Uranium Got You Down? Better Days Are Ahead: Cantor Fitzgerald Canada’s Rob Chang

The Energy Report: The uranium spot price balloon has lost air again and is back down in the mid-$30/pound (mid-$30/lb) range. It was stalled there for months last year. What pushed the spot price up in the first place? Why is it falling now? Rob Chang: The uranium spot market is generally pretty thin, and any number of transactions on either the buy or sell side could push it in any direction. What’s moved it higher recently could be the news of Japanese reactor restarts happening this summer. A couple of reactors are set to restart in the next few months or so, and we believe that helped push the price along a little bit. But the spot price really depends on near-term utility demand. I think that’s the key point here. In terms of utility demand, according to the numbers that we’ve seen, globally about 15–20% of uranium requirements … Continue reading

Hard-Core Investors Found Real Resource Projects in a Vancouver Conference Center

Frank Holmes, CEO and chief investment officer at U.S. Global Investors, gave a talk at the Cambridge House conference titled “Fear Trade Sees Gold as a Store of Value When Interest Rates Are Negative.” Holmes always focuses on the global supply-and-demand equation whether it is traveling to better understand the odds and implications of a possible strike in Chile or changes in what he calls the “love trade” based on buying gold for celebrations in India and China. “This is a classic bottom-of-the-trough year,” he said. He pointed to companies slashing exploration costs, apathetic investors, and the bottom-line impact of “draconian” regulations for raising capital. “The cost of being a public company is almost prohibitive,” he said. On the supply side of the balance sheet, Holmes warned that reserves for some commodities—particularly copper, gold and zinc where not enough had been invested over the last 15 years—are starting to shrink. … Continue reading

Sprott Fund Managers: Sticky Contrarian Investors Wanted

The Gold Report: Rick Rule talks a lot about how much money can be made investing in things people hate, or at least don’t like very much. Throughout the first quarter of this year, natural resources as a whole seemed to be in that category. How do you create a successful investing strategy out of a contrarian philosophy? Paul Wong: First, it takes a lot of patience to be contrarian. You also need to have a lot of discipline. Probably more important than anything else, you need sticky investors. That’s the hardest thing to get on the planet right now, an investor willing to stick it out. Contrarian investors have to have the stomach to buy when the market is in the midst of a violent selloff, and they have to have the wherewithal to ride the volatility of the storm. That’s the patience and the discipline part. Successful bottomfishing … Continue reading

How to Ride the Lithium Battery Boom: JGL Partners’ Jonathan Lee

The Energy Report: Jonathan, what is the condition of the lithium space today? Jonathan Lee: The lithium space today is an oligopoly; there are only four major mines owned by four companies. Over the past three years, the space has actually consolidated with the largest mine, Greenbushes, owned by two companies through a joint venture agreement. From that perspective, price increases have occurred over the past three years, just because of the concentration of the mine operators. TER: What are the greatest challenges for the space? JL: The hardest challenge is that lithium is not really a mining sector investment; it’s a specialty chemicals investment. A lot of the products that lithium miners or producers sell are specialty chemicals, and there is somewhat of a competitive moat around these products because many are specialized to the customer. Lithium is not a commoditized product. The incumbents have both the premier assets … Continue reading

Junior Producers Riding Exploration Success to Reratings: Raj Ray

The Gold Report: Have you ever witnessed such a sustained period where the U.S. Federal Reserve and/or the European Central Bank have had so much sway over market direction? Is it sustainable? Raj Ray: What we are seeing right now is a throwback to the Fed’s original goal of preservation of financial stability. Central bankers believe that maintaining financial stability is just as important as managing monetary policy. Only time will tell whether it’s sustainable, but it’s here to stay for the foreseeable future. TGR: Are central bank decisions changing how you do things? RR: As a mining analyst, the objective has always been to focus on companies with efficient operations, good management and capital discipline. In addition, I am looking for exposure to investments that to some extent can hedge the gold price risk as a direct result of central bank decision-making. A lot of miners’ favorable currency exposure … Continue reading

