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EV sales red-line as lithium chase continues

2021.11.20
When we turn the calendar on 2021 in a few weeks, the year will be remembered not only for its extreme weather, but the progress that was made…

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EV sales red-line as lithium chase continues

2021.11.20

When we turn the calendar on 2021 in a few weeks, the year will be remembered not only for its extreme weather, but the progress that was made in vehicle electrification, considered a necessary step towards carbon emissions abatement in a rapidly warming world.

Transportation makes up 28% of global emissions, so transitioning from gas-powered cars and trucks to plug-in vehicles is an important part of the plan to wean ourselves off fossil fuels.

A 2020 World Bank report entitled ‘The Mineral Intensity of the Clean Energy Transition’,  estimated that production of minerals underpinning the clean energy shift, such as the battery metals lithium, graphite and cobalt, would have to increase by nearly 500% by 2050 to meet global demand for renewable energy technology.

Cleaning up the planet, and “going green” will not be possible without major reductions in carbon emissions from the two largest economies, the US and China.

President Biden is pushing forward on climate-oriented programs. His $1.1 trillion infrastructure spending package, recently passed by Congress, is aimed at transitioning the US transportation system to battery-powered vehicles and supporting renewable wind and solar energies over carbon-based sources like coal and natural gas.

Vehicle electrification is a major part of the legislation’s focus. It would provide $7.5B for low-emissions buses and ferries, and aims to deliver thousands of electric school buses to districts across the country. Another $7.5B would go towards building a nationwide network of plug-in EV chargers.

This past August, Biden signed an executive order requiring that half of all US new vehicle sales be electric by 2030.

$65 billion is earmarked for rebuilding the electrical grid including thousands of new miles of power lines and expanding renewable energy, according to the White House.

From an initial social spending/ climate package of $3.5 trillion, panned by Republicans for containing a wish-list of “progressive” priorities, Biden’s Build Back Better legislation is now roughly $2 trillion and has as its centerpiece over $550 billion to tackle climate change and the transition to clean energy. The legislation was passed on Friday by the House of Representatives and is heading to the Senate for a vote.

China is also moving forward rapidly on its plans to electrify and decarbonize. The country is the world leader in electric vehicles and battery production.

President Xi Jinping a year ago announced the country is aiming for carbon neutrality by 2060.

EV growth explosive

EVs are forecast to make up about 15% of new car sales by 2025, doubling to 30%, or 30 million, by 2030.

Power Technology reports electric-vehicle sales have more than doubled, increasing 160% in the first half of 2021 compared to H1, 2020. This 2.6 million units represented 26% of total new car & truck sales.

1.1 million were sold in China, the top electric-vehicle market, compared to 250,000 sold in the United States.

An analysis from IDTechEx quoted by the publication forecasts EV sales in 2021 are on track to surpass 5 million passenger cars.  “If they do, it will mean an astonishing growth rate of ~86% CAGR since 2011,” the report reads. 

Virta, which claims to be the fastest-growing electric vehicle charging platform in Europe, operating in over 30 countries, is more aggressive in its 2021 EV sales forecast.

“Carried by a decarbonization challenge most leading nations now take seriously, 2021 is a game changer in the history of EV sales and it is expected that 6.4 million vehicles (EVs and PHEVs combined) will be sold globally by the end of the year. It would then represent a 98% year over year increase,” the company states in ‘The Global Electric Vehicle Overview in 2022: Statistics and Forecasts’.

It notes that in 2019, the number of EVs was only 9% higher than in 2018, “a clear deviation” from the growth rates of the previous six years which were between 46% and 69%. The slower uptake was due to decreased sales in the two biggest markets, the US and China.

The big surprise was 2020. Despite the decline in all vehicle sales categories last year due to the pandemic, global EV sales grew by 43% from 2019 and electric-car marketshare, also known as the penetration rate, hit a record 4.6%.

Projecting further out, Virta cites the International Energy Agency’s (IEA) Global EV Outlook 2021, whose Stated Policies Scenario suggests that by 2030, the global EV stock, excluding two- and three-wheelers, will reach nearly 145 million and account for 7% of the total vehicle fleet.

