Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
@Sid, yes I would imagine that the algo will factor in exactly this type of input.
Which news Sid?
The day will be blue, but this is all marginal +/- movement.
It will get exciting, and it WILL get exciting when the price starts to move like in Sep/Oct 2016, Jan 2017, Sep 2018, Sep 2020, Apr 2021, Mar 2022.
And by the way, if you notice, these price moves (peaks) have an interestingly recurring seasonal character and rhythm (0.5/0.6 years, 1.42 years, 2 years). I for one am very curious to see what happens end of Q3/beginning of Q4.
RSI super low but not trending up yet.
Supertrend and Parabolic SAR solidly pointing south.
20dEMA just above 50d EMA, might indicate that the drop might be coming to an end and there is more upside at these levels.
Volume low so no buying pressure, new buyers on their own really.
Technicals overall just reflecting the negative fundamentals around OMI's event, no technical movements per se in the price.
I would say min buy level 1.5p, could start buying around 3p if impatient and averaging down if it keeps dropping.
All personal opinion, DYOR and GLA.
Forte, I guess we shall see, but unless there is any buying pressure, I dont see how BR stopping selling will move the price back up. If they thought the price would go back up they just would not sell.
@Sid200 (what happened to the fist 199 by the way?)
BR uses a lot of data, also a lot of "alternative" data to feed their pricing algos, to determine at any given time if one stock is a buy, a hold or a sell. As stocks are picked for any one or more of their thematic funds, it might be that the algo prices in he Ecuador country risk and on that basis alone determines to sell, or less dramatically it blends different contributing factors to come up with a decision based on their risk appetite at any given point.
From internal sources I know for sure that traders are just executing deals, all decisions are algo-based. Of course we will not know the exact background of their decision to offload SOLG shares, but it's just a mechanical exercise ands it might well be that when the risk profile changes they will load up again. They do this for thousands of positions every hour of every day. That's it really.
And how did you come to this conclusion?
There are different ways to make the price move upwards again, some based on fundamentals, some based on sentiment and expectation. Either way, the price is the price and that is the only thing that will eventually trigger a decision to buy, sell, hold or do nothing.
Now, on the fundamental level, I think it's not correct to state that there is a lack of meaningful action, the company has stated that it is reorganizing itself around more focussed priorities, advancing Cascabel (see SC's comments about negotiating with government for example and exploring various financing options) and with more disciplined cost management. This takes some time and it's made of many day to day activities that don't justify an RNS. OF course we could be sold just BS on these fronts and the reality might be that they are only cutting cost to survive longer while they look to negotiate a sale who knows really...
On the sentiment level, it's low and will likely stay low unless something fundamentally changes, we had too many false dawns and there is justifiable cynicism.
On the expectation level, that's where we tend to disagree. Each of us projects a view of the future based on one interpretation or another, and possibly on our individual aspirations.
All in all, too little known in reality and too much time to think about it all. Not a nice time, made worse by some posters.
GLA
Many juniors dream of attracting partners such as BHP and Newcrest Mining. Mather brought them in and then eventually alienated them. He also alienated Cornerstone Capital Partners, a junior explorer which owned 15% of Cascabel until the two companies finally merged earlier this year, but not before Mather had twice failed in hostile takeover attempts and alienated its board and management.
Following the merger, Cornerstone changed SolGold’s board and picked Caldwell to run the company. Maxit Capital was the largest shareholder of Cornerstone, and its chief executive Bon Singha, was not shy of expressing what he thought of BHP and Newcrest in their approach to working with SolGold, as Mining Journal reported in late 2022 with the help of a few asterisks.
Caldwell has some bridges to build. Part of my role is to work with all our stakeholders, including shareholders, and we are trying to get a good working relationship. The relationship with BHP and Newcrest has not been the best at times. Both BHP and Newcrest voted against me on the board, which tells you what they thought about me joining, said Caldwell.
One relationship that is likely to change anyway is that of Newcrest following its acquisition by Newmont. However, as Mining Journal reported recently, Newmont’s chief executive likes Ecuador and the company’s investment in Lundin Gold but did not mention its investment in SolGold. Newmont would look to realise some $2 billion in portfolio adjustments following the acquisition, leaving some to speculate that SolGold may be a position it would seek to monetise.
