Gold Stocks and ETFs Jump while Nickel Miners Face Questions

By CanadianMiningReport.com Staff Writer / June 21, 2019 / Article Link

With gold finally showing signs of going on a rally, speculation over the effect this could have on junior gold stocks dominated the mining news this week.

 

In an interview with Kitco News, Randy Smallwood, CEO of Wheaton Precious Metals (TSX: WPM), said the latest move to over $1,400 an ounce could spark further investment in gold exploration and mining if it is sustained.

 

Blaming the relatively lacklustre price performance of recent years for what he called a dearth of investment capital particularly among junior explorers and mid-tier producers, Smallwood said that $1,400 is the level the mining industry needs to see to start investing in itself again. 

 

“The industry has not invested in itself because prices have been too low,” he said. “At $1,400 you will see companies take on some production risks to bring some projects on line.”

 

As spot prices spiked through $1,400 on Thursday, gold stocks large and small jumped higher on stock exchanges around the world. The majors were up, but mid-caps and juniors fared even better, with Canada’s Yamana Gold (TSX - RYI) leading the charge with a 9% advance, for a market cap of $2.3 billion. 

 

On the Schaefer’s Investment Research website, Emma Duncan noted that certain Gold ETFs were getting a lift from the gold price - as one would expect - but also that some traders were making bold longer term calls in favour of the sector.

 

“VanEck Vectors Gold Miners ETF (GDX) options are on fire today, with the exchange-traded fund's (ETF) calls flying off the shelves,” she said.

 

Among the junior gold mining news that goes beyond the price speculation, Russia-based Nordgold entered an option agreement on the Arakaka gold project in Guyana, under which it can acquire 100% of the project from Australia’s Alicanto Minerals Ltd (ASX: AQI) for a total of $8 million. The Arakaka project is a permit area totalling 300 square kilometres in Guyana’s Northwest Mining District.

 

Meanwhile, British stock market regulators gave Canadian giant Barrick Gold a further three weeks to cement its all-share bid for the 36% of Acacia it does not already own. It comes as the war of words between Tanzania-focused Acacia and Barrick hotted up, with Barrick releasing a statement criticising the former’s mine plans.

 

Reminding us that there’s more to mining than gold, Ivanhoe Mines (TSX: IVN) announced that “excellent progress” is being made in the construction of the Kakula Copper Mine, its six-million-tonne-per-annum operation in the Democratic Republic of Congo. Joint chairman Robert Friedland was very enthusiastic about the project, which recently received an additional C$612 million investment from Ivanhoe’s China-based backer CITIC Metal.

 

“With the initial mine development of Kakula soon to be fully financed, we now are focused on rapidly advancing the construction of surface infrastructure and the processing plant, to match the accelerating pace of development of the underground mine workings and to transform Kakula into one of the world’s greatest copper mines. The shallow, thick, high-grade nature of the orebody will allow us to ramp up production quickly,” Friedland, said.

 

Nickel stocks were also in the news, but for more controversial reasons, with Canada’s FPX Nickel Corp (TSX-V: FPX) pointing out that “much of the world's #nickel is sourced via questionable practices in developing countries.”

 

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With gold finally showing signs of going on a rally, speculation over the effect this could have on junior gold stocks dominated the mining news this week.

 

In an interview with Kitco News, Randy Smallwood, CEO of Wheaton Precious Metals (TSX: WPM), said the latest move to over $1,400 an ounce could spark further investment in gold exploration and mining if it is sustained.

 

Blaming the relatively lacklustre price performance of recent years for what he called a dearth of investment capital particularly among junior explorers and mid-tier producers, Smallwood said that $1,400 is the level the mining industry needs to see to start investing in itself again. 

 

“The industry has not invested in itself because prices have been too low,” he said. “At $1,400 you will see companies take on some production risks to bring some projects on line.”

 

As spot prices spiked through $1,400 on Thursday, gold stocks large and small jumped higher on stock exchanges around the world. The majors were up, but mid-caps and juniors fared even better, with Canada’s Yamana Gold (TSX - RYI) leading the charge with a 9% advance, for a market cap of $2.3 billion. 

 

On the Schaefer’s Investment Research website, Emma Duncan noted that certain Gold ETFs were getting a lift from the gold price - as one would expect - but also that some traders were making bold longer term calls in favour of the sector.

 

“VanEck Vectors Gold Miners ETF (GDX) options are on fire today, with the exchange-traded fund's (ETF) calls flying off the shelves,” she said.

 

Among the junior gold mining news that goes beyond the price speculation, Russia-based Nordgold entered an option agreement on the Arakaka gold project in Guyana, under which it can acquire 100% of the project from Australia’s Alicanto Minerals Ltd (ASX: AQI) for a total of $8 million. The Arakaka project is a permit area totalling 300 square kilometres in Guyana’s Northwest Mining District.

 

Meanwhile, British stock market regulators gave Canadian giant Barrick Gold a further three weeks to cement its all-share bid for the 36% of Acacia it does not already own. It comes as the war of words between Tanzania-focused Acacia and Barrick hotted up, with Barrick releasing a statement criticising the former’s mine plans.

 

Reminding us that there’s more to mining than gold, Ivanhoe Mines (TSX: IVN) announced that “excellent progress” is being made in the construction of the Kakula Copper Mine, its six-million-tonne-per-annum operation in the Democratic Republic of Congo. Joint chairman Robert Friedland was very enthusiastic about the project, which recently received an additional C$612 million investment from Ivanhoe’s China-based backer CITIC Metal.

 

“With the initial mine development of Kakula soon to be fully financed, we now are focused on rapidly advancing the construction of surface infrastructure and the processing plant, to match the accelerating pace of development of the underground mine workings and to transform Kakula into one of the world’s greatest copper mines. The shallow, thick, high-grade nature of the orebody will allow us to ramp up production quickly,” Friedland, said.

 

Nickel stocks were also in the news, but for more controversial reasons, with Canada’s FPX Nickel Corp (TSX-V: FPX) pointing out that “much of the world's #nickel is sourced via questionable practices in developing countries.”

 

Linking to an article in the Guardian newspaper highlighting the impact on local communities of Guatemala’s biggest nickel mine, FPX asked: How sustainable is this model? Presumably, the Vancouver-based junior nickel mining company is confident that its Decar Nickel District in central British Columbia will be up to higher standards.

 

nking to an article in the Guardian newspaper highlighting the impact on local communities of Guatemala’s biggest nickel mine, FPX asked: How sustainable is this model? Presumably, the Vancouver-based junior nickel mining company is confident that its Decar Nickel District in central British Columbia will be up to higher standards.