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Kitco Mining, Digging Deep with Paul Harris.
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Hello and welcome back to Kitco Mining's Digging Deep with me, Paul Harris, in which we take a closer look at some of the most interesting news items in the mining and exploration space.
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Today is Thursday, the 3rd of September, and joining me is Joe Mazumdar, editor of Exploration Insights.
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Joe, welcome back to Kitco.
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Thanks, uh thanks for the invite, Paul.
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You're more than welcome.
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We have a lot of country risk items today, and we are leading off with the fact that global bond markets are on fire, including the US, the UK, and Japan, with yields rising around the world as investors sell their holdings.
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This has weakened the US dollar and has been driving gold prices higher.
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Joe, what is going on and how sustained do you think this gold rally will be?
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Yeah.
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I think you mean that strengthen the US dollar such that it's it's negatively impacted commodities that are quoted in the US dollar.
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So the government debt level in the US is about$40 trillion.
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Um, you know, if you look at all the uh stimulus packages that have, you know, probably have a cager of like uh COVID had a had a high compound annual growth rate of increase in debt levels.
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Um and consistently there's probably a five to six percent cager in between recession periods in the U.S.
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growing the debt.
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And now it's you know probably predictably hit$40 trillion.
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And with these interest rates rising, the fear is you know, the uh the maintenance of the debt or the interest payments are like they're they're already over a trillion dollars, and now they exceed the defense budget.
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But it's not just a US phenomenon, it's a like you said, it's a global phenomenon.
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So Japan, which has been historically almost zero, is is is at 3% the first time in about 30 years.
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Um and and so this is gonna impact uh uh capital, uh the cost of capital for companies.
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Uh, but also, you know, we're also seeing, and and this is not probably driven by the tariffs, uh although they are problematic, uh, it's mostly driven by oil uh right now, uh, which a lot of the historic restrictions have been driven by uh um oil crises.
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So I I see this uh in terms of impact, uh like you said, uh impacting negatively commodity prices, but then uh I still think that there's a supply issue in most of these commodities, whether it be the mining part or the processing part, um uh the mining part, especially in copper.
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And then on the risk side, because we you know we're we're in several wars uh and uh the current U.S.
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administration changes you know their thinking almost every day, that uncertainty will uh will keep uh an underlying bid on precious metals, I believe.
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Now, the precious metals have been sort of were trading sideways over the past couple of months.
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Uh, a couple of weeks ago they started breaking out again after US Treasury Secretary Scott Bessant announced an increase in the bond buying program.
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Uh, Labor Day's next week.
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Labor Day is typically um a catalyst in the year, and we start seeing a lot more activity following Labor Day.
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With that coming up, uh, and given the sort of context we've just been talking about, Joe, how sustained do you think this gold rally will be?
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Is it going to continue?
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Well, I I think that uh the idea might have been with them buying treasuries uh to basically lower the interest rate.
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That was positive for gold, but but the bond market is is is big, even for the U.S.
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government to impact to uh uh you know uh uh at the scale they want to.
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You know, um the big issue right now is with the currency, how many people want to hold U.S.
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treasuries as well?
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And what else are they holding in their own reserves?
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And before this happened, with the onset of tariffs, the Russia-Ukraine war, there has been a selling of treasuries by certain countries like like China to diversify their reserves.
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So that was an ongoing pressure on U.S.
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treasuries.
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And so it is the question uh is the US the biggest buyer of its own treasuries uh going forward?
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Uh and do they have the means of doing that?
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Do they have the actual uh balance sheet to do that uh consistently going forward?
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And that would be another question.
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Well, it's certainly something on Kitco we will be following closely.
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Country risk also includes physical risk, of course, as barrack mining is finding out at its Recodic Copper Project development project in Balochistan in Pakistan.
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The company paused operations there in March as part of a strategic review, but a restart looks a long way away after security forces killed 12 armed assailants who attacked a convoy of vehicles coming from the project after a heavy exchange of gunfire for more than two hours.
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The new Barrack management team, led by CEO Mark Hill, seems to want nothing to do with Recodick.
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Indeed, Hill will become the CEO of the Barrack North America Spinout Company when it IPOs later this year or perhaps in next year, as a Bloomberg article said today.
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Joe, this uh latest news will certainly give Western contractors even less appetite to work on the Recodic project.
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Um, is Recodic a dead duck?
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Well, I mean, this has been building up a bit.
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I mean, it they got their environmental permit at the end of 24.
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They put the technical report out uh probably February 2025.
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It was building momentum under the former CEO Bristow because he spent all that time negotiating the deal whereby Barak owed 50% of it, and they gave 25% to the government of Pakistan and 25% to the local government of Bakistan.
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Uh, but we got to remember that this project is really close to the border of Afghanistan and Iran.
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So it's problematic automatically.
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Um, and then there's this group that actually wants independence uh uh uh uh from Pakistan.
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Uh so there would always be on uh ongoing issues there.
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Uh at the time they didn't think that they'd be that big, I guess, uh, because they got uh you know loans and that from several government agencies globally uh in terms of funding and uh you know uh progressing this project, which is was quoted as about five and a half billion dollars for first phase.
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Uh was it uh 45 uh million tons per year?
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This is like a big project.
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This is three billion tons of a half a percent copper and about 0.3 grams per ton gold.
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So you know it's a significant project.
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And this is another reason I'm bullish on copper, is that these sort of size projects that uh you know the market essentially needs are not coming on board.
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It's hard to say that it's a dead duck, uh given how long these projects do take.
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But definitely uh as it has been pushed back in terms of they don't want another Pascualama where they keep spending money and then we'll take big write downs later.
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So it's it's prudent to slow it down.
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Uh, but as they slow it down, the capital and everything else is going to go higher for the project.
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And then eventually are they the builders?
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That would be the question.
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Does somebody else build the project?
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I don't know.
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Okay, it's interesting, Joe, that you mentioned Pascualama, the gold silver project that straddles the border between Chile and Argentina.
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Um, Barrack, obviously one of the world's largest gold companies, it wants to develop big projects like Pascualama, like Recordic.
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But uh these ambitious projects obviously come with um considerable challenges to them.
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And as we sit here today, Barrack's cupboard of big deposits that it cannot develop seems to be growing larger and larger.
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Uh, to what extent or not should that be a concern for you know barrack shareholders in particular, but uh investors in the space in general?
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Yeah, I mean, scale uh is what everybody uh wants, especially the big majors.
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Um but if you try to get that in single deposits, they have big footprints, uh Donlin, Pebble, Pasqualama, um, you know, uh, you know, in terms of not only power requirements, water requirements, um uh tailings impacts, uh the size of the open pit or the block cave, which as we're seeing now, uh after years of block cave, uh they could generate their own seismic issues.
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Uh, does that you know have a negative impact on people uh with respect to uh that sort of method of mining?
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So scale brings issues.
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Um and that's why some of these projects take a long time to permit, um, uh because there's these knock-on impacts.
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And they also have the issue of capital intensity.
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Um, yeah, in you know, because usually these projects start off with three to a half billion and they end up being seven to ten billion in terms of capex.
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And I was just looking uh that that uh Pascualama, that project, which was, I believe, uh discovered by Lack Minerals and Barrett Botlack in '94.
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Um, and so a lot of the the work was done while I was down there in the late 90s in Argentina and Chile.
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Um and but they had written down six to six and a half billion dollars on that project from 2013 to 2018.
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I'm sure they don't want to go down that same path with another project.
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So that's why they're focused.
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Yeah, and that's why they're focused on the Spinco uh and Formile and doing that agreement with New Mont and directing uh you know their capital uh to projects like that in stable jurisdictions.
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It does seem that uh you know, spinning out the North American assets that will obviously generate a lot of investor interest and have a lot of value.
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And it does seem Sparrett wants to do that to perhaps take the focus off the rest of its portfolio of more challenging projects in more challenging jurisdictions.
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Yeah, and and I think in the end, when the spin cow happens, you know, the interest on one side would be uh North American investors, European and Western investors, let's just say.
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Uh, and on the spin code, you might get more Eastern investors, whether Middle East, Chinese, what have you, uh, more interest in those kind of assets because they're more comfortable with the geopolitical risk than uh some Western uh companies and investors.
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Okay.
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Well, let's stay in South America and the Andean region where there's some positive news as Peru, the mining ministers of Peru, Chile, Argentina, and Bolivia announced an alliance to promote the development of strategic minerals with a key focus on copper and lithium.
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The governments believe the region could supply more than half the world's copper going forward.
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Greater regional cooperation would facilitate the movement of suppliers and technical personnel and help grow the cluster of service providers in the region.
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Joe, why is cross-border cooperation such a big factor or such an important factor in the development of large-scale projects such as Pascualma, which we've mentioned, and coming down the pipeline, Vicunia and Pachon?
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Well, you know, the thing is infrastructure is huge for all these projects, you know, um, whether it's uh a desalinization plant, whether it's access to the ocean for Bolivia, uh, whether it's uh being able to take advantage of the fact that you're closer to the coast uh by going west uh from Argentina and over the Andes uh if you want to deliver concentrates, uh, or even smelt them uh in Chile before you send them off, and the source of that copper will will be you know from other places, uh, whether it's Peru or Bolivia or Chile or uh you know somewhere else.
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Uh and you can you can create a regional infrastructure that but you would have to negotiate tariffs and uh imports and you know kind of do a I don't know, free trade agreement, I don't know, something like that to expand it.
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But right now that it's a perfect storm with respect to the governments uh that are more right-leaning.
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Uh the question is what happens when they're no longer right-leaning?
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Because as we know, that uh it it can't be highly cyclical in terms of um the leaders of these countries.
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But right now, it is a perfect storm uh to establish something like this.
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And and what I find is when something like this is established and making people money, it's it's hard to s to go back on it.
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But this this this can't happen.
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I don't know if it can happen like overnight, but it makes a lot of sense uh to do something like that.
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And and then also not infrastructure alone, but also regional knowledge.
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Uh like uh, you know, Chile has uh and and Argentina has done a lot of uh you know lithium extraction and lithium mining, and they can help Bolivia uh and also parts of Peru that's not producing as much.
