Click here to read the previous top junior zinc stocks article.
The base metal started January out at US$2,799 per tonne on the London Metal Exchange. As global economies begin to rebound after the COVID-19 pandemic, zinc metal prices held onto gains made in 2020, hitting a high point for the year of US$3,063.50 in mid-May.
Upward price action in the zinc market has also been good for junior zinc-mining stocks. Here’s a look at the five top junior zinc stocks on the TSXV that have seen share price gains year-to-date.
All data for this article was gathered on July 8, 2021, using TradingView’s stock screener. Only junior zinc stocks with market caps greater than C$10 million at that time were considered.
Current share price: C$1.36; year-to-date gain: 515.91 percent
Emerita’s share price has been on a tear in the recent weeks, hitting a year high of C$2 on July 5.
Current share price: C$0.23; year-to-date gain: 181.25 percent
has a diverse portfolio of exploration and development projects in Manitoba, Ontario and Newfoundland. Its flagship project is the Sturgeon Lake property, located in Northwestern Ontario’s polymetallic Sturgeon Lake greenstone belt, which is rich in zinc, copper and silver.
In May, Gossan raised nearly $2 million through a private placements of flow-through units. The company’s share price hit a 2021 high of C$0.35 on May 10.
Current share price: C$4.07; year-to-date gain: 81.74 percent
precious metals-rich deposits located in Manitoba, New Brunswick and Newfoundland. The company is rapidly expanding on its high-grade copper-zinc-gold-silver Rainbow discovery at the Pine Bay project, located in the established Flin Flon mining district.has a portfolio of base- and
Callinex raised nearly C$9 million in a February private placement. The company kicked off the summer by announcing strong drill results from a campaign targeting the expansion of the Rainbow discovery, including drill hole PBM-131, which intersected 20.53 meters of 3.21 percent copper equivalent, consisting of 2.58 percent copper, 0.22 grams per tonne (g/t) gold, 6.63 g/t silver and 1.11 percent zinc.
Callinex’s share price reached a year-to-date high of $6.50 on February 1.
Current share price: C$3.21; year-to-date gain: 77.9 percent
’s main objective may be exploring and developing gold projects in the Americas, but the company’s portfolio also includes the NewMétal property in the Abitibi greenstone belt of Quebec. The project also includes the past-producing Normétal mine, from which approximately 10.1 million tonnes of 2.15 percent copper, 5.12 percent zinc, 0.549 g/t gold and 45.25 g/t silver were produced.
In early July, Starr Peak announced assays from its ongoing 2021 drill campaign on NewMétal, reporting the highest-grade results to date with up to 18.07 percent zinc equivalent over 6.65 meters. Soon after, the company doubled the size of its exploration program at NewMétal to 40,000 meters of drilling.
Starr Peak’s stock price rose to C$4.05, its highest point this year, on May 28.
5. Constantine Metal Resource (TSXV:CEM)
Current share price: $0.245; year-to-date gain: 44.12 percent
Constantine Metal Resource’s main focus is the Palmer volcanogenic massive sulfide copper-zinc-silver-gold project in Southeast Alaska. It is a joint venture between Constantine (50.04 percent) and Dowa Metals & Mining (49.96 percent), with Constantine as operator.
In late March, the company announced a US$8.8 million exploration program at Palmer; it includes a planned 6,000 meters of drilling. Constantine raised nearly $2 million in a private placement in June.
Constantine shares hit a high for the year of C$0.35 on April 1.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure:is a client of the Investing News Network. This article is not paid-for content.
Base Metal Earnings Previews: Here’s What to Expect
Base metal producers and miners are preparing to release their third-quarter earnings results, and the sector should display strong free cash flow. Copper…
Base metal producers and miners are preparing to release their third-quarter earnings results, and the sector should display strong free cash flow. Copper miners should benefit due to the metal’s average price of $4.25 per pound during the quarter.
