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Mick Davis returns with a plan to spend where mining giants won’t (or can’t)

MICK Davis has had a singular career. Firstly, there’s the knighthood, awarded in 2015 for his efforts in Holocaust commemoration and education. Then…

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This article was originally published by Miningmx

MICK Davis has had a singular career. Firstly, there’s the knighthood, awarded in 2015 for his efforts in Holocaust commemoration and education. Then there’s the three-year stint as treasurer and then CEO of the UK’s Conservative Party, under the leadership of then prime minister, Theresa May.

But for the most part it is as a mining tycoon – ‘Mick the Miner’ – as the City once dubbed him – that Davis is renowned. The last three years have been among his quietest following the 2017 closure of X2 Resources, the $6bn privately backed fund. This year, however, marks his return as chairman of Vision Blue Resources (VBR), a company initially backed by $60m in private funds.

Davis says VBR is not like his other mining ventures.

“I’m not building a mining company; I’m essentially investing in opportunities where I think value can be created. I’m adding combinations of my financial capital and my human capital to ensure these projects and opportunities can track up the value curve. That’s why Vision Blue is different to the rest, and that’s essentially what we’re trying to look at.”

‘The rest’ refers to Davis’s previous roles, firstly as the CFO of Billiton, the South African company that merged with BHP to create the world’s largest mining company, and then subsequent roles as founding CEO of Xstrata, and X2 Resources.

The way Davis sees it, Billiton represented the emergence of a newly democratised South Africa on the international mining stage, while Xstrata was driven by the surge in demand for commodities as a result of growing urbanisation in China. X2 Resources, which Davis started after Xstrata’s merger with Glencore, also sought to capitalise on China’s commodities boom, recognising in a debt-burdened mining sector the chance to buy projects cheaply.

VBR is a different animal, says Davis. Its initial investment – in a graphite project in Madagascar through a $29.5m stake in NextSource Materials – is aimed at supplying the electric vehicle market, which Davis believes is part of a new, potentially multi-generational phase in elevated commodities demand. What appears unique about decarbonisation is it has widespread, almost global, political sanction.

“Here we’re seeing the key driver being the transition to green energy and the almost globally mandated reduction of CO2, and that is leading to a new secular shift in demand,” he says. According to Davis, this is not a secular shift created by a country industrialising like China, or massive growth in GDP, but as a result of “… mandated political structural change in the way that economies function”.

Davis thinks demand for minerals such as graphite, which is processed for use in the lithium-ion batteries needed to power electric vehicles, will be profound, easily outpacing in duration and impact the China-led super-cycle of 2002 to 2019.

The investment in the Madagascar mine has been followed by a $300m capital-raising after VBR teamed up with the New York-listed SPAC ESM Acquisition Company. The SPAC’s mandate is to hunt for green energy investments. Separately, VBR has invested $12.6m in Ferro-Alloy Resources Group with a view to expanding a vanadium project in Kazakhstan. Previously a steel-strengthening agent, vanadium is now being used in new ways, including for large-scale power storage.

VBR’s quick-fire investments compare favourably with the stationary nature of X2 Resources, where Davis’s financial backers declined to sign off on at least three deals. He describes this situation as a governance issue but says, had the approval been given, X2 Resources would have returned “ten times the money invested in something like 70% off internal rate of return”.

X2 Resources represented a lean period for Davis. Between it and VBR he helped found Niron Metals, which had an option over West African iron ore but remains heavily hamstrung by a combination of politics, logistics and investment cost. He is keeping Niron Metals on the backburner, especially given the centrality of iron ore in global decarbonisation efforts.

Major miners hamstrung

One transaction that X2 Resources sought to close was the purchase of Rio Tinto’s Australian thermal coal assets.

At the time, it was a pretty big deal in terms of strategic shift, whereas today the major diversified mining companies are falling over themselves to sell or close their emission-heavy assets, especially as investors take a critical view of their environmental, social and governance standards. As a result, the large-cap, diversified mining sector is constrained in its ability to move with speed on opportunities. Diversified miners also can’t easily justify investing in early-stage projects given the low impact they would have on earnings and dividends, and the high-intensity management. For entities such as VBR, this spells opportunity.

“They’re going to have to devote a huge amount of management time without much effort and they get no credits in their multiple,” says Davis of large mining groups. “Whereas I come along and I put some money into NextSource Materials, whose share price goes up threefold by virtue of me being there, and credentialising the project – and that’s tremendously valuable for my investors.”

Since VBR is not a mining company, there’s already a strategy to exit the investments. According to Davis, this will be just as the projects move into production. At some point, mining companies will have to switch from dividend payments to investing in replacement reserves and growth in minerals production. That’s when VBR will be ready to provide those growth options.

China risk

Davis thinks it’s also critical for the West to start building in both upstream and downstream productive capacity in the decarbonising of minerals.

