Kirkland Lake reports 54% increase in Q2 output

Kirkland Lake Gold (NYSE, TSX: KL) reported on Tuesday that its second quarter gold production reached 329,770 ounces, representing an increase of 115,177 ounces or 54% from the same period last year.

Year-to-date, the company has produced 660,634 ounces — 214,162 ounces or 48% higher than the first half of 2019.

Year-to-date, the company has produced 660,634 ounces — 214,162 ounces or 48% higher than the first half of 2019

Production from the Detour Lake mine, acquired by the company in late January, totalled 131,992 ounces for the quarter despite disruptions caused by covid-19.

At the Fosterville mine, production reached 155,106 ounces, a 10% increase over Q2 2019, mainly reflecting higher tonnes processed. This output was similar to the 159,864 ounces produced in the previous quarter.

The Macassa mine added 41,865 ounces, down from the 49,196 ounces produced in Q2 2019 due to a lower average grade. This was also lower compared to the 50,861 ounces produced in the first quarter, reflecting a greater impact on tonnes processed from covid-19 protocols.

The Holt Complex, which was temporarily suspended on April 2, produced only 807 ounces for the quarter. Production in Q2 2019 was 24,696 ounces, while production in Q1 2020 totalled 28,584 ounces.

Total gold sales for Q2 2020 amounted to 341,390 ounces at an average realized price of $1,716 per ounce, compared to 212,091 ounces (at $1,320 per ounce) in Q2 2019 and 344,586 ounces (at $1,586 per ounce) for the previous quarter.

Shares of Kirkland Lake Gold jumped 4.7% and 4.2% respectively on the TSX and NYSE as of 2 p.m. EDT. The Toronto-based gold producer has a market value of $12.1 billion.

Gold vaults $1,800 to highest since September 2011

The rally in the gold price gained fresh momentum on Tuesday as investors piled into physically-backed gold ETFs to secure hard assets amid expectations of continued global ultra-low or negative interest rates and currency debasement.

Gold for delivery in August, the most active contract on the Comex market in New York with 19m ounce traded by lunchtime, touched a high of $1,810.80 an ounce, up 1% from yesterday’s settlement.

Gold is now up 19% or $287 an ounce so far this year. The last time gold traded above $1,800 an ounce was September 2011, but it ended that year at $1,565 an ounce.

H1 inflows are also significantly higher than the multi-decade record level of central bank net purchases seen in 2018 and 2019

The World Gold Council reported that gold-backed ETFs recorded their seventh consecutive month of positive flows, adding 104 tonnes in June – equivalent to $5.6 billion.

June’s net inflows took global holdings to new all-time highs of 3,621 tonnes after 734 tonnes – worth $39.5 billion – were added to vaults during the first six months of the year

This year’s inflows compare to the previous record set in 2009 when 646 tonnes were added – for the entire calendar year. In terms of dollar value first half inflows also dwarf the 2016 total of $23 billion according to the WGC:

“To put this strength of demand into context, H1 inflows are also significantly higher than the multi-decade record level of central bank net purchases seen in 2018 and 2019, and could absorb a comparable amount of about 45% of global gold production in H1 2020.

In June, global gold ETFs registered three consecutive days of outflows near the beginning of the month – the first consecutive daily declines since March – before regaining momentum.

All regions saw net inflows during the month, with North American funds accounting for the lion’s share says the WGC.

Novagold sues J Capital Research for defamation

Novagold (NYSE, TSX: NG) announced on Tuesday that it had served short-seller J Capital Research USA (JCAP) with a civil action lawsuit for defamation in the United States District Court for the Eastern District of New York.

The company alleged that on May 28, JCAP issued a “report” on
Novagold that contained false and misleading statements as part of what the company believes to be a “short and distort” attack.

Novagold and Barrick have reopened the Donlin camp last month following a two-month due to the covid-19 pandemic

J Capital Research accuses managers of the Vancouver-based explorer of “systematically” misleading investors about its proposed Alaska gold mine over the last 15 years.

NovaGold and Barrick’s Donlin project, with measured and indicated resources of about 39-million ounces of gold is considered one of the largest open pit gold deposits in Alaska.

JCAP, a company founded in China a decade ago which usually targets overvalued media and tech companies for short-selling, says the Donlin Gold project “will never be built” and “in short, is a stock promote, not a mining plan.”

Drilling at Donlin

Novagold and Barrick have reopened the Donlin camp last month following a two-month due to the covid-19 pandemic.

Four drill rigs have been remobilized at the project, Novagold says.

The company anticipates that most of the planned program, aimed at confirming recent geologic modeling concepts and testing potential extensions of high-grade zones, will be completed by year-end.

The 2020 drill program consists of approximately 80 holes totalling about 22,000 metres centered on the ACMA and Lewis resource areas.

