Wall Street Silver
Sun, 07/24/2022 – 04:55
It’s official: the economy isn’t going into recession.
That pronouncement comes straight from the same top Biden administration official who last year declared that inflation would be transitory.
On Sunday, Treasury Secretary Janet Yellen went on NBC’s “Meet the Press” and said, “This is not an economy that is in recession.”
Interpretations of what constitutes a recession differ among economists. Some point to negative Gross Domestic Product readings already in the books as confirmation a recession has started. Others merely see a slowdown.
But it doesn’t take an economist to see warning signs of recession abounding. Households see their costs of living rising much faster than their incomes. Businesses, in turn, see weakening sales numbers and tighter margins, pushing many to take drastic cost-cutting measures.
The Alignable small business network’s July hiring report showed that 45% of small businesses are halting new hiring.
According to the report, “This represents a significant hiring shift, and is largely a reaction to mounting labor costs, skyrocketing inflation, fears of a recession, and rising interest rates.”
Large publicly traded corporations are giving of recession warnings. The S&P 500 has fallen over 20% from its high – a classic bear market indicator and recession precursor.
Investors are worried the Federal Reserve’s rate hikes will kill the economy.
And historically, whenever the Fed has embarked on a rate-hiking campaign of this magnitude, it has caused the economy to roll over.
But to top federal officials, none of these signs of a recession are even visible?!
“You don’t see any of the signs,” Janet Yellen insisted during her Sunday media rounds. “A recession is a broad-based contraction that affects many sectors of the economy. We just don’t have that.”
Investors who don’t buy the official story on the economy should prepare accordingly. Whether it’s just a mild recession or a total economic collapse, a deteriorating economy will eventually force the Fed to change course on rate hikes.
Expectations for further tightening have helped push the U.S. Dollar Index higher and precious metals prices lower in recent weeks. However, these trends showed signs of reversing last week.
The Fed will surely hike rates again at is upcoming policy meeting on Wednesday. Markets have already priced that in.
What they haven’t priced in is the Fed pivoting away from inflation fighting and toward digging the economy out of a downturn.
Fed chairman Jerome Powell won’t make an announcement to that effect. But markets will interpret any subtle shifts in language toward dovishness to mean central bankers are, in fact, worried about a recession despite official denials.
Once speculation of a Fed pivot gets any confirmation, it could be curtains for U.S. dollar strength – and all clear for gold and silver markets to take off.
Source: Streetwise Reports 07/27/2022
Shares of Northern Dynasty Minerals Ltd. traded more than 22% higher after the Vancouver mining firm reported it entered into a life-of-mine royalty agreement for non-core metals which may provide up to $60 million in proceeds.
Vancouver explorer and developer Northern Dynasty Minerals Ltd. (NDM:TSX; NAK:NYSE.MKT), which through its wholly owned subsidiary Pebble Ltd. Partnership is focused on advancing the Pebble Project in southwest Alaska, today announced that “it has entered into an agreement with an investor to receive up to $60 million over the next two years, in return for the right to receive a portion of the future gold and silver production from the Pebble Project for the life of the mine.”
The company stated that upon signing the agreement it received the first initial payment of $12 million from the investor (royalty holder).
The Pebble Partnership is a U.S. entity that is solely focused on advancing the world-class Pebble deposit towards permitting, construction, and development into a modern mining operation.
The Pebble Project is considered to be one of the world’s largest undeveloped copper-gold-molybdenum-silver-rhenium resources with an estimated measured and Indicated resource of 6.5 billion tonnes. According to the most recent estimates, the Pebble Deposit is said to contain 57 billion pounds copper (57Blb Cu), 71 million ounces gold (71 Moz Au), 3.4 Blb molybdenum (Mo), 345 Moz silver (Ag), and 2.6 million kilograms rhenium (2.6 Mkg Re). In addition, the deposit includes an Inferred resource of 4.5 billion tonnes thought to host 25 Blb Cu, 36 Moz Au, 2.2 Blb Mo., 170 Moz Ag, and 1.6 Mkg Re, along with the added potential for palladium (Pd) extraction which also is evident in the deposit.
Northern Dynasty Minerals’ President and CEO Ron Thiessen stated, “It has become clear to us that to develop a world-class mineral deposit like Pebble requires time, patience, and sufficient liquidity to successfully navigate the established legal process and continue ongoing efforts to work with the people in the region … This financing gives us the financial wherewithal to keep fighting against what we consider to be unfounded interference by U.S. Federal Government agencies in an otherwise well-established, legal permitting process, as well as to deal with challenges from well-funded parties from outside the area that lack scientific or other factual studies to support their opposition.”