Source: Coldmoon Photoproject/Shutterstock.com
Some themes expected in the miners’ earnings reports this time around include capital allocation, shareholder returns, accelerated projects, and the possibility of merger in the space.
Copper Prices Drive Attractive Valuations
However, copper miners will also face some challenges, according to RBC Capital Markets analysts Sam Crittenden and Alexander Jackson. They expect cost inflation and issues with the copper supply chain to negatively impact their results. The RBC team also noted that copper prices have remained range-bound around $4.25 a pound after hitting $4.86 a pound in the middle of May.
They expect copper prices to weaken going into next year and look for an average price of $3.75 per pound for 2022 amid slowing demand in China due to increased supply. However, the RBC team noted that low inventories and expectations of deficits in the medium term should support copper prices.
They believe valuations among North American base metal producers are attractive after plunging about 30% since mid-May, especially at current spot prices and an average free cash flow yield of 27%. Thus, the RBC team continues to see opportunities in some base metal stocks.
Commodity Strength to Drive Improvements in Earnings
Crittenden and Jackson noted that commodity prices have been strong, and they expect those strong prices to drive improved earnings, although cost inflation will likely offset the positive impact from commodity prices. Base metals were mixed quarter over quarter as copper fell 3%, zinc rose 2%, and nickel climbed 10%. Gold held steady with a 1% decline, while silver tumbled 9%.
Bulk metals were the most volatile of the bunch as iron ore prices plunged 18% quarter over quarter, and met coal climbed 89%. The RBC team expects cost escalation to continue in oil, with WTI up 6% quarter over quarter and global steel prices up from already-elevated levels.
Out of the base metal universe, they have several preferred names, including TECK), First Quantum, , , and .(NYSE:
The RBC team said coal prices. The RBC analysts peg coal at $226 per ton in the third quarter, compared to $144 per ton in the second., which is expected to report its third-quarter earnings on Oct. 26, will benefit from record-high coal prices and a 60% increase in copper production by 2023. They don’t expect any surprises from the company due to the recent investor day and guidance update. However, they do expect to see the beginning of benefits from higher
They expect First Quantum, which is slated to release its next earnings report on Oct. 26, to generate strong free cash flow amid the ramp-up of Cobre Panama to a top 10 copper mine. Other potential impacts on First Quantum’s earnings report include changes to the tax regime in Zambia, which could clear the path for expansion at Kansanshi and the Enterprise nickel project at Sentinel. The RBC team looks for another solid operating quarter from the company, although it could be overshadowed by an update on the Panama tax and royalty negotiations. They warned that the reaction could be mixed or negative.
Ivanhoe, which is expected to report its third-quarter results on Nov. 15, is close to demonstrating the potential of its Kamoa-Kakula copper mine. Meanwhile, Capstone could see a meaningful catalyst in the form of a Santo Domingo partnership. However, the RBC team also warned that Capstone’s results could be negatively impacted by heavy rain in Arizona. Capstone is expected to release its earnings on Oct. 26.
They added that HudBay, which is scheduled to release its earnings on Nov. 4, is at an inflection point for free cash flow after completing investments in Peru and Manitoba. The analysts look for a modest improvement in the company’s results due to the ramp of gold production in New Britannia and contributions from Pampacancha. However, they look for a larger impact from these factors in the fourth quarter and next year.
The RBC team sees strong growth potential fordue to contributions from the phase two project in the middle of next year. They expect a solid operating quarter from the company with positive free cash flow generation, although they expect weaker results on a quarter-over-quarter basis due to lower iron ore prices. is expected to release its next earnings report on Oct. 28.
The RBC team said Lundin Mining, which is expected to release its next earnings report on Oct. 27, could see some relief if it can update investors on potential improvements at its Candelaria asset. However, they warned that investors may have to wait for the full details until the company provides its three-year guidance update late next month.