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But they want to like I guess control their um uh the the downstream uh on these critical minerals because uh they have with lithium, the lithium triangle has about 60% of global reserves and uh Chile just between Chile and Peru uh you know 40% of uh copper reserves.
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So this way they can control what happens with that.
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Uh and if they can add value with um easing the infrastructure requirements, they could also add value by having you know the technical expertise there.
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Because I'm on the geology side, I see a lot more you know, expats being South American, uh, whether Chilean, Argentine, Brazilian, uh, Peruvian, uh, coming to North America or going to other places in the world because that's where you know people have been doing exploration.
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That's where a lot of the money has been directed.
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And if you take that another step, like in terms of technical, like I'm mostly looking at exploration companies, but uh a proxy might be drilling.
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So there's not enough drillers, and drilling costs, uh especially in the US, are skyrocketing.
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And so a lot of these drilling companies that operate in South America are bringing up their drillers from uh places like uh Colombia and Ecuador and that uh to work the rigs because they don't have people.
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Okay, well, Chile and Peru have mining clusters of service providers that are growing, and presumably they'd be some of the main beneficiaries of greater cooperation with Bolivia and Argentina.
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I imagine um the devil will be in the detail, specific agreements for specific projects or infrastructure developments.
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And going back to Pascualama, it reminds me that uh one of the reasons that project never advanced 10, 15 years ago was the fact that Chile and Argentina couldn't agree on how to tax the production from the project.
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And presumably that will still be an issue for you know whether it's Vicunia, whether it's Pachon, you know, that's gonna be one of the key agreements that will have to be negotiated.
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Yeah, I mean it all those projects that are on the uh you know on the uh the limit of the Andes uh make more sense to go west than to go east.
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Um and you know, that's why McEwen Mining now is doing cathode as opposed to um doing a concentrate, uh, because they plan on going east.
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Um I would say in the long term, uh uh it it wasn't just the tariffs and how they treat the concentrates as they go through to Chile and then use their port facilities or even their smelters.
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Because we got to remember that production in Chile is going down.
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Um so you know, did you bring Cadelco in, uh, you know, and then say, okay, well, you're not your smelting capacity, you know, it might be impacted by lower production, so uh why don't we get some of this feed from these Argentine projects or uh from somewhere else?
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Uh the Argentine projects make the most sense.
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Uh and that way that makes that project more viable.
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But there's also the the issue about water, like uh whose water is it that you're actually using and um you know the environmental impacts.
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Right now, with the right-leaning governments, permitting is uh is much more fluid than it was uh previously.
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Okay, talk about talking about right-wing governments and permitting, several companies received some good permitting news this week in the United States and Canada.
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Talamor Mining received the remaining major resource road permit it requires to complete the northern access route to its coffee gold projects in Yukon in Canada.
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That approval removes a key infrastructure permitting hurdle ahead of construction.
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Um, Joe, how important is it for the bigger mining development picture in Yukon that Talamor got its road permit?
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Well, I think it's a good sign.
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I mean, I'm uh nobody uh thinks that the Yukon is, I mean, from the outside thinks that Yukon is a bad place to do uh uh mining.
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Um okay, I'll already take that back.
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I mean, it's it's so if we go back, uh I did this uh tour of the Yukon.
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Like I've been going to the Yukon since uh since the late 80s.
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Um, but if we look uh so I did I did this tour of the Yukon about 10 years ago.
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I did this uh this uh uh discussion for my subscribers uh about a month ago.
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And and at the time, uh you know, there's a lot of expiration, there was a lot of excitement.
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Uh you know, Banyan at that time had a market cap of only 5 million.
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Snowline didn't exist.
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Uh they were having trouble selling their assets.
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Um Keno Hill was the only producing asset at the time, running under capacity, uh, which was I think 400 tons per day of this underground uh silver base metal project um uh in uh in the Yukon, central Yukon.
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Uh so flash for uh forward to my recent trip about six weeks ago or whatever, um that still is the only producing mine, continually producing uh uh undercapacity.
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So over that 10 years, nothing's really happened.
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Um so so to have the road permit uh, you know, and have another project uh come online, a heap bleach, especially given what happened with the Eagle Mine, is a positive.
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You know, uh but what we gotta remember is like uh infrastructure uh is is a big deal not only for the Yukon, British Columbia, Northern Ontario, what have you.
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But also the the issue is power.
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And so uh Talamore with the coffee project uh is going to be diesel.
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Uh so uh I believe they're uh they're they need about 22 megawatts of power for this uh for this, I think it's over 7 million tons per year uh heat bleach project.
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But but it's 30% of their costs uh linked to the cost of diesel.
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Uh, you know, so not only will they have diesel costs impacted by truck because um their their strip ratio is like what is it, 7.6 or something like that to one, but they're also running power uh through diesel.
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But you know, they've got the grade, hopefully, to to to to offset that cost, uh, which it seems they do.
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Um the road is a positive for permitting, but you know, does it does it make casino look a lot better?
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No, because their big problem is not only road infrastructure, but uh the bigger problem is power.
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Um power for me is is is the big issue.
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Although those the big projects that require um you know high uh power requirements, uh those are the ones that that remain unimpacted, let's say, by this announcement, because their big issue is more power.
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Now, as as you mentioned, the the grid connection from Yukon to BC, that's the key to unlocking a lot of these projects.
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The the Canadian federal government wants it, the the Yukon territorial government wants it, the BC provincial government wants it.
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Um, big questions remain: who's gonna pay for it?
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How long is it gonna take to develop uh and the permitting for that?
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Because it's something like what is it, seven or eight hundred kilometers of line that have to build to connect the two groups.
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So, you know, that's not gonna happen for the next 10 years or so.
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Um, in the sort of 10 years between your two visits there, you you touched on this.
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Um, Eagle Mine came into and out of production, and so did the Minto Copper Mine.
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They're both projects that new operators are looking to get into production again.
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Minto, I think it's Selkirk Copper, and the price of Waterhouse Coopers is supposedly in the final stages of trying to sell the former Victoria asset, the Eagle Mine, to a new company.
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Um, also getting permit approvals this week were Paramount Gold Nevada, which received BLM, Bureau of Land Management approval for the plan of operations for its Grassy Mountain Gold project in Oregon, meaning its federal permitting work is functionally complete.
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And South 32 said the US Forest Service signed the final mine plan of operations for its Homosa zinc gold, sorry, zinc silver project in Arizona.
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Homosa was the first mining project added to and completed under the federal FAST 41 permitting program.
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Joe, uh with these last two, it appears that President Trump's efforts to accelerate permitting of mining projects is starting to bear fruit.
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Yeah, I I would say that I mean the gap is that it was very slow under uh the Biden administration uh in terms of permitting, uh especially on federal land, such that people tried to avoid it.
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So they would go out of their way to uh you know just acquire land uh privately uh and try to keep the footprint on the private land to avoid uh you know uh uh process uh uh uh of going through the the the federal permitting.
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State permitting was easier, especially in states like Arizona and Nevada.
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Um but now uh with this current administration uh and the FAST 41, um especially I believe it's called a transparent uh uh permitting process where they actually assign somebody on the website to actually look at the pro permit processing.
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So you don't have to actually phone anybody up.
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That person that's on there, it's their responsibility to make sure everybody underneath them meets their deadlines.
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And so that it doesn't shorten the process, but it makes it much more transparent.
00:22:53.680 --> 00:22:59.519
And the time you give it is the time you got, uh, meaning uh the the permitting people.
00:22:59.599 --> 00:23:04.480
You so as long as you do your job as a company, uh the government's not going to slow you down.
00:23:04.640 --> 00:23:09.440
Uh, and so that certainty has definitely helped a lot of mining projects.
00:23:09.680 --> 00:23:17.440
And but if the state or the locals, just like anywhere in the world, don't want it, it doesn't make some of those projects any easier.
00:23:19.039 --> 00:23:25.599
Okay, well, and congratulations to Talamore, to Paramount Nevada, and of course South 32 there.
00:23:25.920 --> 00:23:29.519
As you alluded to, not all governments are happy with mineral development though.
00:23:29.599 --> 00:23:38.079
In British Columbia, the Jitsan Hu Glip government is weighing into the consultation process of Seabridge Gold for its massive KSM project.
00:23:38.240 --> 00:23:47.279
The Jitsan is not one of the First Nations impacted by the project, but it is supporting another First Nation, the Setsal Skikim La Ha.
00:23:47.680 --> 00:23:57.680
Um, Seabridge has already got agreements in place with the Taltan and NISCA First Nations, which are the most or the main impacted First Nations by KSM.
00:23:57.839 --> 00:24:06.720
Um, Joe, apart from me uh murdering the names of different First Nations, is this to be viewed as solidarity amongst First Nations?
00:24:06.960 --> 00:24:16.400
Or given that they are governments in and of themselves, could this be considered outside interference in the internal politics of other First Nations?
00:24:17.759 --> 00:24:48.160
Yeah, I mean, we gotta understand that uh, you know, there's a lot of First Nations and to bucket them all as as one uh global entity is probably wrong because obviously the Taltan and the NISCAs are are okay with the project, and uh that's how they uh Seabridge got there, uh, you know, they were deemed substantially started, and uh they spent up to when they were substantially started was July 2024, so they spent over a billion dollars like on infrastructure and early works already.
00:24:48.400 --> 00:25:09.279
Um so uh it's similar to the uh uh uh to the Amber Ambler Access Road in that they got their permit, they went through all this permitting process, and then somebody piped up and said, you know what, um uh this uh you guys didn't consult us properly.
00:25:09.359 --> 00:25:20.079
Uh we were ignored because we were on the edge of the impact, and you guys never talk to us uh and we're gonna be impacted, uh, and nobody's listening to us.
00:25:20.400 --> 00:25:28.880
And but in Alaska, uh that was the Doyan nation, which is much bigger uh than this nation.
00:25:29.200 --> 00:25:43.279
Um but this one is probably uh wants to make sure that these little smaller nations are actually heard uh because they probably long term they probably see that being an impact.
00:25:43.759 --> 00:25:54.000
Because if something happens on their nation and they need to consolidate and get other people behind them, they want the little guys to have just as big of a say as the big guys.
00:25:54.160 --> 00:25:58.319
Uh and and that might be uh what's happening here.
