 due to US-China trade tensions producing a substantial fall in copper prices from a mid-year peak.

Copper prices have not fallen much since July, but there hasn’t been any great recovery on the horizon.

Prices at the end of 2018 were 15 per cent below the level at the start of the year, at just over US$6,000 these have lifted so far in 2019 but remain well below what market conditions would normally suggest.

NICKEL

Nickel prices fell below US$12,000 a tonne in the first quarter of 2019 after prices enjoyed strong demand in the first half of 2018, until the pesky US-China trade tensions reversed this strength in second half of the year, resulting in prices falling for six months in succession.

“Nickel demand is expected to rise steadily over the outlook period, growing from 2.3 million tonnes in 2018 to 2.8 million tonnes by 2024,” the chief said.

Nickel demand is expected to rise with electric vehicle production by 2022 once prices of electric vehicles start to come down and climate change-related incentives and penalties take hold around the world, causing an anticipated global electric vehicle uptake.

LITHIUM

Prices for lithium hydroxide peaked late 2018 before falling slightly due to global oversupply and a decline in prices in China.

Lithium prices are projected to drop further as inventories continue to build, but the chief expects this will likely reverse in later years as inventories start contracting in the 2020s.

“The removal of bottlenecks at the refining stage should start to improve market and price stability for lithium,” the chief said.

“Lithium demand will be driven by electric vehicle sales, which are expected to keep rising as their prices approach those of petrol vehicles.”

 

 

Gold Predicted to Continue Price Rise

COMMODITY CAPERS: According the Office of the Chief Economist, gold prices are projected to rise gradually over the next five years, to an average US$1,428 an ounce (2019 dollars) in 2024.

This is predicted to maintain gold’s status as a haven asset and in turn fuel investor demand over the short term as world mine supply declines from 2020.

In its March Resources and Energy Quarterly Report, our chief economist reported that world gold production is projected to fall after 2020, as some long and large established mine projects in Australia and other major gold producing countries reach the end of their life.

Global gold consumption is projected to fall after 2020, driven by falling central bank purchases and industrial demand, however the demand for jewellery in countries such as China and India is expected to offset this decline.

The value of Australia’s gold exports is forecast to peak in 2019–20 at nearly $22 billion (in 2018/19-dollar terms), driven by higher prices and export volumes.

Export values are projected to decline to $16 billion by 2023–24, due to lower domestic production and export volumes.

Australian gold mine production is forecast to increase by 6.8 per cent in 2018/19 and 6.9 per cent in 2019/20, reaching a peak of 346 tonnes in 2019-20.

The chief rattled off all the usual suspects, such as Northern Star and Evolution, but also had room for a special mention for Gold Road Resources and its Gruyere gold mine that is due to come on stream early this year with forecast annual production of 8.4 tonnes.

Delegates attending the RIU Sydney Resources Roundup in May will find there will be plenty of up and coming gold exploration plays to get their teeth into.

Breaker Resources NL (ASX: BRB)

Breaker Resources has been busy at the company’s Lake Roe project, 100 kilometres east of Kalgoorlie in Western Australia.

Drilling undertaken by Breaker extended the strike length of mineralisation at its Bombora gold discovery by 700 metres to 3.2 kilometres whilst enhancing its underground mining potential.

Breaker has continued drilling with four rigs in action to extend and upgrade the Bombora deposit, and to identify the outer limits of initial open pit mining to finalise an open pit Pre-Feasibility Study (PFS).

The company plans to update the existing 1.1 million ounce gold Resource in the June quarter that will include results from drilling the 700m of strike length which has been added since the Resource was last calculated.

After two years of resource drilling, Bombora remains open in every direction and new zones of mineralisation were still being discovered.

Cygnus Gold Limited (ASX: CY5)

Cygnus Gold has a portfolio of 100 per cent-owned projects in the Wheatbelt region of Western Australia.

The projects range in developmental stage from early exploration areas through to advanced, drill-ready targets where high-grade gold results were achieved in drilling by previous explorers.

Recent activity has been happening within the Stanley project, with drilling targeting the Kepler Zone.

Cygnus Gold identified the Kepler Zone via a detailed review of drillhole STRC0002, drilled in late 2018 that ended in mineralisation.

Resampling of the original mineralised intercepts returning encouraging results.

The Kepler Zone is adjacent to Cygnus’ shallow high-grade Bottleneck gold prospect and the drilling program will initially target a metadacitic rock unit that has only been lightly tested by deeper drilling at Bottleneck.

The drilling is targeting extensions to the McDougall South prospect along the Stanley greenstone belt where drilling intersected gold mineralisation associated with a zone of anomalous gold within a structural zone along the central Stanley fold structure.

De Grey Mining LTD (ASX: DEG)

De Grey Mining is running an exploration program focused on the upgrade and expansion of known resources, as well as in the discovery of new deposits at the company’s Pilbara gold project south of Port Hedland in the Pilbara Region of Western Australia.

De Grey Mining believes in the potential of the Pilbara gold project to define additional resource ounces along the existing 200 kilometres strike length of mineralised shears zones, throughout the 1,500 square kilometre landholding.

Exploration carried out by De Grey to date has entailed detailed shallow RC and diamond drilling of approximately 10 per cent of the shear zones around 100m to 150m, from which the company has identified approximately 1.4 million ounces of gold resources.

The largest deposit within the project are is the 6.37 million tonnes at 1.8 grams per tonne gold for 377,300 ounces Withnell deposit.

Recent drilling at Withnell continued to enhance its resource potential, returning:

LODE 1 (West)
8 metres at 20.11 grams per tonne gold from 168m, including 4m at 38.5g/t gold;

LODE 1 (East)
5.47m at 4.57g/t gold from 293m;

LODE 2
16m at 4.21g/t gold from 94m, including 1m at 29.3g/t gold; and

LODE
4m at 16.4g/t gold from 240m.

De Grey considers Withnell, along with the Toweranna and Wingina deposits to have potential to increase underground resources to positively impact the expanded 2 million tonnes per annum Pre-Feasibility Study (PFS) currently underway.

First Au Limited (ASX: FAU)

First Au is drilling at the company’s 100 per cent-owned Gimlet gold project, just outside Kalgoorlie in Western Australia.

First Au is following up a RC drilling program it completed in December 2018 and earlier aircore drilling that returned several strong high-grade gold intersections, including 4 metres at 393 grams per tonne gold from 52m.

Early results from the RC drilling outlined mineralisation over 400m of strike length encouraging FAU to begin work on a potential JORC Resource.

Although primarily focussed on targeting shallower oxide mineralisation, a decision to push the drilling deeper led to the claim of a new lode gold discovery, which appears open at depth.