Newsletter 07 /2020
This newsletter contains news on the following topics:
Stock of the week: Caledonia Mining + Uranium before its comeback + Cameco + Kazatomprom + Uranium Energy + Energy Fuels + Ur-Energy + IsoEnergy + Is the gold price about to explode? + The Corona Crash 2020 + Bradford Cooke's silver estimate + Endeavour Silver + Aurania Resources + Auryn Resources + Maple Gold Mines + RNC Minerals + Sibanye-Stillwater + Uranium Energy + Vizsla Resources
A few days ago, we started with online TV interviews and presentations. We were able to conduct some interesting interviews, which we present to you in the individual articles.
Stock of the week: Caledonia Mining
Caledonia Mining has taken the best possible precautions for the corona crisis and does not expect any production losses
Caledonia Mining seems to have had absolutely the right nose. In anticipation of the supply chain disruptions caused by COVID-19, Caledonia has increased Blanket's inventory of consumables in recent weeks. Caledonia estimates that Blanket has adequate critical spare parts and mining consumables in its inventory to maintain uninterrupted gold production well beyond the expected duration of the supply disruption, including a period of supply chain and inventory replenishment after the end of the South African lockdown on April 16th. Accordingly, management does not expect that Blanket will be forced to suspend gold production as a result of the disruption to the South African supply chain.
Should either a similar closure procedure come into force in Zimbabwe or an outbreak of COVID-19 infections at Blanket, affecting a significant number of workers and requiring the closure of a mine, Caledonia would enter this unprecedented situation with a strong balance sheet with a cash balance of about $12.5 million on 25 March 2020. Cash and cash equivalents have been boosted by strong first quarter production performance in the face of recent increases in gold prices. The current cash position and the term and overdraft facilities already in place at Blanket leave the company in a strong position to survive a prolonged period of production disruption, should it occur.
News: COVID-19 Business Resilience and the Implications of the South African Lockdown
Video-Interview: Caledonia Mining: Stronger Free Cash Flows from 2020 on - Dividend Increased
Newsflash: Newsflash with IsoEnergy, Caledonia Mining und RNC Minerals
Uranium before its comeback
Have we finally seen the turning point in uranium this week? Cameco announced on Monday that it is temporarily suspending production at its Cigar Lake uranium mine in northern Saskatchewan and putting the facility into a safe care and maintenance mode due to the threat of the coronavirus pandemic. The plant will be shut down in the coming days and put into care and maintenance mode for four weeks. During this time, Cameco will assess the status of the situation and decide whether to restart the mine or extend the care and maintenance period. The ore from Cigar Lake will be processed at the McClean Lake Mill of Orano Canada Inc., also located in northern Saskatchewan. The decision to suspend production at Cameco's Cigar Lake Mine was made in conjunction with Orano's decision to suspend production at the McClean Lake Mill. It is important to note that approximately 4 million pounds of U3O8 have been produced at the McClean Lake Mill from the beginning of the year through March 21, 2020. This was approximately in the range of last year's uranium production of 18 million pounds. This means a production loss of 1.5 million pounds of uranium per month. We expect neither Cigar Lake nor McClean Lake to be back in operation within a month. Even if the decision was made to bring the facilities back up after 4 weeks, this would result in a production loss of at least two months. This would leave a total of 3 million pounds of U3O8 unavailable to the uranium market. In addition to the 60 million pounds or so already mined last year less than in 2017, the world's largest uranium producer Kazatomprom could also see its production cut back if its mines were also threatened by the corona epidemic. The producer already published a corresponding announcement on 15 March. At the same time, the demand for uranium will of course not change, because energy supply is a critical infrastructure. US energy suppliers in particular could fall victim to their hesitation in concluding new long-term contracts, as the warehouses at the US utilities are relatively empty, although supplies are now coming to a standstill. Interestingly enough, the uranium spot price has been hitting three consecutive days. On 24th March, it even went straight for US$1.60 per pound. It looks as if the first utilities will try to stock up quickly on the spot market before supply shortages actually occur. At the same time, the previous price depressor, Japan, is likely to refrain for the time being from throwing further uranium material from decommissioned nuclear plants onto the market. As soon as the uranium spot price rises above the 30-dollar mark, one supplier after the other will probably try to panic to get hold of material. Exit open, but we are now extremely bullish for uranium!