00:25:58.480 --> 00:26:06.559
Um because otherwise, people will just go to the biggest nations with the uh the biggest clout.
00:26:06.720 --> 00:26:10.480
Uh so they want uh probably everybody to have an equal say.
00:26:10.559 --> 00:26:14.880
Uh well, you know, which it might be in their interest to do this, I'm sure it is.
00:26:15.039 --> 00:26:18.319
Um, but I think that's that's what's behind this.
00:26:18.559 --> 00:26:23.119
Um Seabridge is a big project, like we were talking about, in terms of footprints.
00:26:23.279 --> 00:26:37.119
Uh, and so uh it's usually those people that are on the margin of the footprint that can slow projects down because the people that are building the projects don't think that impact is worthy of consultation.
00:26:38.000 --> 00:26:38.880
Okay, interesting.
00:26:39.039 --> 00:26:51.039
As a coda to this item in Ontario, the Apitipi Annie Chinapek Nation was granted possession of a large mineral claims package in the Lake Abitibi area by the Ontario Superior Court Justice.
00:26:51.119 --> 00:27:03.440
The claims once belonged to solid gold resources and have been subject to a dispute since 2012, when the community claimed consultation didn't occur prior to exploration work being undertaken on its traditional lands.
00:27:03.680 --> 00:27:24.480
Joe, um, I imagine the key thing for a lot of exploration and development companies in Canada, the crucial question is to what extent or not these things set a precedent for you know different, you know, marginal or unimpacted First Nations to weigh in on the consultation processes that the projects undertake with other larger groups.
00:27:25.039 --> 00:27:45.119
Yeah, I would say like you know, we've seen like the the the impetus for the the drip uh the undrip here in British Columbia was uh you know an incident with a with a mine that uh and and and the fact that people would be exploring on First Nation ground with actually consulting because everything was electronic staking.
00:27:45.279 --> 00:28:06.960
And as we know, um most of the ground, 90, 95% of the ground in British Columbia is unseated uh because uh the the initial Europeans that came here uh you know uh basically declared a terranullis, uh just like the Australians, and so like they didn't have to talk to anybody, and now we're paying for that in terms of how we deal with this.
00:28:07.119 --> 00:28:19.920
Uh what happened uh in uh in Ontario, uh where they do have agreements, uh, is a bit different, and that they're sort of saying, just like this other uh nation, that they were never consulted.
00:28:20.000 --> 00:28:21.920
But this is expiration stage.
00:28:22.079 --> 00:28:26.000
The fact that this company stuck around this long is interesting.
00:28:26.160 --> 00:28:33.440
I mean, 2012 to 2026, like 14 years of not doing anything, uh, you know, forcing it to essentially delist.
00:28:33.920 --> 00:28:44.720
Um uh but they had a hundred million dollar lawsuit with the Ontario government, and now they've given 90% of the project to the First Nation, and the First Nation apparently has no problems with expiration.
00:28:44.799 --> 00:28:51.839
They want to do it, uh, but they want to do it their way and they want to be properly consulted, or you know, whatever properly means for them.
00:28:52.079 --> 00:28:56.319
And so uh it should be interesting going forward.
00:28:56.400 --> 00:29:05.039
I'm I'm I'm sure most companies don't want to do expiration and then only get approval if they cede 90% of the asset to the local First Nation.
00:29:05.119 --> 00:29:08.640
I don't think that was a that's a precedent anybody wants set.
00:29:09.519 --> 00:29:10.720
Yeah, absolutely.
00:29:10.960 --> 00:29:15.839
Okay, let's move on to another area of government uh getting involved in the minerals business.
00:29:16.000 --> 00:29:21.279
BMO, the bank, published a note this week that took a look at critical minerals in drone warfare.
00:29:21.440 --> 00:29:24.559
This was picked up a lot on X, including by Robert Friedland.
00:29:24.880 --> 00:29:30.960
Um, the report said that with 15 million drones expected to be deployed in the Russia-Ukraine war this year.
00:29:31.119 --> 00:29:40.400
It estimates that governments have pledged US$150 billion for the development of drone and counter drone capabilities in the last two years.
00:29:40.559 --> 00:29:49.200
Gallium, germanium, and rare earth are the critical minerals most important for military drone manufacturing and in the counter drone technology.
00:29:49.440 --> 00:30:00.240
The US government is advancing various means to stimulate the reshoring of critical mineral supply chains, the Department of Energy, the Department of War, US X in Bank funding, Project Vault, Defence Stockpiles, and so on.
00:30:00.559 --> 00:30:06.079
Joe, how do you see the US government's understanding of the mineral space evolving?
00:30:06.240 --> 00:30:08.799
How fast are they getting up that learning curve?
00:30:09.119 --> 00:30:14.079
With that in mind, how well do you think they are applying stimulus to this issue?
00:30:14.720 --> 00:30:20.400
Okay, like there are questions still, like let's let's let's go into Project Vault.
00:30:20.640 --> 00:30:26.720
A lot of people like that idea because it generates a price floor for these people uh under volatile conditions.
00:30:26.880 --> 00:30:38.559
Uh, but then the question is it's it's easy to say, okay, um if if Project Vault is for copper, okay, it's got to be a cathode, or it's got to be a concentrated whatever grade.
00:30:38.799 --> 00:30:43.440
It's harder to do that with like what what do you want with rare earths?
00:30:43.680 --> 00:30:44.880
Is it a carbonate?
00:30:45.039 --> 00:30:46.319
Is it an oxide?
00:30:46.480 --> 00:30:48.079
Uh, is it an alloy?
00:30:48.240 --> 00:30:50.319
Uh, like what goes into the vault?
00:30:50.880 --> 00:31:00.720
And then some of these uh uh metals or or commodities, uh critical minerals, uh the markets are less liquid, so uh price discovery is harder.
00:31:00.880 --> 00:31:06.319
Uh so you basically have to go to the company and say, what kind of price do you need uh to make it worthwhile?
00:31:06.480 --> 00:31:11.920
Um and then you got to get the the end users to agree on those floors.
00:31:12.079 --> 00:31:13.519
So there's a lot of negotiation.
00:31:13.680 --> 00:31:15.599
I mean, I you know it's not a bad idea.
00:31:15.759 --> 00:31:30.720
Uh I think they tried to do that uh or did that with uranium um at about 35 to 40 bucks a pound to uh you know uh and you know dis reinvigorate the local industry, which you know doesn't produce a lot of uranium.
00:31:30.880 --> 00:31:36.640
So I I agree with the motivation, uh probably, but uh, you know, I I don't know how they execute that.
00:31:36.799 --> 00:31:44.160
But I I think that they do understand that the key in a lot of these critical minerals is not the mining, it's the processing.
00:31:44.400 --> 00:31:53.599
So in rare earths, they do need to source some rare earths, but sourcing the rare earth carbonate is definitely not good enough.
00:31:53.759 --> 00:31:58.000
That comes from the mine of an ionic absorption clay deposit.
00:31:58.160 --> 00:31:59.519
The mining isn't hard.
00:31:59.680 --> 00:32:10.400
Uh, you don't have to blast, it's free digging, uh, and it's it, you know, it's easy to produce a rare earth carbonate, or and and a worse product might be a mixed rare earth carbonate.
00:32:10.480 --> 00:32:13.519
But getting it to an oxide is harder.
00:32:13.920 --> 00:32:19.039
Getting it to uh um a metal and a magnet is much harder.
00:32:19.200 --> 00:32:36.240
So I think now they're directing more money into the processing side, um, you know, to help uh, you know, uh to get especially the the the metals, the critical minerals that um uh China uh uh has uh export restrictions on.
00:32:36.319 --> 00:32:41.599
So it's gone from probably critical minerals, and I've said this before, uh, to security minerals.
00:32:41.759 --> 00:32:49.920
So they're they're more focused on those ones than let's say the lithiums uh and and and in and even copper.
00:32:50.160 --> 00:32:57.839
They're more focused on things like that, like antimony uh potentially and funding those kind of projects.
00:32:58.000 --> 00:33:04.400
But uh depending on what we're talking about, uh a lot more of the focus, I think rightfully so has been on processing.
00:33:04.559 --> 00:33:14.000
If you look at germanium and gallium, I don't own any of those in my uh portfolio, but uh you know people are going around and looking for those.
00:33:14.160 --> 00:33:24.720
Uh but when you look at it, a lot of the germanium-gallium comes from processed uh uh from uh aluminum processing and zinc smelting.
00:33:24.799 --> 00:33:36.160
Uh so um in that in that waste of slag, let's say, uh that's where you can extract the germanium and gallium uh because it's concentrated uh in there.
00:33:36.400 --> 00:33:45.680
I I remember when I was in Zambia, uh I think it was uh Concola, the Concola Smelter, which at that time was uh on care and maintenance.
00:33:45.920 --> 00:33:57.039
Um there were people that were just driving trucks up to the slag and just walking and hiring laborers uh to grab bags of it and stick in the truck.
00:33:57.200 --> 00:33:59.839
Uh, and that was for germanium and gallium.
00:34:00.000 --> 00:34:10.400
Uh so I would say germanium gallium is probably more linked to processing uh that sort of uh the slags from these sort of uh zinc and aluminum.
00:34:10.559 --> 00:34:17.039
Whereas in rare earths, uh it is a focus in processing, but they do need the supply of the carbonate.
00:34:17.199 --> 00:34:31.599
But it does if they if that's all they get and they don't understand how to process it because the Chinese have been doing it for 20, 30 years, they have to get up the scale uh in terms of understanding how to do it to the quality that the end users need.
00:34:32.400 --> 00:34:33.119
Thank you, Joe.
00:34:33.280 --> 00:34:46.320
And to your point there, the US Department of Energy selected nine projects for 160 million,$162 million of potential funding to recover critical minerals from mine waste and industrial feedstocks.
00:34:46.639 --> 00:34:50.239
But but another thing that they were doing, sorry, uh was off-take agreements.
00:34:50.400 --> 00:35:06.960
So that Serra Verde uh project uh that was purchased by another company uh from here, uh from the state, sorry, um they they got an uh off-take agreement uh with a special purpose vehicle uh you know funded by the government.
00:35:07.039 --> 00:35:11.920
Uh so that's another way of creating a price floor, I guess.
