Pretium buying Brucejack gold offtake from Osisko

Pretium Resources Inc. [PVG-TSX] said Monday September 16 that it has agreed to repurchase a 100% of its Brucejack Mine gold offtake contract from Osisko Gold Royalties Ltd. [OR-TSX, NYSE] for roughly $80 million.

The Brucejack Mine is a high-grade gold underground mine located in northwestern British Columbia, approximately 65 km north of Stewart. The mine produced 376,012 ounces of gold at an all-in-sustaining cost of US$764 an ounce in 2018. The operation is expected to produce between 390,000 and 420,000 ounces this year at an all-in-sustaining cost of US$775-US$875 an ounce.

The offtake agreement, dated September 15, 2015, was entered into by Pretium as part of the construction financing package for the Brucejack Mine. It applied to sale of the first 7,067,000 ounces of refined gold, which were sold to the offtake purchasers, in each case, at a price based on a market referenced gold price in U.S. dollars per ounce during a defined pricing period before and after the date of each sale.

Under the terms of the offtake agreement, Pretium had the option to reduce its offtake obligation on December 31, 2019 to 25% in exchange for a payment equal to US$13 per ounce of refined gold for 75% of the ounces of refined gold remaining to be delivered under the agreement.

Under the offtake repurchase agreement, Pretium will eliminate 100% of the offtake obligation.

“Brucejack’s robust cash flow has enabled us to pay down the construction financing quickly,” said Pretium President and CEO Joseph Ovsenek. “In 2018, the first year after the start of commercial production, we repurchased 100% of the precious metals stream for $237 million and refinanced the credit facility with a $480 million bank debt facility. Now we are repurchasing 100% of the offtake agreement for roughly $80 million,” he said.

“With the construction financing package cleaned up, we have set our sights on paying off the bank debt facility as rapidly as possible.”

Pretium shares advanced on the news, rising 0.67% or 10 cents to $14.90. The shares are currently trading in a 52-week range of $8.85 and $18.29.

Shares of Osisko Gold Royalties advanced 2.1% or $0.33 to $15.64. The shares trade in a 52-week range of $9.27 and $17.47.

The Brucejack offtake was part of a portfolio of over 130 royalties, streams and precious metals offtakes that Osisko acquired from Orion Mine Finance Group in July, 2017. The portfolio was anchored by five cornerstone assets, including a 5% NSR royalty on the Canadian Malartic Mine, the largest gold mine in Canada.

“The sale of Osisko’s offtake contract on the Brucejack Mine will result in the elimination of a low margin offtake contract and allow better utilization of our working capital,” said Osisko Gold Royalties CEO Sean Roosen.

“Since acquiring the Orion portfolio in 2017, we now have received approximately US$164.3 million from Pretium, including the proceeds from the buyback of the stream and sale of the offtake as well as cash margins to date from the offtake, compared to a book value of approximately US$147.3 million four our investment in Pretium,” he said.

The sale is expected to close on September 30, 2019. Pretium will make a payment of US$31.2 million to Osisko on the closing date, with the remainder of the purchase price to be paid on November 30, 2019.

Osisko said it plans to use the proceeds of the sale to fund additional investments.

Fortuna Silver achieves production milestone

Fortuna Silver Mines Inc. [FVI-TSX; FSM-NYSE] said Friday September 13 that it has started pre-production mining at its 100%-owned Lindero gold project in Argentina.

Initial blasting on mineral reserves commenced in early September (2019) and the company said it is planning to build stockpiles of reserves ahead of stacking on the leach pad.

“The start of pre-production mining is one of the important milestones of the project as we go into the final stretch of construction,” said Fortuna President and CEO Jorge Ganoza.

“The Lindero mineralized body presents us with important economic benefits that can be captured right from the start of mining,” he said. “There is no pre-stripping required and high-grade gold mineral reserves will be accessed with a low strip ratio below one in the first year.”

In its first full year in operation, Lindero is expected to produce between 145,000 and 160,000 ounces of gold.

Fortuna is a fast-growing precious metals producer. It already operates two low-cost mines in Peru and Mexico.

The San Jose Mine in Mexico is located in Oaxaca State. It produced 8.0 million ounces of silver and 53,517 ounces of gold in 2018. The Caylloma Mine in Peru, produced 911,309 ounces of silver in 2018.

This year, the company is forecasting consolidated production of up to 9.0 million ounces of silver, up to 54,000 ounces of gold, up to 29 million bounds of lead, and up to 44 million pounds of zinc.

Lindero will be the company’s third mine, and the first in Argentina.