The (former) US uranium producers Uranium Energy, Energy Fuels and Ur-Energy, but also shaken but well financed development companies such as IsoEnergy, will be exciting.
Is the gold price about to explode?
We have been wondering about this for several days, not only because gold always rises quite quickly after stock market crashes, but also because at the moment there are some factors that suggest that the gold price could even scratch the $ 2,000 mark slightly in the near future. The supply side currently seems to be collapsing completely. Gold mines around the world are forced to close due to the corona epidemic. In addition, processing, which takes place largely in Switzerland, is also currently lying idle. All major refineries in Switzerland are also dense, as they are not classified as systemically relevant. At the same time, demand is rising sharply. Both larger and smaller gold traders are reporting massive delivery problems and an increase in demand, which ranges from a tripling to a tenfold increase compared to a year ago. The result is price premiums of sometimes more than 100 Euros per ounce! But also, in the futures contracts there are price differences of up to $100 in monthly comparison. It becomes interesting when contract buyers increasingly insist on the physical delivery of the gold. Right now, this could lead to a situation where short sellers or contract sellers have to stock up quickly, no matter at what price. In extreme cases, this could lead not only to an explosion in the gold price, but also to the collapse of the COMEX. There are increasing signs that we are at the beginning of an epochal development for gold - and in the course of this also for silver.
At this point gold stocks in particular become very interesting again. Two examples of gold stocks that have not been able to return to their old levels recently are Aurania Resources and Auryn Resources. In the silver sector Endeavour Silver is currently lagging somewhat behind.
Crash Interview with Torsten Dennin: Prof. Dr. Torsten Dennin: Corona Crash and Flight in Cash 2020
Presentation Aurania Resources: Aurania Resources: Following Tracks of Lost Cities - New Targets Identified by LIDAR
Interview with Endeavour Silver: Endeavour Silver: Preparations for Corona and Update on Terronera Development
Market assessment by Brad Cooke: Bradford Cooke: Silver is Lagging Behind Gold But its Time Will Come
Further company news:
Maple Gold Mines stops drilling and reduces manager salaries
Maple Gold Mines has not mobilized additional drilling equipment in recent weeks in light of the developing Covid 19 pandemic. This measure was taken to save capital and also to limit the number of people on site at any given time. The Company has completed approximately 4,100 metres to date and will shortly cease drilling and demobilize drill rigs in accordance with new Quebec government contracts covering all non-essential operations. The ALS laboratories in Val d'Or will also cease operations so that the remaining samples will be shipped once operations resume. The samples will be released once the results have been received, verified and interpreted.
The company's senior management has agreed to work for 50 % of the salary in the second quarter of 2020. The company has also consolidated certain functions and is making arrangements to reduce the size of the camp and associated local costs in the coming weeks to save additional costs.
RNC Minerals continues to mine and build stocks
RNC Minerals recently announced that in response to the COVID 19 pandemic, it has introduced strict control measures for its operations. A task force has been set up at Australian operations under the leadership of Graeme Sloan, Managing Director, Australian Operations, to ensure that operations are as prepared as possible for and respond to this evolving situation.
In order to minimize possible disruptions to supply chains, the company is building up additional critical supplies beyond the normal level. During the Australian bushfires in December and January, ROM stocks proved critical to maintaining grinding speeds. Accordingly, the company is now building up stocks again.
In terms of operations, the production forecast for 2020 of 90,000-95,000 ounces and the AISC1 forecast of US$1,050-1,200/ounce remain unchanged. As highlighted in a previous announcement, the Company is targeting an AISC1 value of ~$1,000 per ounce by year-end.
News: RNC Minerals Provides Update on its COVID-19 Risk Management and Conference Call / Webcast Details for Fourth Quarter 2019 Results
Newsflash: Newsflash with IsoEnergy, Caledonia Mining und RNC Minerals
Interview: RNC Minerals: New Strategy as a Gold Company with Straight Forward Plans
RNC Minerals reports strong quarterly results
RNC Minerals recently announced its financial results and review of operations for the year ended December 31, 2019. Gold production exceeded the 2H19 benchmark, totaling 26,874 ounces for the fourth quarter of 2019. In the second half of 2019, production totalled 51,090 ounces, exceeding the forecast for the second half of 2019 of 42,000 to 49,000 ounces. The 2H19 all-in-sustaining costs (AISC) were better than the 2H19 planning: 2H19 AISC of US$1,144 per ounce was below the planned value of US$1,150-1,250 per ounce. An adjusted profit of $13.7 million for the fourth quarter of 2019 and $15.9 million for the full year 2019 was achieved. RNC closed 2019 with a strong cash position of US$34.7 million, less a debt repayment of US$3 million, and working capital of US$26.5 million.
