Mining Monthly: December Edition
What you need to know:• Gold continued to rise in December, gaining 1.3% on the month and closed out 2023 up 13% to $2,062/oz. Notably, gold hit an all-time high, reaching $2,135/oz, rising above the previous record of $2,072 in August 2020.
• Besides gold, other precious metals and commodities had a mixed month, while battery metals continued to underperform.
• The mining equities slightly underperformed broader markets as capital flowed into the TSX & S&P500 on the back of a more defined Fed pivot.
Sentiment Update
Gold closed out the year up 13% at $2,062/oz, marking an all-time high in December at $2,135/oz. The strong performance in gold is mainly attributable to two reasons, 1) in recent weeks, investors have grown increasingly confident that the Fed will start to cut rates as early as March 2024, and 2) the rate predictions and falling 10-year T-bills have weighed on the US dollar, making gold more attractive. The GDX, GDXJ, and SIL performed -1.0%, -1.6%, and +2.6%, respectively, underperforming the TSX and S&P500 which were up 3.6% and 4.4%, respectively. The underperformance can be attributed to their strong month in November (up 11.9%, 15.5%, and 15.2%, respectively), and general market excitement on the back of expected rate decreases (which do not affect most explorers and developers). For 2023, GDX was down 4%, the GDXJ was down 3%, the SIL was up 1% and the COPX was down 5%.
Other commodities also had a modest month, with copper, steel, and iron ore up 1%, 1%, and 7% respectively. The battery metals space once again struggled during the month, led by lithium which was down 16% in November bringing the downfall to 81% on the year. Uranium posted yet another month of positive gains, ending the month up 12% at $91.0/lb and closing the year up 89%.
The mining equities had an exciting month in December with volumes eclipsing the previous 11 months, and M&A and financings continuing to be elevated. The uptick in M&A over the last few months is a key highlight for us as mentioned in our last two mining monthly reports. The majors, who we consider as the well-informed leaders in the industry, have begun taking advantage of the trough multiples that the industry is trading at. A few of note are, Dundee Precious Metals (DPM:TSX) acquiring Osino Resources (OSI:TSXV), Agnico Eagle (AEM:TSX) investing $23.1M into Canada Nickel Company (CNC:TSXV), and Skeena Resources (SKE:TSX) closing a C$81M financing with Franco Nevada (FNV:TSX, see sections below).
Barrick Gold is engaged in the production and sale of gold, as well as related activities such as exploration and mine development. Co. also produces copper and hold interests in oil and gas properties located in Canada. Co.'s mining operations are concentrated in three regional business units: North America, South America and Australia Pacific. Co. also hold a 73.9% equity interest in African Barrick Gold plc that owns gold mines and exploration properties in Africa. Co.'s copper business unit contains producing copper mines located in Chile and Zambia; and a mine under construction located in Saudi Arabia.
Dundee Precious Metals is a Canadian based international mining company engaged in the acquisition, exploration, development and mining of precious metals properties.
Endurance Gold is engaged in the exploration and development of mineral properties in North America and has not yet determined whether its properties contain ore reserves that are economically recoverable. The recoverability of the amounts expended on mineral interests by Co. is dependent upon the existence of economically recoverable reserves, the ability of Co. to obtain necessary financing to complete exploration and development of its mineral properties and upon future profitable production or proceeds from disposition of its mineral interests.
First Quantum Minerals is engaged in the production of copper, nickel, gold, zinc, platinum-group elements and acid, and related activities including exploration and development. Co. has operating mines located in Zambia, Australia, Finland, Turkey, Spain and Mauritania. Co. is developing the Trident project in Zambia, the Cobre Panama copper project in Panama, exploring the Haquira copper deposit in Peru and the Taca Taca copper-gold-molybdenum porphyry deposit in Argentina. Co.'s operating segments are individual mine development projects or mine operations. The Corporate and Other segment evaluates and acquires new mineral properties and includes Co.'s metal marketing division.
Pan American Silver is engaged in the production and sale of silver, gold and other base metals including copper, lead and zinc as well as other related activities, including exploration, extraction, processing, refining and reclamation. Co.'s primary product (silver) is produced in Peru, Mexico, Argentina and Bolivia. Additionally, Co. has project development activities in Peru, Mexico and Argentina, and exploration activities throughout South America and Mexico.
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