The company stated that under the terms set out in the Agreement that upon signing the Royalty Holder made an initial required payment of $12 million. In return, the investor will be paid 2% of the payable gold production and 6% of the payable silver production from the Pebble Project based upon a predetermined formula that provides that “in each case after accounting for a notional payment by the Royalty Holder of $1,500/oz Au and $10/oz Ag, respectively, for the life of the mine.” Northern Dynasty advised that in the event that future spot prices rise to higher than $4,000/oz Au or $50/oz Ag, the firm would share in 20% of the excess price for either metal.
The report noted that the agreement provides the Royalty Holder with the option to invest additional funds in $12 million increments up to a total of $60 million under the same specified terms for two years after signing. If the investor decides to exercise these rights, they would be allowed to acquire up to 10% and 30% of the payable gold and silver production, respectively.
The firm’s EVP of Corporate Development Adam Chodos commented, “It was important to us that we improve our liquidity without issuing equity at what we consider depressed prices. We are pleased to reach an agreement that can raise significant capital over the next two years in return for the right to buy a small portion of future, non-core gold and silver production from the Proposed Project while keeping 100% of the copper production.”
CEO Thiessen added, “As I have said many times before, a large amount of copper is critical for the generation and transmission of electricity, and we believe the world needs to develop the few world-class copper assets that have been discovered in order to have any chance of meeting its green energy goals…The Pebble Project represents an enormous amount of value, both to Alaskans and to the rest of the U.S., and we believe that value should increase significantly as the expected supply/demand imbalance leads to future copper price increases.”
Northern Dynasty is a Vancouver, B.C.-based mineral exploration and development firm. The company’s primary asset is the Pebble Project in Alaska which it manages thru its 100% owned Pebble Partnership domiciled in Anchorage, Alaska. The firm indicated that the Partnership owns a 100% interest in a contiguous block of 1,840 mineral claims covering approximately 274 sq. mi. in Alaska which includes the Pebble deposit. The company claims that the Pebble property is “the world’s largest undeveloped copper-gold-molybdenum-silver-rhenium resource.”
Northern Dynasty Minerals started the day with a market cap of around $141.7 million with approximately 529.8 million shares outstanding and a short interest of about 2.5%. NAK shares opened nearly 5% higher today at $0.28 (+$0.0125, +4.67%) over yesterday’s $0.2675 closing price. The stock has traded today between $0.2725 and $0.3619 per share and is currently trading at $0.3271 (+$0.0596, +22.28%).
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Disclosures
1) Stephen Hytha wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with None. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
( Companies Mentioned: NDM:TSX; NAK:NYSE.MKT,
)
Source: Adrian Day 07/25/2022
Expert Adrian Day discusses recent purchases from two royalty companies, as well as preliminary quarterly reports from several gold companies that he considers top buys right now.
Preliminary second-quarter results from gold companies are coming out. For most of the major miners, production has been broadly in line with forecasts, with record revenues for some (although there have been some shipping delays), while costs have risen modestly; next quarter could see higher costs.
We will have more information once the companies release full results and hold their conference calls. There have also been some
significant acquisitions in the royalty space.
Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) has provided a $352 million financing package to the well-regarded G Mining on its Tocantinzinho Project in Brazil, its largest gold stream investment since 2018. The financing includes a stream on 12.5% of the gold (to be reduced to 7.5% after the anticipated end-of-mine life) as well as a loan and equity.
This financing represents over 75% of the total capex to build the mine, and the company now has more than sufficient funds available, with production expected in the second half of 2024.
One of the significant aspects of Franco’s investment is its “right of first refusal” on future G Mining projects.
Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) also made a major acquisition by buying Great Bear Royalties Corp. (GBRBF:OTCMKTS) and its 2% royalty on Kinross’s Great Bear project. It paid virtually CA$200 million in cash, representing a 43% premium to its 20-day average price.
Kinross famously acquired Great Bear at an early stage, without a resource estimate let alone a PEA or feasibility. However, Great Bear is potentially one of the largest undeveloped gold projects in Canada so is an attractive acquisition.
On an asset basis, Royal’s acquisition is accretive. In order to gain comfort with the asset and the price it paid, Royal obtained the right to examine Kinross’s non-public data on the deposit in exchange for Kinross obtaining the right to buy back one-quarter of the royalty. Separately, Royal reported attributable “gold equivalent ounces” (“GEOs”) above expectations, with full-year guidance of 315,000 to 340,000 GEOs unchanged.
Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) reported 22,240 “GEOs” received in the second quarter, up 22% from the first quarter and a record, though revenues were slightly lower than expected. The second quarter included revenue from the Renaud diamond mine after a long period of restructuring.
Two mines are expected to ramp up through the second half, which should result in higher overall attributable production.
Altius Minerals Corp. (ALS:TSX.V) reported a record quarterly revenue of $28.2 million, ahead of the previous record in the first quarter, on the back of higher-than-expected revenue from thermal coal and potash; base metal revenues were lower, due to metal prices.
The second half of the year may see lower revenues, however, due to expected lower metals and iron ore prices.
Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) reported production more-or-less in line, with strong performance across all assets. Copper production rose on Q1 while gold production was slightly down. Costs are expected to come in 2-4% above the first quarter, which is in line with Barrick’s projections; 2Q costs are expected at $857 cash costs and $1,211 all-in sustaining costs.
Barrick reiterated its full-year guidance of 4.2 to 4.6 million ounces of gold and about 450 million pounds of copper. The first half accounted for about 45% of the anticipated full-year output, which the company had already indicated would be the case.
Separately, the Chilean Supreme Court upheld a lower court decision shutting down Barrick’s massive $8.5 billion Pascua-Lama project straddling the Chile-Argentina border. Barrick has not commented on this ruling yet and any future for the portion of the project in Argentina is unclear. By far the largest part of the pit lies in Chile.
The company also announced that the first phase of the Reko Diq copper/gold project in Pakistan, which will cost about $4 billion, is expected to begin next month, with the second phase about $3 billion, after an updated feasibility study.
The study will take two years, with the first production expected in 2027-2028. The project is 50% owned by Barrick with the other half owned by various Pakistani government entities and companies.
Barrick, which is the operator, is targeting 50% debt financing.
Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) received bad news when Vale reported that copper production from Salobo was significantly below expectations, by almost 30%, and it has also lowered its full-year guidance. This is the second quarter in a row with lower production (about 20% in the first quarter).
A stream on Salobo’s gold byproduct is Wheaton’s largest asset, representing about 26% of its revenues last year. Operational difficulties could also the schedule of the Salobo II expansion, which had been on track to commence production by the end of the year.
Separately, Wheaton has signed a “sustainability-linked” amendment to its $2 billion undrawn credit facility, whereby the rate of interest the company will pay is based on three “ESG” criteria.
We are not fans of this kind of debt. In Wheaton’s case, the criteria are emissions from third-party mines (which are beyond Wheaton’s control); the percentage of women and minorities on its board and in management (which in my view is irrelevant window-dressing); and the company’s S&P ESG score.
Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) reported its second-quarter production results, with silver in line while gold was somewhat lower than expected with both Lindero and Yaramoko producing under expectations. However, significantly, stacking at Lindero was in line, so production may catch up. Management reiterated full-year guidance.
There were no meaningful issues at any of its mines.
Midland Exploration Inc. (MD:TSX.V) announced a one-year extension of the “generative phase” of the Strategic Alliance with a unit of BHP, the world’s largest resource company, with additional funding from BHP of up to $1.4 million. The Alliance is looking for nickel across Nunavik, Quebec.
This agreement is very positive, indicating strong interest from BHP.
Lara Exploration Ltd. (LRA:TSX.V) said that Hochschild had relinquished its option to buy the Corina gold project in Peru. The move was not unexpected, but once Lara has reviewed the results of the drilling, it could seek another partner.
All of the companies discussed above are good buys at current levels. In addition, this week, top buys include Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ) and Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE).
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Adrian Day’s Disclosures
Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2022. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.
Disclosures
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services, or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees, or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in the securities mentioned. Directors, officers, employees, or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company release. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Franco-Nevada Corp., Osisko Gold Royalties Ltd., Altius Minerals Corp., Barrick Gold Corp.,Fortuna Silver Mines Inc., Midland Exploration Inc., Lara Exploration Ltd., Pan American Silver Corp., Wheaton Precious Metals Corp., and Agnico Eagle Mines Ltd, companies mentioned in this article.
( Companies Mentioned: AEM:TSX; AEM:NYSE,
ALS:TSX.V,
ABX:TSX; GOLD:NYSE,
FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE,
FNV:TSX; FNV:NYSE,
LRA:TSX.V,
MD:TSX.V,
OR:TSX; OR:NYSE,
RGLD:NASDAQ; RGL:TSX,
WPM:TSX; WPM:NYSE,
)