The more ambitious [email protected] has, plainly, 30% of all vehicles becoming electric by 2030, putting global sales at 43 million, or almost double that of the Stated Policies Scenario.

Power Technology notes that market penetration has been mostly confined to China, North America and Europe, with the rest of the world lagging significantly. Surprisingly, given the country’s auto-manufacturing history and strength, Japanese cars last year accounted for less than 5% of battery-electric cars sold worldwide.

Virta expects Europe to reach the 14-million milestone by 2025, followed by 33 million by 2030 in low estimates, or 40 million in high estimates. From 2035 onward, the company expects 100% of new cars in Europe to be electric.

Source: EV Volumes

Breaking the data down further, Virta says Europe and China accounted for the most electric-vehicle registrations for the first half of the year, a respective 1.06 million and 1.14 million, followed by the United States at 297,000 new registrations.

Source: EV Volumes

In Europe, where numbers are growing faster than elsewhere, the increase in registrations is explained by stimulus measures introduced by many European government governments. The European Commission is seeking to have at least 30 million electric vehicles on the roads by the end of this decade – a large increase from the current 1.4 million.

Sources: EV Volumes & Global EV Outlook 2021
Source: EV Volumes

It isn’t only electric cars and trucks that are increasing in popularity. According to Virta, “From public transportation to e-scooters: The entire transport industry is turning electric.”

For example in the US, e-bike sales have more than doubled in 2020, whereas in Europe, electric scooters are becoming more mainstream. The IEA’s Global EV Outlook 2021 found more than 100 European cities have started operating e-scooters.

China represents 99% of the world’s privately owned electric two and three-wheelers, out of a market of 290 million.

Heavy-duty electric truck registrations were up 10% in 2020. This is an important sub-market to penetrate, considering that, while large trucks only account for 10% of ICE vehicles, they are responsible for 70% of CO2 emissions.

Electric buses have also been increasing since 2020, with Virta noting that China registered 78,00 new e-buses in the past year, adding to a global fleet of 600,000 in 2020. Perhaps surprisingly, one of the global leaders in electric buses is Chile, which aims to electrify all its public transport by 2040.

As for charging infrastructure, Virta focuses on Europe, stating that in 2019 there were 175,000 public EV chargers, with the expectation that 1.3 million will be available in 2025 and 2.9 million by 2030. Faster chargers are reportedly becoming the norm, with European slow chargers being replaced by rapid, fast and ultra fast units.

More impressive EV sales statistics can be found in a recent report by McKinsey & Company. Starting with 2020, the consultancy notes that global sales exceeded pre-pandemic levels by the third quarter, with Europe and China achieving fourth-quarter sales increases of 60% and 80%, respectively, over the previous quarter, helping to drive global EV penetration to an all-time high of 6%. (higher than Virta’s 4.6%)

McKinsey’s numbers only go to the second quarter of 2021, when it says US EV sales increased by nearly 200% compared to Q2 2020, contributing to a domestic penetration rate of 3.6% during the pandemic.

Across the country, EV adoption hasn’t occurred evenly, with increased uptake tied to population and cities, unsurprisingly. California, says McKinsey, is the outlier, where electric-vehicle registrations shot up to 425,300 in 2020, representing about 42 percent of EV registrations in the entire country, according to the US Department of Energy’s Alternative Fuels Data Center. That’s more than seven times the rate of registrations for Florida, the state with the second-highest number of EVs registered.

The consultancy believes EV sales will continue increasing, propeled by government policies including the Biden administration’s stated goal that half of all new vehicle sales by 2030 be zero-emission; state-level adoption of credit programs; tougher emissions standards; and increasing electrification commitments from OEMs.

