Wednesday 13th December 2017

Resource Clips


November, 2015

Visual Capitalist: Black Swan risks heading into 2016

November 30th, 2015

SocGen’s latest evaluation still sees steep downside risk to market

by Jeff Desjardins | posted with permission of Visual Capitalist

Visual Capitalist: Black Swan risks heading into 2016

The Chart of the Week is a Friday feature from Visual Capitalist.

 

Société Générale has come out with its most recent list of what the bank considers to be potential “black swans” to the market.

France’s third-largest bank publishes this list as part of its Global Economic Outlook. As several users have pointed out in the past, we are indeed aware that black swans are by nature unlikely and extremely difficult to predict. We agree with this, but we do find SocGen’s list a useful way of understanding some of the upcoming risks in the market that could sway investor sentiment and opinion.

In the latest edition of the report, which was published this week, the bank still sees an excess of potential downside risks to the global economy. The greatest of these risks, slated at only a 10% probability but with maximum impact potential, is a new global recession. The report mentions as well that a hard landing in China could have similar effects.

Downside risks and their probability:

  • 45%–Great Britain leaves the EU (impact: low)

  • 30%–China’s economy has a hard landing (impact: high)

  • 25%–U.S. consumers save more than expected (impact: medium)

  • 10%–Fed hikes too late (impact: medium to high)

  • 10%–New global recession (impact: high)

Upside risks and their probability:

  • 20%–Stronger investment and trade (impact: medium to high)

  • 15%–More fiscal accommodation (impact: medium)

  • 10%–Fast track reform (impact: low)

One risk that could be added to the mix is some sort of a deflationary spiral. These are words that no central banker wants to hear, but signs of deflation are popping up all over the market. For example, as we showed in a recent chart, nearly all commodities got hammered over 2015.

The impact of such a spiral would be catastrophic, and the Fed has limited means to combat such an event. That said, it is tough to discern whether deflation will continue to be found sprinkled benignly throughout the economy, or if it could somehow snowball into the full-on death spiral.

Black swan indeed.

November 30th, 2015

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Mining the heavens

November 27th, 2015

It could be 10 years away, with water as the first commodity

by Greg Klein

How best to describe the asteroid mining act that the U.S. signed into law on November 26? A skeptic might say, “One small penstroke for POTUS, one giant leap of fantasy.” But to Eric Anderson, it’s “the single greatest recognition of property rights in history.” The co-founder/co-chairperson of Planetary Resources added, “This legislation establishes the same supportive framework that created the great economies of history and will encourage the sustained development of space.”

While the law doesn’t actually grant Americans extraterrestrial property rights, it does say they can keep anything they find out there. Maybe other earthlings will follow through with their own finders-keepers laws. And there’s a hell of a lot to be found, according to enthusiasts of asteroid mining.

It might happen in 10 years, with water as the first commodity

A simulated image shows Planetary’s next satellite.
Image: Planetary Resources

A 500-metre asteroid “can contain more platinum group metals than have ever been mined in human history,” according to Anderson’s company, perhaps alluding to the possibility of non-humans mining elsewhere. Not-quite 43-101 estimates bandied about for asteroid 2012 DA14 range from $195 billion to $20 trillion.

To put the last figure in perspective, that’s about 20 Afghanistans, according to an oft-repeated but completely unsubstantiated estimate for another difficult-to-access part of the universe.

Visionaries see the market for off-planet resources not so much on Earth but in outer space, helping colonize beyond the continents exploited during our Age of Exploration. In fact Moon Express refers to its hoped-for robotic mining location as Earth’s “eighth continent.” But asteroids remain the destinations of choice for companies like Deep Space Industries and Planetary Resources.

Chris Lewicki, the latter company’s president/chief engineer, foresees asteroid mining within 10 years.

Speaking to ResourceClips.com, he says Planetary now has a “very small, very innovative spacecraft” circling Earth. “It’s about the size of a loaf of bread. It uses a new, advanced form of computer processing to automate and reduce data. When we’re that far from Earth the phone bill can get very expensive, so we want to do a lot of those computations locally.”

The company lost an earlier spacecraft last year with the explosion of a commercial rocket, which would have carried the satellite to the International Space Station prior to re-launch into orbit.

Arkyd 6, another spacecraft scheduled for launch in spring, will orbit with an infrared imager to determine asteroid content, including water. “We’ll be the first commercial company to put one of those into space. A few more satellites are planned after that, then we plan on heading out to our asteroid of choice.”

That’s anticipated to happen by 2020, even though the company states there are 11,000 near-Earth asteroids, with about three new ones being discovered every day.

