FN Media Group Presents Oilprice.com Market Commentary
London – August 12, 2021 – Asset bubbles may now be too big to burst, creating a situation that Central Banks around the world might be unable to control. If it all comes crashing down, we think there’s only one place to be …Gold. Mentioned in today’s commentary includes: Sociedad Química y Minera de Chile (NYSE:SQM), Freeport-McMoRan (NYSE:FCX), Newmont (NYSE:NEM), Yamana Gold (NYSE:AUY), First Majestic Silver (NYSE:AG).
The precious metal could rise as high as $3,000 to $5,000 per ounce in the next 3-5 years. That’s according to the same fund manager who predicted the 2016 gold rally.
As cited by Bloomberg, Diego Parrilla, manager of the $250-million Quadriga Igneo fund that called the last gold rally, massive long-term damage has been caused by wildly loose monetary and fiscal policies, and everyone is underestimating the huge risk as central banks unwind stimulus, with assets soaring amid artificially low interest rates.
“Central bank money printing isn’t really solving problems, it’s delaying the problem,” Parrilla told Bloomberg. “Gold will benefit purely from being a physical asset that you cannot print.”
But the rally may start even sooner …Goldman Sachs is expecting gold prices to break out of their tight trading range this year, with inflation worries stoking demand. Goldman has a $2,300 price target on gold. That’s a 22% rally from current levels.
That’s what is said to happen when you print money like mad. Stocks and assets rise dramatically … but without any link to true fundamentals. And if that all comes crashing down, a junior mining stock like Starr Peak Mining Ltd. (STE.V; STRPF), which has recently doubled its drilling program amid a potential gold rush in Quebec after it found indications of gold–and more.
A Basket of Base Metals
In this atmosphere, it’s hard to imagine much that is better than gold. But there may be something: It’s a Volcanogenic Massive Sulphide, or VMS, deposit–a basket of precious and base metals–many of which are part of today’s major commodities surge.
Zinc is priced near multiple-year highs, despite Chinese attempts to cool the situation down ..Silver prices are set to rally–again …Copper prices have been on a run, with record highs, with only a recent China slowdown managing to pump the brakes a bit. And of course, gold.
Add all of this up and it’s clear why VMS deposits could make a junior mining company even more valuable. They aren’t just wonderfully diverse, but they also give miners long-term production potential.
Why? If you take Australia’s Kidd Mine–a famous VMS deposit–and look at those numbers, it becomes clear why these are the number one plays in the discovery path: Since 1966, the Kidd Mine has produced 9 million tons of zinc, over 3.4 million tons of copper, and 12,000 tons of silver. That’s $27 billion in zinc at today’s prices, $32 billion in copper and $6.6 billion in silver.
So, not only is Quebec one of the most promising venues in the world for potential VMS deposits (not to mention gold, alone) …But Starr Peak (STE.V; STRPF) has discovered an indication of just that. And the company reports it only took two 2 drills to find it.
Maiden Drills Surprised Investors
Starr Peak is an early stage exploration play. Some investors were fairly confident going into this one because they had been watching Amex Exploration, which made a high-grade gold discovery in 2019, right next to the past-producing Normetal Mine.
Now, the Normetal Mine has historically produced ~10.1 million tonnes of 2.15% copper, 5.12% zinc, 0.549g/t of gold and 45.25 g/t of silver. So, when Starr Peak stepped in and acquired the land adjacent to Amex’s … and then bought the Normetal Mine itself (along with a string of other acquisitions), it started to attract attention. Starr Peak started drilling in January this year at its NewMetal property.
In March, it released its first results, showing large intervals of high-grade sulfide mineralization.
In May, they raised the stakes significantly, with drilling results indicating a potential VMS deposit, with rock containing multiple base metals, including zinc, copper, silver, and gold.
Then, in July, the best, highest-grade results yet, intersecting mineralization in every single hole:
- Upper Zone (above 400m vertically)
o STE-21-09: 8.30 m of 10.09 % ZnEq including 2.70 m of 24.44 % ZnEq
o STE-21-17: 11.00 m of 9.01 % ZnEq including 3.00 m of 16.56 % ZnEq
o STE-21-27: 20.55 m of 7.04 % ZnEq including 5.10 m of 11.09 % ZnEq
o STE-21-29: 15.55 m of 9.94 % ZnEq including 10.10 m of 13.16 % ZnEq
- Deep Zone (below 400m vertically)
o STE-21-14: 6.65 m of 18.07 % ZnEq which includes 1.05% Cu
o STE-21-21: 8.70 m of 8.82 % ZnEq including 2.15 m of 13.38 % ZnEq
After intersecting high-grade gold, silver, copper, and zinc on its first two drills at the past-producing mine it acquired earlier this year, the company looks to be fast-tracking expansion.
In May, it expanded drilling from 5,000 meters to 20,000 meters. In late July, when it announced its highest-grade result to date, Starr Peak said it would double drilling, to 40,000 meters.
When a company expands its drilling campaign to this effect, it tells us a lot about their level of confidence; and in this case, the VMS indications so far may be reason enough. VMS deposits occur along tectonic plate boundaries, and finding one of these deposits puts Starr Peak in a position to become rich in metals that will continue to increase in value over time.
Results, Results, Results
Starr Peak (STE.V; STRPF) has proved to be clever with its decision to purchase the land adjacent to where Amex Exploration made their huge discovery. So far they have made some promising findings and based on their investments and efforts, they are quite confident with what they hope to continue to find.
