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Leapfrogging Legacy Banking To A Bitcoin Standard

Leapfrogging Legacy Banking To A Bitcoin Standard

Authored by Mitch Klee via BitcoinMagazine.com,

How looking at the history of technological…

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This article was originally published by Zero Hedge

Leapfrogging Legacy Banking To A Bitcoin Standard

Authored by Mitch Klee via BitcoinMagazine.com,

How looking at the history of technological adoption can give us insights into where Bitcoin could be embraced the fastest…

INTRO

Throughout time, technology has proven to change our lives by leveraging efficiencies in energy. New ways in how we hunt have saved time and energy for innovation and to live more intentionally. Currently, Bitcoin presents an immense opportunity to change the lives of those who are burdened by old forms of manipulated money and preserve their time and energy. It is the first self-sovereign, programmable money that is proving to destroy expectations of every “expert” imaginable. At the intersection of money and technology, Bitcoin’s network effect is spreading like a mind virus to all corners of the globe. This is not a coincidence but the manifestation of a zero to one moment; a radical new technology that will change nearly everything it touches.

This article explores the idea that some regions and nations have a higher susceptibility to adoption in new monetary networks. Specifically, I will outline how the unbanked populations of emerging countries can leapfrog legacy systems, straight into a new monetary standard. But first, let’s lay the groundwork for understanding how this can happen with some concepts.

DEMOCRATIZATION OF TECHNOLOGY

To understand leapfrogging, let’s first look into something that naturally happens when humans produce technology: the democratization of technology. As we make technology, the cost reduces, while the ease of production increases. Our tools get better, people’s skills improve, securing the material for production gets easier, logistics improve, and everything is less costly as humans continue increasing the output/yield over time. Simply put, cost goes down, while production goes up.

Figure 1.

A great example is the printing press. Before this innovation, each book had to be typed out or written one by one and distributed almost by osmosis. This means books were more expensive and were only in the hands of the few. After the printing press, people were able to automate a portion of the process by creating blueprints of the books. This cut down labor costs, and there was a huge explosion in printed material. This may have put people out of work; but it also introduced better dissemination of information to a wider group of people and new opportunities to produce more books for less cost and effort.

Another example is photography. Historically, taking photos on film took hours to produce in a dark room. The film had to be brought to a local expert and it would take several days to get back the finished product. Smartphones and photoshop technology made this essentially free. It was then possible to download an app or use the built-in app on smartphones, take pictures, and immediately process them. Democratization of technology has been happening across every single aspect of human society since the beginning of time. Humans create tools to make it easier and cheaper to survive. Each tool becomes better, we then expand and evolve with less energy improving the quality of life.

Fast-forward to the internet age. Emerging countries are just now tapping into the power of the internet. Although there are many factors underlying the reasons for expansion, one thing that is known is that technology builds on itself, making each successive technology easier to produce. Not only is there growth, but there is exponential growth. Certain times throughout history, technology has made such a large leap forward that it allows extremely poor countries to skip the legacy technology and quickly adopt the new one. This is called leapfrogging.

LEAPFROGGING EXPLAINED

Leapfrogging is when the cost to produce one technology is too great for a population, so when a new, drastically cheaper technology is created it’s quickly adopted and the old tech is skipped. This is the coexistence and benefit of separate populations within society. Let’s look at the mobile phone revolution as a way to explain leapfrogging. Some societies did not have the wealth or infrastructure to adopt landlines and phone communication when it was brand new, but when the mobile phone was introduced, this gave mostly everyone around the world the ability to opt-in.

Figure 2. Landlines in the U.S., 1900–2019.

Figure 2 shows the number of landlines in the U.S. population from the 1900s to 2019. Throughout the entirety of the 20th century, the landline was being adopted in the U.S. Consequently it only took a decade to dethrone this old technology. The decline started when the benefit of cell phones outweighed the cost compared to landlines. This is where democratization hit the tipping point and we saw a huge jump from one technology to the next. Now it’s extremely cheap to use technology that is 100 times or even 1,000 times more advanced than the previous. Mobile phones usurped landlines because they were more affordable, easier to use and more mobile. Figure 2 shows how quickly a society can adopt a technology that has significantly more benefits than the previous, even in an advanced society.

A similar thing is happening with television and the internet. Netflix came out and disrupted how people consume media on the television. As more platforms emerged, and people realized they could pay a fraction of the cost for a Netflix subscription rather than $100 for cable and a bunch of commercials, the switch was easy. Legacy systems were bogged down by all of the brick-and-mortar stores and overhead costs. They could not compete and pivot quickly enough, so they lost their seat at the table.

Figure 3. Number of telephone subscriptions in the U.S. versus worldwide.

When comparing fixed telephone subscriptions to other countries, the U.S. was way ahead of most. Many factors were contributing to this. Wealth played a huge part, but much of it was the production and first movers’ advantage. The U.S. was the first country to set up telephone lines from Boston to Somerville Massachusetts and expanded from there. Other countries did not have this opportunity, so they were laggards in the technology simply by default. It also made it easy to have a grid to run on top of, being a technologically advanced country with a power grid. Because it was so resource-heavy to set up this grid, this took over 30 years to build up the infrastructure.

Figure 4. Landline subscriptions compared to GDP per capita, 2019.

One of the main reasons why it was so hard to increase telephone subscriptions in other countries is because of the initial cost. You can’t just tap into a telephone line, there needs to be a large grid, infrastructure and companies/governments willing to build out this grid. Figure 4 shows that there is a rough line at a GDP per capita of $5,000 to get off zero and start communicating via landline. As the GDP per capita grows in a country, it is more likely they adopt fixed landlines. This is a huge barrier to entry as they try and compete to be a part of the 21st century. With telephones, it brings an easier flow of information across long distances quickly. These are important technologies that helped first-world countries advance quicker than their counterparts. This technology could mean the difference between surviving and thriving in the modern era.

Figure 5. Mobile phone subscriptions versus GDP per capita, 2019.

Things get much different when you start looking at mobile phones in Figure 5. To have a mobile phone is drastically cheaper than having a landline, all costs considered. Before, you needed the infrastructure and everything that came with installing a landline phone. But with mobile phones, even at a GDP per capita of less than $1,000, you get ~50% penetration of adoption within the population. All of the countries that were left out of communication with landlines, now have leapfrogged the old technology, right into a new standard of mobile phones.

People benefit, businesses benefit and countries benefit immensely from these technologies. With mobile communication, people have higher leverage over their energy output. Businesses and life in general are more efficient, in turn creating a higher GDP for the country. It is a feedback loop that is good for all of humanity. When one group of people creates new technology, everyone benefits at one point or another.

FROM LANDLINES TO MOBILE PHONES TO INTERNET-CONNECTED SMARTPHONES

Not only are poorer countries leapfrogging into mobile phone communication, but they are, in turn, jumping right into the internet age. On top of that, (Android) smartphone costs are dropping significantly every year, with the average cost down by 50% from 2008 to 2016. With the growing ability to connect with the rest of the world comes more opportunities to learn and grow with the rest of the world. An incredible amount of information is available on the internet, and the benefit of being on the network is immeasurable.