Once we’ve identified the asteroid, it will probably be a year or two before we can go back to it. I would expect that in the first half of the 2020s we’d have a mission that would begin the first small-scale extraction …—Chris Lewicki,
president/chief engineer
of Planetary Resources

“Once we’ve identified the asteroid, it will probably be a year or two before we can go back to it. I would expect that in the first half of the 2020s we’d have a mission that would begin the first small-scale extraction, demonstrating that we can extract water, hydrogen and oxygen from asteroids.”

As the first priority, water would be the easiest commodity to pull out and one already with a relatively local market. Out there, it costs as much as $50 million a tonne, Lewicki says. “So if we can get it in space, that really helps us establish an industry in space. Water of course supports human life, but it’s also oxygen and hydrogen, which are rocket fuel.”

Technology has progressed further than most people realize, he insists. Formerly with NASA, he took part in Mars missions as flight director for the Spirit and Opportunity rovers, and as surface mission manager for Phoenix. He even has an asteroid named after him, 13609 Lewicki.

Among lessons learned at NASA, he says “there are cheaper ways to do things if the goals are simpler, especially if you can incorporate some commercial innovations. But when we get to the mining and resource extraction, many of those technologies have already been developed. Things that can concentrate sunlight in space have been tested on the Space Shuttle in the 1990s. Things you can use to contain that energy are commercially available.”

Enthusiasts point out advantages of mining the heavens. The primitive evolutionary state of asteroids simplifies geology. There’s no atmosphere or weather getting in the way. Nobody’s saying so out loud, but there’s no permitting to bother with. And, unless there are surprises in store, no indigenous communities either.

It might happen in 10 years, with water as the first commodity

The Arkyd 3, now in Earth orbit, poses with some of its creators.
Photo: Planetary Resources

“It’s not necessarily harder or easier to do things than on Earth, it’s just different,” Lewicki maintains. “Free energy from the sun 24 hours a day is a great advantage and you’d be able to move tonnes and tonnes of material around with only very light structures because you don’t have to fight gravity.”

Still, such ambitions don’t come cheaply. Planetary gets revenue from contracts with NASA, the U.S. Defense Department and private companies. The endeavour also has deep-pocketed backing from the likes of Google founder/Alphabet CEO Larry Page, Ross Perot Jr and Richard Branson, among other “well-known entrepreneurs who understand how important it is to develop this industry.” But the company keeps its financials confidential.

Getting back to those supposedly bountiful resources, Lewicki says there are three main ways to assess asteroids. “Just as we use astronomy and spectroscopy to determine the make-up of a star light years away, we can use the same techniques to understand the rock composition of asteroids.”

Scientists also have some 50,000 bits of those rocks that fell to Earth.

“Perhaps the best way, and this has been done several times now, is to go out with a spacecraft and take that instrumentation right out to the asteroids, and even bring pieces back, as the Japanese did almost 10 years ago. We can actually know more about asteroids than we can about many things mined on Earth that are a kilometre below our feet because there’s nothing between you and it but the vast emptiness of space.”

Wondrous as all this seems, it comes from a soft-spoken NASA veteran. “A lot of people think this is way far off in the future, but it’s actually something we’ve been working on for several years.”

Who knows, maybe one day companies trying to crack Ontario’s Ring of Fire might look on in envy.

November 27th, 2015

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A research report from Chris Berry examines nickel and the possibility of a future supply deficit

November 27th, 2015

…Read more

November 27th, 2015

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Pasinex Resources boosts production as zinc sales fund drilling

November 26th, 2015

by Greg Klein | November 26, 2015

With an enviable plan to finance its initial resource by mining the same project, Pasinex Resources CSE:PSE announced another zinc sale on November 26. Horzum AS, a 50/50 joint venture of Pasinex and chrome producer Akmetal AS, sold 1,478 tonnes wet weight of material grading approximately 38% zinc from the Pinargozu mine in southeastern Turkey. With over 1.1 million tonnes of contained zinc in this lot, sales from small-scale mining have totalled more than 8.8 million tonnes so far.

Pasinex Resources boosts production as zinc sales fund drilling

With production increasing, Pasinex now expects to fund
the rest of Pinargozu’s resource drilling through small-scale
mining at the same project.

“Production is being stepped up, and has recently been averaging around 40 tonnes per day to as much as 60 tonnes per day,” said Pasinex president/CEO Steve Williams. “We have increased our mining areas from two to now three, and have staffed up. This is an exciting time for our growth, as we build Pinargozu into a small but strong zinc mine. We’re focusing our exploration efforts there and in the Akkaya area where we think there is much more zinc to be found.”