The project is a gold-rich porphyry system located in the Argentinian puna at an elevation of approximately 3,500 to 4,000 metres and 260 km west of Salta City. It takes about 7.5 hours to drive over a road distance of 420 km to the mine city from Salta City.

Lindero is an open pit, heap leach gold project with a completed feasibility study that has received all environmental and other major permits necessary for development. It has been designed as an 18,750 tonne-per-day owner-operated open pit mine with a pit life of 13 years, based on existing reserves.

Power will be generated on site, through an eight megawatt power plant, operated by a local contractor. More than 1,000 people are currently working on construction at the mine site.

For the first year of commercial production, Lindero’s mine plan has been optimized so that the operation will benefit from mining the higher grade mineralization out-cropping that was identified through infill drilling completed in 2018.

The feasibility study is based on a measured and indicated resource of 18.9 million tonnes, grading 0.50 g/t gold, 0.11% copper or 302,000 ounces of contained gold. On top of that is an inferred resource of 8.6 million tonnes, grading 0.38 g/t gold and 0.10% copper, or 106,000 ounces of contained gold. Proven and probable reserves stand at 1.7 million ounces gold.

Lindero remains on track with placement of mineral reserves on the leach pad scheduled for the fourth quarter of 2019 and the first doré bar planned for the first quarter of 2020.

As a result, Fortuna’s consolidated precious metals annual production is forecast in 2020 at between 7.5 million and 8.3 million ounces of silver and between 189,000 to 209,000 ounces of gold. That amounts to between 293,000 to 324,000 ounces of gold equivalent, the company said.

The overall project is 70% complete, and has provided employment for a work force of 2,350 people so far. The operational permits for the explosives magazine and the explosive delivery trucks were received in August, 2019.

All mine equipment is on site and is fully operational.

On Friday, Fortuna shares eased 0.21% or $0.01 to $4.58. The shares are trading in a 52-week range of $3.22 and $6.12.

Triumph drills 400.48-metres of 1.21 g/t AuEq at Freegold Mountain

By Peter Kennedy

Triumph Gold Corp. [TIG-TSXV] has announced impressive drilling results from its 100%-owned Freegold Mountain property in the Yukon Territory, where the company has encountered buried porphyry gold-copper mineralization.

Assays release on September 12, 2019, are from the first two of seven holes that the company is planning to drill on the road accessible property, which covers 200 km2, and is located 70 kilometres northwest of Carmacks.

The two drill holes (1,664.21 metres) were completed at the WAu Breccia, a south-dipping tabular body of polymetallic mineralization which has been intersected by eight historic drill holes that tested to a maximum depth of 200 metres below surface.

Drill hole RVD19-01 was oriented northwards to test for a depth extension of the WAu Breccia, 250 metres beneath the previous intersection. RVD19-02, was drilled southward along the same section and was designed to drill down the dip-plane of the WAu mineralized zone. RVD19-02 was also designed to efficiently test continuity of the WAu mineralization to depth, while also using the breccia body as a vector towards an underlying porphyry system.

“At the WAu Breccia, the first of three areas being drill tested in 2019 for buried porphyry mineralization, we have discovered a porphyry copper-gold system,” said Dr. Tony Barries, Vice-president, exploration with Triumph Gold. “The discovery intersection is long, high grade, gold-rich and closer to surface than we had expected,” he said.

“We also more than doubled the known depth of the near surface, gold-rich, epithermal style WAu Breccia,” Barries said. Based on positive results from those two drill holes, an additional hole has been added to the program to further test for high grade porphyry mineralization beneath the WAu Breccia.

Highlights from the latest round of drilling include drill hole RVD19-02. It returned a 400.48-metre intersection of epithermal-style mineralization (77.52 to 478 metres) at the WAu Breccia. It assayed 1.21 g/t of gold equivalent (AuEq), containing 0.73 g/t gold and 0.23% copper, more than doubling the previously known depth of the mineralization.

RVD19-02 also returned a 102.50-metre intersection of gold-rich porphyry related mineralization that assayed 1.26 g/t AuEq equivalent, containing 0.73 g/t gold and 0.18% copper (from 560.50 to 663.00 metres).

Combined the two mineralized zones form an impressively long and rich intersection, 601.80 metres averaging 1.1 g/t AuEq equivalent, with 0.67 g/t of actual gold.

As well, RVD19-01 intersected a 52-metre thick down dip extension of the WAu Breccia. The best interval returned 0.40 g/t gold, 7.1 g/t silver, 0.20% copper and 0.025% molybdenum over 15.64 metres.

