London Metal Exchange and Fastmarkets to set lithium price benchmark

The London Metal Exchange (LME) is partnering with Fastmarkets to develop the reference price for its planned lithium futures contract, which will help analysts and executives to get a full sense of the global market for the key ingredient in the making of the batteries that power electric vehicles (EVs).

Unlike for copper or other metals used in the making of EVs, there currently is no traded price for lithium.

“In recent years there has been unprecedented price volatility in the lithium market, driven particularly by explosive electric vehicle (EV) battery demand,” the exchange said.

Unlike for copper or other metals used in the making of electric vehicles, there is no traded price for lithium.

The move, it added, comes after industry players, including producers, end-users and several leading automotive firms, urged the LME to develop effective lithium price-risk management tools.

“This global strategic partnership will develop a definitive roadmap aimed at providing a pricing mechanism for lithium that can be utilized throughout the supply chain and will support the development of risk-management tools for the industry,” Fastmarkets said in a separate statement.

Last year, the LME asked companies that assess prices of battery-grade lithium to submit proposals to supply a reference for cash-settled contracts it planned to launch  in the fourth quarter of this year.

Today, however, the exchange only said it would continue “to gauge appropriate timing” for a launch.

Currently, producers negotiate contracts with buyers, but the terms of the deals are not made public.

The LME, the world’s oldest and largest market for industrial metals, said it selected Fastmarkets because their prices were used widely across the industry.

The agency already provides the global benchmark for the cobalt market — another key battery raw material.

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Camino Minerals allowed to expand drilling in southern Peru

The Peruvian Ministry of Energy and Mines approved a permit related to Camino Minerals' (TSXV: COR) environmental impact assessment for the Chapitos copper-gold project.

The permit allows for the expansion of drilling activities along the Diva Trend at Chapitos. Drilling is expected to commence during the latter half of 2019.

Camino's 2019 exploration program is ongoing and includes geological mapping and structural analysis, chip/channel and trench sampling, and road building, all in preparation for geophysics and drilling

In a press release, Camino explained that the 200-drill pad permit allows for a maximum of 908 drill holes or 445,200 metres of drilling over a 3.6-year period.

According to the miner, the drilling will further define and potentially expand on the copper mineralized zones at the Adriana, Katty, and Vicky targets, but also includes drilling designed to evaluate the potential for additional zones of copper mineralization along the Diva Trend.

"Camino is excited to have received the EIA permit to continue drilling the Diva Trend copper mineralization along strike and down dip allowing for potential expansion of the mineralized footprint," the firm's CEO, John Williamson, said in the media brief. "The permit will allow the company to better locate drill collars in optimum locations to both test the Diva structure and other structural and stratigraphic copper opportunities while potentially minimizing drill costs."

Camino informed that the exploration program will also include follow-up work on the Atajo Trend where exploratory drilling intersected 0.83 % copper over 16.3 metres, including 2.09 % copper over 5.0 metres.

The Chapitos project is a 22,000-hectare land pack near Chala in southern Peru.

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New Energy to acquire project near Codelco’s and BHP’s mines in Chile

Canada's New Energy Metals (TSXV: ENRG) announced that it entered into a letter of intent with certain arm’s length vendors to be granted the exclusive right and option to acquire an initial 70% royalty-free interest in and to certain exploration and exploitation mineral concessions known as the “Exploradora North project.”

The 84,750-hectare project is located in the II and III Regions of northern Chile along the prolific West Fissure fault system between the open-pit Escondida mine, the largest copper mine in the world which is owned by BHP and Rio Tinto, and Codelco’s El Salvador underground copper mine.

In a press release, New Energy explained that Exploradora North is also located immediately north and east of Codelco’s Exploradora deep drilling project, where near-surface resource reported 100 Mt of 0.3 Cu and 0.2 g/t gold.

According to New Energy, Minera Activa, a private Chilean company, recently announced positive results in the Exploradora district, and Brazil’s Vale is also actively drilling to the west of Exploradora North.

To move forward with the acquisition, New Energy Metals, through a wholly-owned Chilean subsidiary, will enter into a formal option to purchase agreement which contemplates that the Vancouver-based firm has to incur in exploration expenditures on the project of at least $15 million within 48 months of the effective date. The company will also have to pay $8.5 million an issue an aggregate of 11,500,000 common shares of New Energy Metals, all of which will be done in different installments or phases.

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DeepGreen closer to mining battery metals from the sea after $150m injection

Canada’s DeepGreen Metals, a start-up planning to extract cobalt and other battery metals from small rocks covering the seafloor, has secured the bulk of the $150 million it needs to carry out its first feasibility studies.