TRQ) is expected to report its third-quarter results on Nov. 11. The RBC team warned that those results could be negative as the company deals with border closures in Mongolia. Additionally, the start of the block cave is still on hold pending negotiations with the government.(NYSE:
Warrior Met Coal’s (NYSE:HCC) union is still on strike, but the RBC analysts believe the recent settlement at the nearby Shoal creek mine could lead to a resolution for the six-month strike. They expect strong earnings results from the company due to much higher met coal prices, although they warned that there could be a lag in realizing the higher prices. Warrior Met Coal is expected to release its results on Nov. 2.
Labrador Iron Ore is expected to report its third-quarter results on Nov. 4. The RBC team expects a neutral reaction to those earnings results, which they expect to increase sequentially due to higher sales volumes. However, they said that could be partially offset by lower iron ore prices.
On the date of publication, the author did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at [email protected].
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Golden Arrow Resources Commences Exploration at Various Projects
Source: The Critical Investor for Streetwise Reports 10/24/2021
Golden Arrow Resources is looking to benefit from current positive sentiment…
Golden Arrow Resources is looking to benefit from current positive sentiment in metals, as it recently commenced drilling at the Terra Dorada gold project in Paraguay and at its Rosales Copper project in Chile, but it also optioned the Libanesa silver-gold project in Argentina, and is planning early stage exploration at this and two other projects.
Sampling Rosales Copper project, Chile
After lots of reconnaissance exploration at several of their projects, Golden Arrow Resources Corp. (GRG:TSX.V; GARWF:OTCQB; G6A:FSE) is ready for the follow-up, and recently commenced drilling at two different projects. These are the Rosales Copper project in Chile, and the Terra Dorada gold project in Paraguay. The company also completed an IP and magnetics surveys, and a mapping/rock sampling program at their Yanso gold project in Argentina.
Furthermore, it finished a trenching program at the Esperanza target, part of the Flecha de Oro gold project in Argentina.
Lastly Golden Arrow Resources very recently signed an option agreement for the Libanesa silver-gold project, also in Argentina, the longtime base for the company, and plans to do reconnaissance exploration on this project soon. These activities and more will be discussed with VP Exploration Brian McEwen in this article.
All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise.
After a lackluster summer, the tide for mining seems to be turning, as large scale shortages for many metals cause renewed multi-year high spikes in metal prices, from copper to zinc, from uranium to lithium. These shortages have been caused by a combination of reasons, mostly underinvestment combined by economic recovery after COVID-19, and subjects like inflation. Increasing inflation, caused by extremely dovish policies by central banks around the world, took a while to develop, but now it seems to be there, and one of the benefits of a devaluating US Dollar is higher metal prices, including gold and silver.
It is anticipated that central banks are wary to end their stimulus programs, as the world economy is far from out of the woods yet, and fragile. This dovish environment is interpreted as good for stocks, as interest rates are kept low and money has to produce returns somehow. It seems Golden Arrow Resources is positioned well in this context, as it is exploring precious metals projects, but also a copper project. The two recently commenced drill programs, if successful, should be able to generate much more investor interest compared to the last 2 years:
Share price five-year time frame (Source: tmxmoney.com)
As the share price still seems to be bottoming, with investors waiting for exciting exploration/drill results from multiple projects, and with plenty of cash in the treasury, management viewed this as a good opportunity to announce another buyback of up to 10% of the public float, or 10.13M shares, after they did a similar buyback from March 17, 2020 to March 16, 2021.
During this program, 3,147,076 shares were repurchased. The current program started at September 1, 2021, and will end at August 31, 2022 or earlier. Since September 1, 2021, 1,191,000 shares have been bought back.
As per the last financials (June 2021) the company owns 675,580k shares of(SSRM.TO), this equity being worth C$13.55M at the moment (October 15, 2021, share price C$20.05) as well as C$4M in cash. As such it is clearly fully funded for upcoming exploration programs for at least the next two years.