Triumph shares rallied on the news, rising 7.36% or $0.035 to 51 cents Thursday September 13 on volume of 367,050. The 52-week range is 30.5 cents and 70 cents.

Triumph is a mineral explorer which is focused on its Freegold Mountain Project in the Dawson Range gold-copper belt. The area also hosts Western Copper and Gold’s [WRN-TSX] Casino Project as well as Newmont Goldcorp Corp.’s, [NGT-TSX, NEM-NYSE] Coffee deposit. Newmont Goldcorp recently gained exposure to the road-accessible Freegold Project by taking a 19.9% stake in Triumph for $6.3 million.

Since Triumph Gold acquired the property in 2006, more than 20 mineralized zones have been identified, and NI 43-101-compliant mineralized resources have been delineated in the Revenue, Nucleus, and the Tinta Hill deposits

Within the last three years, exploration has been focused on the six-kilometre-long intense multi-element soil and geological anomaly that encompasses the Revenue and Nucleus deposit areas.

The Nucleus and Revenue deposits are known to be components of a larger porphyry-related mineralizing system.

The 2019 exploration program at Freegold Mountain was designed to test for a buried copper-gold porphyry system beneath the six-kilometre-long Revenue-Nucleus soil and geophysical anomaly.

With the addition of the third drill hole to the WAu Breccia area, the 2019 exploration program now includes seven drill holes totalling 6,000 metres, the company said Thursday. The current results indicate success at the WAu Breccia, the first area tested. Triumph said it now looks forward to receiving drill results from the other two target areas.

Meanwhile, Triumph has said the terms copper and gold equivalent are used for illustrative purposes to express the combined value of copper, gold, silver and molybdenum as a percentage of either copper or gold. No allowances have been made for recovery losses that would occur in a mining scenario.

The Trudeau years and mining

by Leonard Melman

The Canadian mining industry entered a new era on October 19, 2015 with the election of Justin Trudeau as Canada’s new Prime Minister. His Liberal Party gained a solid majority in the House of Commerce, thereby giving him a relatively free hand for the next four years.

His initial policy paper outlining his goals contained no specific statement on resource extraction industries, but rather concentrated on goals that might be regarded as ‘politically correct’ including support for abortion, women’s rights, Indigenous support, and support for efforts to control so-called global warming or climate change.

Judging by the TSX Venture Exchange Index, the mining world greeted Trudeau’s arrival with some optimism as the index rose from near 600 in late 2015 to around 820 in mid-2016, but the performance ever since has been mediocre and that index now stands below 600 as of September 2019. The number of junior miners has dropped during the Trudeau years.

One of the conundrums relating to Trudeau is that while declaring some support for the economic contribution from both mining and petroleum development, he staunchly supports two sources of many regulations which have impeded both those industrial sectors – namely support for Indigenous peoples and imposing controls to reduce environmental impacts.

Miners want to be good environmental stewards and Indigenous people to be treated fairly; however, they need clear and doable regulations that will work for everyone.

These apparent contradictions became public when the Prime Minister was interviewed at the March 2019 PDAC Convention in Toronto and delivered a mixed message.

While reiterating his support for the industry thanks to its economic and employment contributions and while promising to do everything possible to shorten regulatory approval delays and simplifying the process where possible, he re-stated – in the strongest possible terms – his continuing legislative support for Aboriginal rights and climate change controls.

Unfortunately for mining, it appears the Prime Minister might be more concerned with environmental and Indigenous matters than resource development. Economist Jack Mintz addressed this in a recent column published in the Financial Post when he commented on proposed bills C-48 and C-69, noting, “…Prime Minister Trudeau‘s government has said it wants to ‘develop our resources responsibly’. Both these measures will almost certainly make resource development more difficult if not impossible.”

Mintz also noted that there seems to be no definite program being put forward for resource development by asking, “What is Canada’s actual plan for resource development in the future?”

Mintz adds another particularly chilling (to the resource industries) comment when he notes, “…Numerous politicians have expressed their desire to stop resource development entirely…Some politicians are even going so far as considering putting an end to mining. In other words, no more responsible resource development. No resource development at all.”

One can only wonder why the Prime Minister has been mute in the face of such comments. Mintz closes his piece with this seemingly rational comment; “We need a resource policy that allows for responsible development, just like other countries are doing. That’s not the direction we appear to be headed now.”

In fact, others have said mining may have little to look forward to in terms of the outcome of the national election slated for October 21, 2019.

Most Canadian political ‘professionals’ believe the coming election will see either Trudeau’s Liberals or Andrew Scheer’s Conservatives emerge victorious – but there are striking similarities in their approaches to climate change. Trudeau’s support for regulatory impositions to support measures to control this supposed ‘menace’ are well known and Scheer joined the same crowd by noting, “Canada, yes us, is going to ‘invent’ the world out of climate doom.”