00:35:12.480 --> 00:35:13.119
Thank you.
00:35:13.360 --> 00:35:18.880
Some critical minerals, the price of some critical minerals has gone off the charts over the past couple of years.
00:35:19.039 --> 00:35:20.800
Tungsten is one of those.
00:35:20.880 --> 00:35:29.360
Um, and you can see this as North Cliff Resources Reported an updated feasibility study for its CISOM tungsten molybdenum project in New Brunswick.
00:35:29.519 --> 00:35:42.639
It's looking to get a 27-year operation that will average about 598,000 MTU of tungsten and 4.2 billion pounds a year of molybdenum following an initial capex of about 1.5 billion dollars.
00:35:42.800 --> 00:35:54.800
This would deliver an after after tax NPV of 6.9 billion Canadian dollars and an 8% discount with a 50% IRR and 1.6 year payback.
00:35:54.960 --> 00:35:59.119
Northcliffe targets a construction decision in late 2027.
00:35:59.280 --> 00:36:08.719
Um, Joe, I want to sort of use this uh to sort of talk about how the economics of base metals projects is evolving in the sort of current situation.
00:36:08.880 --> 00:36:12.719
Um, 50% IRR for base metals project is pretty unheard of.
00:36:12.880 --> 00:36:16.320
Typically, the sort of hurdle rate is somewhere between 10 and 15%.
00:36:16.719 --> 00:36:18.639
So this is way, way above there.
00:36:18.800 --> 00:36:21.039
Um, what's your view of things here?
00:36:22.559 --> 00:36:26.800
I mean, um uh tungsten is uh uh is a volatile uh metal.
00:36:27.039 --> 00:36:28.239
We see the price spike.
00:36:28.320 --> 00:36:37.519
Um the whole question is uh, you know, uh what are they using in terms of uh uh commodity price uh to generate that kind of return?
00:36:37.760 --> 00:36:58.079
Uh historically, like when I worked on copper projects and the uh the financing of uh of these project capital projects uh with with Newmont, like the Conga project, uh as copper prices were going up, I when I re-ran that model, the IRR never changed because our costs were going up almost in lockstep with the copper price.
00:36:58.239 --> 00:37:12.320
The copper price has spiked now, uh, such that you know maybe returns are are higher than the 10 to 12 percent that we used to look at, uh, but they're nowhere near 50% uh for these uh multi-billion dollar projects.
00:37:12.480 --> 00:37:23.119
Uh so I I I would look at that if you're an investor in this one, a little bit more detail of the technical report and the underlying assumptions in it to generate the 50% IRR.
00:37:24.480 --> 00:37:25.519
Good advice there.
00:37:25.679 --> 00:37:28.639
Now the big raises continue for select juniors.
00:37:28.800 --> 00:37:37.280
Magna mining closed a 140 million Canadian dollar strategic investment by Peruz Alpayana, which gave it a 19.9% stake.
00:37:37.360 --> 00:37:46.719
While Thesis Gold closed a 59 million Canadian bought deal financing, in which Anger Gold Ashanti invested$20 million for a 9.9% stake.
00:37:46.800 --> 00:37:55.760
And Radisson Mining Resources closed a 57 million Canadian strategic investment by Agneco Eagle Mines for a 10.5% stake.
00:37:56.000 --> 00:38:01.840
Joe, uh, apart from the quantums raised, all of these financings were for projects in Canada.
00:38:02.000 --> 00:38:05.199
Is there anything uh that we can or should surmise from this?
00:38:06.159 --> 00:38:22.000
Yeah, but um we have seen uh like uh Canada, the US, Australia being the preferred uh uh uh uh uh places that people want to spend money uh either in development or expiration.
00:38:22.159 --> 00:38:35.280
So Canada is around over the last five years is about$3.22 billion in expiration expenditures every year, mostly on gold, uh then down copper and then and then nickel.
00:38:35.360 --> 00:38:37.360
Uh that's where the expiration money is going.
00:38:37.440 --> 00:38:49.360
And if you look at another project that got funded, uh like Talamore was uh, you know, they got funded um to develop uh the coffee project with debt and equity.
00:38:49.599 --> 00:39:00.880
Um uh uh Thesis is getting uh Thesis and Radisson are getting like equity placements from cash, from companies with a lot of cash and looking for uh new projects.
00:39:00.960 --> 00:39:05.440
Uh so that makes sense for Anglo Golda Shanti, it makes sense for IGNICO.
00:39:05.599 --> 00:39:16.719
Um and and so uh but they're trying to lower their jurisdictional risk by going to places like British Columbia, the Yukon, Nevada, and places like that, which which makes perfect sense.
00:39:16.960 --> 00:39:38.000
Um I think continue like because of what we've talked about, Pakistan and some of these other places in West Africa that are raising royalties and that um people prefer countries with stable uh mining laws and uh tax regimes, uh, that you can uh you can say that for your 20-year mine life, this is what what it's gonna be.
00:39:38.079 --> 00:39:41.119
And so they are willing to invest in those kind of projects.
00:39:41.199 --> 00:39:49.280
So I see no uh no issue with that with respect to uh uh you know um how the money is being directed.
00:39:49.360 --> 00:40:01.760
But I would I would say right now that we're seeing a turn like we were talking about in South America with these countries like Peru, Argentina, Brazil, Chile with the uh more right-leaning governments.
00:40:01.840 --> 00:40:04.000
I I think that's a positive for mining there as well.
00:40:04.079 --> 00:40:07.280
And we might see more money directed down there as well.
00:40:07.840 --> 00:40:10.639
And I expect the big checks to continue.
00:40:10.800 --> 00:40:11.920
That's all for this week.
00:40:12.000 --> 00:40:16.000
Um Joe Mizumja, I'll be seeing you at the Beaver Creek Conference in a few weeks' time.
00:40:16.159 --> 00:40:18.880
Until then, thank you very much for joining me today.
00:40:19.199 --> 00:40:21.039
All right, thanks a lot, Paul.
00:40:21.679 --> 00:40:26.079
And to our viewers, of course, if you like what you see, don't forget to hit that subscribe button.
00:40:26.159 --> 00:40:29.280
I'm Paul Harris, digging deep for Kitco Mining.
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Kitco Mining, Digging Deep with Paul Harris.
00:00:05.519 --> 00:00:14.080
Hello and welcome back to Kitco Mining's Digging Deep with me, Paul Harris, in which we take a closer look at some of the most interesting news items in the mining and exploration space.
00:00:14.240 --> 00:00:20.000
Today is Thursday, the 3rd of September, and joining me is Joe Mazumdar, editor of Exploration Insights.
00:00:20.160 --> 00:00:21.519
Joe, welcome back to Kitco.
00:00:22.640 --> 00:00:24.719
Thanks, uh thanks for the invite, Paul.
00:00:25.359 --> 00:00:26.399
You're more than welcome.
00:00:26.640 --> 00:00:39.840
We have a lot of country risk items today, and we are leading off with the fact that global bond markets are on fire, including the US, the UK, and Japan, with yields rising around the world as investors sell their holdings.
00:00:40.000 --> 00:00:43.759
This has weakened the US dollar and has been driving gold prices higher.
00:00:44.079 --> 00:00:48.960
Joe, what is going on and how sustained do you think this gold rally will be?
00:00:49.520 --> 00:00:50.159
Yeah.
00:00:51.920 --> 00:00:59.359
I think you mean that strengthen the US dollar such that it's it's negatively impacted commodities that are quoted in the US dollar.
00:00:59.520 --> 00:01:02.799
So the government debt level in the US is about$40 trillion.
00:01:03.359 --> 00:01:17.359
Um, you know, if you look at all the uh stimulus packages that have, you know, probably have a cager of like uh COVID had a had a high compound annual growth rate of increase in debt levels.
00:01:17.519 --> 00:01:24.719
Um and consistently there's probably a five to six percent cager in between recession periods in the U.S.
00:01:24.879 --> 00:01:25.920
growing the debt.
00:01:26.079 --> 00:01:29.840
And now it's you know probably predictably hit$40 trillion.
00:01:30.480 --> 00:01:43.280
And with these interest rates rising, the fear is you know, the uh the maintenance of the debt or the interest payments are like they're they're already over a trillion dollars, and now they exceed the defense budget.
00:01:43.439 --> 00:01:47.359
But it's not just a US phenomenon, it's a like you said, it's a global phenomenon.
00:01:47.439 --> 00:01:55.359
So Japan, which has been historically almost zero, is is is at 3% the first time in about 30 years.
00:01:55.599 --> 00:02:02.480
Um and and so this is gonna impact uh uh capital, uh the cost of capital for companies.
00:02:02.560 --> 00:02:18.960
Uh, but also, you know, we're also seeing, and and this is not probably driven by the tariffs, uh although they are problematic, uh, it's mostly driven by oil uh right now, uh, which a lot of the historic restrictions have been driven by uh um oil crises.
00:02:20.000 --> 00:02:38.319
So I I see this uh in terms of impact, uh like you said, uh impacting negatively commodity prices, but then uh I still think that there's a supply issue in most of these commodities, whether it be the mining part or the processing part, um uh the mining part, especially in copper.
00:02:38.479 --> 00:02:45.919
And then on the risk side, because we you know we're we're in several wars uh and uh the current U.S.
00:02:46.080 --> 00:02:58.479
administration changes you know their thinking almost every day, that uncertainty will uh will keep uh an underlying bid on precious metals, I believe.
00:02:58.879 --> 00:03:03.680
Now, the precious metals have been sort of were trading sideways over the past couple of months.
00:03:03.840 --> 00:03:11.919
Uh, a couple of weeks ago they started breaking out again after US Treasury Secretary Scott Bessant announced an increase in the bond buying program.
00:03:12.240 --> 00:03:13.680
Uh, Labor Day's next week.
00:03:13.840 --> 00:03:21.520
Labor Day is typically um a catalyst in the year, and we start seeing a lot more activity following Labor Day.
00:03:21.680 --> 00:03:28.719
With that coming up, uh, and given the sort of context we've just been talking about, Joe, how sustained do you think this gold rally will be?
00:03:28.800 --> 00:03:30.240
Is it going to continue?