I have not spoken to Newmont. I want the dust to settle on the transaction with Newcrest, and we will reach out to them when the timing is appropriate. I certainly would encourage anyone to at least look at the asset before they sell the stock, just because of its size and the magnitude, said Caldwell.
Shares in SolGold are trading at 29c, valuing the company at C$873 million.
A key task is to continue advancing discussions with the government about obtaining an investment protection agreement and amending the company’s current investment protection agreement to reflect development and exploitation. We are in discussions on both of those, and we would like to get those successfully negotiated by the end of the year, said Caldwell.
It is not just Caldwell who has relocated. The accounting and IT functions will be done in the country as well as other functions, including the engineering on the feasibility study, once that resumes.
There are tax savings, and it is good for the country to spend those dollars here. We will ensure that when we resume the feasibility work, we will put it out for bid and ask that the work is done in Ecuador. Obviously, some specialists would have to be imported, but we would make sure the work was done here in country rather than offshore. It really is emulating what Lundin Gold did, said Caldwell.
While progress has been swift, with the initial focus being a business restructuring to reduce costs and improve efficiencies, Caldwell and his team are now moving onto the most important nut to crack: how to profitably develop Cascabel.
The SolGold under Caldwell will be a very different beast than the SolGold under his predecessor Darryl Cuzzubo and company founder Nick Mather before him. Mather had visions of grandeur, such as the company becoming the next BHP, which in addition to perhaps raising the hackles of the company’s biggest shareholder, BHP, saw him aim for the stars with a large block cave development with a 40-60Mtpa throughput and pre-production capital expenditure of US$2.4-2.8 billion and total capex of $10.1-10.5 billion, in a 2019 preliminary economic assessment.
Repeated delays to a prefeasibility study eroded market confidence in the company, and when it eventually came, in April 2022, it featured a more modest 25Mtpa block cave operation to produce an average of 132,000tpa of copper, 358,000ozpa of gold and 1Mozpa of silver following pre-production capital expenditure of US$2.7 billion.
First up for Caldwell is an internal study to assess the options, which Caldwell should have ready to present to the board in about three months time. If accepted, engineering work would follow before the company begins to speak publically about it.
The Cascabel deposit has some very high-grade zones inside that massive deposit. The idea would be to begin the operation by exploiting that high grade, with smaller throughput, lower capital costs and a shorter development schedule, rather than a massive block cave right out in the block. Then expanding over time to where you extract the entire resource. We don’t have any numbers yet, but the preliminary indications are positive. [The capex] would be significantly less than the current capital costs, said Caldwell.
Caldwell was brought in to fix a litany of fractious relationships, temper and refocus expectations and fix several other issues that had almost made SolGold untouchable despite owning a deposit endowed with one of the greatest mineral endowments in the Andes.
One of Cornerstone’s criticisms of SolGold was that it was being run as a large company when it wasn’t one. Caldwell’s first task has been to restructure the company and make it fit for purpose.
Our number one focus was to optimise the organisation with the goal of reducing costs and improving efficiencies. We had key groups spread all over the world, from Brisbane, Australia, London, and, of course, here in Quito. We are really trying to move as many activities in-country [Ecuador] as we can. I moved to Quito and probably spend 80% of my time in-country. We have been successful in dramatically reducing our costs over the last six months, and with our available cash balance of US$46 million at the end of March, we’ll definitely be able to carry that well into 2024, said Caldwell.
With country factors being one of the most significant risks to the development of any project, Caldwell believes the only way you can manage it is to be there. He has taken inspiration from Ron Hochstein, chief executive of Ecuador’s development success story, Lundin Gold and its Fruta del Norte project.
At PDAC this year [the Prospectors and Developers Association Conference in Toronto, Canada in March] Ron spoke at the memorial for Lukas Lundin and told the story of when they were marketing in London during the early days of the company. He said a potential investor asked what makes them any different from Kinross, to which Lukas said, Ron’s moving to Ecuador, which was the first time Ron had heard about it. That is when I said it is the right thing to do, and I decided to move. The person in this position needs to be in Ecuador to be involved in the day-to-day decisions and the political situation, said Caldwell.
The current political situation in Ecuador, where president Guillermo Lasso has called for new elections to escape corruption charges, makes Caldwell’s relocation a prudent decision. Based on the historical development of the mining sector, both Lundin Gold and Mirador were permitted, developed and built under previous regimes that were more liberal or left-leaning than the current president. I think the responsible mining of renewable energy minerals like copper is the future of Ecuador and that we will have the support of whoever is ruling. Responsible mining has a place in Ecuador’s future, and we are going to do what we need to do, said Caldwell.