The financing, provided by Switzerland-based offshore pipeline company Allseas Group, is a welcome sign of progress for the deep sea mining sector, which has been stalled due regulatory uncertainty and environmental concerns.

Unlike other seafloor mining companies, including pioneer Nautilus Minerals, the Vancouver-based explorer doesn’t want to drill, blast or dig the bottom of the ocean. DeepGreen’s main goal is to scoop up small metallic rocks located thousands of metres below the surface in the North Pacific Ocean.

Unlike other seafloor mining companies, the Canadian start-up doesn’t want to drill, blast or dig the bottom of the ocean, but to scoop up small rocks containing cobalt, nickel and other battery metals.

Its exploration focus is the Clarion-Clipperton Zone (CCZ), a mineral-rich, 4,000-kilometre swath of the Pacific that stretches from Hawaii to Mexico, where billions of potato-sized metals-rich rocks lie in a shallow layer of mud on the seafloor.

The deep sea, more than half the world’s surface, contains more cobalt, nickel, copper, manganese and rare earth metals than all land reserves combined, according to the US Geological Survey.

Companies exploring or already developing projects to mine the seafloor argue the extraction of those deep-buried riches could help diversify the sources currently supplying metals needed for electronics and evolving green technologies, such as electric vehicles (EVs) and solar panels.

Academics and scientist, however, are concerned by the lack of research on the possible impacts of high seas mining. They fear the activity could devastate fragile ecosystems that are slow to recover in the highly pressurized darkness of the deep sea, as well as having knock-on effects on the wider ocean environment.

Not enough studies

Last year, the European Parliament called for a ban on seabed mining until the environmental impacts and risks of disturbing unique deep-sea ecosystems are understood. In the resolution, it also urged the European Commission to persuade member states to stop sponsoring and subsidizing licenses to explore and exploit the seabed in international waters as well as within their own territories.

Shortly after, an international team of researchers published a set of criteria to help the International Seabed Authority (ISA), a UN body made up of 168 countries, protect biodiversity from deep-sea mining activities.

So far, it has granted 29 licences to governments and companies, authorizing them to explore in international waters.

Nautilus, however, is the only company that has gone beyond the exploration stage and has gotten close to open the first polymetallic seabed mine off the coast of Papua New Guinea. Its Solwara 1 project, however, has been slowed by funding issues and local opposition.

Anglo American (LON:AAL) sold its 4% stake in Nautilus a year ago, as part of efforts to retain only its most profitable assets. And, in March, it had to delist from the Toronto Stock Exchange.

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Researchers produce gold, silver, copper foams

Scientists at the US Lawrence Livermore National Laboratory created ultra-low density gold, silver and copper foams to give physicists better X-ray sources to employ in experiments at the National Ignition Facility.

This facility is a large laser-based inertial confinement fusion research device that uses lasers to heat and compress a small amount of hydrogen fuel with the goal of inducing nuclear fusion reactions.

“We are looking primarily at fundamental science questions that govern how to synthesize, assemble and shape metal nanowire-based aerogels,” said the project’s principal investigator, Michael Bagge-Hansen, in a media statement.

Bagge-Hansen explained that although the material is called foam, it is not made by foaming. Rather, it is a spaghetti-like web of randomly connected nanometer-sized wires, formed into the shape of a miniature marshmallow and containing the same or fewer number of atoms as air.

The National Ignition Facility’s mission is to achieve fusion ignition with high energy gain, and to support nuclear weapon maintenance and design

To conduct this experiment, the research group sought different ultra-low density metals that could be used as targets for laser-driven X-ray sources for experiments further probing the properties of various materials placed under the extreme conditions possible when the National Ignition Facility’s 192 high-powered lasers are directed inside the target chamber.

According to Tyler Fears -one of the scientists involved in the project- each element emits a characteristic set of X-rays when heated by lasers into a plasma. “Metal foams can mimic gas even though they are made from materials that are not gas at room temperature,” he said.

To create the foams, the team freezes the nanowire inside a shape-creating mold typically filled with a water-glycerol mix. When it hardens, the nanowire looks like a mesh of frozen spaghetti.

The material is then removed from the mold and the frozen water is extracted by replacing it with the solvent acetone, which is then dissolved in a supercritical drying process using liquid carbon dioxide, leaving only the metal and air. “Supercritical drying ensures the liquid transforms into a gas phase without creating a meniscus that could damage the fragile ultra-low density metal foam structure,” Fears said.

Using this process, the experts have produced copper and silver foam, and silver has performed well at the National Ignition Facility.

When it comes to gold foams, Fears said they still tend to fall off the mounts that hold them in front of the lasers. “That’s the challenge we’re trying to overcome now,” he said.

