Mining Monthly: April Edition
What you need to know:• The precious metals and mining market continued to rise in April even after a sizeable outperformance of broader indices in March
• M&A accelerated in the month of April following what appears to be the peaking of rates and inflation, and persistent elevated metals prices
• This month only strengthens our confidence that 2023 will be a standout year for both precious metals and base metals, and encourage investors to position themselves accordingly
Sentiment Update
Following a very strong month in March (Gold, Silver, and the GDX up 7.2%, 14.5%, and 15.0%, respectively), precious metals held in with a slight rise during April, a bullish indicator considering back-to-back monthly gains. Gold rose 1.2% in the month to $1988.3/oz, silver rose 7.2% to $25.0/oz, and copper declined 5.2% to $3.90/lb. Mining equities also rose with the GDX up 3.9%, in line with broader markets like the S&P500 and TSX which rose 3.5% and 4.0%, respectively. The battery metals space was mixed with lithium down a dramatic 29% however nickel and cobalt held in and finished the month positive with both being up just 1%.
However, the Chinese lithium price finally ticked up at the end of the month after a five-month slide, supported by purchases by traders who believe that the prices have bottomed. Prices have tumbled more than 70% over the last 6 months as companies across the battery supply chain drew down on inventories rather than buying new material and an end to Chinese EV subsidies curtailed demand. However, with all that said, the lithium carbonate price is still four times its 2020 price.
This month there was a sizeable acceleration in M&A transactions, highlighted in the M&A section below. We believe the primary reason for this is with interest rates peaking, major companies now have more clarity into the borrowing cost of future investments. Additionally, with limited transactions and elevated metals prices over the last year, major miners are flush with cash and have begun spending it.
On April 14th, the U.S. inflation came in at 5.0% YoY and 0.1% MoM, compared to consensus of 5.2% YoY and 0.2% MoM. This compares to U.S. Core inflation data which came in as 5.6% YoY and 0.1% MoM, in line with consensus expectations and in line with the 5.6% posted last month. Canadian core inflation was also in line with expectations, posting 4.3% vs. consensus of 4.4%. On April 27th, the U.S. GDP Growth Rate came in at +1.1% QoQ vs. consensus of +2.0%, down significantly from the 2.6% posted last quarter, highlighting slower growth and a sizeable gap in GDP growth to the inflation rate. Canadian MoM GDP Growth came in at +0.1% vs. +0.2% for consensus and down from the +0.6% last month. We reiterate that with inflation declining at a measly pace, gold will increasingly be viewed as a safe-haven in 2023, especially considering deteriorating economic data (and bank failures), potential for lower interest rates in the back half of the year, and various central banks accumulating gold.
Artemis Gold Inc is a Canada-based gold development company. The Company is engaged in identification, acquisition and development of gold properties. The Company is working under GK Project that is approximately 17 kilometer west of the community of Telegraph Creek, northwestern British Columbia.
Dundee Precious Metals is a Canadian based international mining company engaged in the acquisition, exploration, development and mining of precious metals properties.
Eldorado Gold is engaged in the exploration, development, mining and production of gold and other mining resources in Brazil, China, Turkey and Greece.
Eldorado Gold is engaged in the exploration, development, mining and production of gold and other mining resources in Brazil, China, Turkey and Greece.
Freeport-McMoRan is a holding company. Through its subsidiaries, the company is a mining company. The company operates assets with proven and probable reserves of copper, gold and molybdenum, and the company is a publicly traded copper producer. The company's portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits; and mining operations in North America and South America, including the Morenci minerals district in Arizona and the Cerro Verde operation in Peru. The company has organized its mining operations into four primary divisions: North America copper mines, South America mining, Indonesia mining and Molybdenum mines.
Hecla Mining and its subsidiaries discover, acquire and develop mines and other mineral interests and produce and market concentrates, carbon material and dore containing silver, gold, lead and zinc. The company has five units: the Greens Creek, Lucky Friday, Casa Berardi, San Sebastian and Nevada Operations units. The company produces zinc, lead and bulk flotation concentrates at its Greens Creek unit and lead and zinc flotation concentrates at its Lucky Friday unit, each of which the company sells to custom smelters and metal traders on contract. The company also produces unrefined gold and silver bullion bars (dore), loaded carbon and precipitates at its Casa Berardi, San Sebastian and Nevada Operations units.
Newcrest Mining is engaged in the exploration, mine development, mine operations and the sale of gold and gold/copper concentrate. As of June 30 2016, Co.'s reportable operating segments were: Cadia, Australia; Telfer, Australia; Lihir, Papua New Guinea (PNG); Gosowong, Indonesia; Hidden Valley Joint Venture (JV) (50% interest), PNG; Bonikro, COte d'Ivoire; and Exploration and Other, which mainly comprises projects in the exploration, evaluation and feasibility phase and includes Wafi-Golpu JV (50% interest) in PNG, Namosi JV (70.67% interest) in Fiji, O'Callaghans in Australia and Co.'s global greenfields exploration portfolio.
Teck Resources is engaged in mining and related activities including exploration, development, processing, smelting and refining. Co.'s major products are steelmaking coal, copper and zinc. Co. also produces precious metals, lead, molybdenum, electrical power, fertilizers and other metals. Co. also owns an interest in certain oil sands leases and have partnership interests in an oil sands development project and wind power project.
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