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Stocks, Bonds, Crypto, & Copper Soar As Confidence Crashes Near Decade-Lows

Stocks, Bonds, Crypto, & Copper Soar As Confidence Crashes Near Decade-Lows

This week was a tale of two halves. Stonks chopped lower into…

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This article was originally published by Zero Hedge

Stocks, Bonds, Crypto, & Copper Soar As Confidence Crashes Near Decade-Lows

This week was a tale of two halves. Stonks chopped lower into Wednesday morning, bounced off an opening dump then accelerated (despite The Fed Minutes signaled considerably more hawkish taper and rate-trajectory expectations). Nasdaq was the week’s biggest gainer (thanks to Small Caps puke today) and The Dow underperformed but only modestly…

That was the S&P’s best week since July.

Major reversal in Small Caps today however from the cash open, as the rest of the majors rallied divergently…

This week’s panic-buying has reduced the drawdown from record highs (for the S&P) to just 1.5%…

Source: Bloomberg

After Monday’s dump, every day this week has opened with a panicky short-squeeze to ignite momentum…

Source: Bloomberg

But as today’s OpEx struck early, the short-squeezers ran out of ammo…

Source: Bloomberg

Both Defensives and Cyclicals were bid this week but the latter outperformed today to win the week…

Source: Bloomberg

Sectors were all higher on the week but Utes lagged and Materials led the gains. Financials were towards the lower end of the overall performance…

Source: Bloomberg

In bank-land, earnings have sparked a notable divergence with MS leading and JPM lagging (after a buying panic renewed in WFC today)…

Source: Bloomberg

VIX was clubbed like a baby seal this week, hitting a 15 handle briefly today…Tough to see much downside for vol from here (especially given the typical post-opex bounce)

Bonds were very mixed this week with the short-end dumped and long-end well bid (2Y +8bps, 30Y -12bps)…

Source: Bloomberg

2Y yields pushed up to their highest since March 2020 and 5Y at its highest since Feb 2020…

Source: Bloomberg

The yield curve flattened dramatically this week (the biggest curve flattening week since June) with the 5s30s spread at its lowest since May 2020 as traders signaled expectations for a Fed policy error…

Source: Bloomberg

The very-short-end of the curve repriced dramatically this week – in a hawkish manner – with a full rate-hike now priced in for September 2022 (with expectations that The Fed’s taper will start in Dec and end in July 2022)…

Source: Bloomberg

And on a side note, the ‘kink’ is back and building in the T-Bill curve as the odds of a clean debt-ceiling extension in December slide…

The dollar fell for the 3rd straight day today and suffered the broke a 5-week winning streak.  The dollar has traded in a tight range for the last 3 weeks though…

Source: Bloomberg

Crypto soared higher, rising for 3rd straight week, led by Bitcoin…

Source: Bloomberg

With Bitcoin back above $60k for the first time since April (and in fact reached almost $62k today)…

Source: Bloomberg

Commodities all made gains this week (CRB all comms hit an all-time record high) but copper was the dramatic outperformed while gold lagged…

Source: Bloomberg

WTI rallied for an 8th straight week, its longest winning streak since May 2015, topping $82 for the first time since Oct 2014…

Source: Bloomberg

Copper soared this week (its best week since Nov 2016 and 2nd best week since Oct 2011), back near the May highs, as global inventories plunge…

Source: Bloomberg

Gold tagged $1800 but was unable to hold it…

Finally, you have to laugh really that stocks are surging back towards record highs on a day when consumer sentiment printed at its 2nd lowest level in a decade…

Source: Bloomberg

“Probably nothing…”

 

Still this chart makes us wonder if a redux is in the cards?

Source: Bloomberg

Tyler Durden Fri, 10/15/2021 – 16:00

Author: Tyler Durden

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Investors pumped $2.55 billion into explorers in just three months in the hope of chasing the next breakout star

ASX-listed exploration companies are in rude shape at the moment, with seemingly unfettered access to capital markets driving a boom … Read More
The…

ASX-listed exploration companies are in rude shape at the moment, with seemingly unfettered access to capital markets driving a boom in IPOs and drilling investment.

It is not just the vibe of the thing either, hard figures back that up.

According to figures compiled by BDO, appendix 5B reports from ASX-listed explorers show instos, funds, professional and retail investors are backing the sector at a level not seen in years, if ever.