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Bonus schemes play a role in tailings dams failures – research

A paper published in the journal Resources Policy states that bonus schemes for middle management employees in mining companies play a role in tailings dams failures.

According to the research article, such compensation packages actively encourage managers to cut costs and increase production, as the material decisions that put into motion such measures lay in their hands and positive results would increase their annual bonuses.

Although most mining companies don’t make public the compensation packages they give their middle management personnel, such incentives are known to be a common practice in the industry. Thus, using the information provided by the two companies that do report them, Newmont Goldcorp (NYSE: NEM, TSX: NGT) and AngloGold Ashanti (JSE:ANG, NYSE:AU), the authors of the study found that some schemes are equivalent, in financial terms, to an equity payment plus a put option.

The number of tailings dam failures has doubled in recent years from 8 in the period 1999–2003 to 16 in 2014–2018

“So the bonus is highly leveraged. Like investment bankers, the person stands to gain a lot if his/her performance is above target, but loses little, if it falls below target,” the study reads. “Year after year, managers keep taking risks with a low probability of occurrence but with potentially catastrophic consequences. These risks are compounded by shortages of experienced staff due to the cyclic nature of the industry and the retirement of the baby-boomer generation.”

Authors Margaret Armstrong, Renato Petterd and Carlos Petterd connected their observations to those in earlier research papers that analyzed certain cases of tailings dams failures and found that either production was increased or costs were significantly reduced in the years leading to the accidents.

The academics report that, for example, prior to the collapse of the tailings facility at the gold and copper Mount Polley mine in British Columbia in August 2014, which resulted in 24 million cubic meters of contaminated sludge and mine waste going into nearby lakes and rivers, Canada’s Imperial Metals (TSX: III) had grown its production by 23% in Q2-2014 from the previous quarter.

Boliden Apirsa, on the other hand, had flat revenues from 1995 to 1997, just before the tailings dam crashed at the Los Frailes lead and zinc mine in Aznalcóllar, Spain, in April 1998. But capital expenditures doubled during this period from $55.4 million to $112.3 million and operating income increased spectacularly from $2.3 million to $84.9 million. “So production costs must have dropped significantly over the period.”

The aftermath of the disaster in Brumardinho following Vale's tailings dam collapse. Photo by Vinícius Mendonça/Ibama, Wikimedia Commons.

In Brazil, production at Vale’s (NYSE:VALE) Samarco iron ore mine had increased by almost 40% in the five quarters just before the accident there in 2015, which killed 19 people and became the country’s worst-ever environmental disaster. Similarly, at the Paraopeba subsection of the Southern System where the Corrego do Feijão dam was located, production was risen by 12% in the five quarters before the Brumardinho catastrophe where almost 300 people died.

“The next question we asked ourselves was: Had an extra tailings dam been constructed to handle this additional quantity of rejects, or was it being pumped into existing tailings facilities? Alternatively, had filter presses or high capacity thickening been introduced to reduce the quantity of water?”, the authors of the paper ask.

After reviewing Vale’s quarterly reports for investors, which list all the major projects in progress, they found that there is no mention of building a new tailings dam or of filter presses. “This means that the existing ones had to cope with the waste from the extra production.”

Off the hook

Except for $42.5 million for the initial clean-up, the paper in Resources Policy highlights the fact that Boliden Apirsa succeeded in avoiding paying for the pollution caused by the tailings dam breach.

“Boliden's legal team and expert witnesses convinced a Spanish court of law that the tailings dam failure was due to geotechnical problems, thereby transferring the responsibility to the companies that had designed and built the dam. An epic legal battle ensued in which the Spanish Ministry of the Environment and the local government of Andalusia attempted to get Boliden to pay for the damage, but failed due to loopholes in the Spanish legal system,” the document reads.

In the case of the Mount Polley mine, Armstrong and her colleagues bring to the forefront the fact that the Independent Expert Engineering Investigation and Review Panel established after the accident found that the failure was caused by the design, which did not take into account the complexity of the sub-glacial and pre-glacial geological environment associated with the Perimeter Embankment foundation.

This has meant that no one has been held responsible for the disaster and, on top of this, the 3-year deadline to lay charges under British Columbia laws passed in 2017, while there is only one year left to lay charges under federal environmental and fisheries law.

The authors of the study refrained from commenting on the legal proceedings involving Vale’s tailings dam failures as they are still in progress.

In their recommendations of what would be needed to stop tailings dam failures, the researchers suggest, besides changes in the processing technology and wider adoption of the Mining Association of Canada’s guidelines issued in 2017, heavier fines and penalties.

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This 50-year chart shows just how undervalued commodities are

US stock markets just enjoyed their best week of the year on speculation that the Federal Reserve would once again ride to the rescue of equities and inflate asset prices by cutting rates.