Noteworthy is the reality that both support the regulatory impositions called for in the Paris Climate Accord. These include such directives as limiting petroleum production and usage; major financial contributions from advanced economic nations to those more disadvantaged; passage of tax impositions to decrease energy and materials consumption and a host of other categories which are sufficiently intrusive to cause the US to withdraw from the Accord.

When attempting to judge the future impact of Trudeau on Canada’s mining industry, a new reality is emerging and that is the sudden drop in the Prime Minister’s popularity. Political columnist John Gurney recently noted, “Justin Trudeau’s personal popularity has utterly collapsed (due to) a series of very public and very avoidable major errors in judgement, including the entire SNC-Lavalin fiasco.”

On balance, with the elections less than two months away, a Liberal/Trudeau loss would appear to be a plus for the mining world – but only moderately so as neither party has forthrightly confirmed strong support for our industry.

This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. Leonard Melman is a financial and political writer who focuses on issues relating to the resource sector.

Energy metals poised for massive ramp-up in demand

THIS COULD BE THE START OF SOMETHING BIG

by Ron Hall

The growing push towards replacing traditional fossil fuel derived energy sources with renewables has seen increased attention on the so called “energy metals” i.e. those metals that are key to the future generation, storage and use of electrical energy.

Solar and wind energy are considered by many to be the panacea for all things fossil but it might not be so easy to continue rampant growth in these sectors. Both require specific exotic metals such as neodymium, indium and silver along with much rarer praseodymium and dysprosium in their manufacture and the demand may not be able to keep up with the supply.

According to a recent article in online Popular Mechanics magazine, by 2050 solar panels and wind turbines will require around 12 times as much indium as the entire world produces right now; neodymium production will have to grow by more than seven times, and silver will have to grow by nearly three times. And this is just for renewable energy; all of these metals have various uses in other industries.

If solar and wind alone cannot replace the world’s reliance on fossil fuels, then what about nuclear? Both nuclear and fossil-fuelled power stations use heat to produce steam that drives turbines and generators to generate electricity. But in a nuclear power station it is the fissioning of uranium atoms that replaces the burning of coal, oil, diesel or gas.

The four main types of Li-ion batteries are defined by the cathode material. Source: Synergy Files.

Nuclear plants can produce an enormous amount of energy with no carbon emissions – one tonne of uranium generates the same amount of energy as burning 130,000 tonnes of coal. Nuclear power can be generated consistently, where wind and solar are intermittent by nature. But according to the International Energy Agency (IEA), the share of nuclear power in the global energy mix has fallen from a peak of about 18% in the mid-1990s to 10% in 2018, largely due to concerns of radioactive waste and nuclear accidents like those that happened at Three Mile Island, Chernobyl and Fukushima.

Canada, however, has long been a leader in nuclear power. It currently makes up 15% of the country’s energy mix, and billions of dollars are being spent in Ontario to refurbish aging nuclear plants. But elsewhere, some large-scale and expensive conventional nuclear plants are aging out of commission. Canada is now positioning itself to be a leader in a new age of nuclear power by exploring the use of small modular reactors that generate under 300 megawatts of electricity. They would be cheaper and smaller than conventional nuclear power plants and are manufactured in factories. They are portable; they could be shipped to remote communities or job sites, such as the Alberta oil sands or mines that are off the grid and otherwise rely on diesel.

Source: StockCharts.com

The demand for green power generation will be exacerbated as grid power is required to charge the batteries used in Electric Vehicles (EVs). The hype around EVs replacing combustion engine powered transport has been going on for some time but constrained by the development of reliable and efficient battery technology to provide the power. With advances in battery technology and with many jurisdictions around the world planning to legislate the banning of internal combustion engines in the future, the age of EVs may have finally arrived.

However, the continued transition won’t be easy. As well as the challenges in the grid generation, there are concerns over the future supply of many of the metals essential to the manufacture of EV batteries.

The lithium-ion battery is by far the dominant type. The structure of a typical battery cell has three primary functional components: a positive electrode, a negative electrode, and an electrolyte in between. The negative electrode (anode) is made from carbon usually in the form of graphite; the positive electrode (cathode) is a metal oxide, and the electrolyte is a lithium salt in an organic solvent.

Currently, graphite anodes are not manufactured in North America and further, there are only two operating graphite mines in North America – the Imerys Carbon and Graphite Mine in Quebec and Eagle Graphite Inc.’s [EGA-TSXV] Black Crystal Mine in BC.