Midday Tuesday, Novagold’s stock was up 4.25% on the TSE. The company has a C$4.28 billion market capitalization.

First Quantum restarts Cobre Panama following three-month halt

First Quantum Minerals (TSX: FM) is resuming full production at its Cobre Panama copper operations following a three-month work interruption due to covid-19, the company announced on Tuesday.

First Quantum has received notice from the Ministry of Health of the Republic of Panama (MINSA) lifting the temporary suspension of mining activities at the Cobre Panama site, which has been in preservation and safe maintenance mode since early April.

Last month, the company urged the government to allow for a gradual resumption of operations at the Cobre Panama mine, one of the few large copper projects to have come online over the past two years. First Quantum noted that the mine suspension could cost the company between $4 million and $6 million per week.

No cases of covid-19 have been detected on the Cobre Panama site since April 30

The company will implement a reopening plan that provides for a phased increase of on-site personnel while production is ramped up to an 85 million tonnes per annum annualized throughput rate. There are currently approximately 800 personnel on site, which will be gradually increased in compliance with Cobre Panama’s reopening plan and in line with MINSA guidelines.

First Quantum said the operation is expected to ramp up to full production by mid-August, depending on successful implementation of the reopening plan. No cases of covid-19 have been detected on the Cobre Panama site since April 30.

The company added that it will provide an updated 2020 production guidance for Cobre Panama with the second quarter results later this month.

Shares of First Quantum Minerals rose 1.6% on the TSX by midday Tuesday. The Vancouver-based miner has a market capitalization of over C$7.8 billion.

Bill Gates-backed firm searching for cobalt in Canada

KoBold Metals, a start-up backed by a coalition of billionaires led by Bill Gates, plans to scour for cobalt in Canada using advanced mapping technology in northern Quebec, just south of Glencore’s Raglan nickel mine.

The company, founded in 2018, has acquired rights to an area of about 1,000 square kilometres (386 sq. miles), where it plans to begin collecting geophysical before the end of the year.

KoBold’s backers include big names such as Venture capital firm Andreessen Horowitz and Breakthrough Energy Ventures. The latter is financed by well-known billionaires including Jeff Bezos, Ray Dalio, Michael Bloomberg, Richard Branson and Gates.

KoBold Metals, founded in 2018, has acquired rights to an area of about 1,000 square kilometres, just south of Glencore’s Raglan nickel mine.

KoBold aims to create a “Google Maps” of the Earth’s crust, with especial focus on finding cobalt deposits. It collects and analyzes multiple streams of data — from old drilling results to satellite imagery — to better understand where new deposits might be found.

Algorithms applied to the data collected determine the geological patterns that indicate a potential deposit of cobalt, which occurs naturally alongside nickel and copper.

Chief executive officer Kurt House believes the company’s exploration activities at the site in Quebec could help prove the value of its approach.

“The subtleties in the geophysical signals are really only evident when you have all of the data and can evaluate it in a systematic, statistically rigorous way,” he told Bloomberg on Tuesday. “It’s just too much for the human brain to handle.”

KoBold’s boss noted the company was likely to begin collecting geophysical data in the next three to six months. Drilling, House said, could start in a couple of years.

The California-based firm also expects to bring in other investors, potentially including its current backers, on a deposit-by-deposit basis. It will also seek mining-savvy partners once it has identified an interesting project.

Not a miner

KoBold, as House has stated multiple times, does not intend to be a mine operator “ever”.

This is not the first time the American start-up eyes Canada. Public records show that Faith in Gravity Holdings Inc., which is registered in British Columbia, staked last year claims in the northeast corner of Saskatchewan.

The holding company’s directors, according to The Star Phoenix, are Kobold Metals’ top three executives.


Currently, about 65% of the world’s cobalt is mined in the Democratic Republic of Congo, much of it by hand and employing children and young men.

New cobalt mines outside the DCR could become the preferred source of ethically-mined cobalt in the medium-term.

Freeport beats revised Q2 copper sales, shares jump

Freeport-McMoRan (NYSE: FCX) announced on Monday that it exceeded several key performance targets included in its April revised operating plans.

According to the company, second-quarter 2020 copper sales are expected to exceed the estimate of 690 million pounds by approximately 8% and gold sales are expected to exceed the estimate of 165,000 ounces by approximately 10%.

Freeport said that the Lone Star project in Arizona is substantially complete and on track to produce approximately 200 million pounds of copper per year, beginning in the second half of 2020.

Midday Monday, Freeport’s stock was up 7.9% on the NYSE

“Significant progress was achieved at Cerro Verde during the second quarter to restore operations following covid-19 restrictions imposed by the Peruvian government,” the company said in a press release.