Figure 6. Mobile versus landline subscriptions, worldwide, 1960–2019.

When comparing the numbers of mobile phone users to the numbers of landlines, you get a huge disparity in the pace at which they were adopted. Fixed landlines were around for almost 50 years before they started to see some real competition. Thinking back to our Figure 5, this makes sense, because the cost to build infrastructure is drastically higher than that of mobile phones. The opportunity a landline brought to civilization was immense, but the cost-effective mobility of cell phones transcends previous communication technology by a longshot.

As of September 2021, the world’s population was ~7.89 billion people. Of that, there are 10.5 billion cell phones with network connections. That is 2.52 billion more activated phones than there are people. This becomes thought-provoking when adoption data starts to reveal where mobile phones are headed next.

As people adopt mobile phones, smartphones are becoming cheaper and more abundant. The cost of production for smartphones is less and less each year, and soon there will be little reason to have a cell phone without internet connection because the cost difference will be so minuscule. Smartphone abundance is allowing people around the world to tap into the internet and it is estimated that “by 2025, 72% of all internet users will solely use smartphones to access the web.”

Figure 7. Share of the population using the internet, 1990–2019.

Currently, the world is in a transitionary period of communication. Not all of the world has access to the internet, only 65%, with an increasingly rapid pace of adoption. Because it is so inexpensive to get a mobile phone, and the benefits are immense, the world is being onboarded at an incredible rate.

To answer the question “What is Leapfrogging?” we can look directly at mobile phones. But it’s not just one leapfrog, it’s more of a continuous onboarding to the digital revolution for the entire human population. Things are getting cheaper, and technology is moving exponentially forward, toward a more connected future. Soon, everyone will have access to the internet and will bring about new and exciting opportunities for the world to grow. With the high rate of adoption in communication technology, mobile phones swept across low-GDP countries allowing information to spread. Smartphones are a small hop away from mobile phones. With smartphones comes all sorts of opportunities not to mention the connection to the world’s internet. In developing countries, the internet is starting to hit its hockey stick moment. Adoption continues to grow and as smartphones get cheaper, more people in the world have access to the internet, connecting them to their local and global economies and new innovations will come about in unforeseen ways.

This begs the question, what monetary network will they use to transact in the digital age? It’s taken years to get the legacy banking system up to speed. We’ve bootstrapped and “Frankensteined” many different ways to connect the internet to a centuries-old banking infrastructure, but these newly onboarded countries have the opportunity to skip that altogether. With no legacy banking infrastructure rooted within the nation, this leaves the door wide open for a new legacy.

LEAPFROGGING ONTO A BITCOIN STANDARD

It seems the stage is set for a paradigm shift. A perfect storm is brewing in populations that lack bank accounts and access to store their wealth. Coupling this with connection to the internet, and 21st-century e-commerce and monetary system, it is impossible for countries not to adopt it. Because bitcoin is a global asset with no intermediaries, its infrastructure is inherently global. Any improvements to the network, the entire world will benefit automatically without having to update the old tech. Unlike landlines, there is no infrastructure to build, and the barrier to entry is almost zero. You just opt in with a bit of hardware and an internet connection.

As of 2017, according to the World Bank, there are 1.7 billion adults in the world without a basic transacting account. Most of these countries with higher rates of unbanked are poor, have high rates of inflation and lower currency stability, not to mention a disconnected state government ripe with problems. This is extremely common when looking at currencies in other low-GDP countries. So, what are some of the biggest factors in which people would want or need to adopt Bitcoin? If we can answer this question, then maybe we can quantify and pinpoint which countries have the biggest opportunity and most to gain from adopting a Bitcoin standard.

Figure 8. World’s most unbanked countries (Source).

Figure 8 shows the top-10 most unbanked countries as of February 2021. The Oxford dictionary defines “unbanked” as “not having access to the services of a bank or similar financial organization.” Much like building the infrastructure for landlines, it’s expensive to build banks and serve the local economy. Not to mention, many of the people living in these countries don’t have the amount of money that would warrant the cost of owning a bank account. Some even share bank accounts with members of their families to save on costs. There is a huge opportunity to solve the problem of banking in low-GDP countries, but many of the digital banking companies around the world are constrained by regulation and geographical jurisdiction. It may be hard to grasp the importance of a bank account having never lived without one, but without a bank, citizens cannot secure funds safely. Without secure funds, the future is uncertain. This is where Bitcoin can solve some of the problems in these less developed and emerging countries. There are three specific ways in which these problems could be solved.

1. Bank the Unbanked

Bitcoin gives everyone the ability to be their own bank with something as little as a cell phone. All that’s needed is to be connected to the network and accept funds. The smartphone does all of this. It allows people to download a bitcoin wallet, connect to the internet and start transacting. There are many ways in which one can use this wallet. Coincidentally, the countries above who have low banking numbers within their population, also have mobile phones and high internet penetration. This is an open door from a technological standpoint, allowing people to opt into Bitcoin and secure their funds digitally.

In addition to using the Bitcoin network to transact on your phone, you can also use it as a cold storage solution. Cold storage is similar to a savings account. This savings account or cold storage is disconnected from the internet, making it harder for people to steal your funds. With the old technology of banks, you would have to pay for this solution, but with Bitcoin, it’s free, just download the software and/or buy a hardware wallet. There are some cold storage solutions where you can pay for a hardware device, but creating a phone wallet and securing your keys, gives the people an entry point and on-ramp to storing their wealth in a digital bank.

2. Securely Store Value Over Time

The second opportunity is the store of value function. Many of the countries that have unbanked populations and poverty issues are a result of a currency problem. In my previous article, “Bitcoin As A Pressure Release Valve,” I wrote that certain countries have hyperinflated currencies with no option but to turn to the black market. Most of the time, these countries use the U.S. dollar to transact since it holds its value better relative to their currency. Strictly from a monetary standpoint, bitcoin is scarce. It is the most scarce form of money there is. There will only ever be 21 million bitcoin in existence and when the value rises, the production does not increase. This is called elasticity or the lack of elasticity in bitcoin’s case. Unlike fiat money, no government, central bank or agency can print more. And unlike gold, silver or any other commodity, when the demand rises, the amount that is mined stays the same. The first completely inelastic asset in existence is a result of preprogrammed architecture, with consensus in the network that’s default is to not change the protocol.

People that live in countries where the money is known to be manipulated, understand Bitcoin almost immediately. When the idea of something that can’t be manipulated is presented, the concept of scarcity and 21 million is understood. With the reality of incorruptible money, the current regime in power can’t stuff their pockets without alienating the population through force. These people understand this idea because they have experienced it firsthand. When food prices rise faster than people can spend a weekly budget on groceries, it is immediately apparent the importance of a completely scarce, un-manipulatable asset.