00:03:31.120 --> 00:03:37.840
Well, I I think that uh the idea might have been with them buying treasuries uh to basically lower the interest rate.
00:03:37.919 --> 00:03:42.960
That was positive for gold, but but the bond market is is is big, even for the U.S.
00:03:43.039 --> 00:03:49.039
government to impact to uh uh you know uh uh at the scale they want to.
00:03:49.199 --> 00:03:55.199
You know, um the big issue right now is with the currency, how many people want to hold U.S.
00:03:55.360 --> 00:03:56.319
treasuries as well?
00:03:56.479 --> 00:03:59.360
And what else are they holding in their own reserves?
00:03:59.599 --> 00:04:11.280
And before this happened, with the onset of tariffs, the Russia-Ukraine war, there has been a selling of treasuries by certain countries like like China to diversify their reserves.
00:04:11.360 --> 00:04:14.240
So that was an ongoing pressure on U.S.
00:04:14.319 --> 00:04:14.800
treasuries.
00:04:14.960 --> 00:04:23.360
And so it is the question uh is the US the biggest buyer of its own treasuries uh going forward?
00:04:23.519 --> 00:04:25.839
Uh and do they have the means of doing that?
00:04:26.000 --> 00:04:30.800
Do they have the actual uh balance sheet to do that uh consistently going forward?
00:04:30.959 --> 00:04:33.040
And that would be another question.
00:04:33.519 --> 00:04:37.519
Well, it's certainly something on Kitco we will be following closely.
00:04:37.839 --> 00:04:48.000
Country risk also includes physical risk, of course, as barrack mining is finding out at its Recodic Copper Project development project in Balochistan in Pakistan.
00:04:48.160 --> 00:05:04.399
The company paused operations there in March as part of a strategic review, but a restart looks a long way away after security forces killed 12 armed assailants who attacked a convoy of vehicles coming from the project after a heavy exchange of gunfire for more than two hours.
00:05:04.639 --> 00:05:10.560
The new Barrack management team, led by CEO Mark Hill, seems to want nothing to do with Recodick.
00:05:10.720 --> 00:05:20.160
Indeed, Hill will become the CEO of the Barrack North America Spinout Company when it IPOs later this year or perhaps in next year, as a Bloomberg article said today.
00:05:20.480 --> 00:05:28.800
Joe, this uh latest news will certainly give Western contractors even less appetite to work on the Recodic project.
00:05:28.959 --> 00:05:31.439
Um, is Recodic a dead duck?
00:05:32.399 --> 00:05:34.560
Well, I mean, this has been building up a bit.
00:05:34.720 --> 00:05:37.600
I mean, it they got their environmental permit at the end of 24.
00:05:37.680 --> 00:05:41.920
They put the technical report out uh probably February 2025.
00:05:42.079 --> 00:05:56.160
It was building momentum under the former CEO Bristow because he spent all that time negotiating the deal whereby Barak owed 50% of it, and they gave 25% to the government of Pakistan and 25% to the local government of Bakistan.
00:05:56.399 --> 00:06:02.480
Uh, but we got to remember that this project is really close to the border of Afghanistan and Iran.
00:06:02.560 --> 00:06:04.720
So it's problematic automatically.
00:06:04.879 --> 00:06:11.120
Um, and then there's this group that actually wants independence uh uh uh uh from Pakistan.
00:06:11.199 --> 00:06:15.519
Uh so there would always be on uh ongoing issues there.
00:06:15.600 --> 00:06:33.439
Uh at the time they didn't think that they'd be that big, I guess, uh, because they got uh you know loans and that from several government agencies globally uh in terms of funding and uh you know uh progressing this project, which is was quoted as about five and a half billion dollars for first phase.
00:06:33.519 --> 00:06:37.120
Uh was it uh 45 uh million tons per year?
00:06:37.199 --> 00:06:38.319
This is like a big project.
00:06:38.399 --> 00:06:43.600
This is three billion tons of a half a percent copper and about 0.3 grams per ton gold.
00:06:43.680 --> 00:06:45.759
So you know it's a significant project.
00:06:46.000 --> 00:06:56.079
And this is another reason I'm bullish on copper, is that these sort of size projects that uh you know the market essentially needs are not coming on board.
00:06:56.319 --> 00:07:02.399
It's hard to say that it's a dead duck, uh given how long these projects do take.
00:07:02.639 --> 00:07:13.839
But definitely uh as it has been pushed back in terms of they don't want another Pascualama where they keep spending money and then we'll take big write downs later.
00:07:14.000 --> 00:07:16.399
So it's it's prudent to slow it down.
00:07:16.560 --> 00:07:22.079
Uh, but as they slow it down, the capital and everything else is going to go higher for the project.
00:07:22.160 --> 00:07:24.399
And then eventually are they the builders?
00:07:24.720 --> 00:07:25.519
That would be the question.
00:07:25.759 --> 00:07:27.680
Does somebody else build the project?
00:07:27.920 --> 00:07:28.959
I don't know.
00:07:29.600 --> 00:07:37.120
Okay, it's interesting, Joe, that you mentioned Pascualama, the gold silver project that straddles the border between Chile and Argentina.
00:07:37.279 --> 00:07:44.639
Um, Barrack, obviously one of the world's largest gold companies, it wants to develop big projects like Pascualama, like Recordic.
00:07:44.800 --> 00:07:50.560
But uh these ambitious projects obviously come with um considerable challenges to them.
00:07:50.639 --> 00:07:56.879
And as we sit here today, Barrack's cupboard of big deposits that it cannot develop seems to be growing larger and larger.
00:07:57.040 --> 00:08:04.879
Uh, to what extent or not should that be a concern for you know barrack shareholders in particular, but uh investors in the space in general?
00:08:05.759 --> 00:08:12.000
Yeah, I mean, scale uh is what everybody uh wants, especially the big majors.
00:08:12.240 --> 00:08:38.720
Um but if you try to get that in single deposits, they have big footprints, uh Donlin, Pebble, Pasqualama, um, you know, uh, you know, in terms of not only power requirements, water requirements, um uh tailings impacts, uh the size of the open pit or the block cave, which as we're seeing now, uh after years of block cave, uh they could generate their own seismic issues.
00:08:38.879 --> 00:08:44.879
Uh, does that you know have a negative impact on people uh with respect to uh that sort of method of mining?
00:08:45.120 --> 00:08:47.440
So scale brings issues.
00:08:47.600 --> 00:08:54.080
Um and that's why some of these projects take a long time to permit, um, uh because there's these knock-on impacts.
00:08:54.159 --> 00:08:56.879
And they also have the issue of capital intensity.
00:08:57.039 --> 00:09:04.960
Um, yeah, in you know, because usually these projects start off with three to a half billion and they end up being seven to ten billion in terms of capex.
00:09:05.200 --> 00:09:15.919
And I was just looking uh that that uh Pascualama, that project, which was, I believe, uh discovered by Lack Minerals and Barrett Botlack in '94.
00:09:16.080 --> 00:09:23.440
Um, and so a lot of the the work was done while I was down there in the late 90s in Argentina and Chile.
00:09:23.519 --> 00:09:29.440
Um and but they had written down six to six and a half billion dollars on that project from 2013 to 2018.
00:09:29.679 --> 00:09:33.279
I'm sure they don't want to go down that same path with another project.
00:09:34.559 --> 00:09:36.320
So that's why they're focused.
00:09:36.559 --> 00:09:50.240
Yeah, and that's why they're focused on the Spinco uh and Formile and doing that agreement with New Mont and directing uh you know their capital uh to projects like that in stable jurisdictions.
00:09:51.279 --> 00:09:57.840
It does seem that uh you know, spinning out the North American assets that will obviously generate a lot of investor interest and have a lot of value.
00:09:58.000 --> 00:10:07.440
And it does seem Sparrett wants to do that to perhaps take the focus off the rest of its portfolio of more challenging projects in more challenging jurisdictions.
00:10:08.399 --> 00:10:19.279
Yeah, and and I think in the end, when the spin cow happens, you know, the interest on one side would be uh North American investors, European and Western investors, let's just say.
00:10:19.360 --> 00:10:35.120
Uh, and on the spin code, you might get more Eastern investors, whether Middle East, Chinese, what have you, uh, more interest in those kind of assets because they're more comfortable with the geopolitical risk than uh some Western uh companies and investors.
00:10:36.000 --> 00:10:36.320
Okay.
00:10:36.639 --> 00:10:50.559
Well, let's stay in South America and the Andean region where there's some positive news as Peru, the mining ministers of Peru, Chile, Argentina, and Bolivia announced an alliance to promote the development of strategic minerals with a key focus on copper and lithium.
00:10:50.720 --> 00:10:54.879
The governments believe the region could supply more than half the world's copper going forward.
00:10:55.120 --> 00:11:03.519
Greater regional cooperation would facilitate the movement of suppliers and technical personnel and help grow the cluster of service providers in the region.
00:11:03.840 --> 00:11:18.639
Joe, why is cross-border cooperation such a big factor or such an important factor in the development of large-scale projects such as Pascualma, which we've mentioned, and coming down the pipeline, Vicunia and Pachon?
00:11:19.759 --> 00:11:55.919
Well, you know, the thing is infrastructure is huge for all these projects, you know, um, whether it's uh a desalinization plant, whether it's access to the ocean for Bolivia, uh, whether it's uh being able to take advantage of the fact that you're closer to the coast uh by going west uh from Argentina and over the Andes uh if you want to deliver concentrates, uh, or even smelt them uh in Chile before you send them off, and the source of that copper will will be you know from other places, uh, whether it's Peru or Bolivia or Chile or uh you know somewhere else.
00:11:56.000 --> 00:12:09.360
Uh and you can you can create a regional infrastructure that but you would have to negotiate tariffs and uh imports and you know kind of do a I don't know, free trade agreement, I don't know, something like that to expand it.
00:12:09.519 --> 00:12:15.440
But right now that it's a perfect storm with respect to the governments uh that are more right-leaning.
00:12:15.600 --> 00:12:18.720
Uh the question is what happens when they're no longer right-leaning?
00:12:18.799 --> 00:12:26.000
Because as we know, that uh it it can't be highly cyclical in terms of um the leaders of these countries.