During June, Cerro Verde mill operations averaged 315,000 metric tonnes of ore per day, approximately 80% of the 2019 annual average. Meanwhile, Freeport continues to operate its open-pit copper mining complex El Abra in Chile.

Grasberg

After cutting its workforce at Grasberg in May amid a surge in covid-19 cases, Freeport expects to ramp-up underground production at the world’s second-biggest copper mine.

“During the second quarter, combined production rates from the Grasberg Block Cave and Deep MLZ underground mines exceeded 54,000 metric tonnes of ore per day, approximately 9% above the April 2020 estimate and 46% above the first-quarter 2020 average,” the company said.

At the end of June, combined production from the Grasberg Block Cave and DMLZ averaged approximately 70,000 metric tonnes of ore per day.

PT Freeport Indonesia expects its 2021 copper and gold production to approximate 1.4 billion pounds of copper and 1.4 million ounces of gold, nearly double projected 2020 levels.

Freeport expects second-quarter 2020 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to approximate $650 million and expects to record a net loss before nonrecurring items (adjusted net income) approximating $0.03 per share.

Midday Monday, Freeport’s stock was up 7.9% on the NYSE. The company has a $18 billion market capitalization.

K92 achieves record quarterly production, stock jumps

Vancouver-based intermediate gold producer K92 Mining (TSXV: KNT) announced Monday the company has achieved record quarterly production at its Kainantu gold mine in Papua New Guinea.

During the second quarter of 2020, the Kainantu mine produced 25,762 oz gold, 531,406 lb copper and 10,867 oz silver — for a total of 26,847 oz gold equivalent. This marks a 37% improvement over its Q2 2019 output.

The quarter also achieved record mill throughput of 49,311 tonnes despite lower running time associated with the covid-19 lockdowns and other production impacts, with multiple daily mill throughput records exceeding 700 tonnes.

Surface exploration at Kainantu also resumed by end of Q2 following the lifting of state of emergency (SOE) by the PNG government, with three surface diamond drill rigs again operating on two targets in addition to the three underground diamond drill rigs.

The Stage 2 plant commissioning to double throughput from 200,000 tonnes to 400,000 tonnes per year is now targeting for completion by the end of Q3 2020, the company says. The Stage 3 expansion PEA based on the recently updated resource is also expected later this month.

Shares of K92 Mining jumped 5.9% by midday Monday on the TSX Venture Exchange. The company has a market capitalization of C$909.7 million.

Skeena exercises buy option on Barrick’s Eskay Creek

Skeena Resources (TSXV: SKE) will be exercising its option to acquire 100% of the Eskay Creek gold-silver project from Barrick Gold (TSX: ABX; NYSE: GOLD) via a binding term sheet signed between the parties on Monday.

Discovered in 1988, the former Eskay Creek mine located in British Columbia’s Golden Triangle was once the highest-grade gold mine and the fifth-largest silver mine in the world by volume, having produced approximately 3.3 million oz gold and 160 million oz silver at average grades of 45 g/t gold and 2,224 g/t silver.

Based on the preliminary economic assessment released by Skeena in late 2019, the Eskay Creek mine, once reopened, is estimated to produce 236,000 oz gold and 5.81 million oz silver annually. The company is currently focused on infill and exploration drilling to advance the project towards pre-feasibility stage.

The former Eskay Creek mine was once the highest-grade gold mine and the fifth-largest silver mine in the world

The binding agreement involves the amendment of an original option agreement between Skeena and Barrick that was in place for the project. Under the new terms, Skeena will acquire a 100% ownership in Eskay Creek through the issuance of 22.5 million units to Barrick. Each unit comprises one common share and one-half warrant of the company, with each full warrant exercisable for one Skeena common share at C$2.70 per share.

In addition, Barrick has agreed to waive its back-in right on Eskay Creek. Following the transaction, Barrick would become a major shareholder in Skeena, with 12.4% ownership of Skeena’s outstanding shares a non-diluted basis and 17.2% on a partially diluted basis.

Skeena will also grant of a 1% net smelter return royalty on the entire Eskay Creek land package. Half of that royalty may be repurchased from Barrick during the 24-month period after closing at a cost of C$17.5 million.

A contingent payment of C$15 million is also agreed upon, which will become active if Skeena sells more than a 50% interest in Eskay Creek during the 24-month period after closing.

News of the Eskay Creek purchase sent Skeena’s stock to an all-time high on Monday morning. By 12:30 p.m. EDT, the company’s shares were up nearly 15.6% on trading volume of 986,499, more than three times the daily average.

The Vancouver-based precious metals miner currently has a market capitalization of approximately C$380.4 million.

Peru miners struggle as coronavirus cases top 300,000

Mining companies operating is Peru are being forced to keep operations suspended and halt new ones as confirmed coronavirus cases in the country jumped past 300,000 on Sunday, with several of the new infections happening in the copper sector.