$2.55 billion was thrown into early stage companies on the Australian bourse in the three months to September 30, a record since BDO first released its explorer quarterly cash update in 2013 and keeping pace with the $2.54 billion tipped into the sector in the June quarter.

A near record $877 million was spent exploring around the world by the 704 exploration companies on the ASX in September, a remarkable 32% rise on the $666 million spent in the June quarter – already a seven-year high.

Pic: BDO Corporate Finance

Given more than 850 resources juniors were on the boards the last time spending was higher in 2013 and early 2014, the $1.25 million spent per reporting company was an eight-year record.

BDO global head of natural resources Sherif Andrawes said IPOs were a big driver of the rise in investment, with 62 more resources companies reporting 5Bs than in September 2020.

“With the increased number of new entrants over recent periods, the exploration sector is showing no signs of slowing,” he said.

Among the biggest raisings were cobalt miner Jervois Mining’s (ASX:JRV) $266m equity deal to fund its purchase of Freeport’s cobalt business, Vulcan Energy’s (ASX:VUL) $200m equity raise for its Zero Carbon Lithium Project in Germany, Core Lithium (ASX:CXO) raising $116m for its Finniss lithium mine in the NT and Bellevue (ASX:BGL) raking in $106m in equity for its gold mine in WA.

 

Battery minerals on a tear

While gold investment accounted for the lion’s share of funding for resources companies in 2020, battery metals like lithium, nickel and copper are drawing the most support from investors at the moment.

The $544.5 million raised by lithium juniors in the September Quarter is more than three times the amount raised in all of 2020, BDO says.

“The rise of battery minerals is clearly linked to the global trends of rising electric vehicle adoption and lower carbon emission targets which is a key consideration of the market,” Andrawes said, noting that investors and governments are sharpening their focus on the energy transition.

“It is essential that all exploration companies, regardless of commodity exposure, constantly consider the relevance of ESG to their ongoing operations and also to any investment decisions and future strategies.

“The ones who are able to do so successfully will likely continue to be supported by investors and contribute to the push for a cleaner and greener economy.”

Lithium companies were the top earners in September. Pic: BDO Corporate Finance

In general the health of exploration companies on the ASX is at its strongest point since BDO began its quarterly survey.

A record 88% of companies had cash balances of more than $1 million.

At the market’s nadir in 2016 less than 50% of explorers could lay claim to that level of funding, something reflected in the level of cash companies are willing to commit to drilling programs.

“With exploration spending peaking to this seven-year high, 56% of companies recorded net investing outflows, which is 13% higher than the two-year average,” Andrawes said.

88% of explorers have more than $1m in the bank. Pic: BDO Corporate Finance

 

Risks from labour shortages, inflation

While 10 explorers surveyed last week by Stockhead expect buoyant market conditions to continue into the new year, a number are concerned about labour shortages and inflationary pressures.

BDO noted administration costs were also on the rise, climbing 22% to a three-year high of $253 million or $360,000 a company, although BDO suggested this could be due to the heat in the market as well.

“This trend is in line with the cyclical nature of administration spending observed over the last four years, for which administration expenditure tends to be lower in the March and June quarters and higher in the September and December quarters,” report authors said.

“The increase is also linked to the increased level of exploration activity, capital raises, and listings, which have placed upward pressure on corporate expenses.

“Furthermore, it may also be a result of the corporate skilled labour shortages resulting in companies being required to increase remuneration of corporate staff for retention purposes as well as an increase in the fees that are being paid to external advisers.”

BDO said growth in the exploration sector could be constrained by the availability of resources, travel restrictions and a shortage of skilled labour.

Junior exploration financing is at record levels. Pic: BDO Corporate Finance

The post Investors pumped $2.55 billion into explorers in just three months in the hope of chasing the next breakout star appeared first on Stockhead.




Author: Josh Chiat

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Energy & Critical Metals

Metal of the Future? 2021 Copper Price Peaks May Just Be the Start

When LME copper stores hit 47-year lows in October, driving prices above US$10,000 per tonne, it looked like the beginning … Read More
The post Metal…

When LME copper stores hit 47-year lows in October, driving prices above US$10,000 per tonne, it looked like the beginning of an almighty run for the red metal.  

At its October peak, the copper price was within striking distance of the LME all-time high, of US$10,724/t recorded in May of this year.

Prices didn’t exceed the early-year benchmark in that instance, but that’s not to say they won’t run further into the future.