00:12:26.159 --> 00:12:30.320
But right now, it is a perfect storm uh to establish something like this.
00:12:30.480 --> 00:12:37.759
And and what I find is when something like this is established and making people money, it's it's hard to s to go back on it.
00:12:37.919 --> 00:12:39.440
But this this this can't happen.
00:12:39.679 --> 00:12:45.279
I don't know if it can happen like overnight, but it makes a lot of sense uh to do something like that.
00:12:45.440 --> 00:12:50.960
And and then also not infrastructure alone, but also regional knowledge.
00:12:51.120 --> 00:13:03.360
Uh like uh, you know, Chile has uh and and Argentina has done a lot of uh you know lithium extraction and lithium mining, and they can help Bolivia uh and also parts of Peru that's not producing as much.
00:13:03.440 --> 00:13:27.600
But they want to like I guess control their um uh the the downstream uh on these critical minerals because uh they have with lithium, the lithium triangle has about 60% of global reserves and uh Chile just between Chile and Peru uh you know 40% of uh copper reserves.
00:13:27.840 --> 00:13:31.440
So this way they can control what happens with that.
00:13:31.519 --> 00:13:40.639
Uh and if they can add value with um easing the infrastructure requirements, they could also add value by having you know the technical expertise there.
00:13:41.039 --> 00:13:58.879
Because I'm on the geology side, I see a lot more you know, expats being South American, uh, whether Chilean, Argentine, Brazilian, uh, Peruvian, uh, coming to North America or going to other places in the world because that's where you know people have been doing exploration.
00:13:58.960 --> 00:14:00.879
That's where a lot of the money has been directed.
00:14:01.039 --> 00:14:08.720
And if you take that another step, like in terms of technical, like I'm mostly looking at exploration companies, but uh a proxy might be drilling.
00:14:08.879 --> 00:14:15.039
So there's not enough drillers, and drilling costs, uh especially in the US, are skyrocketing.
00:14:15.200 --> 00:14:28.480
And so a lot of these drilling companies that operate in South America are bringing up their drillers from uh places like uh Colombia and Ecuador and that uh to work the rigs because they don't have people.
00:14:29.360 --> 00:14:40.480
Okay, well, Chile and Peru have mining clusters of service providers that are growing, and presumably they'd be some of the main beneficiaries of greater cooperation with Bolivia and Argentina.
00:14:40.639 --> 00:14:47.279
I imagine um the devil will be in the detail, specific agreements for specific projects or infrastructure developments.
00:14:47.440 --> 00:15:00.960
And going back to Pascualama, it reminds me that uh one of the reasons that project never advanced 10, 15 years ago was the fact that Chile and Argentina couldn't agree on how to tax the production from the project.
00:15:01.039 --> 00:15:10.799
And presumably that will still be an issue for you know whether it's Vicunia, whether it's Pachon, you know, that's gonna be one of the key agreements that will have to be negotiated.
00:15:11.200 --> 00:15:21.360
Yeah, I mean it all those projects that are on the uh you know on the uh the limit of the Andes uh make more sense to go west than to go east.
00:15:21.519 --> 00:15:30.320
Um and you know, that's why McEwen Mining now is doing cathode as opposed to um doing a concentrate, uh, because they plan on going east.
00:15:30.480 --> 00:15:44.159
Um I would say in the long term, uh uh it it wasn't just the tariffs and how they treat the concentrates as they go through to Chile and then use their port facilities or even their smelters.
00:15:44.320 --> 00:15:47.919
Because we got to remember that production in Chile is going down.
00:15:48.399 --> 00:16:04.799
Um so you know, did you bring Cadelco in, uh, you know, and then say, okay, well, you're not your smelting capacity, you know, it might be impacted by lower production, so uh why don't we get some of this feed from these Argentine projects or uh from somewhere else?
00:16:04.879 --> 00:16:07.679
Uh the Argentine projects make the most sense.
00:16:07.919 --> 00:16:11.519
Uh and that way that makes that project more viable.
00:16:11.840 --> 00:16:19.759
But there's also the the issue about water, like uh whose water is it that you're actually using and um you know the environmental impacts.
00:16:19.919 --> 00:16:27.679
Right now, with the right-leaning governments, permitting is uh is much more fluid than it was uh previously.
00:16:28.799 --> 00:16:36.879
Okay, talk about talking about right-wing governments and permitting, several companies received some good permitting news this week in the United States and Canada.
00:16:37.120 --> 00:16:46.320
Talamor Mining received the remaining major resource road permit it requires to complete the northern access route to its coffee gold projects in Yukon in Canada.
00:16:46.480 --> 00:16:51.360
That approval removes a key infrastructure permitting hurdle ahead of construction.
00:16:51.600 --> 00:16:59.600
Um, Joe, how important is it for the bigger mining development picture in Yukon that Talamor got its road permit?
00:17:00.480 --> 00:17:02.000
Well, I think it's a good sign.
00:17:02.080 --> 00:17:11.119
I mean, I'm uh nobody uh thinks that the Yukon is, I mean, from the outside thinks that Yukon is a bad place to do uh uh mining.
00:17:11.519 --> 00:17:14.079
Um okay, I'll already take that back.
00:17:14.240 --> 00:17:19.920
I mean, it's it's so if we go back, uh I did this uh tour of the Yukon.
00:17:20.079 --> 00:17:23.839
Like I've been going to the Yukon since uh since the late 80s.
00:17:24.079 --> 00:17:28.480
Um, but if we look uh so I did I did this tour of the Yukon about 10 years ago.
00:17:28.559 --> 00:17:34.240
I did this uh this uh uh discussion for my subscribers uh about a month ago.
00:17:34.400 --> 00:17:40.880
And and at the time, uh you know, there's a lot of expiration, there was a lot of excitement.
00:17:41.039 --> 00:17:45.200
Uh you know, Banyan at that time had a market cap of only 5 million.
00:17:45.359 --> 00:17:46.960
Snowline didn't exist.
00:17:47.119 --> 00:17:49.599
Uh they were having trouble selling their assets.
00:17:49.759 --> 00:18:06.000
Um Keno Hill was the only producing asset at the time, running under capacity, uh, which was I think 400 tons per day of this underground uh silver base metal project um uh in uh in the Yukon, central Yukon.
00:18:06.319 --> 00:18:22.799
Uh so flash for uh forward to my recent trip about six weeks ago or whatever, um that still is the only producing mine, continually producing uh uh undercapacity.
00:18:23.119 --> 00:18:26.160
So over that 10 years, nothing's really happened.
00:18:26.400 --> 00:18:38.799
Um so so to have the road permit uh, you know, and have another project uh come online, a heap bleach, especially given what happened with the Eagle Mine, is a positive.
00:18:39.680 --> 00:18:50.240
You know, uh but what we gotta remember is like uh infrastructure uh is is a big deal not only for the Yukon, British Columbia, Northern Ontario, what have you.
00:18:50.559 --> 00:18:52.960
But also the the issue is power.
00:18:53.119 --> 00:18:59.279
And so uh Talamore with the coffee project uh is going to be diesel.
00:18:59.440 --> 00:19:10.000
Uh so uh I believe they're uh they're they need about 22 megawatts of power for this uh for this, I think it's over 7 million tons per year uh heat bleach project.
00:19:10.240 --> 00:19:14.559
But but it's 30% of their costs uh linked to the cost of diesel.
00:19:14.720 --> 00:19:28.480
Uh, you know, so not only will they have diesel costs impacted by truck because um their their strip ratio is like what is it, 7.6 or something like that to one, but they're also running power uh through diesel.
00:19:28.880 --> 00:19:37.279
But you know, they've got the grade, hopefully, to to to to offset that cost, uh, which it seems they do.
00:19:37.440 --> 00:19:43.279
Um the road is a positive for permitting, but you know, does it does it make casino look a lot better?
00:19:43.519 --> 00:19:49.519
No, because their big problem is not only road infrastructure, but uh the bigger problem is power.
00:19:49.680 --> 00:19:52.960
Um power for me is is is the big issue.
00:19:53.039 --> 00:20:08.559
Although those the big projects that require um you know high uh power requirements, uh those are the ones that that remain unimpacted, let's say, by this announcement, because their big issue is more power.
00:20:09.279 --> 00:20:16.079
Now, as as you mentioned, the the grid connection from Yukon to BC, that's the key to unlocking a lot of these projects.
00:20:16.160 --> 00:20:23.119
The the Canadian federal government wants it, the the Yukon territorial government wants it, the BC provincial government wants it.
00:20:23.279 --> 00:20:26.000
Um, big questions remain: who's gonna pay for it?
00:20:26.160 --> 00:20:29.279
How long is it gonna take to develop uh and the permitting for that?
00:20:29.359 --> 00:20:34.559
Because it's something like what is it, seven or eight hundred kilometers of line that have to build to connect the two groups.
00:20:34.720 --> 00:20:38.480
So, you know, that's not gonna happen for the next 10 years or so.
00:20:38.640 --> 00:20:43.119
Um, in the sort of 10 years between your two visits there, you you touched on this.
00:20:43.200 --> 00:20:47.759
Um, Eagle Mine came into and out of production, and so did the Minto Copper Mine.
00:20:47.839 --> 00:20:53.039
They're both projects that new operators are looking to get into production again.
00:20:53.279 --> 00:21:06.640
Minto, I think it's Selkirk Copper, and the price of Waterhouse Coopers is supposedly in the final stages of trying to sell the former Victoria asset, the Eagle Mine, to a new company.
00:21:06.880 --> 00:21:21.359
Um, also getting permit approvals this week were Paramount Gold Nevada, which received BLM, Bureau of Land Management approval for the plan of operations for its Grassy Mountain Gold project in Oregon, meaning its federal permitting work is functionally complete.
00:21:21.440 --> 00:21:30.960
And South 32 said the US Forest Service signed the final mine plan of operations for its Homosa zinc gold, sorry, zinc silver project in Arizona.
00:21:31.279 --> 00:21:37.920
Homosa was the first mining project added to and completed under the federal FAST 41 permitting program.
00:21:38.400 --> 00:21:47.359
Joe, uh with these last two, it appears that President Trump's efforts to accelerate permitting of mining projects is starting to bear fruit.