(Carmakers that comprise 57% of the current vehicle market have already announced ICE vehicle sales elimination dates that range from this decade to the year 2050 — McKinsey)

Sales could also be boosted via direct measures such as consumer tax credits on EV purchases, and the Bipartisan Infrastructure Framework, whereby the government has pledged $1.2 trillion for transportation and infrastructure spending over eight years, to be initially funded with $550 billion. As explained by McKinsey, the deal, which has been passed by Congress, includes $15 billion to speed up adoption of EVs and accelerate America’s EV market. The plan sets aside $7.5 billion to construct a nationwide EV charging network and another $7.5 billion for low- and zero-emission buses and ferries to replace school buses that run on diesel fuel.

In McKinsey’s estimation, the most likely EV-adoption scenario, would see EV sales comprising about 53% of all passenger-car sales by 2030.

If Electric Adoption continues to accelerate, EVs are likely to account for more than half of all US passenger car sales by 2030

If Electric Adoption continues to accelerate, EVs are likely to account for more than half of all US passenger car sales by 2030

As to the question of EV affordability compared to regular gas vehicles, the consultancy expects it will take until 2024 to 2026 to achieve cost parity as battery prices continue to decline.

Energy storage surge

A lithium-ion battery is a type of rechargeable battery technology common to portable electronics, electric vehicles and large grid-scale storage systems for renewable energy. 

These batteries consist of an anode, cathode, separator, electrolyte and two current collectors (positive and negative). The cathode contains lithium, either in the form of lithium carbonate or lithium hydroxide, while the anode is made up of graphite. There are no substitutes for either in a li-ion battery.

Researchers at Imperial College London developed a model to determine the lifetime costs of nine electricity storage technologies for 12 applications, between 2015 and 2050. The model predicted that the cost of lithium-ion batteries would fall far enough to beat pumped hydro energy storage – currently the cheapest way to keep energy on ice, as it were.

The finding opens up a potentially lucrative market for lithium and other metals that go into lithium-ion batteries, beyond electronics and EVs. The energy storage market was just 1.4 gigawatts (GW) worldwide in 2017 but it could reach 8.6GW by 2022, according to GTM Research. The US and China are currently the biggest supplies of stored energy and are expected to remain so until 2022, GTM Research said in a 2018 report.

A more recent forecast by BloombergNEF found that global energy storage installation is expected to be 20 times larger within a decade (358 gigawatts, or 1,028 gigawatt-hours compared to 17GW/ 34GWh).

“BloombergNEF’s 2021 Global Energy Storage Outlook estimates that 345 gigawatts/999 gigawatt-hours of new energy storage capacity will be added globally between 2021 and 2030, which is more than Japan’s entire power generation capacity in 2020,” the report reads. “The US and China are the two largest markets, representing over half of the global storage installations by 2030.”

Other top markets include India, Australia, Germany, the UK and Japan.

BloombergNEF

BNEF’s report suggests that over half (55%) of energy storage by 2030 will be for energy shifting, i.e., storing solar or wind power for release later. It also states that, while the industry is adopting multiple lithium-ion battery chemistries, the dominant one for energy storage is lithium-iron-phosphate (LFP).

According to BNEF, in 2021 LFP batteries were used more than nickel-manganese-cobalt (NMC) batteries, popular in EVs, for the first time, and they are expected to be the chemistry of choice until at least 2030,“driven by its dominant role in China and increasing penetration in the rest of the world.”

Although non-battery technologies such as compressed air and thermal energy storage are being developed, the report says batteries are expected to dominate the market at least until the 2030s, “in large part due to their price competitiveness, established supply chain and significant track record.”

Lust for lithium

Rising demand for lithium-ion batteries is stoking prices for the light element, which can be extracted from brines, clays or the mineral spodumene found in pegmatites, an igneous rock.

The increase this year in electric car registrations has resulted in higher production of automotive lithium-ion batteries, up by 33% from 2019, according to the above-cited Virta report. China remains the leading country for battery-making, accounting for over 70% of global production capacity.

The prices of lithium carbonate and hydroxide, both used in the li-ion battery cathode, have soared this year on break-neck demand and tight supply.