The fundamentals driving demand, combined with ageing copper projects around the world and an increasing focus on ESG issues, have lead analysts and major miners alike to a bullish stance on the metal’s future.

Argonaut’s George Ross is among them.

“What we’re seeing around the world is a rapid shift to decarbonise our industries, our consumer goods, our vehicles and heating,” he said.

“Through that we’re going to need to basically electrify our economy, and copper is the most fundamental metal for electrification of industry and our lives in general.

“That can only help the demand side of the copper equation, and the big question is – can supply keep up?”

If supply can’t keep up with demand, it would be reasonable to expect prices to set highs beyond the May peak. And with a number of the world’s prolific copper projects maturing, Ross said it seemed likely that new supply will be required to sustain a hungry market.

But what should investors be looking for when it comes to a copper project?

“Grade and scale, because that typically defines how you can mine the minerals,” Ross said.

“After that it’s the cost of mining and operating costs, as well as upfront and sustaining capital costs.

“You can have quite small deposits with quite low capital costs, but they churn out money because they’ve got very good grades and low operating costs.

“At the same time, you can have very large deposits that look amazing, and might contain a huge amount of metals, but that doesn’t necessarily mean they’ll be particularly profitable in all circumstances through a cycle.

“Some deposits make an enormous amount of money when prices are good, but either lose money or just keep their head above water during the lean times.”

As the red metal rises, a number of ASX-listed aspirants will be looking to fill the supply gap.
 

Copper plays to watch

Stockhead highlights a number of copper plays to watch into the new year and beyond.

Eagle Mountain Mining (ASX:EM2)

Eagle Mountain’s Arizona copper assets have turned plenty of heads in recent times, with the focus largely on the Oracle Ridge project where an aggressive exploration campaign continues to produce promising assays.

The company is actively building up a critical mass of mineralisation at the project with a view to restarting operations, supported by a historic underground mine with 18km of existing development.

Mineralisation at Oracle Ridge sits within a hill, potentially enabling Eagle Mountain to leverage gravity to reduce its emissions in mining and transport – fitting, given copper’s demand forecasts are being largely driven by global shifts toward renewables.

“Copper is critical for global decarbonisation through electrification,” CEO Tim Mason told Stockhead.

“Pleasingly, we are seeing increasing commitments from governments, companies and industries towards decarbonisation through the increased use of renewable energy generation, electric vehicles and electric equipment.

“All of these initiatives require significant amounts of copper to generate and transmit electrons.

“Without reliable access to copper, the transition to renewable energy sources may be delayed, which could have dire consequences on climate change, with long-lasting negative impacts on health, agriculture, forests and water supply.”

Emmerson Resources (ASX:ERM)

A topical inclusion, given its hit announced yesterday of 117m at 3.38% copper from 75m during drilling at the Hermitage project in the Tennant Creek mineral field of the Northern Territory.

Emmerson’s vertical hole HERC003 recorded the above and was abandoned in the middle of some serious high-grade mineralisation – 3m at 14.91 grams per tonne gold and 4.24% copper – and will be continued with a diamond tail in 2022.

One to look out for.

The hole was drilled as part of a program testing an area 200m east-west and a theory that high-grade mineralisation at Hermitage is hosted in almost vertical pipe structures.

“Whilst it is still early days, the metal zonation and mineralisation in drill hole HERC003 displays increasing gold and copper grades with depth – the subject of future diamond drilling,” ERM managing director Rob Bills said in the company’s announcement yesterday.

“Although based on limited data (i.e. rock chips), it appears that HERC003 intersected a subvertical, brecciated, high grade metal rich feeder zone which has channelled and concentrated the copper and gold and remains open at depth.”

Assays are pending for one other hole drilled in the campaign.

Hermitage and its nearby Jasper Hills projects sit on a 100% owned mining lease, and the company says they have seen no modern exploration.

ERM’s share price closed almost 130% higher following the news.

New World Resources (ASX:NWC)

New World’s Antler copper deposit, located on sparsely-populated, privately-owned land in northern Arizona, has plenty of factors in its favour.

“The Antler deposit is the highest grade undeveloped copper asset on the ASX, and one of the highest grade copper deposits in the world,” NWC MD and CEO Mike Haynes told Stockhead.

“With high grade comes opportunity.”

The opportunities Haynes sees are multi-fold – high grade means a smaller and more socially acceptable footprint against comparable operations, projected ease of permitting and lower CAPEX.