It’s a mistake to have allowed China a march on green energy technology. “It gives them disproportionate commercial and strategic power. I do think that the West needs to catch up and basically our view is that the greater part of the value-add chain is down to the process as opposed to simply in the mining chain.”

To this end, VBR is weighing up potential locations for a battery materials factory that will produce a purified form of graphite for use by end-users such as Tesla, the US carmaker. One potential location identified by VBR is South Africa, potentially even Gqeberha, formerly Port Elizabeth, where Davis was born. However, he questions South Africa’s ability to attract investment.

“The ideology and politics are inimical to investment. You have a situation where it [the government] is driving an ideological agenda which doesn’t make it easy to invest, and increases cost of investment.” That affects everything, says Davis, including logistics, which would be South Africa’s ace card considering its proximity to Madagascar.

“I’m not going to say that I would never invest in South Africa. I’m just saying that it’s easier to invest in other countries.”

For the full story as it appeared in our 2021 Mining Yearbook, please visit the special ebook section below.

The post Mick Davis returns with a plan to spend where mining giants won’t (or can’t) appeared first on Miningmx.

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Mining battery metals from the sea floor – could it soon be a low-impact reality?

Low-impact sea mining could become a reality for one ambitious company with the arrival of a 228m ship in Rotterdam … Read More
The post Mining battery…

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Low-impact sea floor mining could finally become a reality for one ambitious company with the arrival of a 228-metre ship in Rotterdam earlier this week, heralding a critical milestone in its plans to become a producer of battery metals sourced from the deep ocean.

Named the Hidden Gem, the vessel is the key to The Metal Company’s (NASDAQ:TMC) vision of developing the world’s largest source of battery metals from the ocean floor with commercial production plans targeted for 2024.

TMC’s strategic partner, Allseas, will be converting a former deep-sea drilling vessel into a subsea mining vessel, retrofitting the ship with equipment to gather polymetallic nodules on the seafloor within contract areas held by TMC in the Pacific Ocean’s Clarion Clipperton Zone (CCZ).

The Hidden Gem. Pic: Business Wire

These potato-sized polymetallic nodules contain high grades of critical minerals such as nickel, manganese, copper and cobalt, which are integral to the manufacturing of electric vehicle batteries and other renewable energy technologies.
 

Enough to power 250 million EVs

Back in April 2020, TMC acquired its third seabed contract area to explore for polymetallic nodules from Tonga Offshore Mining Limited (TOML), which opened it up to a further 74,713km square block of exploration rights.

The third contract area comprises an inferred resource of 756 wet tonnes of polymetallic nodules, meaning its expanded footprint now contains enough nickel, copper, cobalt and manganese to build more than 250 million electric vehicle batteries.

Speaking to the TOML acquisition, TMC’s chairman and CEO Gerard Barron said the project will enable The Metal Company to bring more critical minerals to market to break through the bottleneck and shift away from fossil fuels.

“Our research shows that ocean polymetallic nodules can provide society with these metals at a fraction of the environmental and social impacts associated with land-based extraction.”

Pic: Supplied

 

Environmental concerns about sea floor mining

The environmental concerns which surround mining of the ocean’s floors are well documented, with several jurisdictions and regulatory bodies imposing bans and strict regulations on subsea mining due to the lack of understanding around the environmental impacts and growing fears about the irreversible effects these practices may have on the fragile ecosystems that we know very little about.

Many scientists believe that far more resources have been spent researching ways to mine the ocean floor rather than studying the impact this type of mining might have on the underwater environment.

TMC, however, believes that the Hidden Gem subsea vessel, which will deploy a 4.5km riser to collect the nodules off the seafloor without drilling, blasting or digging, can avoid much of the environmental disturbance associated with traditional sea floor mining methods.
 

Past failures

Planning to mine the oceanic crust’s wealth of mineral resources is a well-trodden path that’s seen many companies fail to deliver on their promises of production due to regulatory and financial hurdles.

Companies such as Nautilius and its high-grade Solwara 1 copper-gold project off the PNG coast is one recent example.

Nautilius had plans to turn its Solwara 1 project into the world’s first underwater copper-gold mining operation but wound up delisting from the TSX and going bankrupt in 2019.

The Canadian company had developed three undersea robots to mine hydrothermal vents on the ocean floor before funding issues became a problem midway through construction.
 

On the road to meeting deep-sea battery metals goal

There are examples of successful mining ventures in the ocean such as in Indonesia’s tin industry, diamond extraction in Namibia, and gold mining off Alaska’s coast, however these ventures are often heavily scrutinised by environmental lobby groups and constantly face the risk of being shut down due to increasing global environmental awareness and a trend towards greener policies from the governments who licence them.