In developed countries with low levels of unbanked, people have ways of storing their wealth. They have a 401k and IRA, and most people own property. This is a way of storing value over time. It may not be completely efficient, but it is sufficient enough to escape some level of inflation. The alternative would be to keep your dollars in a savings account, and the real yield of that is negative and not a smart way to store money. These countries put money in financial devices, because it is the smart thing to do and it preserves time and energy. Unbanked countries have no way of storing long-term value. It is degraded and evaporated through manipulation and high levels of money printing. Emerging countries cannot store time and value into financial instruments. There is no Apple stock or S&P 500 to put money into. They are stuck with low levels of wealth that are stolen away on an ever-moving treadmill. There is no way of truly saving value or energy spent over time.

For the first time, Bitcoin gives the world, particularly those in emerging countries, the ability to hold their value in a closed system that cannot be inflated. Much like the opportunity the mobile phone brought to change communication, bitcoin is the first “store of value” that is available for low-GDP countries to buy and hold. It allows them to securely transfer their wealth over time, without fear of inflation or confiscation. Add on top of that, if they need to transfer wealth out of the country and flee an oppressive regime, bitcoin is the first asset that gives the ability to do so. Large amounts of gold cannot be taken on a plane or property and homes cannot be transferred to another country. Bitcoin gives people the freedom to do what they want with their earned value, without fear of a centralized power removing it. Bitcoin preserves the fundamental human right of property.

3. Connection to the Digital Economy

The third problem Bitcoin solves is connecting and transacting digitally. Being a digitally native asset, bitcoin smooths the rails of commerce allowing low-GDP countries to join the 21st century of commerce. This is huge, and what cell phones did for communication, digital commerce will do the same. It immensely increases our ability to transact and exchange value. Bitcoin allows anyone, anywhere, to join a digital transacting network and exchange value natively over the internet, whether in person or without knowing them at all.

Digital economies move at the speed of light, while old-school economies move at the speed of osmosis. This brings more time and efficiency for people on both ends of the transaction. Businesses spend less time on transactions, widen their addressable market, and start putting more time and effort into other things that can improve their work. It is the difference between transacting daily in cash and using a preprogrammed point of sales system. It is simply better.

Not only does Bitcoin make things easier and frees up more time, but it is programmable money. Like the internet, Bitcoin can be built in layers. Each layer brings a new way to use it that widens the possibilities and use cases. What the internet did for communication, Bitcoin will do for money.

Combining all three of these factors, you get a massive magnetic pull toward adoption of the new technology. It is hard to slow the movement of technological adoption and impossible to stop. Like throwing a match on a tinder-filled hillside, years of opportunity build up in countries that lack technology where innovation and adoption prepare to explode at the right moment.

QUANTIFYING BITCOIN ADOPTION IN LOW-GDP COUNTRIES

Figure 9. LocalBitcoins and Paxful Vietnamese dong (VND) combined volume in Vietnam (Source).

Looking at every one of the top-10 countries from Figure 8, they all have meaningful adoption in Bitcoin and it is growing every week. Not only is Vietnam number two on the unbanked list, but it is also number one on the “Chainalysis 2021 Global Adoption Ranking.” In fact, looking at Figure 10 of adoption through LocalBitcoins and Paxful, USD volume shows that every one of the countries in the top-10 list of unbanked have meaningful adoption.

Figure 10. LocalBitcoins and Paxful Vietnamese dong (VND) combined volume.

What does this tell us about Bitcoin adoption in unbanked countries? It tells us that it’s working. Continuing to see these trends improve will be good for Bitcoin adoption and not to mention the countries in which they are adopting it. All the ingredients are there. Most are unbanked with high internet access and an unreliable currency that isn’t natively digital. All you need is time for the adoption to take hold.

There are also some concerns that come up when thinking about Bitcoin adoption. Like, “How can they adopt bitcoin when it is so volatile?” Well, there are a few solutions to this problem. The first is that when a population has no choice, something as volatile as bitcoin could mean the difference between losing 30% or losing 90% over the span of one year. Keep in mind that bitcoin is already solving three of the major problems listed above, we are just remedying the problem of volatility.

First, look at just bitcoin and its use cases today. For some countries, their currency is just as volatile if not more volatile than bitcoin. Not only that, but it is volatile to the downside, continuing to lose value as the government steals and prints away spent time and energy. If bitcoin were to be used, sure it might be volatile, but this volatility is either short lived, or it’s to the upside.

Now look at bitcoin while using it for everyday transactions through Strike, as a more technical solution. This solution is currently available now in El Salvador as a test case and is starting to roll out to more and more countries. People use the Bitcoin and Lightning rails every single day but transact in USD, choosing to either save in bitcoin or not. This solution gives the best of both worlds. One, a population has the ability to transact short term in a currency that isn’t volatile, like other emerging countries. Two, this gives access to the payment rails of Bitcoin and the ability to save in the most scarce asset in existence. Looking back historically, bitcoin has grown at a 200% compound annual growth rate and this has the opportunity to conserve and grow wealth immensely. For someone in a developing world, this is life changing.

As this trend of adoption in underbanked countries continues, new and exciting ways where Bitcoin is used will emerge. For the first time in history, countries have the ability to store wealth in something that cannot be stolen. It gives the opportunity to transact freely without the permission of the state or government, and it allows people to break free from imposed serfdom. Bitcoin is here and it is only getting bigger. There is a change in the tides of time, and Bitcoin is a once-in-a-millennia technology that is pulling the shores.

Tyler Durden
Fri, 12/03/2021 – 18:20








Author: Tyler Durden

Precious Metals

Eldorado Gold: BMO Reiterates $20 Price Target

This week Eldorado Gold (TSX: ELD) provided full year 2022 production and cost guidance as well as a 5-year production
The post Eldorado Gold: BMO Reiterates…

This week Eldorado Gold (TSX: ELD) provided full year 2022 production and cost guidance as well as a 5-year production outlook. By 2022, Eldorado expects total gold production to be 460,000 to 490,000 ounces, or about 7% higher than the prior guidance. Cash operating costs are expected to be between $640 and $690 per ounce, while the all-in sustaining costs are expected to be between $1,075 and $1,175.

Eldorado Gold also raised their 2023 and 2024 production guidance, bringing them up 4% and 7% respectively. The company additionally expects by 2026 to be producing between 510,000 and 540,000 ounces of gold per year.

Eldorado Gold currently has 11 analysts covering the stock with an average 12-month price target of US$13.50, or a 42% upside to the current stock price. Out of the 11 analysts, 6 have buy ratings, 4 have hold ratings and the last analyst has a sell rating. The street high price target sits at US$17.51, or an 85% upside to the current stock price while the lowest comes in at US$9.25.

In BMO Capital Markets’ note, they reiterate their outperform rating and $20 12-month price target saying that the company is “approaching the growth spurt.”