Pinargozu and the nearby Akkaya claims sit close to the historic Horzum mine, a few kilometres from a major highway and about one and a half hours from the city of Adana. In August the JV staked eight additional zinc-lead prospects “relatively close” to Pinargozu. Pasinex intends to continue drilling both Pinargozu and Akkaya throughout the year, with a goal of completing Pinargozu’s maiden resource within 12 months.

The company also holds a 100% option on the northern Turkey Golcuk project, where previous drilling confirmed the presence of Manto-style mineralization grading up to 2% copper.

Rapaport wants rough diamond prices slashed, De Beers CEO axed

November 26th, 2015

by Greg Klein | November 26, 2015

Saying rough prices must fall by 30% to 50%, a leading industry commentator has called on De Beers head Philippe Mellier to resign. “The rough diamond distribution system is collapsing as De Beers and other mining companies attempt to force unsustainable artificially high rough diamond prices on the diamond trade,” Martin Rapaport said in a November 24 statement.

Rapaport wants rough diamond prices slashed, De Beers CEO axed

Martin Rapaport

“Rough prices are higher than polished prices, which have come down to realistic levels due to the downturn in the global economy. The mining company’s refusal to lower rough prices is destroying the diamond trade, creating severe financial losses, illiquidity, supply shortages and the loss of tens of thousands of jobs…. Without a viable, profitable and sustainable diamond trade distributing their diamonds, De Beers diamond mines are worthless.”

Rapaport is chairperson of the Rapaport Group, described as “an international network of companies providing added value services.” The press release appeared on his news website, along with an article called Rough Bubble Bust.

Rapaport called on those working in the industry to contact Anglo American chief executive Mark Cutifani. “De Beers CEO Philippe Mellier’s brand of trade exploitation and cannibalization is no longer tolerable,” Rapaport charged. “It is time for Mellier to go.” Anglo owns 85% of De Beers, with the government of Botswana holding the rest.

A November 26 Rapaport News article predicted De Beers’ revenue will fall about 44% in 2015.

In a report released earlier this month, diamond analyst Paul Zimnisky said De Beers reduced its 2015 production plan by 12% with cutbacks in Botswana and South Africa. Although the company dropped rough prices around 10% at an August sight, prices remained unchanged at an October sale.

“Some buyers responded by rejecting up to half of their parcels offered, an indication that additional price cuts are probably still necessary in the current environment for some mid-stream clients to remain economically viable,” he stated. “Anecdotes suggest that in some cases it is still cheaper to buy polished on the open market than it is to buy rough directly and cut into polished.”

In a recent interview with Mining Weekly Online, Zimnisky said Canadian diamond mines are less likely to be affected by the downturn.

November 26th, 2015

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MOU offers Americans scrutiny over B.C. mining projects

November 25th, 2015

by Greg Klein | November 25, 2015

British Columbians and Alaskans will seek involvement in each other’s mining proposals following a memorandum of understanding signed November 25. The MOU calls for governments and natives to take part in environmental assessment and permitting processes in their neighbour’s jurisdiction. But with an emphasis on trans-boundary waters, which mostly would consist of rivers and streams originating in B.C., Canadian projects might get more scrutiny than those next door.

B.C.-Alaska MOU pledges cross-border co-operation on mining and environment

The memo follows visits by B.C. mines minister Bill Bennett and Alaska lieutenant-governor Byron Mallott to each other’s turf. Bennett’s trips, following the tailings dam collapse at Imperial Metals’ (TSX:III) Mount Polley mine, tried to reassure Alaskans about B.C. environmental practices.

In August 2014, just weeks after the disaster, Alaska’s Department of Natural Resources asked Canada’s Environmental Assessment Agency for participation in the approval process for Seabridge Gold’s (TSX:SEA) KSM gold-copper project near the state border. Provincial approval had already been granted the previous month. The federal permit came through last December.

Other prominent projects in B.C.’s northwestern corner include:

  • Galore Creek, a NovaGold Resources TSX:NG/Teck Resources TSX:TCK.A and TCK.B copper-gold-silver project that reached pre-feasibility in 2011

  • Schaft Creek, a Copper Fox Metals TSXV:CUU/Teck copper-gold-molybdenum-silver project that achieved feasibility in 2013

  • Chieftain Metals’ (TSXV:CFB) Tulsequah Chief zinc-copper-gold project, now permitted for construction

  • Pretium Resources’ (TSX:PVG) Brucejack gold-silver project, slated for 2017 commercial production

  • Imperial’s Red Chris copper mine, which achieved commercial production in July

The MOU sets no timeframe for achieving its goals. Money for the cross-border initiative would come from existing government budgets, with the possibility of additional “alternate public or private sector funding.”