Keep in mind the current market cap is C$19.78M, which is almost exactly the value of the SSR shares and cash, which is not only extremely rare for explorers, but also hardly assigning any value to the array of various projects.
Let’s have a look at these exploration projects of Golden Arrow Resources.
Rosales Copper project, Chile
Golden Arrow Resources has been busy all year at their Rosales Copper project in Chile with surface exploration, including geophysical surveying. The goal of the recent geophysics program was to detect and delineate prospective electromagnetic conductor responses consistent with near-surface copper stockwork mineralization, potentially related to larger copper systems at depth, and associated with surface anomalies.
As a reminder, the Rosales Copper project includes several targets, with one located on the Margarita Trend, which is a structural trend that continues from the adjacent operating Margarita mine southwest onto the Rosales Project:
Mineralized occurrences were sampled and returned high values from rock chip samples in a target area.
The company completed the first pass of sampling in February, and has completed a Transient Electromagnetic (TEM) surface geophysical survey in June. This survey generated better than expected results, as they identified large areas with near-surface anomalies, starting about 100m depth, which can be seen here:
The anomaly G1, as indicated on the left map, is the highest priority target, based on size, conductivity, and correlation with high-grade copper sampling (up to 4.37% Cu). The second target is G2, as indicated on the right map below. The third G3 target to the north is the smallest target and thus the lowest priority, although all three targets returned significant sampling grades. As the high conductivity seems to be continuing to the south, the company decided to apply for additional concessions to cover the entire anomaly zone.
The company also completed three lines of TEM soundings, crossing the G1 and G2 anomalies, to provide resistivity, displayed in vertical images. These TEM sounding sections reveal one or more upper zones of moderate conductivity above 250m from surface, interpreted to correlate with the conductors detected in the previously reported fixed in-loop TEM surveys.
It was very interesting to see the large and intense conductor at approximately 500m depth and appear to resolve increased conductivity below G1, proximal to a vertical corridor postulated to represent a feeder-structure. The flat-lying and layered appearance of the anomalies, combined with the copper sulphide mineralization observed at surface, are consistent with expectations for copper manto deposits.
The geophysical consultant Miles Rideout was enthusiastic about what he observed from the readings:” The observed TEM responses show broader conductors consistent with manto deposits and strong narrow features consistent with feeder structures. It is easy to recommend drilling based on these very positive results.”
VP Exploration Brian McEwen was excited as well:
“We are very excited by this additional data from TEM soundings, which suggests a stratabound or mantos-style copper deposit model, which is further supported by the mineralization, alteration, and host rocks identified to date at Rosales. This type of high-flat-laying, layered, high-grade (1-2%) copper deposit is common in Chile, with well-known examples including the El Soldado and Mantos Blanco mines. We are very excited to have the drills turning to test our interpretation”.
and didn’t hesitate long on this recommendation, and decided to commence drilling as soon as possible on a 3,000m program, which was announced on September 23, 2021. The first phase of drilling will include approximately 1,400 metres in four holes, to test both the upper and lower conductors and confirm the geophysical interpretation. As can be seen in the sections, 4 trajectories of upcoming drill holes are planned, and as I like big targets, drill hole P2 is the one I’m particularly interested in as it will be directed to hit the large conductor at depth. The subsequent 1,600 metres will be used to test the extent of the anomalies as well as other targets. The program is expected to continue through this quarter, and as the turnaround time for assay labs is about 6-8 weeks now, the first results can be expected somewhere after this timeframe.
Tierra Dorada gold project, Paraguay
Management considers their Tierra Dorada project in Paraguay its second flagship project. As a reminder, highlights of the last drill program completed early this year at their Alvaro target were DHTD18 returning 0.5m @143.5g/t Au from 3m, and DHTD35 returning 3.16m @11.8g/t Au from 1.7m. Golden Arrow initiated a new 2,000m diamond drill program on September 28, 2021, focusing on better defining this target, and drill-test a new target 10km southwest of Alvaro called Itayuru, with one hole. Sampling from the past returned up to 7.04g/t Au, an outcrop returned 3.49g/t Au recently, and assays of a recent, extensive 475 soil sample program are pending.