For the 2022 guidance, production came in line with BMO’s 471,000-ounce estimate while all-in sustaining costs came in slightly above their $1,070 per ounce estimate. Onto the improved 5 year guidance, they say that the outlook looks a little above their expectations.

Lastly, they say that if you take the midpoint of the 2025 guidance, which is 550,000 ounces produced, it would be a 5% 3-year organic CAGR, which is “a rarity among intermediate and senior producers at present.”

Below you can see BMO’s updated estimates.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Eldorado Gold: BMO Reiterates $20 Price Target appeared first on the deep dive.


Author: Justin Young

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GSP continues to explore past-producing Alwin Mine, as copper price support remains solid

2022.01.22
Copper has been one of the biggest winners of the commodities complex since 2020.
Not only is the tawny-colored industrial metal an essential…

GSP continues to explore past-producing Alwin Mine, as copper price support remains solid

2022.01.22

Copper has been one of the biggest winners of the commodities complex since 2020.

Not only is the tawny-colored industrial metal an essential part of economic growth, it is also imperative to the global transition towards sustainable energy sources.

Because electric vehicle are copper intensive (in fact tdhey use 4x as much copper as a regular vehicle), demand for copper has risen at an unprecedented pace with no signs of slowing down.

Wind and solar energy systems have the highest copper content of all renewable energy technologies, making the metal even more important in achieving climate goals.

Driven by robust industrial demand, copper prices surged to an all-time high of $4.77/lb in May of 2021. Compared to its trough of $1.94/lb in early 2016, this represents a 150% rally within a span of five years.

Source: Kitco

A report by Goehring & Rozencwajg, which specializes in natural resource investments, points out that recommendations on copper investments have focused primarily on bullish demand trends; the supply side of the equation also must be factored in.

The primary concern lies in the inevitable depletion of existing copper mines — a problem that has been brewing for over a decade.

A dearth of new copper discoveries and capital spending on mine development in recent years means that once an existing mine becomes exhausted, its output may not be replaced in time to meet the growing demand.

Moreover, since 2000, most reserve additions have come from simply lowering the cut-off grade and mining lower-quality ore as prices moved higher (e.g. Chile’s Escondida copper deposit), a practice that may not be feasible for geological reasons in the upcoming cycle, as Goehring & Rozencwajg argues.

Source: S&P Global Market Intelligence

Although there will be new projects coming online around the globe (DRC, Panama and Mongolia), these will only offset depletion at other existing mines, leading to stagnant overall mine supply growth.

Acuity Knowledge Partners, formerly part of Moody’s Corp., is predicting a widening demand-supply gap that could reach as high as 8.2 million tonnes by 2030.

For this reason, exploration companies holding high-quality copper assets will appeal to investors.

GSP Resource Corp.

One copper junior to recently catch the attention of AOTH, is GSP Resource Corp. (TSXV:GSPR, FRA:0YD). Vancouver-based and British Columbia-focused, the company’s flagship is the Alwin Mine Project located 18 km from the town of Logan Lake. The past-producing mine is southwest of the New Afton and Ajax mines, and less than a kilometer away from the Highland Valley Mine.

GSP was formed in 2018 with the goal of finding copper-gold-silver assets in southwestern BC. Management prefers the area’s three-season climate to the Golden Triangle of northwestern BC, which gets a lot of snow and therefore has a limited exploration window, roughly May to October. The company has an option to acquire a 100% interest in the past-producing Alwin copper mine, located in BC’s Highland Valley copper camp.

Alwin Mine Project

The Alwin Mine Project is 18 km from the town of Logan Lake, southwest of the New Afton and Ajax mines, and less than a kilometer from the Highland Valley copper mine owned and operated by Teck Resource Corp.

Alwin Mine Project location map

Small-scale mining was conducted at the Alwin Mine in the early 1900s, with modern exploration and mining occurring in two periods, from 1967 to 1982 and from 2005 to 2008. In all about 36,000 meters of historical drilling has been completed. 

The first copper occurrence discovered in the Highland Valley was the Ashcroft glory hole, an outcropping copper deposit that saw limited mining during the First World War, then lay dormant until the 1960s when it was explored on a larger scale.

From 1967 to 1970, 6,940m of surface diamond drilling in 81 holes was drilled along the main Alwin mineralized trend, and 5,860m of underground drilling in 119 holes was completed in 1,400m of mine workings.

In 1980, Dekalb Mining Corp. expanded the capacity of the mill to 700 tons per day and resumed mining of the Alwin trend. Total production was 155,000 tonnes grading 1.54% Cu. Mining was suspended in 1981 due to low copper prices. At the conclusion of mining, a trackless development decline was extended to a depth of 270m and 3,935m of drilling was completed in 76 underground holes. Dekalb calculated a resource of 390,000 tonnes grading an average of 2.5% Cu, after factoring for 25% dilution. No cut-off grade was reported.

This historical resource is not National Instrument 43-101-compliant and therefore GSP is not relying on it for accuracy; more drilling needs to be done to bring the resource up to modern reporting standards.

An important aspect of the GSP story, is the fact that previous underground operators were focused on the high-grade copper mineralization — a series of deep and narrow replacement deposits. At a 1.5% cut-off grade with copper being less then a dollar a pound, and getting as low as US$0.56, the mine was never considered from a bulk tonnage, open-pit perspective. Ironic, considering that is precisely what the Highland Valley has become known for, with five large pits developed over the past 60 years including Teck’s Highland Valley open-cast copper-molybdenum operation.

Developed to a depth of 300 meters, the Alwin Mine produced over 233,000 tonnes from five zones between 1916 and 1981. It milled 3,786 tonnes of copper, 2,729 kilograms (87,739 oz) of silver and 42.6 kg (1,369 oz) of gold.

Fast forward to today, when the economics of copper mining are completely different, with copper currently trading at $4.53 a pound compared to a ballpark average 68 cents during the 1960s and early 1980s. The much higher copper price now makes the lower-grade areas of the Alwin Mine project more interesting if they can be developed into an open-pit mine.

GSP management believes there is a low-grade halo of mineralization north and south of an east-west trending structure, that could be bulk-tonnage and open-pittable.

A lot of historical drilling has been done at the Alwin Mine, however most of it was underground with short, tightly-spaced holes targeting the high-grade material. Not much was drilled from surface around the edges of the mine.

GSP decided to investigate what would happen if they stepped back from the east-west trending structure the mine sits on, at first pointing the drill south to north.

Drilling in 2020 from the southern property boundary towards the mine, GSP hit numerous low-grade halo structures that proved to be in excess of the Highland Valley pit’s 0.28% CuEq mining head grade. A side note: the Alwin property is so close to Highland Valley that when you stand on it you can see, hear and feel the mining trucks rolling “next door”.

