News

Lithium developer Liontown Resources (ASX: LTR) continues to attract attention from the bigger end of town, with two initiation reports since the start of July.

Macquarie Research initiated coverage with an Outperform rating (see last week’s story in our FitzGerald column) and a $1.05 valuation, saying that the company’s flagship Kathleen Valley lithium-tantalum project in WA has the potential to produce ~700ktpa of spodumene, a scale large enough to underpin a fully integrated lithium hydroxide refinery. “Kathleen Valley is one of the largest undeveloped spodumene resources globally and the largest not tied to off-take and joint venture agreements,” Macquarie said.

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Investors caught a glimpse of the elephant in the room this week as inflation in the U.S. bolted to a 13-year high in June, triggering a predictable response from gold which rose to a six-week high and looked poised to keep going.

The return of gold to a price above $US1825 an ounce followed news on Tuesday that inflation in the U.S. hit an annualised 5.4% last month, triggering a debate about whether the increase was temporary or the start of a significant upward trend. The only answer to the inflation question, at this stage, is that the jury of professional opinion is out. Jay Powell, head of the U.S. central bank, reckons the June number was a blip, but if he’s wrong then gold could take off, as it does whenever there’s an inflation scare and fear of a collapse in the value of money.

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Plus, Macquarie backs up bullish lithium call with initiation note and ‘outperform’ on Liontown and newly-listed Ozz to hit the exploration ground running.

It’s a bit hard to know what’s more interesting – Bellevue (BGL) cranking up the resource estimate at its namesake gold project to 3 million ounces or heavyweight BlackRock taking on the 6% short position in the stock through steady purchases. The resource upgrade is in the here and now and has an immediate valuation implications, while BlackRock versus the shorts could end up anywhere, although there are signs the shorts are already beating a retreat.

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Gold reclaimed the high ground this week as U.S. interest rates slipped on fears that the global economy is not recovering as quickly as hoped, or that a significant correction is brewing – or both.

Look anywhere in markets today and there are warnings flashing and value disconnections caused by the inflationary effect of cheap money which has created a hothouse economic effect and asset bubbles. A good example of contradictory pricing is that while lower interest rates and slower growth might have helped gold move back above $US1800 an ounce (before easing) it is a lot harder to explain copper, nickel and iron ore rising at the same time.

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Former Orica boss Alberto Calderon has predicted a bright future for gold as a store of value in a world where central banks keep “printing money like there is no tomorrow” (reports The Australian Financial Review).

Mr Calderon is taking the reins as chief executive at AngloGold Ashanti just a month after quitting as boss of Orica. Johannesburg-based AngloGold Ashanti said Mr Calderon would bring two decades of executive leadership experience in the global mining sector to its operations in Africa, the Americas and Australia. The world’s third-biggest gold miner had been on the hunt for a new chief executive since the departure of Kelvin Dushnisky last year.

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Perth-based explorer Trigg Mining (ASX: TMG) has moved closer to progressing its wholly-owned Lake Throssell sulphate of potash project in Western Australia with the completion of a critical lake trenching and test pumping program (reports Small Caps)

Brine pumping trials from test trenches at the project have demonstrated the abstraction potential of the lake surface aquifer, which would be the target for initial production from a trench network. The trials aimed to determine the drainable porosity (specific yield) and hydraulic conductivity properties for the upper section of the aquifer. Two test trenches (each 100m long) and seven test pits were distributed across the current resource, each comprising a small pumping trench up to 9m long and an adjacent monitoring pit.

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Australia's big miners are cheap on a global basis and may drive the S&P/ASX 200 index as high as 8,000 points in the second half of 2021, according to Mike Aked, Director of Research for Australia at Research Affiliates (reports The Australian).

While banks have surged this year because of very low interest rates and the resulting rise in property prices Australia-wide, he says they are expensive on a global basis. "Because our financial companies are expensive on a global basis and our miners are cheap, we would expect that Australian resource companies are much more likely to drive our local market higher over the second half of 2021, to fresh all-time highs over 7,400, possibly rising to as high as 8,000 given the momentum in commodity prices," he says.

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Sandfire Resources says it remains on track for first copper production from its $US279 million ($364m) Motheo mine in Botswana in early 2023 after securing a mining licence for the proposed operation (reports The West Australian).

The permit comes ahead of an updated mineral resource for the company’s satellite A4 deposit in coming weeks, which will allow Sandfire to boost throughput from Motheo from 3.2 million tonnes per annum to 5.2mtpa. A definitive feasibility study for the project in December 2020 estimated Motheo’s T3 deposit would be a 12.5-year operation, producing on average 30,000t of copper and 1.2 million ounces of silver a year over the first 10 years of operations, with relatively low capital intensity and robust operating margins.

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