PART 2
The bank said weaker data from China was the trigger for the copper’s decline, along with rising production after the resolution of supply disruptions in Peru, Chile, Indonesia, Panama, and the Democratic Republic of Congo.
We have been calling for copper to end the year at $7800 a tonne ($3.54/lb), implying further downside from here; Morgan Stanley said.
With that call we flagged a risk to demand as well as supply growth ahead as new mines ramp up and existing disruptions resolve.
However, in the near-term copper price action is likely to be heavily influenced by macro sentiment and any policy response from China.
Another bank, Australia’s ANZ, made a similar point a week earlier when it referred to copper’s false start and a failure to meet expectations of a surge in demand which had seen the metal give up most of this year’s gain.
PART 1
Last week saw the latest instalment of the Henry v Copper saga when the BHP boss used his time at the Bank of America metals conference in Spain to remind everyone that a copper shortage and price boom is coming.
He estimates that US$250 billion needs to be invested in copper mines to meet end of the decade global decarbonising targets, whereas the currently committed projects amount to a spend of up to $50 million.
Ultimately, higher prices will induce further investment and more supply. But this takes time, Henry said.
Indeed, it does take time, as Lord Keynes famously said last century. Markets can remain irrational longer than you can remain solvent.
In the days after Henry’s speech in Barcelona the copper price edged down by two cents, from $3.74 a pound to $3.72/lb, which is irrelevant when discussing the long-term outlook but sobering for copper bulls who subscribe to the theory of huge demand and sluggish supply growth.
What went wrong for copper last week was a fresh blast of the chilly wind blowing off the Chinese economy which is not performing as promised, dragging copper down to a five-month low.
The Wall Street Journal newspaper best summed up the problem with copper in a weekend headline: China’s wavering recovery reverses copper rally, a story which reported that there negativity coming from all sides for copper.
Also on the side of the downbeat copper market is a man whose company is a big and growing consumer of copper, Elon Musk, the Tesla boss.
While not predicting a slump in the copper price, Musk said that all future Teslas would operate on a 48-volt electrical system, superseding the existing 12v system common to most vehicles, with 48v using much less copper compared 12v.
The first approximation means we need only about a quarter as much copper in the car as would be needed for a 12v battery, to that’s a big deal because people often worry about whether there is enough copper Musk said, before adding, there is (enough copper).
The difference between Musk’s view of copper and that of Henry is largely one of timing with Musk talking about immediate changes on the Tesla production line and Henry talking about long-term copper demand in a decarbonising and increasingly electrifying world.
But a deeper dig into the copper market reveals that there is unlikely to be a rapid recovery in price as the fundamentals of supply and demand drift further apart, piling pressure onto the price.
Morgan Stanley, an investment bank, weighed into the copper debate just before Henry spoke in Spain with a warning that weakness abounds.
After a few range-bound weeks, copper broke below its 200-day moving average and reached the lowest level since late November, Morgan Stanley said.
Good for you Bubble, you will sleep better and well done for your profit.
@BDU, I second that.
@ addicknt, let's hope that soon we will be able to comment on more interesting things than that!
Come on Covgaz, happy Monday to you.
Where do you see the cognitive dissonance?
No one suggested we are mining, that was jut in your head, we just commented on the fact that innovation around technologies that use copper heavily is good overall for general copper demand because it make its use more ubiquitous. We as "JUNIOR MINING EXPLORERS" (see my post from yesterday at 19:38) might eventually benefit from it. However we will still need a buyer to take us out of our current misery!
Are you ok now?
And by the way, net-net I would think that this is good news for a junior mining explorer. If EVs and 48V technology become less demanding on copper resources, it should promote more EVs and 48V applications, which would promote an even wider need for copper overall. Electrification is a worldwide process we don't even measure to its full extent. There are 2 billion people on the planet with no access to electricity and technology must become cheaper to scale.
But back on the favourite topic, where are the SOLG buyers????????????
Https://www.mining.com/new-tesla-low-voltage-system-a-big-deal-for-copper-says-musk/
SWS reports a target price reduction from 72p to 66p.
Personally I would be relieved to see that we can reach half that to show that there ia life in the share.
GLA