The best intercept from the 10-hole 2020 drill program returned 62 meters at 0.3% copper equivalent (CuEq), “with some very high grades of silver in the guts of the high-grade zone,” CEO Simon Dyakowski told me.

2021 exploration

GSP has completed its 2021 drill program and all indications point to a porphyry-style copper system similar to the mineralization found at Highland Valley.

Last fall, a three-hole program was designed to further test the bulk grade of the Alwin deposit and surrounding lower-grade rock with the drill holes collared from the north of the historical deposit. Assay results are expected in the first quarter.

According to GSP, most of the alteration and mineralization observed in the upper and lower portions in all deeper drill holes intersecting rock greater than 20 meters from the shell of the Alwin deposit have copper porphyry-style characteristics similar to that seen nearby in the Highland Valley camp.

Together with last summer’s drilling, GSP’s 2021 eight-hole program totaled 2,313 meters, testing the bulk-tonnage copper potential of unmined mineralization within and surrounding the historical Alwin Mine. (4,200 meters and 18 holes in the past two seasons)

Highlights included 3.5% copper, 2.4% gold and 39.6% silver over 6.4m (4.66% CuEq) and 2.71% CuEq over 35.5m.

Bulk tonnage grade highlights were 0.61% CuEq over 164.6m, 0.14% CuEq over 176.7m, and 0.21% CuEq over 229.7m including a higher-grade 0.28% CuEq over 158.5m and 0.48% CuEq over 79.3m.

Among other milestones achieved last year, GSP obtained an important five-year exploration permit, and completed a 3D digital model of the Alwin Mine’s workings and drill data.

The model includes all known underground workings, separated into drift and declines, raises, cement-filled, rock-filled and open stopes and the numerous unmined copper-silver and copper-gold mineralized portions of the 425-meter long by 275m-deep by 150m-wide zone.

The permit allows GSP to carry out exploration activities including drilling, trenching and IP lines, for five years.

Also in 2021, GSP optioned 60% of its its Olivine Mountain Project located southeast of Alwin and about 25 km northwest of the producing Copper Mountain mine, to Full Metal Minerals. Exploration programs will be operated by GSP until the option agreement is completed, including a sampling program that started in September with results pending.

To fund current and upcoming activities, the company closed a $455,000 oversubscribed financing back in August.

“Work at Alwin to date continues to support the reimagining of the Alwin Mine from a high-grade underground operation to a potential shallow, bulk tonnage open-pittable deposit model,” Dyakowski stated in the Jan. 19 news release.

2021 drilling plan

So far GSP’s plan is working. Mineralization has been identified in deep (>300m) holes more than 20 meters from the mine, which appears to verify GSP’s geological model of a low-grade halo of mineralization north and south of the east-west trending structure.

“We’re starting to be able to envision a sizeable amount of material as bulk tonnage,” says Dyakowski.

But the really exciting part of the project concerns the type of mineralization GSP could be looking at.

During 2021 drilling a new mineralized zone was discovered from hole AM21-02, shown as a dotted red circle on the above map. Previous drilling didn’t go very deep, but hole 2 of the 2021 program was completed to a depth of 367m. Near the end of the hole, the rock was found to be increasing in alteration. From 338m to 351m, the exploration team intersected what GSP describes as “an intensely mesothermal to epithermal clay style altered shear hosting dilational quartz vein fragments hosting coarse-grained pyrite and chalcopyrite.”

In plain English? This is evidence of a porphyry. Dyakowski explains:

“We punched through a lot of pyrite right in the area of a geophysical anomaly so we think that might be the top of an unknown porphyry. That’s something we’re going to save for next spring when we have a whole season of deeper drilling, but one of the main theories on Alwin is it is a skarn replacement system that’s associated with a larger porphyry.”

A porphyry deposit is formed when a block of molten-rock magma cools. The cooling leads to a separation of dissolved metals into distinct zones, resulting in rich deposits of copper, molybdenum, gold, tin, zinc and lead.

Porphyry deposits are usually low-grade but large and bulk-mineable, economics of scale come into play making them attractive targets for mineral explorers. Porphyry orebodies typically contain between 0.4 and 1% copper, with smaller amounts of other metals such as gold, molybdenum and silver.

In Canada, British Columbia enjoys the lion’s share of porphyry copper/ gold mineralization. These deposits contain the largest resources of copper, significant molybdenum and 50% of the gold in the province. Examples include big copper-gold and copper-molybdenum porphyries, such as Red Chris and Highland Valley.  

GSP believes the mineralization it is encountering is part of the Highland Valley hydrothermal system associated with the Highland Valley copper mine, which has been operating for 50-plus years. Owner Teck Resources is planning an expansion that would extend the mine life to 2040.

A word of caution. GSP doesn’t yet know whether, a/ If what was found in hole 2 means it has hit a porphyry. More drilling is required to bolster this case. And b/ If it is indeed a porphyry system, is it a porphyry unique to the Alwin mine, or is it an extension of Teck Resources’ next-door Highland Valley copper-moly porphyry? An interesting fact to note here is Teck Resources has a copper-moly porphyry, GSP has been assaying a lot of gold and silver, the highest grades drilled yet to date in the Valley.

We do know that Teck is planning on expanding its mine and that there is a network of roads and drill pads to the west of the pit edge, as shown on the map below.

Teck’s Highland Valley property in relation to Alwin

We learned from a local media source that the company is planning on extending the mine life to 2040 from its original closure date of 2027. The company is looking to expand the footprint by 800 hectares and would build out the Highmont pits and waste rock dumps. Teck has reportedly applied for permits needed to expand the more than 50-year-old operation. If approved, there would be a projected 25% increase in production, with construction starting in the first quarter of 2023.

How does the expansion affect GSP? Well again, it depends on whether the potential porphyry is its own, or an extension of Highland Valley’s. If GSP ends up discovering a new porphyry next to Highland Valley’s deposit, it may open up the possibility of a partnership with Teck, which could use ore from the Alwin mine as mill feed for its own operation, maybe even expanding it beyond 2040.

Dyakowski says he’s confident “we’ve got more than enough space to develop our own open-pit deposit and potentially look at a block cave just on our ground, but it does beg the question what is just over the line to the south and to the east, given that they are planning to mine there.”

GSP has other options besides partnering with the Canadian mining major. Only 45 minutes drive away on a paved highway is Nicola Mining’s fully permitted mill which is open to contract milling. Another potential partner is New Gold, which operates the New Afton Mine to the northeast. Gold Mountain Mining, focused on re-opening the Elk Mine about 57 km from Merritt, has been trucking their ore to New Afton for processing, suggesting that GSP could do the same with its ore from Alwin. 

“Alwin couldn’t be in a better location from a development perspective,” says Dyakowski, “it’s very much a brownfields development in all directions.”

2022 plans

This year at the Alwin Mine Project, GSP will focus on incorporating new drilling data into the geological model, and updated the Alwin Mine 3D model. Management is planning a substantial infill drill program to support a future resource estimate, as well as seeking additional exploration targets.