The program will start with shallow drilling of up to 1,000 metres in 50 holes, as already permitted. All application requirements for the full exploration permit, which allows for deeper drilling, are complete and management is anticipating the granting of that permit imminently. The alternative deep program includes up to 1,536 metres in 12 holes as a first priority, with up to 17 holes or 2,096 metres in total. The company had to wait longer for the full exploration permit than expected due to COVID-19 outbreaks, but fortunately this kind of delays seem to be something of the past now.
Libanesa silver-gold project, Argentina
The company executed a definitive option agreement on October 12, 2021 to acquire a 75% interest in the (now fully) drill-permitted, 14,500ha Libanesa silver-gold project fromin the Santa Cruz province of Argentina, which is a mining friendly province as it hosts many mines and mining projects:
Libanesa is a drill-ready project hosting several diversified geological, geochemical and geophysical supported drill targets. Mineralization at Libanesa is developed as localized hydrothermal and phreatic breccias, sulphide-quartz veining and gossans. Analysis of geological and geophysical results suggests that soil anomalies form two parallel northeast-trending structural belts associated with a series of andesitic dykes. The more pronounced northern belt, which hosts the Cerro Plomo Breccia, is open-ended to the east and west, and produced silver/gold-polymetallic anomalies, developed intermittently over 1.2 kilometers of strike length:
When seeing the small inserted ground magnetics image, I wondered if Golden Arrow is looking to explore the strong magnetic zones to the northwest. VP Ex McEwen answered that target delineation is ongoing throughout the properties.
Based on the work to date, Cerro Plomo is the principal target and is characterized by a mineralized Au/Ag hydrothermal breccia that is exposed at surface, and both chargeability and resistivity geophysical anomalies at depth. Trenching at Libanesa returned results up to 18g/t Au, and 3910g/t Ag:
The geophysical anomalies can be observed in the following section below. One is a 250m long conductive anomaly, potentially representing the continuation of the outcropping breccia, another is 200m long, potentially related to a soil anomaly, indicating a blind breccia body:
Vendor Mirasol already defined 2 drill targets as can be seen in the section above, and Golden Arrow management is looking to refine these targets further. Additional targets within Libanesa include the peripheral polymetallic veins at the Libanesa Main prospect; and, the Lagunita prospect, which has reported rock chip values up to 7.2 g/t gold.
The 75% interest in Libanesa will be earned by Golden Arrow Resources over 6 years by the following terms:
- incurring exploration expenditures totaling $4,000,000
o $500,000 per year during the first 2 years, with a minium of 2,000m of drilling at the end of year 2; and
o $750,000 per year thereafter.
- making cash payments to Mirasol totaling US$1,000,000
o $100,000 to be paid on the 2nd, 3rd and 4th anniversaries;
o S$250,000 on the 5th anniversary; and
o $450,000 on the 6th anniversary.
It is good to see the company only has to spend C$600k per annum during the first two years. The initial US$500,000 in exploration expenditures is a firm commitment. Golden Arrow will be the operator, and after completion of the option, Mirasol and Golden Arrow will hold 25% and 75% in the resulting JV. If an interest is diluted below 10%, it will convert to a 2% net smelter return royalty.
Golden Arrow Resources has concrete plans to start exploration as soon as possible, as it is planning to mobilize an exploration team to Santa Cruz this month. The goal is to complete additional surface work which may include geophysical surveying, with the intent of refining targets as mentioned for a drill program to start in the first quarter of 2022.