EV manufacturer Tesla said recently that there could be a shortage of all of these key battery metals as a dearth of investment in mining has failed to keep up with the soaring demand. Lithium demand is set to more than triple through 2025, rising from 300,000 tons per year to over 1 million tons per year and the World Bank estimates that by 2050 demand for lithium, graphite and nickel will skyrocket by 965%, 383% and 108%, respectively.

Copper supply may also be affected as EVs need twice as much copper as conventional engines.

Tesla said recently that it might enter the mining business as it seeks to ensure that it can make enough batteries for future vehicles. Tesla is also trying to cut its use of cobalt that is primarily mined in the war-torn Democratic Republic of Congo where its production is associated with human rights abuses.

China controls about two-thirds of the world’s battery electric manufacturing capacity, a figure that is expected to rise to 73% by 2021, according to Bloomberg New Energy Finance (BNEF). By comparison, the US only accounts for about 13% of global lithium-ion battery manufacturing capacity.

An alternative to the lithium-ion battery is the nickel metal hydride battery, (NiMH). The chemical reaction at the positive electrode is similar to that of the nickel cadmium battery except that the negative electrodes use a hydrogen-absorbing alloy instead of cadmium.

Toyota has announced that the company will move its electrification goals forward by five years and remains the final frontier for the use of NiMH batteries in hybrid electric vehicles. Most other auto manufacturers committed to lithium-ion battery technology although Toyota has already shifted the hybrid drive-trains to be compatible with both battery technologies, for example in the 2018 Toyota Camry. Toyota’s rare earth NiMH batteries used in their HEV fleet have grown to account for over half of demand in 2018. Rare earths lanthanum and cerium are already significantly oversupplied, and batteries accounted for around 13% of demand for these elements in 2018, over 6% of which was in hybrid electric vehicles.

If Toyota switches battery technology away from NiMH, the demand for lanthanum (and to a lesser extent, cerium) will be adversely affected. An accelerated decline in demand for these elements in batteries would exacerbate the already expanding surplus supply as the rare earths industry focuses its attention on neodymium and praseodymium demand in magnets. Nickel supply concerns cathode manufacturers, as only a quarter of the nickel ore currently produced can meet the standards required for processing ore into nickel sulphate for cathode production in both NMC (Lithium Nickel Manganese Cobalt) and NiMH batteries. Cathode manufacturer BASF forecasts EVs to account for up to half of nickel demand by 2025.

The market share of the NMC cathodes was estimated by Macquarie Research to be around 23% of total EVs in 2015, but this share has increased over the last two years according to market participants. Many battery makers have switched to NMC batteries because of their lower cost and good capacity. In 10 years, as much as 80% of lithium-ion batteries will use NMC cathodes according to Cairn Energy Research.

To significantly reduce the quantity of nickel and cobalt in its cathodes, BASF aims to create ‘manganese-rich’ cathodes in the longer term. Roskill forecasts that manganese demand, just from lithium-ion batteries, will grow at a compounded annual rate of 23% from now until 2027.

The metal vanadium is used in the vanadium redox battery to store electrical energy on a large scale within an electrical grid. Electrical energy is stored during times when production (especially from intermittent power sources such as wind, solar and tidal) exceeds consumption, and returned to the grid when production falls below consumption.

As EV sales rise around the world, and the deployment of solar and wind also continues to scale up, Bloomberg noted recently that many of these clean technologies actually rely on the same supply chains and compete against one another for certain high-tech parts. As a result, some solar-component companies have to wait as long as 50 weeks for parts because EV companies are scaling up production, illustrating the bottlenecks that are beginning to appear.

But batteries can always be reconditioned, opening up opportunities in metal recycling perhaps somewhat offsetting the looming issues with supply.

 

Harte Gold raising $6 million in bought deal financing

Harte Gold Corp. [HRT, TSX] is raising $6 million from a bought deal offering of 20 million flow-through common shares priced at 30 cents per share. Harte is the company that recently commenced production at its Sugar Zone Mine located 80 km east of the Hemlo Gold Camp in northern Ontario.

Harte said it has struck a deal with Echelon Wealth Partners Inc., which has agreed to purchase the shares on a bought deal basis, the company said in a press release that was issued after the close of trading on September 11, 2019. Echelon has been granted a green shoe option to buy up to an additional 15% of the flow-through shares sold under the offering at the issue price.

Gross proceeds from the offering of flow-through shares will be used for Canadian exploration expenses and will qualify for as flow-through mining expenditures under the Income Tax Act (Canada). The offering is expected to close by September 27, 2019.