At Olivine Mountain, there will be a partner-funded project review and sampling program, including at Hop, a copper-gold porphyry target.

In its shareholder update, the company says it is continually evaluating new opportunities to add value, through acquiring and developing projects with a southwestern BC focus.

Conclusion

At AOTH we are very encouraged by what we are seeing from GSP at its Alwin Mine Project.

Alwin has always been thought of as a high-grade underground mine and for good reason. During it last phase of production, 1916 to 1981, copper was a fraction of the >$4.00 per pound it is worth today, making any low-grade material surrounding the mine un-economic. Times have changed and the low-grade halo that appears to be north and south of the mine might, at +$4 copper, be a stand alone bulk-mined open-pit.

Clearly that is GSP’s intention and the company, imo, appears to be well on its way to proving the model. Between 2020 and 2021 drilling, they have come up with what we consider to be a significant amount of mineralization.

The last three holes drilled in the fall are vectoring north-south toward the mine, rather than the previous south-north drilling. GSP describes most of the alteration and mineralization observed in the upper and lower portions of these holes as having “copper porphyry-style characteristics similar to that seen nearby in the Highland Valley camp.”

We are eager to see the assays — they are expected to be available in Q1 — and what GSP is planning next at Alwin, once they have boots back on the ground in the spring.

GSP Resource Corp.
TSXV:GSPR, FRA:0YD
Cdn$0.18, 2022.01.20
Shares Outstanding 20.2m
Market cap Cdn$3.6m
GSPR website  

Richard (Rick) Mills
aheadoftheherd.com
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Author: Gail Mills

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Dolly Varden has 21 drill holes left to report, as gold, silver and copper prices bounce

2022.01.22
Predominantly a silver explorer, Dolly Varden Silver’s (TSXV:DV, OTC:DOLLF) flagship project is located in the southern part of British Columbia’s…

Dolly Varden has 21 drill holes left to report, as gold, silver and copper prices bounce

2022.01.22

Predominantly a silver explorer, Dolly Varden Silver’s (TSXV:DV, OTC:DOLLF) flagship project is located in the southern part of British Columbia’s Golden Triangle, an area well-known for its base and precious metals deposits.

The property hosts four historically active mines — Dolly Varden, Torbrit, North Star and Wolf — all have parts that remain unexplored to this day. More than 20 million ounces of high-grade silver have been produced from these deposits between 1919 and 1959.

Dolly Varden’s project lies to the west of Hecla Mining’s Kinskuch Project. It also borders Fury Gold Mines’ Homestake Ridge, which it acquired late last year to consolidate what it considers to be an emerging silver-gold district.

The consolidated project, named Kitsault Valley, is now among the largest, high-grade, undeveloped precious metal assets in Western Canada, with a combined mineral resource base of 34.7Moz silver and 166,000 oz gold in the indicated category.

Regional exploration and reconnaissance drilling also led to the identification of a large new porphyry copper-gold system that may be related to others in the Golden Triangle such as KSM, Treaty Creek, Saddle, Red Chris and Snowfield.

In December DV announced encouraging results from last year’s regional exploration and reconnaissance drilling on its 100% owned Dolly Varden project, which is host to two past-producing silver mines (Dolly Varden and Torbrit) and two other historically active mines (North Star and Wolf).

Encompassing 10 holes testing five regional exploration targets, the drill results demonstrated “excellent exploration and resource expansion potential on the property,” DV stated in the Dec. 10, 2021 news release.

Results are pending for the 21 holes drilled near Dolly Varden’s existing resource.

Dolly Varden Project

The Dolly Varden silver project comprises 8,800 hectares (88 sq km) in the Stewart Complex of northwestern BC, which is known to host base and precious metals deposits.

Dolly Varden project map

Mining activity dates back to 1910, when the original Dolly Varden Mine was discovered by Scandinavian prospectors.

In its early days, it was among the richest silver mines in the British Empire. The other deposit in the area to see production later was Torbrit, which, at one time, was the third-largest silver producer in Canada.

Historical records show these two deposits together have produced more than 20 million ounces of high-grade silver between 1919-1959, with assays as high as 2,200 oz (over 72 kg) per tonne.

Production subsequently ceased due to low silver prices, and the assembled property was eventually acquired by DV with a view to re-awakening the historical silver mine.

An updated NI 43-101 resource estimate completed by the company in 2019 revealed 32.9Moz silver in indicated resources and 11.477Moz inferred, for a total of 44Moz Ag, all adjacent to the historical deposits.

Dolly Varden project map

Drilling and underground work that went into the resource estimation confirmed that the mineralization occurs as two styles.

The first is VMS (volcanogenic massive sulfides) similar to that mined at Eskay Creek to the north. Once the highest-grade gold mine in the world, Eskay Creek produced 3.3Moz gold and 160Moz silver at average grades of 45/g/t Au and 2,224 g/t Ag respectively between 1994 and 2008.

The second is cross-cutting epithermal mineralization similar to that being developed at Pretium’s Valley of the Kings deposit (Brucejack Mine).

The southern part of the Golden Triangle is the least explored of all. Only 3% of Dolly Varden’s property has been explored in detail up until now, leaving plenty of potential discovery upside.

According to DV, both the Eskay Creek and Valley of the Kings deposits are located on the same structural trend to the north of the company’s ground. So, it is possible that Dolly Varden represents the southern end of a large silver district that extends northward.

To prove this, the company completed 40 drill holes (11,397m) in 2020, 19 of which were in the Torbrit area. The rest were reconnaissance and exploration drill holes, testing multiple areas on the property.

Highlights included 310 g/t over 6m, a stand-out 304 g/t over 45.82m, and 306 g/t over 5.10m. Higher-grade core within those intercepts featured 648 g/t over 6.06m, 1,595 g/t over 1.06m, and 1,290 g/t over 0.6m.

2021 drill results

Last summer, the company kicked off a surface diamond drill program on the Dolly Varden property. A total of 31 drill holes (10,506m) were completed during the 2021 field season.

This drill program was part of an aggressive two-year campaign to infill and expand the high-grade silver resource at the Torbrit deposit, and to test multiple highly prospective targets throughout the property.

The drill results encompassed 10 holes that tested five regional exploration targets on the property, including the Wolf Vein extension and Western Gold-Copper belt.

Drill hole location map

The highlight was drill hole DV21-273, which tested the southwest projection of the Wolf Vein, 94m down plunge from the current mineral resource at the Wolf deposit.

This hole intersected 1,532 g/t Ag, 0.44 g/t Au, 2.11 % Pb and 1.07% Zn over 1.22m, within a brecciated sulfide-rich quartz vein hosted within a broader pyrite stockwork breccia zone of 17.50m averaging 214 g/t Ag and 0.47% Pb.