00:21:48.000 --> 00:21:59.839
Yeah, I I would say that I mean the gap is that it was very slow under uh the Biden administration uh in terms of permitting, uh especially on federal land, such that people tried to avoid it.
00:22:00.240 --> 00:22:15.839
So they would go out of their way to uh you know just acquire land uh privately uh and try to keep the footprint on the private land to avoid uh you know uh uh process uh uh uh of going through the the the federal permitting.
00:22:16.000 --> 00:22:20.960
State permitting was easier, especially in states like Arizona and Nevada.
00:22:21.119 --> 00:22:38.640
Um but now uh with this current administration uh and the FAST 41, um especially I believe it's called a transparent uh uh permitting process where they actually assign somebody on the website to actually look at the pro permit processing.
00:22:38.799 --> 00:22:41.119
So you don't have to actually phone anybody up.
00:22:41.359 --> 00:22:47.359
That person that's on there, it's their responsibility to make sure everybody underneath them meets their deadlines.
00:22:47.519 --> 00:22:53.440
And so that it doesn't shorten the process, but it makes it much more transparent.
00:22:53.680 --> 00:22:59.519
And the time you give it is the time you got, uh, meaning uh the the permitting people.
00:22:59.599 --> 00:23:04.480
You so as long as you do your job as a company, uh the government's not going to slow you down.
00:23:04.640 --> 00:23:09.440
Uh, and so that certainty has definitely helped a lot of mining projects.
00:23:09.680 --> 00:23:17.440
And but if the state or the locals, just like anywhere in the world, don't want it, it doesn't make some of those projects any easier.
00:23:19.039 --> 00:23:25.599
Okay, well, and congratulations to Talamore, to Paramount Nevada, and of course South 32 there.
00:23:25.920 --> 00:23:29.519
As you alluded to, not all governments are happy with mineral development though.
00:23:29.599 --> 00:23:38.079
In British Columbia, the Jitsan Hu Glip government is weighing into the consultation process of Seabridge Gold for its massive KSM project.
00:23:38.240 --> 00:23:47.279
The Jitsan is not one of the First Nations impacted by the project, but it is supporting another First Nation, the Setsal Skikim La Ha.
00:23:47.680 --> 00:23:57.680
Um, Seabridge has already got agreements in place with the Taltan and NISCA First Nations, which are the most or the main impacted First Nations by KSM.
00:23:57.839 --> 00:24:06.720
Um, Joe, apart from me uh murdering the names of different First Nations, is this to be viewed as solidarity amongst First Nations?
00:24:06.960 --> 00:24:16.400
Or given that they are governments in and of themselves, could this be considered outside interference in the internal politics of other First Nations?
00:24:17.759 --> 00:24:48.160
Yeah, I mean, we gotta understand that uh, you know, there's a lot of First Nations and to bucket them all as as one uh global entity is probably wrong because obviously the Taltan and the NISCAs are are okay with the project, and uh that's how they uh Seabridge got there, uh, you know, they were deemed substantially started, and uh they spent up to when they were substantially started was July 2024, so they spent over a billion dollars like on infrastructure and early works already.
00:24:48.400 --> 00:25:09.279
Um so uh it's similar to the uh uh uh to the Amber Ambler Access Road in that they got their permit, they went through all this permitting process, and then somebody piped up and said, you know what, um uh this uh you guys didn't consult us properly.
00:25:09.359 --> 00:25:20.079
Uh we were ignored because we were on the edge of the impact, and you guys never talk to us uh and we're gonna be impacted, uh, and nobody's listening to us.
00:25:20.400 --> 00:25:28.880
And but in Alaska, uh that was the Doyan nation, which is much bigger uh than this nation.
00:25:29.200 --> 00:25:43.279
Um but this one is probably uh wants to make sure that these little smaller nations are actually heard uh because they probably long term they probably see that being an impact.
00:25:43.759 --> 00:25:54.000
Because if something happens on their nation and they need to consolidate and get other people behind them, they want the little guys to have just as big of a say as the big guys.
00:25:54.160 --> 00:25:58.319
Uh and and that might be uh what's happening here.
00:25:58.480 --> 00:26:06.559
Um because otherwise, people will just go to the biggest nations with the uh the biggest clout.
00:26:06.720 --> 00:26:10.480
Uh so they want uh probably everybody to have an equal say.
00:26:10.559 --> 00:26:14.880
Uh well, you know, which it might be in their interest to do this, I'm sure it is.
00:26:15.039 --> 00:26:18.319
Um, but I think that's that's what's behind this.
00:26:18.559 --> 00:26:23.119
Um Seabridge is a big project, like we were talking about, in terms of footprints.
00:26:23.279 --> 00:26:37.119
Uh, and so uh it's usually those people that are on the margin of the footprint that can slow projects down because the people that are building the projects don't think that impact is worthy of consultation.
00:26:38.000 --> 00:26:38.880
Okay, interesting.
00:26:39.039 --> 00:26:51.039
As a coda to this item in Ontario, the Apitipi Annie Chinapek Nation was granted possession of a large mineral claims package in the Lake Abitibi area by the Ontario Superior Court Justice.
00:26:51.119 --> 00:27:03.440
The claims once belonged to solid gold resources and have been subject to a dispute since 2012, when the community claimed consultation didn't occur prior to exploration work being undertaken on its traditional lands.
00:27:03.680 --> 00:27:24.480
Joe, um, I imagine the key thing for a lot of exploration and development companies in Canada, the crucial question is to what extent or not these things set a precedent for you know different, you know, marginal or unimpacted First Nations to weigh in on the consultation processes that the projects undertake with other larger groups.
00:27:25.039 --> 00:27:45.119
Yeah, I would say like you know, we've seen like the the the impetus for the the drip uh the undrip here in British Columbia was uh you know an incident with a with a mine that uh and and and the fact that people would be exploring on First Nation ground with actually consulting because everything was electronic staking.
00:27:45.279 --> 00:28:06.960
And as we know, um most of the ground, 90, 95% of the ground in British Columbia is unseated uh because uh the the initial Europeans that came here uh you know uh basically declared a terranullis, uh just like the Australians, and so like they didn't have to talk to anybody, and now we're paying for that in terms of how we deal with this.
00:28:07.119 --> 00:28:19.920
Uh what happened uh in uh in Ontario, uh where they do have agreements, uh, is a bit different, and that they're sort of saying, just like this other uh nation, that they were never consulted.
00:28:20.000 --> 00:28:21.920
But this is expiration stage.
00:28:22.079 --> 00:28:26.000
The fact that this company stuck around this long is interesting.
00:28:26.160 --> 00:28:33.440
I mean, 2012 to 2026, like 14 years of not doing anything, uh, you know, forcing it to essentially delist.
00:28:33.920 --> 00:28:44.720
Um uh but they had a hundred million dollar lawsuit with the Ontario government, and now they've given 90% of the project to the First Nation, and the First Nation apparently has no problems with expiration.
00:28:44.799 --> 00:28:51.839
They want to do it, uh, but they want to do it their way and they want to be properly consulted, or you know, whatever properly means for them.
00:28:52.079 --> 00:28:56.319
And so uh it should be interesting going forward.
00:28:56.400 --> 00:29:05.039
I'm I'm I'm sure most companies don't want to do expiration and then only get approval if they cede 90% of the asset to the local First Nation.
00:29:05.119 --> 00:29:08.640
I don't think that was a that's a precedent anybody wants set.
00:29:09.519 --> 00:29:10.720
Yeah, absolutely.
00:29:10.960 --> 00:29:15.839
Okay, let's move on to another area of government uh getting involved in the minerals business.
00:29:16.000 --> 00:29:21.279
BMO, the bank, published a note this week that took a look at critical minerals in drone warfare.
00:29:21.440 --> 00:29:24.559
This was picked up a lot on X, including by Robert Friedland.
00:29:24.880 --> 00:29:30.960
Um, the report said that with 15 million drones expected to be deployed in the Russia-Ukraine war this year.
00:29:31.119 --> 00:29:40.400
It estimates that governments have pledged US$150 billion for the development of drone and counter drone capabilities in the last two years.
00:29:40.559 --> 00:29:49.200
Gallium, germanium, and rare earth are the critical minerals most important for military drone manufacturing and in the counter drone technology.
00:29:49.440 --> 00:30:00.240
The US government is advancing various means to stimulate the reshoring of critical mineral supply chains, the Department of Energy, the Department of War, US X in Bank funding, Project Vault, Defence Stockpiles, and so on.
00:30:00.559 --> 00:30:06.079
Joe, how do you see the US government's understanding of the mineral space evolving?
00:30:06.240 --> 00:30:08.799
How fast are they getting up that learning curve?
00:30:09.119 --> 00:30:14.079
With that in mind, how well do you think they are applying stimulus to this issue?
00:30:14.720 --> 00:30:20.400
Okay, like there are questions still, like let's let's let's go into Project Vault.
00:30:20.640 --> 00:30:26.720
A lot of people like that idea because it generates a price floor for these people uh under volatile conditions.
00:30:26.880 --> 00:30:38.559
Uh, but then the question is it's it's easy to say, okay, um if if Project Vault is for copper, okay, it's got to be a cathode, or it's got to be a concentrated whatever grade.
00:30:38.799 --> 00:30:43.440
It's harder to do that with like what what do you want with rare earths?
00:30:43.680 --> 00:30:44.880
Is it a carbonate?
00:30:45.039 --> 00:30:46.319
Is it an oxide?
00:30:46.480 --> 00:30:48.079
Uh, is it an alloy?
00:30:48.240 --> 00:30:50.319
Uh, like what goes into the vault?
00:30:50.880 --> 00:31:00.720
And then some of these uh uh metals or or commodities, uh critical minerals, uh the markets are less liquid, so uh price discovery is harder.
00:31:00.880 --> 00:31:06.319
Uh so you basically have to go to the company and say, what kind of price do you need uh to make it worthwhile?
00:31:06.480 --> 00:31:11.920
Um and then you got to get the the end users to agree on those floors.
00:31:12.079 --> 00:31:13.519
So there's a lot of negotiation.
00:31:13.680 --> 00:31:15.599
I mean, I you know it's not a bad idea.