Harte shares were unchanged at 27.5 cents on Thursday. The shares are trading in a 52-week range of 21 cents and 55 cents.

Harte is Ontario’s newest gold producer through its wholly-owned Sugar Zone Mine. The project is estimated to contain a NI 43-101 compliant mineral resource of 1.1 million ounces of contained gold and an inferred resource of 558,000 ounces of contained gold.

A feasibility study was completed on the Sugar Zone mine in February, 2019, which estimated total reserves at 890,000 ounces of gold.  Exploration continues on the Sugar Zone, which covers 79,335 hectares of a significant greenstone belt.

In the second quarter ended June 30, 2019 Harte said gold production increased by 42% from the previous quarter to 7,754 ounces. The average head grade of the mined ore was 6.01 g/t gold. Net revenue in the second quarter was $11.8 million, marking a 50% increase in comparison to the previous quarter. The average realized gold price during the quarter was US$1,305 per payable ounce.

Mining operations are currently expected to run for 12 years and will support further resource expansion drilling in the immediate vicinity of the mine and the ramp up of property-wide exploration programs.

In addition to the Sugar Zone property, Harte Gold also holds the Stoughton Abitibi property on the Destor-Porcupine Fault Zone, east of Timmins, Ontario. That property is adjacent to the Holloway Gold Mine.

Harte acquired the Sugar Zone property in May 2010 from Corona Gold Corp. [CRG-TSX], a company headed by mine financier Ned Goodman. At the time, Corona received cash payments, plus shares equal to a 9.9% stake in Harte.

Some of the exploration since then has focused on Hemlo-style mineralization to the east of the Sugar Zone. This is a reference to the famous Hemlo gold discoveries of the early 1980s, which were rich enough to support three mines – Williams, Golden Giant, and David Bell.

Nutrien upbeat on potash in 2020 despite mine downtime

Nutrien Ltd. [NTR-TSX, NYSE], the world’s largest producer of potash fertilizer, said Thursday September 12 that it is taking temporary downtime at three mines in Saskatchewan.

The company said it expects to proactively take up to eight-week inventory shutdowns at its Allan, Lanigan and Vanscoy mines during the fourth quarter of 2019. The shutdowns are expected to begin in November and could impact up to 700 miners across the three sites.

It said the production downtime is in response to a short-term slowdown in global potash markets. If all three potash facilities were to remain idled for the full eight weeks, potash production could be reduced by approximately 700,000 tonnes and potash annual EBITDA (earnings before interest, tax and depreciation) could be reduced by US$100-US$150 million.

Nutrien spokesman Will Tigley attributed the shutdown decision to weak palm oil prices that reduced fertilizer demand in Indonesia and Malaysia, and a suspension of potash imports into China that began on September 1, 2019.

Nutrien shares declined slightly on the news, falling 1% or 69 cents to $67.65. The shares are currently trading in a 52-week range of $59.97 and $76.17.

The product of an amalgamation involving Agrium and Potash Corp., Nutrien is the world’s largest provider of crop inputs and services. The company can produce and distribute 27 million tonnes of potash, nitrogen and phosphate products worldwide.

When the company reported its second quarter results in July, 2019, the company said it was hit by unprecedented wet conditions in the United States. “U.S. weather in the first half [of 2019] was so severe it nearly eliminated global demand growth for crop inputs,” the company said.

Global potash prices in the first half of 2019 were largely stable across key spot markets as import demand was strong particularly from China and Brazil. At the same time, supply was tight due to further production delays from green field projects, Nutrien said.

However, due to weather and policy-related issues impacting the second half of 2019, Nutrien lowered its projection of global potash deliveries to 65-67 million tonnes. Its 2019 potash sales volume guidance was also reduced to 12.6 to 13.0 million tonnes from the previous estimate of 13.0 to 13.4 million tonnes.

“North American spring potash demand was impacted by weather related delays and lower crop planting, of which only a proportion is expected to be made up in the fall,” Nutrien said. “Chinese demand could be deferred by import policies, while potash demand in India is being negatively impacted by a below normal monsoon,’’ the company said.

Based on its first half results and market factors detailed above, Nutrien lowered its 2019 net earnings forecast to US$2.70 to US$3.00 per share. That’s down from an earlier estimate of US$2.80 to US$3.20. Adjusted EBITDA guidance was also lowered to US$4.35 to US$4.70 billion from US$4.4 to US$4.9 billion.

Despite the current short-term market conditions, we remain positive on potash demand for 2020, as well as the medium to long-term potash fundamentals, Nutrien said in a press release Thursday.