1 year-lithium carbonate price, in Chinese currency. Source: Trading Economics

In mid-September lithium prices reached their highest since 2018; they have continued to climb. Prices for lithium carbonate in China have risen more than 160% this year, while in Australia, where most “hard rock” lithium mining is done, spodumene prices in September jumped 144% to $990 per tonne.

“Right now it’s very simple: the market is so tight that players are fiercely competing for any spot tonnage available,” Reuters quoted a trader at Transamine in Geneva.

“Things are heating up and there is huge anxiety about where lithium supply is going to come from in the near future,” said Benchmark Mineral Intelligence analyst George Miller, adding, “If new lithium doesn’t start coming to market, we might start to see electric vehicle production rates hamstrung by a lack of raw material supply.”

Benchmark forecasts lithium demand to more than triple between 2020 and 2025, rising to a million tonnes and out-pacing supply by 200,000 tonnes.

Another market analysis firm, CRU, foresees 2021 lithium demand of about 450,000 tonnes will exceed supply by around 10,000 tonnes.

EV sales are expected to hit 55% of total vehicle sales as early as 2030. That represents 65 million units, and 3 million tonnes of lithium in just eight years, compared to the 400,000 tonnes of lithium per year mined currently.

Shorter-term, Chilean-state-owned SQM expects lithium prices to shoot nearly 50% higher in the last three months of the year compared to the third quarter, as strong demand for the electric-vehicle battery ingredient continues to pressure the market to deliver.

The world’s second largest lithium miner is reporting a huge increase in revenues and profitability, on higher prices. Net profits in the third quarter were about $106 million compared to just $1.7M last year, while revenues of $661M outpaced third-quarter 2020 revenues by 46%.

The benchmark lithium index has more than doubled in 2021 and prices in China have hit records. As MINING.com notes, with little to no inventory in the system, buyers are snapping up all the lithium they can, forcing SQM and number one lithium miner Albemarle to fast-track expansion plans.

Chile, which currently generates close to 30% of world supply, plans to double production by 2025 to about 250,000 tonnes of lithium carbonate equivalent (LCE). Nonetheless, the country is predicting a shortage by 2030, with expected supply of 1.5 million tonnes unable to meet a quadrupling of demand to 1.8Mt.

Despite surging prices, the mining industry saw several major deals involving lithium firms in October.

Rock Tech Lithium plans to locate its first battery metals smelter within a 90-minute drive of Tesla’s gigafactory under construction outside Berlin, in a bet that Germany will take the lead in Europe’s electric vehicle transition.

South Korea’s LG Energy Solution, one of the biggest EV battery makers globally, recently agreed to buy as much as 100,000 tonnes of lithium a year as part of a six-year “take-or-pay” deal with Vancouver-based Sigma Lithium Corp., which controls a hard rock lithium deposit in Brazil.

China’s top battery maker, Contemporary Amperex Technology (CATL), outbid Ganfeng Lithium to acquire Canadian miner Millennial Lithium, which holds lithium assets in Argentina.

As China’s largest lithium compounds producer and the world’s biggest lithium company by market value, Ganfeng has gone on an acquisition spree over the years, having invested in several lithium projects in Argentina (Caucharí-Olaroz, Mariana), Australia and China.

In August, Ganfeng proceeded with a takeover of Mexico-focused lithium developer Bacanora, and in the same month, inked a four-year supply deal with Australia’s Core Lithium for 300,000 tonnes of spodumene concentrate, a partly processed form of the battery material.

China’s Zijin Mining, known for its status as a major gold and copper producer, announced its first foray into the lithium sector with a $770 million purchase of Neo Lithium, outbidding many other Chinese bidders.

Neo Lithium’s main asset is a high-grade brine operation in Argentina, with CATL already being one of its backers.

In total, Bloomberg Intelligence analyst Christopher Perrella estimates five companies essentially control the $4 billion global lithium market, two of which are Chinese.

Conclusion

Recent mergers and acquisitions (“m&a”) in the lithium space show the industry is consolidating in an effort to secure enough lithium supply to meet future demand. As Chris Berry of House Mountain Partners, a well-known battery metals expert, was quoting saying earlier this year, the bidding war for Millenial Lithium “is just a taste of what’s to come. I do see more mergers and acquisitions even at existing pricing.” 