Yanso gold project, Argentina
The 100% owned Yanso Gold Project is a gold-copper intrusive-related target with a 300 metre by 90 metre zone of strong alteration coincident with gold and other geochemical anomalies, which is open along strike and untested at depth. It includes 12,480 hectares in five non-contiguous concessions, situated approximately 27 kilometres south of the Gualcamayo mine in San Juan province, Argentina. Previous sampling returned 16m @ 0.6g/t Au, 2m @ 3.46g/t Au and 2m @ 3.15g/t Au.
Golden Arrow Resources announced a new exploration program on July 23, 2021, which includes a 6.6 line-kilometre Induced Polarization (IP) resistivity survey. Gold-copper mineralization at Yanso is associated with pyrite or related oxidized surface minerals, so management believes that this technique will provide an excellent tool to understand the subsurface extents of the mineralized zone based on chargeability.
The survey will cover the known target area and test for extensions to the north and south over a distance of 2.4km, most of which is under recent alluvial cover. In addition, Golden Arrow’s field team will complete a 700-hectare ground magnetics survey, and the field team will initiate a surface reconnaissance program of mapping and rock sampling.
According to VP Ex Brian McEwen, the IP survey is completed along with a portion of the magnetics and the mapping and sampling program.
McEwen expects to announce the compiled and interpreted results later this quarter.
Flecha De Oro gold project, Argentina
The Flecha de Oro project includes the La Esperanza, Puzzle and Maquinchao properties, and the company completed a trenching program at the Puzzle property last December and January, and subsequently at La Esperanza.
The trenching program of Puzzle didn’t return the desired results, so McEwen decided to prioritize Esperanza for ongoing exploration.
This property hosts multiple vein corridors defined by outcropping quartz veins, boulders and quartz float (quartz float are discrete pieces of quartz vein at surface, likely from closer to the source than a boulder).
Since the commencement of trenching at Esperanza on March 1st, 2021, Golden Arrow completed 30 trenches totaling 2,200 metres across surface quartz veins and sheeted veinlets that range from a few centimeters to two metres in width. Assays have been announced for 10 of these trenches, generating results like 1.8m @ 3.19g/t Au, and 5m @2.98g/t Au.
I wondered what the current status of the program was, if new results will be announced soon, and what the next plans for La Esperanza are. McEwen stated that the trenching was completed and that results compilation and interpretation is continuing for La Esperanza. The company is also waiting for permits to start working at the third property in the project area, the Maquinchao tenement which was optioned in June 2020. In the meantime, the field team has been deployed to Yanso and Libanesa.
With 5 projects being drilled, explored or planning exploration soon, Golden Arrow Resources is clearly intensifying its activities after the quiet COVID-19 period, becoming one of the more active juniors I know of. As the company discovered and advanced several meaningful deposits in the past, I’m sure they aren’t satisfied by exploring and killing assets into eternity, but they are focusing on real discoveries.
Their extensive network and expertise in Latin America, their huge treasury, extensive portfolio of projects and turning mining sentiment should be strong fundamentals in order to achieve a successful discovery sooner or later.
In a time of slowly improving gold sentiment, and increasing (base) metal prices due to increasing shortages everywhere, as the world economy is picking up pace after the worst of COVID-19 seems behind us, Golden Arrow Resources is ramping up their exploration activities. Drill programs have recently commenced at their copper project Rosales in Chile, and their other gold project Tierra Dorada in Paraguay. The first results for both projects may come by the end of the quarter.
This is not all, as the company is working on three projects in Argentina, Libanesa, Yanso, and Flecha de Oro. With exploration at five projects underway soon, Golden Arrow has several chances to hit significant mineralization in Latin America, which in the current environment of improving sentiment should be a serious catalyst for a higher share price.
I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.
The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high-quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long-term commodity pricing/market sentiments, and often looking for long-term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources that more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.
Disclaimer: The author is not a registered investment advisor, and currently has a long position in this stock. Golden Arrow Resources is a sponsoring company. All facts are to be checked by the reader. For more information go to https://goldenarrowresources.com/ and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
Streetwise Reports Disclosure:
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2) The following companies mentioned in the article are 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.