Kutcho Copper rallies on metallurgical results

Kutcho Copper Corp. [KC-TSXV; KCCFF-OTC] has announced the results of ongoing metallurgical testing on its 100%-owned Kutcho Project located approximately 100 km east of Dease Lake, northern British Columbia. The company said the test program is part of the work completed or under way that is designed to support completion of a feasibility study for the project.

Kutcho said it achieved recoveries of up to 92.3% copper and 84.2% zinc in metallurgical locked cycle tests completed on composites representing a range of proposed process plant feed characteristics found within the Main Lens, including sulphur content, copper grade and copper mineralogy. That marked an improvement on 2017 pre-feasibility life-of-mine results, including improved zinc concentrate grades and the rejection of zinc from the copper concentrate.

Silver performance was also significantly improved, the company said in a press release on September 11, 2019.

Selected copper and zinc concentrates produced from the 2019 cycle tests were analysed for minor trace elements and were found to be free of impurities which would typically attract smelter penalties.

Kutcho shares rallied on the news, rising 16% or $0.03 to 22 cents. The shares are currently trading in a 52-week range of 13 cents and 46 cents.

Kutcho Copper, formerly known as Desert Star Resources Ltd., acquired a 100% interest in the Kutcho Project from Capstone Mining Corp. [CS-TSX] in June 2017. Capstone now owns a 13.5% stake in Kutcho Copper.

In December, 2017, the company closed a $20 million subordinated secured convertible term debt loan and a US$65 million early deposit precious metals purchase agreement with Wheaton Precious Metals Corp. [WPM-TSX, NYSE]. The deal entitled Wheaton to up to 100% of the payable silver production and up to 100% of the gold production from the Kutcho copper-zinc-silver-gold project.

Mineralization on the 17,060-hectare property is hosted in three known volcanic massive sulphide (VMS) deposits. The largest is the Main deposit. The other two are Sumac and Esso.

According to an updated mineral resource estimate that will be used for an upcoming feasibility study, measured and indicated resources in all deposits stand at 17.3 million tonnes grading 2.61% copper equivalent, 1.85% copper, 2.72% zinc, 0.49 g/t gold and 33.9 g/t silver.

On top of that is an inferred resource of 10.7 million tonnes of 1.67% copper equivalent, 1.18% copper, 1.76% zinc, 0.26 g/t gold and 21.5 g/t silver.

The updated estimate includes an 84% increase in the inferred mineral resources compared to the 2017 resource estimate. In addition, there remains significant exploration potential between, below and along strike from the existing mineral resources, providing further upside opportunities to grow the size of the project, Kutcho has said.

“This expanded mineral resource will form the foundation for the feasibility study, which is slated to be completed in Q2/Q3 2019, said Kutcho President and CEO Vince Sorace.

The 2017 pre-feasibility study envisaged a 12-year mine life with a 2,500 tonne-per-day production rate. Total payable production over the life of the mine was expected to be 378 million pounds of copper, and 473 million pounds of zinc, plus by-product gold and silver.

Average annual production was forecast at 33 million pounds of copper and 42 million pounds of zinc, plus by-product gold and silver. However, the company aims to double the production rate from 2017 forecasts to 100 million pounds of copper equivalent annually.

Initial capital costs, including a 15% contingency, have been estimated at $220.7 million.

Impact Silver rallies on high grade results

Impact Silver Corp. [IPT-TSXV; IKL-FSE] shares rallied Wednesday September 11 after the company announced high-grade silver results from underground drilling at the San Ramon Mine in the Royal Mines of Zacualpan District, central Mexico.

Highlights from drilling include 2.14 metres of 418 g/t silver from 65.55 metres to 68 metres and 1.54 metres of 1,393 g/t silver from 48.44 metres to 50.17 metres.

On Wednesday, Impact shares jumped 8% or $0.03 to 41.5 cents. The shares are trading in a 52-week range of 19.5 cents and 51 cents.

Impact is a silver-gold producer with two processing plants on adjacent districts within its 100%-owned, 623-km2 claim package located three hours southwest of Mexico City.

The San Ramon Mine has been in production for over 14 years and continues to yield mineralization. During that period, Impact has produced over 9.4 million ounces of silver, generating revenue of $175 million.

San Ramon is located 5 km southeast of Impact’s 535-tonne-per-day Guadalupe processing plant. The company currently operates three producing silver mines which feed the Guadalupe plant, including the underground San Ramon Deeps Mine, Mirasol Mine and Cuchara-Oscar mine.