00:31:15.759 --> 00:31:30.720
Uh I think they tried to do that uh or did that with uranium um at about 35 to 40 bucks a pound to uh you know uh and you know dis reinvigorate the local industry, which you know doesn't produce a lot of uranium.
00:31:30.880 --> 00:31:36.640
So I I agree with the motivation, uh probably, but uh, you know, I I don't know how they execute that.
00:31:36.799 --> 00:31:44.160
But I I think that they do understand that the key in a lot of these critical minerals is not the mining, it's the processing.
00:31:44.400 --> 00:31:53.599
So in rare earths, they do need to source some rare earths, but sourcing the rare earth carbonate is definitely not good enough.
00:31:53.759 --> 00:31:58.000
That comes from the mine of an ionic absorption clay deposit.
00:31:58.160 --> 00:31:59.519
The mining isn't hard.
00:31:59.680 --> 00:32:10.400
Uh, you don't have to blast, it's free digging, uh, and it's it, you know, it's easy to produce a rare earth carbonate, or and and a worse product might be a mixed rare earth carbonate.
00:32:10.480 --> 00:32:13.519
But getting it to an oxide is harder.
00:32:13.920 --> 00:32:19.039
Getting it to uh um a metal and a magnet is much harder.
00:32:19.200 --> 00:32:36.240
So I think now they're directing more money into the processing side, um, you know, to help uh, you know, uh to get especially the the the metals, the critical minerals that um uh China uh uh has uh export restrictions on.
00:32:36.319 --> 00:32:41.599
So it's gone from probably critical minerals, and I've said this before, uh, to security minerals.
00:32:41.759 --> 00:32:49.920
So they're they're more focused on those ones than let's say the lithiums uh and and and in and even copper.
00:32:50.160 --> 00:32:57.839
They're more focused on things like that, like antimony uh potentially and funding those kind of projects.
00:32:58.000 --> 00:33:04.400
But uh depending on what we're talking about, uh a lot more of the focus, I think rightfully so has been on processing.
00:33:04.559 --> 00:33:14.000
If you look at germanium and gallium, I don't own any of those in my uh portfolio, but uh you know people are going around and looking for those.
00:33:14.160 --> 00:33:24.720
Uh but when you look at it, a lot of the germanium-gallium comes from processed uh uh from uh aluminum processing and zinc smelting.
00:33:24.799 --> 00:33:36.160
Uh so um in that in that waste of slag, let's say, uh that's where you can extract the germanium and gallium uh because it's concentrated uh in there.
00:33:36.400 --> 00:33:45.680
I I remember when I was in Zambia, uh I think it was uh Concola, the Concola Smelter, which at that time was uh on care and maintenance.
00:33:45.920 --> 00:33:57.039
Um there were people that were just driving trucks up to the slag and just walking and hiring laborers uh to grab bags of it and stick in the truck.
00:33:57.200 --> 00:33:59.839
Uh, and that was for germanium and gallium.
00:34:00.000 --> 00:34:10.400
Uh so I would say germanium gallium is probably more linked to processing uh that sort of uh the slags from these sort of uh zinc and aluminum.
00:34:10.559 --> 00:34:17.039
Whereas in rare earths, uh it is a focus in processing, but they do need the supply of the carbonate.
00:34:17.199 --> 00:34:31.599
But it does if they if that's all they get and they don't understand how to process it because the Chinese have been doing it for 20, 30 years, they have to get up the scale uh in terms of understanding how to do it to the quality that the end users need.
00:34:32.400 --> 00:34:33.119
Thank you, Joe.
00:34:33.280 --> 00:34:46.320
And to your point there, the US Department of Energy selected nine projects for 160 million,$162 million of potential funding to recover critical minerals from mine waste and industrial feedstocks.
00:34:46.639 --> 00:34:50.239
But but another thing that they were doing, sorry, uh was off-take agreements.
00:34:50.400 --> 00:35:06.960
So that Serra Verde uh project uh that was purchased by another company uh from here, uh from the state, sorry, um they they got an uh off-take agreement uh with a special purpose vehicle uh you know funded by the government.
00:35:07.039 --> 00:35:11.920
Uh so that's another way of creating a price floor, I guess.
00:35:12.480 --> 00:35:13.119
Thank you.
00:35:13.360 --> 00:35:18.880
Some critical minerals, the price of some critical minerals has gone off the charts over the past couple of years.
00:35:19.039 --> 00:35:20.800
Tungsten is one of those.
00:35:20.880 --> 00:35:29.360
Um, and you can see this as North Cliff Resources Reported an updated feasibility study for its CISOM tungsten molybdenum project in New Brunswick.
00:35:29.519 --> 00:35:42.639
It's looking to get a 27-year operation that will average about 598,000 MTU of tungsten and 4.2 billion pounds a year of molybdenum following an initial capex of about 1.5 billion dollars.
00:35:42.800 --> 00:35:54.800
This would deliver an after after tax NPV of 6.9 billion Canadian dollars and an 8% discount with a 50% IRR and 1.6 year payback.
00:35:54.960 --> 00:35:59.119
Northcliffe targets a construction decision in late 2027.
00:35:59.280 --> 00:36:08.719
Um, Joe, I want to sort of use this uh to sort of talk about how the economics of base metals projects is evolving in the sort of current situation.
00:36:08.880 --> 00:36:12.719
Um, 50% IRR for base metals project is pretty unheard of.
00:36:12.880 --> 00:36:16.320
Typically, the sort of hurdle rate is somewhere between 10 and 15%.
00:36:16.719 --> 00:36:18.639
So this is way, way above there.
00:36:18.800 --> 00:36:21.039
Um, what's your view of things here?
00:36:22.559 --> 00:36:26.800
I mean, um uh tungsten is uh uh is a volatile uh metal.
00:36:27.039 --> 00:36:28.239
We see the price spike.
00:36:28.320 --> 00:36:37.519
Um the whole question is uh, you know, uh what are they using in terms of uh uh commodity price uh to generate that kind of return?
00:36:37.760 --> 00:36:58.079
Uh historically, like when I worked on copper projects and the uh the financing of uh of these project capital projects uh with with Newmont, like the Conga project, uh as copper prices were going up, I when I re-ran that model, the IRR never changed because our costs were going up almost in lockstep with the copper price.
00:36:58.239 --> 00:37:12.320
The copper price has spiked now, uh, such that you know maybe returns are are higher than the 10 to 12 percent that we used to look at, uh, but they're nowhere near 50% uh for these uh multi-billion dollar projects.
00:37:12.480 --> 00:37:23.119
Uh so I I I would look at that if you're an investor in this one, a little bit more detail of the technical report and the underlying assumptions in it to generate the 50% IRR.
00:37:24.480 --> 00:37:25.519
Good advice there.
00:37:25.679 --> 00:37:28.639
Now the big raises continue for select juniors.
00:37:28.800 --> 00:37:37.280
Magna mining closed a 140 million Canadian dollar strategic investment by Peruz Alpayana, which gave it a 19.9% stake.
00:37:37.360 --> 00:37:46.719
While Thesis Gold closed a 59 million Canadian bought deal financing, in which Anger Gold Ashanti invested$20 million for a 9.9% stake.
00:37:46.800 --> 00:37:55.760
And Radisson Mining Resources closed a 57 million Canadian strategic investment by Agneco Eagle Mines for a 10.5% stake.
00:37:56.000 --> 00:38:01.840
Joe, uh, apart from the quantums raised, all of these financings were for projects in Canada.
00:38:02.000 --> 00:38:05.199
Is there anything uh that we can or should surmise from this?
00:38:06.159 --> 00:38:22.000
Yeah, but um we have seen uh like uh Canada, the US, Australia being the preferred uh uh uh uh uh places that people want to spend money uh either in development or expiration.
00:38:22.159 --> 00:38:35.280
So Canada is around over the last five years is about$3.22 billion in expiration expenditures every year, mostly on gold, uh then down copper and then and then nickel.
00:38:35.360 --> 00:38:37.360
Uh that's where the expiration money is going.
00:38:37.440 --> 00:38:49.360
And if you look at another project that got funded, uh like Talamore was uh, you know, they got funded um to develop uh the coffee project with debt and equity.
00:38:49.599 --> 00:39:00.880
Um uh uh Thesis is getting uh Thesis and Radisson are getting like equity placements from cash, from companies with a lot of cash and looking for uh new projects.
00:39:00.960 --> 00:39:05.440
Uh so that makes sense for Anglo Golda Shanti, it makes sense for IGNICO.
00:39:05.599 --> 00:39:16.719
Um and and so uh but they're trying to lower their jurisdictional risk by going to places like British Columbia, the Yukon, Nevada, and places like that, which which makes perfect sense.
00:39:16.960 --> 00:39:38.000
Um I think continue like because of what we've talked about, Pakistan and some of these other places in West Africa that are raising royalties and that um people prefer countries with stable uh mining laws and uh tax regimes, uh, that you can uh you can say that for your 20-year mine life, this is what what it's gonna be.
00:39:38.079 --> 00:39:41.119
And so they are willing to invest in those kind of projects.
00:39:41.199 --> 00:39:49.280
So I see no uh no issue with that with respect to uh uh you know um how the money is being directed.
00:39:49.360 --> 00:40:01.760
But I would I would say right now that we're seeing a turn like we were talking about in South America with these countries like Peru, Argentina, Brazil, Chile with the uh more right-leaning governments.
00:40:01.840 --> 00:40:04.000
I I think that's a positive for mining there as well.
00:40:04.079 --> 00:40:07.280
And we might see more money directed down there as well.
00:40:07.840 --> 00:40:10.639
And I expect the big checks to continue.
00:40:10.800 --> 00:40:11.920
That's all for this week.
00:40:12.000 --> 00:40:16.000
Um Joe Mizumja, I'll be seeing you at the Beaver Creek Conference in a few weeks' time.
00:40:16.159 --> 00:40:18.880
Until then, thank you very much for joining me today.
00:40:19.199 --> 00:40:21.039
All right, thanks a lot, Paul.
00:40:21.679 --> 00:40:26.079
And to our viewers, of course, if you like what you see, don't forget to hit that subscribe button.
00:40:26.159 --> 00:40:29.280
I'm Paul Harris, digging deep for Kitco Mining.
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