“It’s not just hedge funds riding momentum,” he added. “These are larger strategic players from both inside and outside the EV supply chain positioning amidst the decarbonization thesis.”

“We have and will continue to see the Chinese looking to buy lithium,” agreed Matthew Hind, head of global mining at the Scotiabank’s investment banking division, in a July Forbes piece. “There will also be small-cap consolidation as well as EV companies buying stakes in mines with strategic partners in order to secure supply.”

The latter bodes well for lithium juniors, especially those with large, scalable lithium deposits that can separate lithium and other saleable minerals from brines, spodumene or claystones at relatively low cost.

The rise in the popularity of electric vehicles can no longer be dismissed as media hype. The trend of decarbonization and electrification is happening and it is accelerating. In fact the horse and barn analogy seems appropriate, where EVs are the stallion that has bolted out the barn door and the suppliers of lithium and other battery metals are running to catch it while they still can.

Richard (Rick) Mills
aheadoftheherd.com
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Articles

Resources Top 5: Big hits, Chalice’s new ‘Julimar like’ target, and Greenland — one of exploration’s final frontiers

Manhattan hits 8m at 40.5g/t gold, including 3m at 105.34g/t Chalice completes first stage of Venture Minerals nickel-copper-PGE project earn … Read…

  • Manhattan hits 8m at 40.5g/t gold, including 3m at 105.34g/t
  • Chalice completes first stage of Venture Minerals nickel-copper-PGE project earn in deal
  • Coda Minerals’ ‘Emmie Bluff Deeps’ IOCG discovery keeps getting bigger

Here are the biggest small cap resources winners in early trade, Monday December 6.

 

MANHATTAN CORP (ASX:MHC)

The stock excited punters late last year when a maiden drilling program discovered a new shallow and high-grade gold lode ’ at the ‘Tibooburra’ project in NSW, 240m west of the historic ‘Main Zone’ at the project’s New Bendigo prospect.

The company failed to maintain this momentum into 2021.

Now the excitement could be back, with MHC pulling up nice hits like 8m at 40.5 g/t gold from about 70m, including 3m at 105.34 g/t at Main Zone.

This wasn’t the only big hit from the completed 20 hole, ~2,100m program either, which is also a good sign.

It also only covered a small, 650m chunk of a much larger 5km long gold-in-soil anomaly.

Future drilling will focus on testing the size of Main Zone which has the potential to be a significant shallow, high-grade gold resource, MHC says.

A planned 5,000m drilling program will now be significantly increased and extended to include diamond drilling at depth (>100m). Drilling is scheduled to kick off after the Christmas Break.

“These are the best gold drill intersections reported from the Koonenberry Region to date,” exec director Kell Nielsen says.

“We are extremely pleased with their significance and feel that they prove the potential of the Tibooburra Project to host multi-million-ounce gold discoveries.”

“The next steps and drill planning will be important in understanding the potential of the mineralised system at New Bendigo where numerous individual lenses (or shoots) may exist.”

“From the recently completed RC drilling, MHC is better placed to target future drilling, specifically the high-grade lenses that traditionally can be up to 15-20m thick and 50-150m wide and plunge or extend over several hundred metres in length.”

The $20m market cap stock is up 30% over the past month, and down 57% year-to-date. It had $3.8m in the bank at the end of September.

 

VENTURE MINERALS (ASX:VMS)

Chalice Mining (ASX:CHN) reckons Venture Minerals has some of the best-looking ground in the Julimar region (besides their own, of course), which is why they inked a earn in JV agreement over VMS’ ‘South West’ nickel-copper-PGE project.

$3.2bn market cap CHN has now completed the first stage of the deal by spending at least $300,000 on exploration by November 30.

The focus right now is Thor’, a 20km long Julimar lookalike magnetic anomaly.