“New World should be able to meet the capital development costs in its own right, most likely through a combination of debt on attractive terms and equity, rather than having to rely on a major mining company or some other similar partner to help fund the development of a large capital cost operation,” he said.

“Accordingly, our timeline to development is largely in our own hands.”

A handy thing to have, given the climate for copper. New World’s current 7.7 million tonne resource at 3.9% copper equivalent also offers plenty of upside, according to Haynes.

“There are very strong geological and geophysical indicators that suggest the deposit extends further to the south, outside the area that New World has drilled to date,” Haynes said.

“We know the current 7.7Mt resource at Antler is constrained entirely by the lack of extensional drilling, and we know VMS deposits elsewhere in northern Arizona can be as large as 50Mt.

“So there is a very real chance that Antler is going to get a lot bigger. And if it does, we expect the high grades will continue.”

Peel Mining (ASX:PEX)

Focused on Cobar, Peel Mining has been particularly active over the last 12 months, with multiple rigs drilling out the company’s high grade Mallee Bull and Wirlong copper deposits to deliver maiden and upgraded mineral resources, respectively.

The company will be looking to deliver scoping and feasibility studies in the new year, and its managing director Rob Tyson said he believed increased demand for the red metal could only mean good things for pricing and Peel.

“We are planning to move into production as soon as possible, and being in the Cobar Basin, we think we’ll be mining there for many years to come,” he told Stockhead.

Tyson said he felt there was a large risk that the world’s copper supply would fall short of demand as the world moved away from fossil fuels.

“With a predicted 13% annual growth rate in green copper (copper used in renewable energy and EVs) over the coming decade, the world needs to move quickly to ensure supply lines remain intact,” he said.

“The reality is, however, that mining projects generally take a long time to bring online, and the risk of shortfall in the years ahead is very real.”

Sunstone Metals (ASX:STM)

Sunstone is exploring for large copper-gold porphyry deposits in Ecuador, and recently had success in exploration at its El Palmar porphyry discovery.

Here, the company delivered a number of standout intersections including 105.09m at 0.75 grams per tonne gold and 0.2% copper from 32m, with mineralisation intersected across a 300m long zone and from surface.

CEO and managing director Malcolm Norris told Stockhead he felt porphyry deposits represented the best long-term copper supply opportunity.

“They take considerable skill, funding and time to discover and develop, and at Sunstone we are in the early stages of discovery at El Palmar,” he said.

Drilling at the project is ongoing, and early results support Sunstone’s belief that only the upper portion of a porphyry system has been drilled to date.

Norris is another who sees huge potential longer term for the red metal.

“As the world electrifies and as it looks at opportunities to reach emissions targets, copper will be present in all of the solutions,” he said.

“Copper is the ultimate green metal, and we need to take a very long-term view of the supply fundamentals.

“We are setting the stage for intergenerational demand-supply balance – and the answer is we need to find more copper.”

West Cobar Metals (ASX:WC1)

“There is no decarbonisation without copper.”

Simply put, the words of West Cobar Metals managing director David Pascoe succinctly summarise the state of play for the world’s copper explorers, developers, miners and investors.

Pascoe said new tech like solar, wind energy, EVs and charging stations would all be copper intensive – supplementing the world’s existing industrial consumption of the red metal.

That holds in good stead West Cobar’s work in the underexplored namesake region of New South Wales, where early exploration at the flagship Bulla Park project has returned a best intercept of 135m at 0.24% copper, including 33m at 0.45%.

West Cobar has interpreted the project to have the potential to host a large stratabound copper deposit, similar to those found in Queensland’s Mt Isa region and WA’s Paterson province.

“Success in identifying higher grade mineralisation and proving up a deposit will position Bulla Park very well to help meet the forecast rise in copper demand,” Pascoe said.

The company’s two projects northwest of Bulla Park – Mt Jack and Nantilla – are highly prospective for copper and gold and will be the focus of exploration activity over the next six months.

 

 

At Stockhead, we tell it like it is. While Eagle Mountain, Peel Mining, West Cobar and New World Resources are Stockhead advertisers, they did not sponsor this article.

The post Metal of the future? 2021’s copper price peaks may just be the start appeared first on Stockhead.

Author: Jack McGinn

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Odessa aims to be the diamond in the rough in bid to revive Australian industry

Special Report: Almost more precious and rare than a diamond itself is exposure to the sector on the ASX, where … Read More
The post Odessa aims to be…

Almost more precious and rare than a diamond itself is exposure to the sector on the ASX, where just two companies currently provide an entry to the world of Australian sourced luxurious gems.