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. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Golden Arrow Resources, a company mentioned in this article.
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( Companies Mentioned: GRG:TSX.V; GARWF:OTCQB; G6A:FSE,
EU Could Run Out Magnesium by November End Forcing an Aluminum Alloy Supply Crisis
Countries from the Western Hemisphere to the Eastern hemisphere are now focusing on economic recoveries from the pandemic. That means spending is up, manufacturing…
Countries from the Western Hemisphere to the Eastern hemisphere are now focusing on economic recoveries from the pandemic. That means spending is up, manufacturing is up, and industry is refiring.
But some European leaders worry about a shortage of magnesium and what kind of effects that might have on an industrial recovery from the pandemic. The European Union gets 95% of its magnesium from China, and so talks have opened between the EU and China to ensure the supply of the silvery-white metal used to make aluminum.
One of the challenges facing Chinese magnesium smelters is the electricity shortages sweeping the nation. The power cuts due to challenges generating sufficient energy from current power sources mean that China has ordered some smelters to close.
Factories have had to be powered down, and rationing is in effect in many regions as the country tries to manage its electricity supply. The talks are of particular importance since China has ordered approximately 35 out of 50 magnesium smelters to close until the end of the year. The reason was to conserve electricity, but the effect has been a supply shift that has EU leaders worried.
A Fast-Approaching Deadline
Germany’s association of metals producers, WVM, warned that the current European inventories will be exhausted by the end of November – a fast-approaching deadline. The price of magnesium has spiked in recent months as uncertainty surrounding a supply dearth creates chaos in the markets.
It is also difficult to store, and this has been a worrying point of contention as well. It begins to oxidize after three months, and global stocks could run critically low before the end of 2021 if China does not restart production soon.
Magnesium is used to make aluminum, which has become a critical metal for the industrial sector, especially for the auto industry. Aluminum alloys are used in auto parts that include gearboxes, steering columns, fuel tank covers, and seat frames. Its lightweight nature means it can be formed into the necessary shapes while maintaining strength and lightness.
As a result of aluminum used in cars, fuel efficiency has skyrocketed in the past decade. The lighter, more efficient cars are also cheaper to produce thanks to affordable aluminum. However, with the price of magnesium up from approximately $2000 per tonne at the beginning of the year to approximately $4700 per tonne now, the certainty that affordable aluminum can continue to be made is in doubt as well. Industry groups have said that the remaining stocks in Europe are selling for $10,000-$14,000 per tonne in Europe.
The issue was raised on Thursday during an EU leaders’ summit, and a dialogue was opened with China by the European Commission.
On the other side of the world, North American is having its own issues with magnesium. Canada’s Matalco Inc. produces aluminum billet. Last week it had to tell clients that magnesium availability had “dried up” and if it continued then the company may have to cut output. Additionally, it may need to ration deliveries beginning in 2022 to ensure that some are prioritized and every client gets the minimum needed.
Magnesium as a Critical Metal
Magnesium is a light metal used as an alloy for hardening aluminum used in beverage cans and light car parts. The most commonly used magnesium castings do not contain more than 90 mg of alloyed aluminum. Magnesium compounds are used for various purposes.
Magnesium castings are used in the automotive industry, aerospace components, defense applications, and consumer goods (especially laptops, tablets, and mobile phones covers). Aluminum alloys contain an average of 0.8% magnesium and are used in a wide variety of industries with packaging (35% of magnesium used in aluminum alloys), transport (25%), and construction (21%) being the three most important.
China has a quasi-monopoly on the production of magnesium, which is a key component of the production of aluminum alloys. About 95% of the world’s magnesium production comes from China, most of it from the city of Yulin in Shaanxi Province. Worldwide production of magnesite (Sitmate) is 596 Mt, of which China is the largest producer.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
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New Found Gold Uses Sprott Investment to Double Queensway Drill Program To 400,000 Metres
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