Results of an early-stage electromagnetic program will be announced “once Chalice’s exploration team have received the final data and completed their interpretation of any resultant bedrock conductors”, VMS says.

This is expected in early 2022.

Chalice will follow-up any conductors from the EM program with soil sampling to define potential drill targets. Should Chalice elect to drill the targets it will need to spend a cumulative $1.2 million by 29th July 2022 to earn 51%, and then a further $2.5 million to earn 70%.

“With Venture’s JV partner Chalice Mining completing the first stage of the JV earn-in through the completion of a detailed EM survey, the company now eagerly awaits the survey results,” VMS managing director Andrew Radonjic says.

“The knowledge gained from Chalice’s Julimar discoveries will be a huge advantage in determining which conductors should be drilled first and this no doubt increases the probability of bringing a discovery forward.”

$68m market cap VMS – which also has advanced iron ore and tin-tungsten projects in the portfolio — is up 20% over the past month and down 4% year-to-date. It had about $9m in the bank at the end of September.

 

CODA MINERALS (ASX:COD)

On 9 June Coda announced that its first diamond drillhole at ‘Emmie Bluff Deeps’ IOCG target in South Australia had intersected 200m of “intense IOCG alteration”, including~ 50m of copper sulphides.

The market loved it. IOCG (iron oxide copper gold) discoveries — while often super deep — are big, lucrative, and rare as hens’ teeth.

Subsequent assay results confirmed the potentially company making find which, since then, has only gotten bigger.

The mineralised envelope at Emmie Bluff Deeps has now been “materially extended by drilling to the north, east and south”. It remains open in all directions, COD says.

Critically, hole ‘EBD3W3B’ encountered additional zones dominated by bornite — a high-grade copper sulphide — extending the core of the mineralised zone a further 70m to the south where it remains open.

Assay results from five drill holes, for which visual observations of mineralisation have been released to ASX, remain outstanding due to delays at assay labs, COD says.

The company expects to receive and release most of these results prior to Christmas. A maiden resource for the shallow Emmie Bluff Zambian-style copper cobalt deposit is also on track for release before the end of the year.

“We have now had an outstanding run of nine holes from this and the previous drilling program,” Coda CEO Chris Stevens says.

“All have returned materially important intersections and we are beginning to demonstrate a clear trend of increasing thickness and tenor of mineralisation as we systematically follow the bornite-dominant zone to the south-east.”

“In particular, the results from EBD3W3B are exceptional. Once confirmed by assays, this hole will not only materially extend the known bornite-dominated zone but should also give us one of our thickest sulphide intersections to date.”

“It also appears to have identified at least one major mineralising structure, providing a significantly improved structural understanding of the deposit – and possible vectors towards a basement-tapping source or ‘pipe’ structure.”

COD has now approved an “ambitious” ongoing exploration program which is underpinned by a strong cash balance of $17.8m at the end of the September quarter.

The $90m market cap stock is up 11% over the past month, and 211% year to date.

 

PRAIRIE MINING (ASX:PDZ)

(Up on no news)

Former coal minnow PDZ has done a full 180-degree swivel, dumping its fossil fuel focus in favour sexier, ‘new age’ metals like copper, nickel and PGMs. It is also changing its name to GreenX Metals.

The main game is some newly acquired ground in Greenland called ‘Arctic Rift’, where historical exploration results are indicative of an extensive mineral system “with potential to host world-class copper deposits”.

Greenland is increasingly recognised as one exploration’s final frontiers, as melting ice caps reveal more ground. All the big boys want a slice, PDZ says.

” A boat’s a boat, but the mystery box could be anything!” — Peter Griffin.

“Greenland is increasingly recognised as one of the last great mineral resource frontiers having recently attracted interest from Rio Tinto, Anglo American, DeBeers, Glencore, Trafigura, and IGO, as well as KoBold Metals who have joint ventured with Bluejay Mining to explore in Greenland for critical materials used in EVs,” it said October 6.

“KoBold is backed by Microsoft co-founder Bill Gates, Bloomberg founder Michael Bloomberg, Amazon founder Jeff Bezos, and Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates.”