The current resource estimate for Wolf is 3.83 million ounces of silver at 296 g/t in the indicated category. The deposit is located approximately 2 km northwest of the Torbrit deposit, which hosts most of Dolly Varden’s resources at 25 million ounces of silver indicated and 10.5 million ounces inferred.

Wolf Vein DV21-273 section, looking northeast

Hole DV21-273 is also significant as it tested the prospective Hazelton volcanic rock that underlies the sedimentary units of the Upper Hazelton for the Wolf Vein extension.

Discovering that the strong potassic alteration associated with silver mineralization within the volcanogenic Torbrit deposit continues beneath the sediment suggests that the mineralizing system continues to the west of the 4.5 km long surface anomaly.

According to DV, this opens up the exploration potential of the entire bottom of the Kitsault Valley north of Wolf towards the property boundary and onto the Homestake Ridge property, which the company recently acquired from Fury Gold Mines.

Dolly Varden and adjacent properties, including Homestake Ridge to the north.

Wolf is the northernmost deposit found at the Dolly Varden project. Modeling of the epithermal vein style deposit indicates a stepped vein system, offset by steep faults. The hanging wall has a strong barium signature and the veins contain barite and quartz. There are underground drifts at Wolf, but no historical production was reported.

Drilling at other silver prospects also returned promising results. At the Syndicate target, a near-surface vein in hole DV21-270 returned 126 g/t Ag and 1.31 g/t Au over 1.10m.

Hole DV21-272 was drilled to test the potassic alteration zone at Silver Horde, located approximately 900m north of Wolf. The structure returned 9.0m averaging 126.7 g/t Ag within the volcanic host.

In other exploration drilling, DV’s technical team is encouraged by long intervals of stockwork quartz with strongly anomalous gold (>100 ppb) over wide intervals (up to 303m) along with silver and copper at the Western Gold Belt area.

Hosted within early Jurassic volcanic rocks, this style of stockwork and alteration is analogous to numerous gold-copper deposits and mines found throughout BC’s Golden Triangle. These include KSM, Treaty Creek, Saddle, Red Chris and Snowfield.

Such a finding could be a game changer for DV, given it was previously positioned as a pure silver-focused explorer sitting on a high-grade, potentially bulk-mineable resource.

The Western Gold Belt is located on the west side of the Kitsault Valley and trends from near the Dolly Varden Mine northward for several kilometers towards Homestake Ridge.

According to DV chief executive Shawn Khunkhun, the strong porphyry-related gold-copper-silver indicators is perhaps the most significant exploration breakthrough on the property in years.

Therefore, the next phase of exploration drilling will prioritize connecting the historical mines and current deposits of the Dolly Varden trend with the deposits at Homestake 5.4 km to the northwest along the Kitsault Valley trend.

Of course, the high-grade silver intercept at Wolf is also significant, as it confirmed Dolly Varden’s resource expansion potential. Assays are pending for the 21 holes completed at the high-grade Torbrit and Kitsol Silver deposits.

The three metals Dolly Varden is exploring for, have all been posting gains of late. Gold and silver both rallied this week, as investors parked money in safe-haven metals on fears of inflation and geopolitical tensions, ahead of a Federal Reserve meeting Jan. 25-26. Gold gained $30, Wednesday, and silver climbed 3%. Copper rose for a third session on Friday, breaking above 10,000 a ton as investors fled a sliding stock market and sought protection against rising inflation, Reuters said.

Gold market update

As Kitco News noted, gold’s move up coincided with the Biden administration’s announcing $200 million in military aid to Ukraine, citing fears of a Russian invasion.

“And this follows on with reports over the weekend that the UK was providing military assistance to Ukraine. It’s just like a perfect mix here for gold prices in the very short term,” DailyFX senior strategist Christopher Vecchio told the precious news outlet.

Higher inflation numbers are adding to risk-off sentiment in the market, which is already pricing in rate hikes and the possibility of central banks making a mistake while tightening.

OANDA senior market analyst Craig Erlam believes that traders are inflation-hedging because they don’t think central banks are doing enough to bring prices down.

The US Federal Reserve, whose job is to keep unemployment in check and inflation (the Federal Funds Rate) in the “Goldilocks” zone of 2%, is telegraphing three interest rate increases of 0.25% each (1% at the high end of the range) this year.

The US Labor Department said that its Producer Price Index (PPI) rose 0.2% from November to December, bringing producer prices to a record-high 9.7%, the biggest calendar-year increase since data was first calculated in 2010.

The same report said US consumer prices increased solidly in December, led by gains in rental accommodation and used cars, culminating in the largest annual inflation rise in 40 years. The Consumer Price Index (CPI) surged 7% in the 12 months through December, which is the biggest year on year increase since 1982.

US inflation rate (CPI)

As we have argued, the Fed (and the Treasury) is between a rock and a hard place, the Fed can’t raise rates enough to combat high inflation because doing so will wreck the economy, and imo, the Treasury will soon struggle to find enough buyers for US government bonds because the real yields are so low, currently in all cases negative.

This practically guarantees the continuation of Fed bond buying (QE) despite the much-ballyhooed taper. As for raising rates, we proved that the Fed can’t do it, at least not at the levels required to beat current inflation, which even if covid-related supply chain issues get solved, leaves another 3-4% to deal with. (higher prices will, imo, stay with us for a long time due to persistent food inflation, wage/ salary increases due to a shortage of workers, a ragged energy transition from fossil fuels to renewables that has led to high natural gas prices, and climate change which has a negative effect on crops)

Then there is the debt problem. We’ve written extensively about the dangers of the mounting US debt load. Gold correlates strongly to rising debt to GDP ratios. The US’s debt to GDP currently sits at 127.3%.

The Congressional Budget Office (CBO) and the Committee for a Responsible Federal Budget (CRFB) — both reliable sources — project a deficit of $1.3T in 2022, and every year until 2031. This severely constrains the Fed’s policy options.

Each interest rate rise means the federal government must spend more on interest, reflected in the annual budget deficit, which keeps getting added to the national debt, which is almost $30 trillion. We are talking about interest costs nearing a trillion dollars per year, when the deficit is accounted for. 

Furthermore, the incentive for buying a US Treasury bill or bond is gone, the buyer’s purchasing power eroded by inflation.

The current Federal Funds Rate is .08%, but CPI inflation is 7%, giving a real (after inflation) Effective Federal Funds Rate (EFFR) of -6.94%. This is the most negative EFFR since 1954. The 10-year yield, which pays better interest, is -5.3% in real terms.

Negative real interest rates, as most gold investors are aware, are a strong buy signal for bullion.

The fact is nobody is going to want to buy US debt at 7% inflation. The Fed will continue to print money, buy bonds and keep interest rates below 1% for as long as it can — probably hoping that inflation will magically melt away — all of which is extremely positive for gold.

Silver market  update

The Silver Institute predicted that global silver demand will rise to 1.029 billion ounces in 2021, up 15% from 2020 and exceeding a billion ounces for the first time since 2015.