The S&P 500 index is sporting double digit percentage gains so far this year. Meanwhile, the S&P GSCI All Commodities index is down 14% over the past year.

Apart from all things gold, Incrementum's 13th annual In Gold We Trust report also features broader takes on the environment for raw materials and argues that in a historical context commodities remain undervalued compared to stock markets in the extreme.

Plotting the S&P GSCI and the S&P 500 all the way back to 1970 shows the indices long-term upward trend line and the current disconnect between commodities and equities:

To return to this trend line – which happens on average every 6 to 8 years – the S&P would have to fall by 44% and the GSCI to rise by 112%.

This is a scenario that seems highly unlikely, if not impossible, at the moment. However, a glance at the following chart or at the history books puts this alleged impossibility into perspective.

This 50-year chart shows just how undervalued commodities are

Source: Incrementum In Gold We Trust Report 2019

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Goldspot partners with Pacton on AI exploration at Red Lake

Goldspot Discoveries (TSXV: SPOT) announced Friday a signed service agreement with Pacton Gold (CVE: PAC) to Goldspot's A.I. and machine learning tools to evaluate and identify possible mineral and drill targets on Pacton’s Red Lake, Ontario property.  "We believe Red Lake's ground is ripe for a technological revolution" — Goldspot CEO

 Goldspot has been granted a 0.5smelter royalty on the property and the option to purchase an additional 0.5% net smelter return royalty on all metals produced from the Red Lake property for C$1 million, as well as 0.5% net smelter return royalty on all metals produced from all the current claims comprising Pacton's Australia assets in the Pilbara Craton for C$1 million.  

 "The Pacton Gold property in the historic Red Lake gold camp in North western Ontario excites us. It is the ideal district to use artificial intelligence and machine learning to find new discoveries," said Denis Laviolette, GoldSpot’s president and CEO in a media statement. "After initial screening and utilizing artificial intelligence to analyze various layers of data related to Pacton Gold's property, we have made our largest speculative bet to date." 

"We believe Red Lake's ground is ripe for a technological revolution, and this deal gives us royalty exposure to 16,630 hectares of prospective land," said Laviolette. 

Market reaction to the partnership was positive: Goldspot’s stock was up 4%, and Pacton’s stock was up on the CVE Friday afternoon.  

 

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Bluerock Diamonds’ shares jump on record find

BlueRock Diamonds (LON: BRD) shares were up 15% on the London Stock Exchange Friday after the miner announced it had recovered its largest diamond to date, a 24.9 carat gem quality stone.  

BlueRock owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa.  The miner’s largest diamond prior was 16.28 carats, which sold for $78,947.
 
“This record recovery of such a high-quality diamond is an exciting milestone and underpins why we are so confident about the potential of the Kareevlei mine. We have a comprehensive development plan to increase production and look forward to providing further updates as we progress,” executive chairman Mike Houston said in a media statement. 

The diamond will be put to tender, the results of which will be announced June 17, the company said.

BlueRock’s shares were priced at 11 pence on the LSE late Friday, on a day that saw trading volume at 61.9 million, mover six times the average daily trading volume is 9.5 million. The company has a £1.8 million market capitalization. 

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Five BHP tailings dams could pose “extreme risk” to communities in event of collapse

The world’s biggest miner, BHP (NYSE: BHP), published risk assessment results on Friday that revealed five of its tailings dams that would be at “extreme risk” of damage to local environments and harm to nearby residents if they failed, the Financial Times reported.  

The Australian miner released risk assessment results in response to pressure from a group of investors that requested information on facilities controlled by nearly 700 mining companies be disclosed.   

The Sydney Morning Herald reported that BHP told investors that 32 of its 67 tailing dams around the world, which hold sometimes dangerous mining by-products were 'high risk' or worse under Canadian Dam Association dam safety classifications 

The Investor Mining & Tailings Safety Initiative in April requested that over 600 resource companies, including major miners, reveal the safety records of their waste storage facilities, following the collapse of Vale’s Brumadinho dam in Brazil in January, which killed hundreds. 

Following the disaster, a group of 96 institutional investors, representing more than $10.3 trillion assets under management, to 683 extractive companies seeking greater disclosure on the management of tailings storage facilities. 

About 100 investors, led by the Church of England Pensions Board and Sweden’s public pension fund, requested that the companies to publish the answers to 20 questions sent, covering issues such as the height and type of dams they have, their capacity, engineering records and safety checks. 

Industry group the International Council on Mining and Minerals (ICMM) said in March it was working with the United Nations Environment Programme (UNEP) and the Principles for Responsible Investment (PRI) to develop new standards. 

BHP said it is establishing a dedicated tailings task force focused on  internal dam management and development of international best practice.

 

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