Canada’s Trevali Mining (TSX: TV) said on Friday that a total of 82 workers had tested positive for covid-19 at its Santander mine, which would remain halted. The company had suspended operations in June after 19 workers tested positive. The number of confirmed cases now comprises nearly 30% of the total workforce of the mine.

London-based Hochschild Mining (LON: HOC) halted on Monday operations at its flagship Inmaculada silver mine, after “a number” of workers there tested positive for coronavirus. The mine will now operate with a reduced workforce running care and maintenance activities at the site. The company expects to resume operations as soon as a safe and healthy workforce can return to site.

Hochschild’s Pallancata silver-gold mine in Peru and the San José mine in Argentina remain open, it said.

Japan’s Mitsui Mining and Smelting seems to have the situation under control as it said on Monday it had resumed operations at its two zinc mines in Peru last week. The company’s Huanzala and Palka mines had been suspended for more than three months to limit the spread of the novel coronavirus.

The death toll from the virus in Peru, the world’s no. 2 copper producer, now stands at 10,589, the 10th-highest in the world, based on data from Johns Hopkins University. In terms of confirmed cases, the Andean country is the fifth-highest in the world.

Key week for copper

Disruptions related to pandemic situation in Peru as well as in neighbouring Chile, the world’s largest copper producer, have been propelling prices for the metal in recent weeks.

After hitting a five-month high last week, copper was trading close to that milestones again on Monday thanks to growing optimism about demand in top consumer China and concerns about the spread of covid-19 in the world’s largest producers.

Benchmark copper on the London Metal Exchange traded up 1.5% at $6,105 a tonne in official rings. Then industrial metal, also needed in the making of electric vehicles, hit $6,120 a tonne last week, the highest since Jan. 22.

Analysts believe that copper will extend gains above $6,000 for days, especially after state-owned Codelco suspended expansion work at El Teniente, its largest copper mine.

It means that the world’s largest copper miner is now running parts of its two flagship divisions (Chuquicamata and El Teniente) at reduced levels. Additionally, work at all of Codelco’s Northern District projects including Chuquicamata, Gaby, Ministro Hales and Radomiro Tomic have now been temporarily suspended.

While Chile managed to maintain output at high levels in May, curtailments and shift-pattern changes have begun to affect the country’s overall output. A clear view into how it fared in June comes on Tuesday, with monthly export data.

“The risks are clearly mounting and we believe completion timelines on the aforementioned structural projects are set to be further delayed,” said Colin Hamilton, analyst at BMO Capital Markets, in a note to investors.

There’s also important technical action in the charts, with spot copper now trading higher than in the futures market. In addition, the metal’s 50-day moving average is now fast closing in on its 200-day counterpart and may move above it in the coming days, Bloomberg analysts said on Monday.

The pattern, known as “golden cross”, normally anticipates further gains in an asset. The last time investor watched it  unfold for copper was early this year, just before it collapse due to the spread of the novel coronavirus.

Australia’s Century zinc mine begins commercial production

New Century Resources (ASX: NCZ) has kicked off commercial production at its zinc mine in Queensland, Australia, amid forecasts that see prices for the metal climbing in the coming months as restrictions related to the covid-19 pandemic ease.

The Melbourne-based zinc producer, which bought the then mothballed Century mine in 2016, said operations had not been affected by the global pandemic. Instead, Century delivered record production of 34,500 tonnes in the April-June period.

It was the seventh consecutive quarter of increased output and lower costs at the mine, said managing director Patrick Walta.

“From a market perspective, despite the zinc price remaining near four-year lows, a strong decline in spot treatment charges in the quarter has improved conditions for zinc miners,” he noted.

“The company also sees potential for a price rebound due to additional metal demand from increased global infrastructure development linked to covid-19 government stimulus,” Walta said.

Century was the world’s third largest zinc mine prior to its closure in 2016, churning out an average 475,000tpa of zinc and 50,000tpa of lead in concentrate products over its history.

Goro acquisition

Century entered in May into a 60-day exclusivity period with Vale (NYSE: VALE) to complete due diligence and negotiate the acquisition of 95% the Brazilian miner’s nickel and cobalt operations on the Pacific island of New Caledonia.

Vale Nouvelle Calédonie (VNC) owns and operates the troubled Goro nickel-cobalt mine on the French territory, which has proven a financial burden for Vale since it began operations two years behind schedule in 2010.

According to New Century, integrating Goro into its portfolio would make it a major supplier of nickel and cobalt sourced from outside the Democratic Republic of Congo. The African country is currently the world’s biggest supplier of cobalt for the electric vehicles (EVs) sector.

Details on the transaction will be released in the second-half of July, Century said.