The $61m market cap stock is up 4% over the past month, and 41% year-to-date. The company is looking to raise $4.6m to fund the Greenland acquisition and exploration into the new year.

 

BLACK ROCK MINING (ASX:BKT)

POSCO-backed BKT wants to bring its advanced ‘Mahenge’ graphite project in Tanzania into production.

Mahenge’s 212 million tonne graphite resource makes it the fourth largest in the world. BKT says it has lowest peak capital expenditure per annual tonne of production of any development stage global graphite project and would enjoy a high AISC margin of 63.1% once in production.

The company has just completed a massive 500t pilot plant run – the largest ever, it says — to send to off for qualification (testing) to POSCO and potential customers in North America, Asia and Europe. This will ultimately support project financing, BKT says.

“Black Rock has delivered the largest customer qualification program in the graphite sector globally, that continues to demonstrate to the market that we have a high-quality commercial grade product,” BKT managing director John de Vries says.

“The positive outcomes from this large-scale qualification plant campaign effectively provide a robust platform for our strong customer base to now base their decisions to confidently partner with Black Rock for the long-term.”

“This in turn provides confidence to financiers that the robust economics of the Project are supported through a clear path to market.”

BKT now needs to finalise off-take terms with POSCO and secure finance to underpin $US116m Phase 1 development capex.

The $170m market cap stock is down 17% over the past month, and up 100% year-to-date. It had $9.3m in the bank at the end of September.



The post Resources Top 5: Big hits, Chalice’s new ‘Julimar like’ target, and Greenland — one of exploration’s final frontiers appeared first on Stockhead.







Author: Reuben Adams

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Precious Metals

Bitcoin: Welcome To The Big Leagues

Bitcoin: Welcome To The Big Leagues

Submitted by bithedge

If there was still anyone left shouting that Bitcoin is an uncorrelated asset they…

Bitcoin: Welcome To The Big Leagues

Submitted by bithedge

If there was still anyone left shouting that Bitcoin is an uncorrelated asset they were put to rest in recent days. And what was once confined to obscure corners of the internet has obviously left them a long time ago, but it truly feels like this was the week that cranked things to 100…

In moments of major stress Bitcoin has followed risk assets for years – hardly much of a ‘digital gold’ but crisis is crisis, and recall during the March 2020 puke that even the precious metal was dumped indiscriminately alongside bonds and everything else as confused traders and algos were either forced or scared into dumping it all for cash. There is a saying that in real volatility “all correlations go to 1.”

What is more concerning is the strengthening connection between Bitcoin (and thus Ethereum, and thus altcoins) and greater financial assets when equities are 3% off all time highs. This speaks to either 1) a greater integration of Bitcoin into the wider risk-on/risk-off framework that both traders and computers are programmed to buy or sell out of depending on mostly whether or not rate hike expectations are up that day, 2) a market that is under increasing stress despite being just off all time highs and up 23% YTD, or 3) both…

Of course nothing is really as simple as just risk-on or risk-off, and Bitcoin, on top of being long beta / long momentum, is a great beneficiary of inflation both realized and expected. 

That’s certainly one of the reasons why it’s up 160% over the past year (at this point anyone with an internet connection knows that no doubt about it – this is the highest inflation the U.S. has seen in 50 years). Even Powell ditched ‘transitory’…

AND a third factor in Bitcoin’s favor may be establishment distrust, which is obviously higher following two years of Americans being told their lives are now vastly different because the bat coronavirus that first emerged blocks away from an NIH-funded lab that studied bat coronaviruses actually was just an unfortunate development in a cave somewhere. BofA has dubbed it an “anarchy hedge” – record wealth inequality and soaring inflation seem to set the stage for taking out some insurance.

So since the three things that drive bond yields higher are conveniently risk-on, higher inflation expectations, and higher credit risk, it’s no surprise that Bitcoin trades even tighter alongside the 10 year: 

Which begs the question of why not just go short the 10 year in size and avoid the regulatory and custody risks that come with holding crypto? If this trend holds for another year, that’ll be a question many are hoping you don’t ask. But for the average person buying Bitcoin is easier than short selling bonds – and in a market where passive > active flows and retail is a prominent force that may be all it takes for the coin to remain in fashion. 