News: RNC Announces Strong Fourth Quarter Results Including Gold Production of 26,874 oz, Adjusted Earnings2 of $14 million, 2H19 AISC1,2 Guidance Beat and No Change to 2020 guidance
Sibanye-Stillwater is part of critical infrastructure in the USA - Van Eck increases its share
Sibanye-Stillwater recently published an update on the current measures that have been initiated due to the corona crisis. An executive coronavirus steering committee, headed by the Group's Chief Executive Officer, has been established to regularly supervise, guide and advise a multidisciplinary coronavirus coordination team. The team is responsible for developing and implementing measures to prevent the occurrence and limit or spread COVID-19 among the workforce, to ensure full and regular stakeholder involvement, and to develop plans for corporate sustainability and post COVID-19 recovery.
In order to continue to proactively manage the COVID 19 threat at the US PGM plants and to meet the additional requirements of local health authorities, it was decided to significantly reduce the number of employees at the US sites while maintaining production from ongoing operations.
Sibanye-Stillwater's U.S. PGM operations are a "critical infrastructure industry" as defined by the Cybersecurity and Infrastructure Agency, with PGMs as essential components of many chemical, medical and biochemical applications. As the only primary platinum metals producer in the United States, the Company will seek to maintain current production from the Stillwater and East Boulder mines while maintaining throughput through the Columbus Metallurgical Complex to provide platinum metals for the critical sectors mentioned above.
The Company also reported that it has received formal notice that Van Eck Associates Corporation has increased its total ownership to 5.02% of the total issued shares of the Company.
News 1: Sibanye-Stillwater preparations for Covid-19 and US PGM operations update
News 2: Notification of an acquisition of beneficial interest in securities
Uranium Energy is well prepared against corona epidemic
Uranium Energy provided an update a few days ago on the measures the company has taken in response to COVID-19 to ensure the safety of its employees and the proactive steps being taken to reduce operating costs and adjust the capital expenditure schedule.
Earlier plans to resume last year's successful drill program at ISR's Burke Hollow project, along with related capital expenditures, will be postponed until market conditions normalize. In the meantime, the UEC team will continue to advance the ISR projects with technical and geological assessments that will support the Company's production readiness strategy.
At the time of the last quarterly filing (for the period ending January 31, 2020), the Company had approximately $21 million in cash and securities.
News: Uranium Energy Corp Provides Corporate Update
Vizsla Resources continues drilling
Vizsla Resources recently reported that in light of the increasing global response to the COVID 19 virus outbreak, the Company has implemented an internal plan to ensure the health and safety of employees and stakeholders and to minimize disruption to exploration activities.
At the Panuco project, the Company is continuing exploration with increased awareness of virus-related issues and a quarantine and hygiene response plan. The drilling program continues to methodically work through the twenty targets identified. Drilling on the Honduran vein is currently underway. The Company intends to continue drilling on the project only as long as it is safe. Therefore, the situation is being closely monitored by management and may change for the safety of the team.
The company has also initiated a community program to help local communities around the project raise awareness and respond to the COVID 19 virus.
News: Vizsla outlines COVID-19 response
Video-Interview: Vizsla Resources: Consolidating Silver District in Mexico - Fast Track to Production
Swiss Resource Capital AG and the authors of Swiss Resource Capital AG currently hold or intend to hold shares in the following companies mentioned in this issue: Caledonia Mining + Cameco + Kazatomprom + Uranium Energy + Energy Fuels + Ur-Energy + IsoEnergy + Endeavour Silver + Aurania Resources + Auryn Resources + Maple Gold Mines + RNC Minerals + Sibanye-Stillwater + Vizsla Resources.
Swiss Resource Capital AG has concluded IR consulting agreements with the following companies mentioned in this issue: Caledonia Mining + Uranium Energy + IsoEnergy + Endeavour Silver + Aurania Resources + Auryn Resources + Maple Gold Mines + RNC Minerals + Sibanye-Stillwater + Vizsla Resources.
This publication is based on the detailed risk information, limitations of liability and disclaimers of Swiss Resource Capital AG, which can be viewed here: risk information and disclaimer