Make that three, with the soon to be listed Odessa Minerals (proposed ASX code: ODE), which has launched a $6 million IPO at 2c a share, which is anticipated to close early due to strong demand.

It is not too difficult to see why demand for shares in Odessa could be as feverish as diamonds themselves at auction.

Armed with 2400sqkm of tenements and applications in the legendary Kimberley diamond district in WA, Odessa will join just Burgundy Diamonds and Lucapa Diamond Company in the Australian sector.While Burgundy and Lucapa trade at ~$80 million and $105 million, respectively, Odessa will have plenty of room for growth with an EV on listing of just $7.7 million, leveraging the company for exploration success on proven brownfields sites.

With the closure of Rio’s Argyle diamond mine in 2020, Australia went from one of the world’s largest producers of rough diamonds to none overnight.

Odessa’s board believes they have the projects and modern exploration nous to have a go at fixing that.

 

The Projects

Odessa lays claim to licenses over the Aries diamond project, where a mineralised kimberlite pipe—described by Odessa as one of the largest and most diamondiferous kimberlites in Western Australia—was discovered by Triad Minerals and Freeport in 1986.

Bulk testing on pipes at the project by United Kimberley Diamonds in 2005 returned 181 diamonds for 25.34 carats in 2169t of material and the pipes have been known to host rare and highly sought after coloured diamonds.

181 diamonds were extracted from a bulk testing program at Aries in 2005, many of them fancy coloured. Pic: Odessa Minerals/Supplied

Aries is located just 230km west of Rio Tinto’s recently mothballed Argyle mine, the source of 90% of the world’s fancy pink diamonds, and has only been sporadically explored since its discovery in 1986.

Rare coloured diamonds have seen a sharp rise in investor interest, especially after Argyle’s closure, with the investment value of pinks increasing by around 30% and Rio recording record prices at its final tender this year.

Odessa plans to use state of the art modern exploration techniques not available to the diamond explorers of the 1990s. It believes this will enable it to accelerate the exploration of the Aries project, with another four exploration leases around Aries waiting for agreement from traditional owners and grant by the WA Government.

Odessa has three additional projects in the Kimberley, including the Ellendale project surrounding the closed Ellendale diamond mine, famous for producing fancy yellow gems.

It also has license and applications at the Calwynyardah project, which has similar geology to Ellendale and includes two of the largest lamproite pipes in the Kimberley, and the applications at the Noonkanbah project which was explored for diamonds between 1969 and 1980 and hosts Walgidee Hills, the largest known lamproite in Australia.

Odessa has 4 diamond exploration projects
Odessa has four projects located between the historic Argyle and Ellendale diamond mines. Pic: Odessa Minerals

 

The Market

Diamond markets have been resilient since the onset of the Covid-19 pandemic, with the rough diamond market now at its strongest since 2012.

They say timing is everything, and evidence suggests Odessa is entering the diamond market at the start of a long period of undersupply in the rough trade.

Less than 100 million carats are delivered to the market each year, but a little under 15% of that came from Rio’s Argyle.

That mine will likely never be reopened, with few large-scale operations in the global pipeline to replace it.

Odessa has also pledged to place its relationship with traditional owners front and centre of its work in its bid to produce ethically sourced diamonds, or “ESD”, to take advantage of the market’s desire for diamonds from an ethical supply chain.

Odessa is committed to adopting and implementing a comprehensive ESG plan next year that is reflective of their combined beliefs, ethics and commitment to working in partnership with the traditional owners and minimising the explorer’s footprint on the environment.

 

The People

Odessa will have an experienced board to direct its exploration plans at Aries and across its Kimberley diamond portfolio.

Former Arafura and Globe Metals and Mining boss Alistair Stephens, a geologist with 30 years of experience, will be at the helm as CEO.

The board will include non-executive chairman Zane Lewis, principal and joint founder of corporate advisory firm SmallCap Corporate, veteran geologist and Aurumin non-executive director Darren Holden, and Lisa Wells, a non-executive director of Territory Minerals who was a senior geo at UKD when the bulk sampling program at Aries South took place.

This article was developed in collaboration with Odessa Minerals, 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 Odessa aims to be the diamond in the rough in bid to revive Australian industry appeared first on Stockhead.


Author: Special Report

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