Recent developments are undoubtedly a thorn in the side of the once-isolated crypto trading community, filled with many who after spending years mastering their specific market are now essentially in competition with firms backed by billions in capex and decades of experience. Because unless it’s also a coincidence that Tesla and Bitcoin have hit their high or low for the month on the same day 8 out of the last 15 months, it really appears that Bitcoin trades only as a composite of long ‘the next big thing’ FOMO and short U.S debt. There’s nothing wrong with that – the trade has done well. But it’s a slap in the face to the uncorrelated/digital gold/reserve asset narrative. And it’s a major blow to those who were looking for an ‘alternative’ investment. Increasing correlation with bonds and equities is the biggest threat to Bitcoin right now. 

It’s possible and maybe even likely that this is temporary – but whatever needs to happen for Bitcoin to again decouple from greater markets hasn’t happened yet. In light of the past two weeks, can anybody seriously say right now that they think Bitcoin will end the year higher than where it is currently if the S&P 500 doesn’t?

But to be fair, long term hodlers really don’t have anything to worry about since if the world post-GFC is any guide, the current pullback in equities will bottom out soon and if it doesn’t – the Fed will just announce a pause in their tapering plans and at that point everyone should go even more all in because rest assured it will give way to new all time highs for the Nasdaq, home prices, inequality, and the newest member of the liquidity-firehose winners club, Bitcoin. 

Tyler Durden
Sun, 12/05/2021 – 21:30






Author: Tyler Durden

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Metalicity hits bonanza 77.4g/t gold in new zone east of Leipold

Special Report: Metalicity’s Kookynie project is looking increasingly appetising after drilling uncovered bonanza gold grades in a new zone 200m ……

Metalicity’s Kookynie project is looking increasingly appetising after drilling uncovered bonanza gold grades in a new zone 200m east of the main Leipold Lode.

Notable reverse circulation drilling results in the new zone are 1m grading 77.4 grams per tonne (g/t) gold from 74m within a broader 10m zone at 8.34g/t gold from 64m (LPRD0002) and 1m at 5.3g/t gold from 74m within a 3m intersection grading 3.05g/t gold from 73m (LPRD0005).

Importantly for Metalicity (ASX:MCT), the results indicate a possible new parallel lode to the main Leipold Lode and demonstrates that the area is very prospective for further high-grade mineralisation.

“These are spectacular results, and the identification of an outlying bonanza intercept further adds to the excitement of this prospect,” chief executive officer Justin Barton said.

“This adds up to a very exciting picture of significant potential to grow laterally, as well as along strike and down dip at Leipold, with significant mineralisation at depth encountered from the core of the diamond drilling for which we eagerly await assays.”

He added that the potential to deliver a step change in the initial resource estimate bodes well for the project and highlights the commercial sense behind its proposed acquisition of Nex Metals Exploration (ASX:NME).

Assays are pending for the company’s diamond drilling.

Leipold Prospect plane of vein section with recent drilling. Pic: Supplied

Drill results

The results from the RC pre-collars of both LPRD0002 and LPRD0005 are considered to be exceptional with the 10m intersection in the LPRD0002 demonstrating a very consistent and wide mineralised intercept.

Results from the diamond drilling portion of both holes are expected to be intriguing to say the least, with the company already planning to test the dimensions of these intercepts and how they may potentially contribute towards the resource estimate on a possible separate lode.

Follow up drilling is planned for the new year within this area.

Density measurements from the core are being completed and will form the basis for the tonnage aspect of the resource estimate.

Metalicity expects these to be completed by early December with the metallurgical test work also expected to be finalised by mid-December 2021 as well.

 


 

 

This article was developed in collaboration with Metalicity, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Metalicity hits bonanza 77.4g/t gold in new zone east of Leipold appeared first on Stockhead.



Author: Special Report

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