In a November report, SI said every area of silver demand was forecast to rise in 2021, including a record amount of industrial demand despite ongoing supply issues.

“The recovery in silver industrial demand from the pandemic will see this segment achieve a new high of 524 million ounces (Moz). In terms of some of the key segments, we estimate that photovoltaic demand will rise by 13% to over 110Moz, a new high and highlighting silver’s key role in the green economy,” states a press release that accompanied the Silver Institute’s Interim Silver Market Review webcast.

Demand for silver used in brazing and solder is expected to improve by 10%, aided by a recovery in housing and construction.

Silver bars and coins will continue to hold investors’ interest, with the Silver Institute predicting that physical investment in 2021 will increase by 32% to 64Moz, pushing the year-on-year total to a six-year high of 263Moz. US bar and coin demand is expected to surpass 100Moz for the first time since 2015, while in India, physical investment in silver is expected to recover from last year’s collapse, and surge three-fold.

A major source of silver investment demand, exchange traded products, are forecast to see total holdings rise by 150Moz. Last January to November, silver ETP holdings increased by 83Moz, bringing the global total to 1.15Boz, within a whisker of 2020’s record-high 1.21Boz.

The supply picture for silver is especially interesting.

According to SI, “In 2021 mined silver production is expected to rise by 6% year-on-year to 829 Moz. This recovery is largely the result of most mines being able to operate at full production rates throughout the year following enforced stoppages in 2020 due to the pandemic.”

“Overall, the silver market is expected to record a physical deficit in 2021, albeit modestly. At 7Moz, this will mark the first deficit since 2015.”

Silver demand is only likely to strengthen, given its use in solder, solar panels, 5G, EVs, and printed and flexible electronics — not to mention steady investment demand in the form of physical silver (bars & coins) and silver-backed ETFs.

Remember, less than 30% of silver production comes from primary silver mines, with over half sourced from lead-zinc operations, and copper mines, meaning that silver’s fortunes are tied to other industrial metals.

The prices of zinc, lead and copper have all done quite well, rising a respective 37%, 16% and 24% from a year ago.

Source: Kitco

Copper market update

Copper is coming off a historic year during which prices broke records on not just one, but two, separate occasions, hitting $4.76/lb in mid-October after peaking in May.

Source: Kitco

During the first half of 2021, copper rallied off the back of a sharp recovery in economic activity across the world, led by top consumer China. Also pushing prices higher was the belief that pandemic-related stimulus, plus the global push for decarbonization, will further lift demand for the industrial metal.

That saw copper prices break the $10,000/t level towards the end of April, the first time that has happened in a decade, and eventually surged to a new high the week after.

Then in the second half, copper received yet another boost amid an energy crisis that affected several major producers and threatened global supply. In October, a surge in metal orders from warehouses in Europe saw LME inventories plunge by as much as 89%, to their lowest in 47 years.

All these events factored into copper’s record-breaking year, though many believe that the red metal is just getting started. Click to read AOTHs in-depth copper market analysis;

In two decades, copper producers must, at the minimum, double the current production of 20Mt to have a chance of coming close to meeting demand. This equates to one new Escondida mine (1Mt annual production) every year for the next 20 years!

While such a feat is difficult to achieve, finding the right investments in projects leading to copper discoveries would help to close the supply gap. According to CRU, the copper industry needs to spend upwards of $100 billion to erase what it estimates to be a 4.7Mt deficit by 2030.

We aren’t the only ones feeling bullish on copper. Goldman Sachs is reportedly forecasting copper will, on average, reach $5.39 in 2022 and $5.44 in 2023. The investment bank said it expects “extreme deficits” coming as soon as mid-decade, due to a lack of new development commitments, combined with accelerating growth in green demand.

“To solve the long-term supply gap copper faces, we would need to see close to 40 new average-sized copper mine projects being approved,” LiveWire quoted Goldman saying. “And as we all know, bringing forward a new mine of any description is getting harder to achieve in a timely fashion.” Indeed in some jurisdictions, getting from discovery to resource definition to commercial production, can take upwards of 20 years.

Conclusion

Snow may have blanketed the Golden Triangle of northwestern British Columbia, putting a temporary halt on all mineral exploration activities, but there is still plenty of news to come out of Dolly Varden’s namesake project. Assays are pending for the 21 holes completed at the high-grade Torbrit and Kitsol Silver deposits.

In the spring, when DV returns to the property with boots on the ground, we expect to see continued investigation of the Dolly Varden project targets, including the Wolf Vein extension and Western Gold-Copper belt.

Also likely to be a priority is the connection between the historical mines/ current deposits of the Dolly Varden trend, and the deposits at Homestake Ridge 5.4 km to the northwest along the Kitsault Valley trend.

Readers stay tuned; this is a company we’ll be watching closely.

Dolly Varden Silver Corp.
TSXV:DV, OTC:DOLLF
Cdn$0.75, 2022.12.21
Shares Outstanding 130.6m
Market cap Cdn$98.1m
DV website

Richard (Rick) Mills
aheadoftheherd.com
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Please read the entire Disclaimer carefully before you use this website or read the newsletter. If you do not agree to all the AOTH/Richard Mills Disclaimer, do not access/read this website/newsletter/article, or any of its pages. By reading/using this AOTH/Richard Mills website/newsletter/article, and whether you actually read this Disclaimer, you are deemed to have accepted it.

Any AOTH/Richard Mills document is not, and should not be, construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

AOTH/Richard Mills has based this document on information obtained from sources he believes to be reliable, but which has not been independently verified.

AOTH/Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness.

Expressions of opinion are those of AOTH/Richard Mills only and are subject to change without notice.

AOTH/Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, AOTH/Richard Mills assumes no liability for any direct or indirect loss or damage for lost profit, which you may incur as a result of the use and existence of the information provided within this AOTH/Richard Mills Report.

You agree that by reading AOTH/Richard Mills articles, you are acting at your OWN RISK. In no event should AOTH/Richard Mills liable for any direct or indirect trading losses caused by any information contained in AOTH/Richard Mills articles. Information in AOTH/Richard Mills articles is not an offer to sell or a solicitation of an offer to buy any security. AOTH/Richard Mills is not suggesting the transacting of any financial instruments.

Our publications are not a recommendation to buy or sell a security – no information posted on this site is to be considered investment advice or a recommendation to do anything involving finance or money aside from performing your own due diligence and consulting with your personal registered broker/financial advisor.

AOTH/Richard Mills recommends that before investing in any securities, you consult with a professional financial planner or advisor, and that you should conduct a complete and independent investigation before investing in any security after prudent consideration of all pertinent risks.  Ahead of the Herd is not a registered broker, dealer, analyst, or advisor. We hold no investment licenses and may not sell, offer to sell, or offer to buy any security.

Richard does not own shares of Dolly Varden Silver Corp. (TSX.V:DV). DV is a paid advertiser on his site Ahead of the Herd










Author: Gail Mills

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