U.S. Global’s Brian Hicks Shares His Summer Plans for Creating the Ultimate Resource Fund

The Energy Report: Summer means driving season, which is good news for oil and gas prices. U.S. Global Investors recently published an article that says Americans are driving and flying more than ever. Will energy investors who “sell in May and go away” kick themselves later, when they look at the stock charts for their favorite companies? Brian Hicks: The summer driving season is a supportive time for crude oil. Refineries are at very high utilization levels, ramping up production of gasoline, and that creates extra demand for crude oil. We have begun to see inventories come down, which creates physical demand in the marketplace and helps offset high domestic inventories. This is a seasonally strong period for oil, which should alleviate the storage overhang heading into the summer months. TER: Oil has been above $60/barrel ($60/bbl) recently. Do you believe we’ve hit a bottom in oil prices? What can … Continue reading

Yukon Premier Darrell Pasloski: Our Goal Is to Be the Number One Mining Location

The Gold Report: The Yukon is ranked first in mineral potential and ninth overall in the recent ranking of global mining jurisdictions in the Fraser Institute’s 2015 Annual Survey of Mining Companies. Is that good enough? What are some of your mining-related goals for the Yukon? Darrell Pasloski: You can’t get better than number one when it comes to mineral potential but the ninth overall ranking to me says that there’s still some work to be done. Our mineral endowment certainly is world class and the opportunities as a world-class jurisdiction for mining exploration and development will make us a future leader in the mining sector. There are more than 2,700 existing mineral occurrences in Yukon but these cover only about 12% of the land, so that leaves vast potential for current and future explorers. The first goal would be more streamlined permitting. The federal government currently holds our environmental … Continue reading

‘Lean and Mean’ Is the Secret to Junior Mining Equity Success: Thibaut Lepouttre

The Gold Report: In January, you told The Gold Report that the price of gold is driven by market panic and inflation, neither of which looks imminent. If investors can’t expect higher gold prices in the near term, why should they be in this space? Thibaut Lepouttre: I’ve never been a goldbug but I see gold as a form of asset diversification. There’s nothing wrong with having some exposure to precious metals in a portfolio, both in the physical form and in the form of precious metals mining equities. Mining companies are much like any other company. You should find the ones that have free cash flow or have set their sights on positive cash flow, even when the gold price is range bound. It’s up to investors to make sure that they know what they own and understand the financial situation of those companies. TGR: How are you playing … Continue reading

Now Is the Time to Own the Oil & Gas Leaders: Keith Schaefer

The Energy Report: Keith, the first U.S. grassroots refinery in nearly 40 years just began operation in North Dakota. Is the growth in U.S. oil production going to catalyze refinery construction? Keith Schaefer: I’m going to say no. U.S. production has peaked and we’re doing just fine, so I don’t see any great need for more refineries right now. There was talk a couple of years ago, particularly in 2012–2013, that with unbridled shale oil growth we would need more refineries. But the producers have been more disciplined than anybody expected in the last three months, with the rig count declining sharply and then staying down. I think we’re going to see a drop in U.S. production, so I don’t see the need for any new refineries right now. The only thing that could change would be even more demand growth, which we’re seeing because of lower prices. Somebody might … Continue reading

Why Ricardo Carrión and Alberto Arispe Are Optimistic About Mining in Peru

The Gold Report: Canadian and Australian miners have realized a 25–30% premium due to the strong U.S. dollar. How has the U.S. dollar affected Peruvian miners? Ricardo Carrión: Peruvian miners have realized a similar benefit due to currency exchange. This factor has resulted in lower costs for the Peruvian industry. In addition, miners have also benefited from lower prices in oil. But the question is has this cost reduction offset lower metal prices, and the answer is no. Lots of companies are still struggling with current market conditions. TGR: How has the mining industry fared since President Ollanta Humala was elected in 2011? Alberto Arispe: Humala ran in 2011 on a radical, antimarket platform. Presidential elections in Peru use the runoff system, so in order to win a majority in the second round of voting, he had to moderate his tone and make alliances with more moderate parties. He then … Continue reading