- Starr Peak now has over 2,800 hectares of highly prospective gold property, including a past-producing mine
- It’s operating at a 98% hit rate for its drilling and has landed on high-grade indications of a potential VMS deposit, which position it to be very attractive to major miners combing wildly untapped Quebec for a juicy basket of metals
- It’s just added significantly to its drilling for a second time from 40,000 meters to 60,000 meters based on its positive results so far, and it’s fully funded to keep drilling (with CAD$7.5 million in the bank as of July 22nd, 2021)
- Amex earned early-in shareholders tons of returns, Starr Peak is setting themselves up for a potential repeat–or better.
This is an early-stage exploration play, but so far, it’s looking like one of the most exciting gold+ narratives we’ve seen in a very long time. It’s high-risk, high-reward, but with each drill hole, Starr Peak is further de-risking at a relatively fast pace.
Gold Majors Are Making Big Moves
Sociedad Química y Minera de Chile (NYSE:SQM) is a Chilean company that has been in operation for over 100 years and operates the most profitable commercial mine in the country. SQM produces more than 55 minerals, including lithium, iodine, potassium nitrate and copper. The company’s headquarters are located on Avenida Kennedy, Santiago which was once an industrial area of the city with as many of 300 factories built there during its heyday between 1880 to 1930s.
Sociedad Química y Minera,signed in December a long-term supply deal with LG Energy Solution, which in turn supplies batteries to carmakers such as Tesla and GM. Under the deal, SQM will supply battery-grade lithium carbonate and lithium hydroxide to LG Energy Solution between 2021 and 2029. Sociedad Química y Minera sees the lithium industry growing at around 20 percent per year in the long term.
Freeport-McMoRan’s (NYSE:FCX) roots date back to 1871, when it was founded as the Arizona Mining Company. In 1928, after experiencing a number of name changes and acquisitions, the company became Freeport-McMoRan Inc. While it’s primarily known for its copper production, it also produces gold. In fact, its Grasberg mine in Indonesia holds of the world’s largest deposits of copper and gold. But that’s just scratching the surface of the miner’s global assets. Freeport-McMoRan also has extensive operations across the Americas, including mines in Arizona, Mexico and Peru.
The miner has long been recognized as a leader in safety practices and environmental stewardship with its sustainable development initiatives. The company is also committed to protecting human rights within their supply chain through an aggressive anti-corruption policy that includes detailed reporting on progress made towards these goals.
Following its acquisition of Goldcorp, Newmont (NYSE:NEM, TSX:NGT) has now become one of the world’s largest gold producers. It is clear that this company knows how to produce and market gold on a large scale. The company also owns several mining operations in North America, Australia, and Asia Pacific regions.
In addition to producing and marketing their own mined resources, Newmont Goldcorp offers consulting services where they provide guidance on exploration projects around the globe. This company is an industry leader in exploration both domestically and abroad with offices located in 12 countries across 5 continents!
Yamana Gold (NYSE:AUY, TSX:YRI), is a well-known gold mining company, with operations in Brazil and Argentina. The company has been producing gold for over 50 years and operates two mines: the Canadian Malartic mine in Canada and the Minera Florida mine in Chile. It also owns three other properties: Agua Rica, Tapada do Norte, and Caiena.
Earlier this year, Yamana signed a deal with industry giants Glencore and Goldcorp to develop and operate another Argentinian project, the Agua Rica. Initial analysis suggests the potential for a mine life in excess of 25 years at average annual production of approximately 236,000 tonnes (520 million pounds) of copper-equivalent metal, including the contributions of gold, molybdenum, and silver, for the first 10 years of operation.
First Majestic Silver (NYSE:AG, TSX:FR) is an exploration and development company with operations in Mexico and Nevada. First Majestic Silver has been developing the San Jose mine for over 20 years, and it is now one of the world’s largest silver producing mines. With a team of experienced geologists, engineers, metallurgists, miners and other professionals, First Majestic Silver strives to develop high-quality resources that maximize shareholder value.
First Majestic Silver’s goal is to provide shareholders with a secure investment in precious metals while maximizing profitability for each project. They are committed to enhancing economic growth by creating jobs through sustainable mining practices which will contribute positively to their local communities as well as society at large.
By. Tom Kool
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that prices for gold, silver, copper, zinc and other base metals will retain their value in future as currently expected, or could continue to increase due to global demand and political reasons; that Starr Peak can fulfill all its obligations to acquire its Quebec properties; that Starr Peak’s property can continue to achieve drilling and mining success for gold and other metals; that historical geological information and estimations will prove to be accurate or at least very indicative; that high-grade targets exist; that Starr Peak will be able to carry out its business plans, including future exploration and drilling programs; that the preliminary drilling results will be confirmed as further exploration continues; that the lab results from Starr Peak’s initial exploration program will confirm evidence of a significant VMS deposit; that Starr Peak’s exploration results will gain the attention and interest of larger mining companies and investors; that Starr Peak’s exploration results will continue to show promising results justifying ongoing exploration and possible development efforts. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that politics don’t have nearly the strong effect on gold and other base metal prices as expected; that demand for base metals may not continue to increase; that the Company may not complete all its announced mineral property purchases for various reasons; that the Company may not be able to finance its intended drilling and exploration programs; Starr Peak may not raise sufficient funds to carry out its business plans; that geological interpretations and technological results based on current data may change with more detailed information or testing; that the lab results from Starr Peak’s initial exploration program may not support evidence of a significant VMS deposit; that the preliminary drilling results may not be confirmed during further exploration efforts; that Starr Peak will fail to gain the attention and interest of other mining companies and investors; that Starr Peak’s exploration results may fail to find additional promising results justifying ongoing exploration and/or development efforts; and despite promising results from drilling and exploration, there may be no commercially viable minerals or ore on Starr Peak’s property. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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