By Chris Berry
A Major Hurdle Cleared
When I wrote about EMC Metals (EMC:TSXV, EMMCF:OTCBB) last month, the main issue facing the company was clear: raise approximately $2.6 million by the end of June or risk losing control of the Nyngan scandium deposit. This $2.6 million was broken down in two pieces: AUD $1.4 million was due to EMC's former JV partner to complete the buyout of the JV and award EMC 100% ownership of the Nyngan deposit. In addition to this, $1.2 million was outstanding on a promissory note held by investors close to the company which was due at the end of this month and used Nyngan as collateral. Should EMC fail to raise sufficient funds, they risked losing control of Nyngan.
This would have been significant for a number of reasons including the fact that the deposit is truly world class - a phrase I despise, but I can't think of another way to describe it.
By Chris Berry
- Precious metals roared higher yesterday.
- This was presumably due to a confluence of events including Iraq dissolving into civil war, more unrest in the Ukraine, and Fed Chair Yellen's dovish remarks regarding keeping rates low for an extended period.
- Lest we get too excited, base metals were left in the dust and bond yields fell precipitously.
- These two reliable indicators of growth (and inflationary expectations) lead us to believe that what happened yesterday was either short covering or a profit taking opportunity and nothing more.
Plus Ca Change…..
I'll admit to being surprised at the move in gold and silver yesterday. It's almost as if people were looking for an excuse to take metals prices higher.
Here is the link to Mike's most recent presentation to the FFIEC in Arlington, Virginia earlier this week. It is lengthy, but discusses numerous topics including the Inflation/Deflation debate, Commodities, Banks, Jobs, Currencies, Deficits, and Emerging Markets.
You can download a copy here.
By Chris Berry
Separate and Unequal
In a note I wrote last week, I discussed the danger in assessing all critical metals together rather than individually. I am just back from serving as the Chair of the 6th Lithium Supply and Markets Conference hosted by Industrial Minerals. Of the many takeaways, this idea of analyzing the prospects for these metals separately is no more evident than in the case of lithium.
In the wake of Tesla’s (TSLA:NASDAQ) Gigafactory announcement, many lithium junior companies, who were left for dead, were given a new lease on life. I have written in the past about the challenges I think must be overcome to make the Gigafactory a reality, and am still unconvinced that a junior mining company not close to production can participate and benefit its shareholders, but we shall see. I try and make a habit of not betting against terminally successful visionaries like Elon Musk.
It is clear that the automotive sector is the real growth driver for lithium, as David Merriman of Roskill pointed out in his remarks:
By Chris Berry
There are convincing arguments to be made for both embracing and shunning the junior sector at this point in the cycle. At risk of flip-flopping, our take is more nuanced, but throwing the “baby out with the bathwater” at this stage is an unwise move.
I have said since Q4 2013 that I believe most commodity markets have finally bottomed. This does not mean that we have turned the corner and the commodity super cycle will pick up where it left off. That said, I think it’s worth examining the forces that brought us to this point and determining how to navigate in the current market environment.
A Band Aid on an Amputation
Recent attempts by global central banks to “fix” the global economy have clearly failed. One wonders if they can succeed in this task given their present set of tools. Flooding the global economy with excess liquidity thanks in part to a low (or zero) interest rate environment has only masked the challenges we face.
By Chris Berry
Arianne Phosphate (DAN:TSXV, DRRSF:OTCBB)
Good news out of Arianne Phosphate (DAN, TSXV, DRRSF:OTCBB) this week with the announcement of a mineral resource estimate on the Nicole Zone of the Lac à Paul phosphate project.
As a refresher, the Lac à Paul project hosts several distinct zones and the addition of the inferred resource on the Nicole Zone should be beneficial to the company as it can positively affect the already promising project economics.
By Dr. Mike Berry
Chris and I have spent several months redefining our approach to the natural resource, life science, and high tech discovery markets. Chris is focusing on Energy Metals and has honed his attention to portfolio trading strategies across the entire value chain. We believe that we are still in the midst of an economy that has not, and will not, achieve escape (growth) velocity for many months or possibly several years.
Given the Fed’s money printing proclivities we should be seeing significant and sustainable economic growth. That is not yet the case. The Fed, through the FOMC, is now walking on egg shells. Members of the FOMC are as divisive on the Hawk / Dove spectrum as ever. The Fed’s goals are constantly being redefined.