To the south in the Mamatla District, the Capire processing pilot plant is currently rated at 200 tonnes per day, but is expandable. It is adjacent to an open pit silver mine with a NI 43-101-compliant resource of over 4.5 million ounces of silver, 48 million pounds of zinc and 21 million pounds of lead.

Since 2005, production at San Ramon has been based the San Ramon Upper Zone and since 2014 on the San Ramon Deeps Zone, which continues down to the southeast extending the known mineralized system to a depth of 1,611 metres above sea level.

Known mineralization over the total San Ramon workings has a down-dip length of over 500 metres.

In Wednesday’s press release, the company said it intersected the vein system at depth and to the southeast of the current mine workings.

In total, the company said mining has occurred on 27 working levels over a vertical distance of 430 metres on three subparallel vein systems.

Meanwhile, on August 14, 2019, the company announced its financial results for the six months ending June 30, 2019. The company posted second quarter revenue of $2.8 million, a decrease of 11% from the same period last year.

Impact also reported a net loss of $2.8 million in the second quarter, which includes a one-time write-down of $1.7 million of exploration and evaluation assets as the company reduced its land package size to save on biannual concession taxes.

The company said silver production decreased to 145,658 ounces in the second quarter of 2019, from 194,223 in the year earlier period due to fewer tonnes being processed.

However, the company said it is well positioned for a rebound in the price of silver, which recently played catch-up with the rising price of gold. On Wednesday, spot silver was trading at US$18.13 an ounce.

New Destiny starts Treasure Mountain drilling

Ximen Mining Corp. [XIM-TSXV; XXMMF-OTCQB] said Wednesday September 11 that its option partner New Destiny Mining Corp. [NED-TSXV] has begun drilling at its Treasure Mountain silver property near Tulameen, British Columbia, close to the Coquihalla Highway about 150 km east of Vancouver.

Ximen is a B.C.-focused company which has a 100% interest in all three of its precious metals projects in the southern part of the province. The company’s two gold projects are the Gold Drop and Brett Epithermal. Ximen also owns the Treasure Mountain Silver Project, which lies adjacent to Nicola Mining Inc.’s [NIM-TSXV; HUSIF-OTC] Treasure Mountain property, site of the former Treasure Mountain silver-lead-zinc mine.

Currently, Ximen has Treasure Mountain optioned to New Destiny for staged cash and stock payments (details were unavailable at press time).

The Treasure Mountain property covers 10,700 hectares of geologically prospective ground located 30 kM east of Hope. The property hosts at least seven gold, silver, lead-zinc, and or copper occurrences in various regions. These include gold-quartz vein, polymetallic veins and porphyry-type showings.

Ximen said diamond drilling commenced with the first hole at the Superior (Lucky Todd) area, one of at least four holes to be drilled at this prospect. Drilling is targeted at the mineralized zones exposed in trenches completed earlier this season.

Rock sample geochemical results from the Superior (Lucky Todd) prospect ranged up to 1.6% copper, 0.87 g/t gold and 109 g/t silver in one sample, and 0.36% copper and 3.99 g/t tonne gold in another. All samples were chip samples of varying widths between 0.3 and 1.5 metres.

Ximen said New Destiny will continue to examine other known historic prospects in the area, including the Railroad and Jim Kelly Creek areas. Rock samples from 2019 trenches at the Railroad ranged up to 1.06% copper and 264 g/t silver in one sample, and 0.95 g/t gold, 0.9% zinc and 0.4% lead in another sample.

At Jim Kelly Creek, a grab sample from the Superior/John Bull prospect returned results of 11.3 g/t gold in 2018. Other known copper-gold prospects in the Jim Kelly Creek area include Spokane, Marsellaise and Gold Mountain.

Ximen shares were unchanged on Wednesday at 42 cents.  The shares are trading in a 52-week range of 14 cents and 86 cents. New Destiny shares eased 23% or $0.03 to 10 cents. The shares trade in a 52-week range of $0.and 25 cents.

Ximen recently entered into an option agreement to acquire the Kenville gold mine near Nelson, B.C.

Discovered and staked in 1888, Kenville was mined intermittently until 1954, generating recorded production of 2,029 kilograms of gold, 861 kilograms of silver, 23.5 tonnes of lead, 15 tonnes of zinc, 1.6 tonnes of copper and 37 kilograms of cadmium from 181,395 tonnes processed.

The property is located 8 km west of Nelson and is accessible by paved road. It is also connected to the power grid. The existing infrastructure includes mining equipment, offices, mechanic shop, core storage and accommodation.

In a recent update, the company said the main focus of activities is currently updating the permits for underground operations to allow the exploration decline and planned diamond drilling program to proceed.