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It’s All About Grade

The steady increase in the price of gold since mid-2018 has been a boon to many precious metals investors; those who own physical gold, gold ETFs and senior gold producers being the most obvious.

But the implications for the precious metals industry as a whole are more wide-spread. The big question miners and investors alike are asking is – where will the next generation for profitable gold mines come from? The short answer is exploration companies.

One key determining factor for undeveloped gold deposits to become commercially feasible is payable grades, which really puts emphasis on grades and recoveries:
• A prospective ore deposit can have higher than average concentrations of gold
• Or the processing of an ore deposit results in higher than average recovery of gold

As this gold bull market picks up speed, well-known, high grade, previously discovered gold deposits become more and more attractive, driving their value significantly higher. When gold was below $1350 for much of the period between 2013 and 2018 – a period of falling gold prices but rising operating costs – many good quality, pre-development companies and deposits went on hold because the numbers just didn’t work.

Enter Canarc (TSX: CCM). Their New Polaris Gold Mine Project in British Columbia is one such example. New Polaris was discovered in the early 1990’s and became known as Western Canada’s highest-grade undeveloped gold resource to an entire generation of miners and investors.

In early 2019, Canarc updated its Preliminary Economic Assessment (PEA) of the New Polaris project using bear market numbers and a “game changing”, commercially available process to boost recoveries and reduce costs. Notably, the same process used to recover gold at Kirkland Lake’s Fosterville Gold Mine.

The new numbers were robust. Using an economic model at $1300 per/oz gold and a $0.77 Cdn/US exchange rate, the after-tax internal rate of return (IRR) and net present value (NPV) were 38% and USD$216 million respectively. Good, but not enough to set the market on fire at the time.

Fast forward a year, Canarc recently updated it’s still-compliant PEA, this time using $1500 gold, a $0.71 exchange rate, and lower cash operating costs for the economic model. New Polaris now runs an IRR of 56% and an NPV of USD$333 million. Perhaps no surprise that the stock has traded up on volume in recent weeks!

“It’s imperative to recognize that our business in cyclical,” said Canarc Chairman Bradford Cooke. “And more importantly, to know where we are in the cycle and when it is running in our favour. Now is the time to convert our long-term investment in discovering and evaluating New Polaris into Western Canada’s next great gold mine.”

Other Canadian pre-development projects that have returned to the front burner in recent months with updated PEA’s include Seabridge Gold’s (TSX:SEA) flagship KSM project – also in British Columbia, and ATAC’s (TSX-V:ATC) attractive Tiger deposit on their Rau project in the Yukon.

“It may take some time for these robust new economics to sink in for some analysts and investors,” said Canarc CEO Scott Eldridge. “There is always a bias towards new discoveries. Exciting new finds like Great Bear Resources rightly dominate the headlines. But at the end of the day, grade is king, and Canarc owns one of the best. We can create real value for our shareholders by advancing this high-grade gold deposit to feasibility.”

Ultimately, the new bull market for gold, coupled with fewer quality gold mine projects available to develop, suggests that keen investors may find more profitable opportunities beyond physical gold, ETFs and senior producers. Especially as those options become priced past reasonable valuations. Re-visiting some of the highest grade, well-known, undeveloped projects held by exploration companies may be a great place to start.

Copper price rally builds as China’s spending balloons

Copper advanced to 12-week high on Thursday as China’s $700 billion stimulus program focussed on so-called “new infrastructure” and “new urbanization” kicked into gear.

Copper trading in New York jumped to $2.5025 a pound ($5,515 a tonne) in lunchtime trade, bringing the bellwether metal’s gains since its mid-March low to just under 27%.

BMO Capital Markets, in a research note points out that data from China’s Ministry of Finance show the value of special purpose bonds issued – destined for local government spending on infrastructure – has already surpassed the full-year total in 2019…CLICK for complete article

Gold price drops below $1,700 as equities rally

Gold prices fell further on Wednesday as optimism over a short-term economic recovery boosted investor demand for riskier assets, sending equities to three-month highs despite rising covid-19 tolls and ongoing protests in the US.

Spot gold declined 1.9% to $1,692.93 per ounce as of 11:30 a.m. EST. Gold futures were also down 2.1% to $1,691.90 per ounce on the Comex in New York.

“Generally markets are getting comfortable with the fact that even though the data is bad, things are likely to improve and that is taking the shine off gold,” Michael Hewson, Chief Market Analyst at CMC Markets UK, told ReutersCLICK for complete article

Gold Soars To 7-Year Highs

Gold climbed to a fresh seven-year high Monday after the US Federal Reserve said in a report last Friday that stocks and asset prices could “suffer a significant hit,” should the covid-19 pandemic deepen.

Chairman Jerome Powell warned that a full economic recovery could drag through until the end of 2021, depending on the delivery of a vaccine.

Spot gold jumped as much as 1.2% to $1,764.73 an ounce, the highest since October 2012. Since then it has cooled off, trading at $1,734.31 an ounce as of 11:15 a.m. EST.

Gold futures for June delivery also rose 1.0% earlier to $1,775.8 an ounce before falling down to $1,739.70 on the Comex…CLICK for complete article

How To Play The Next Big Rally In Gold

The pandemic lockdown is killing the global economy, and while stocks are rebounding on the slim hope that everything will eventually go back to normal, Wall Street knows a fear bargain when it sees one, and this could be gold’s time to shine, while some other commodities get crushed.

Gold is trading at over $1,688 an ounce right now. And it’s going to hit $3,000 an ounce in about 18 months, according to the Bank of America.

So imagine buying it in the ground for $3-$4 an ounce instead.

When Wall Street goes bargain hunting, it’s looking for discount gold.

One way it does so is by targeting junior miners with in the ground gold assets, setting short-term price targets that make these global gold assets a cheap base price for investors who are fleeing the next potential economic meltdown.

Among the well-known Wall Street bargain shoppers are Cantor Fitzgerald and GMP Research, two authorities on the street that closely follow the world’s breakthrough gold developments…CLICK for complete article

Demand For Battery Metals To Surge By 500%

Production of so-called battery metals, such as graphite, lithium and cobalt, will have to increase by nearly 500% by 2050 to meet the growing demand for clean energy technologies, the World Bank said on Monday.

According to the global lender, over 3 billion tonnes of minerals and metals will be needed to deploy wind, solar and geothermal power, as well as energy storage required for mov transitioning to a low-carbon economy.

Many of the critical minerals used to make batteries for electric vehicles are found in developing nations. The World Bank’s goal is to help those nations to mine those commodities in a sustainable way to avert major ecological damage.

Mining the vast amount of key commodities the world will need in 30 years is seen as the only path to achieving the goals of the Paris Agreement. The accord seeks limiting global warming to 2°C or less….CLICK for complete article