While there is still plenty of obstacles and work to be done, TMC, with the help of Allseas and their new vessel, which is expected to be the first ship classified as a sub-sea mining vessel under American Bureau of Shipping, are much closer than many of their peers to realising the goal of supplying the market with battery metals from the seafloor.

The post Mining battery metals from the sea floor – could it soon be a low-impact reality? appeared first on Stockhead.

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Mining Experts Have Their Eye on Golden Arrow Resources

Source: Streetwise Reports   09/22/2021

The Critical Investor and Gerardo Del Real look forward to the first set of drill results from this…

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Source: Streetwise Reports   09/22/2021

The Critical Investor and Gerardo Del Real look forward to the first set of drill results from this Canadian explorer's Rosales project in the prolific Atacama mining district.

Golden Arrow Resources Corp. (GRG:TSX.V; GARWF:OTCQB; G6A:FSE), a junior mining company with properties in Chile, Argentina, and Paraguay, has already attracted attention in the industry. It is on the verge of starting to drill at its Rosales copper project in Chile.

The TEM soundings suggest a "strata-bound or mantos-style copper deposit model, which is further supported by the mineralization, alteration, and host rocks identified to date at Rosales," Golden Arrow Vice President of Exploration and Development wrote in a recent news release.

"Results are expected back from the lab in October."

 

 

"This type of high-grade copper deposit is common in Chile, with well-known examples including the El Soldado and Mantos Blanco mines."Plans call for 3,000 meters (3,000m) of phased reverse circulation drilling at Rosales, testing the anomalous targets identified via a surface transient electromagnetic (TEM) survey, TEM soundings, and a ground-based magnetic survey.

Catarpe Valley, Argentina

At least two industry experts have discussed the reports on Golden Arrow. The Critical Investor, an online mining platform whose editor is a mining stock investor and newsletter writer, is eager to see the results of Golden Arrow's drill campaign, writing, "It is very interesting to see Golden Arrow Resources drilling the big conductor at Rosales now which starts at 500m depth. . .I'm looking forward [to seeing] if this deep, large conductor could indicate actual mineralization."

"The recent hole by Filo Mining speaks to the incredible geologic potential in the region." 

 

 

 

Also, The Critical Investor summarized the timeline of the first phase of drilling. "After talking to Vice President of Exploration Brian McEwen, the company appears to have planned to drill one of the first holes into this conductor around the first week of September, to a depth of 700m. Drilling the first phase of 1,500m will take about one to two weeks, assaying another three to four weeks, and results are expected back from the lab in October," it wrote.

Gerardo Del Real, co-owner of Digest Publishing, which offers investment research and ideas, wrote the following about Golden Arrow, a member of the Grosso Group, and its exploration success and potential upside in Argentina:

"The Grosso Group pioneered mining in Argentina. The recent hole by Filo Mining speaks to the incredible geologic potential in the region."

Del Real explains, "It bodes well when the group looking to make a discovery or discoveries of significance has done it before. In this case not only has this group done it, they opened the door for others to unlock the vast potential Argentina has for significant deposits."

Golden Arrow has approximately 116 million shares issued and outstanding and 148 million fully diluted. In a recent press release, the company announced that it has received approval from the TSX to purchase up to 10,132,012 of its common shares, which is equal to 10% of the public float as of Aug. 10, 2021.

The bid to purchase the shares commenced on Sept. 1, 2021 and will end within a year (or at Golden Arrow's discretion).

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Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) An affiliate of Streetwise Reports is conducting a digital media marketing campaign for this article on behalf of Golden Arrow Resources Corp. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. 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 Corp., a company mentioned in this article.

( Companies Mentioned: GRG:TSX.V; GARWF:OTCQB; G6A:FSE, )

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What’s To Blame?

(Don Boudreaux) TweetHere’s a letter to the Wall Street Journal: Editor: Daniel Yergin and Matteo Fini blame today’s serious shortage of computer chips…

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(Don Boudreaux)

Here’s a letter to the Wall Street Journal:

Editor:

Daniel Yergin and Matteo Fini blame today’s serious shortage of computer chips on pandemic lockdowns and on a drought in Taiwan, a fire at a Japanese semiconductor factory, and a winter storm in Texas. (“For Auto Makers, the Chip Famine Will Persist,” Sept. 23).

Alas, only one of these four events is to blame: lockdowns.

Factory fires, droughts, and winter storms – along with hurricanes, earthquakes, floods, tsunamis, tornados, and dust storms – happen every year, yet they never cause global supply disruptions of the sort that have become commonplace since Spring 2020. The only events of the past 18 months that are out of the ordinary are lockdowns; these, therefore, are the only genuine cause of today’s supply disruptions.

Blaming inadequate production on weather events (and on other routine mishaps such as factory fires) is akin to the Soviet-era practice of blaming the perpetual shortages of consumer goods in the U.S.S.R. on an uncooperative mother nature rather than on the iron fist of the state that obstructed voluntary commerce.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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