Tag: Metals & Mining

Metals & Mining Fourth Quarter 2023 Review and Outlook

Posted on by cpatches

Monday, January 2, 2024

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the bottom of the report for important disclosures

Relative performance. During the fourth quarter, mining companies (as measured by the XME) appreciated 14.0% compared to a gain of 11.2% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were up 15.2% and 17.6%, respectively. Gold, silver, and copper futures prices gained 11.0%, 7.0%, and 4.1%, respectively, while nickel and lead declined 11.2% and 5.5%. Zinc prices were flat. For the full year 2023, all indices were in positive territory, led by the XME which appreciated 20.1%, but underperformed the S&P 500 which gained 24.2%.

Precious metals outlook. Our outlook for precious metals and precious metals mining equities remains favorable. Factors supporting our view include: 1) the Federal Reserve appears to have reached the end of its tightening cycle, 2) heightened geopolitical uncertainty, 3) growth in U.S. deficit spending and national debt, and 4) increasing investments in gold by central banks. Based on these factors, along with the potential for lower interest rates and a weaker dollar, we think portfolio allocations to precious metals could increase. The futures price of gold rose 13.4% in 2023 and closed the year at $2,071.80 per ounce.

Outlook for industrial and battery metals. While slower economic growth could provide a headwind for industrial metals demand and prices, longer-term secular trends such as electrification remain supportive of supply and demand fundamentals for metals such as copper. Although the longer-term outlooks for battery metals such as lithium, nickel, and cobalt are constructive, the near-term outlook remains challenging due to unfavorable supply and demand fundamentals. In 2023, futures prices for battery grade lithium, nickel and cobalt fell 81.4%, 43.6%, and 44.2%, respectively. Lower near-term prices may slow new development making existing projects attractive and better positioned to take advantage of stronger pricing when demand inevitably accelerates.

Putting it all together. We think the precious metals mining sub-sector is poised for outperformance in 2024. While well-diversified portfolios should have exposure to precious metals, mining equities may offer a stronger current alternative to bullion. In our opinion, junior companies remain attractive based on valuation, and we expect industry consolidation to accelerate as senior producers seek to replenish reserves and resources.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest

Gold Glitters as Prices Continue Record-Breaking Surge

Posted on by slightbourne@noblecapitalmarkets.com

Gold prices have been on a dazzling run in recent months, with the precious metal notching consecutive monthly gains to reach new all-time highs. On Monday, spot gold prices topped $2,100 an ounce for the first time ever, hitting $2,110 before pulling back slightly. This adds to the previous record set back on Friday when prices exceeded $2,075, blowing past 2020’s earlier high point.

Analysts say gold still has room to run in 2023 and 2024 as key conditions line up to support further upside for bullion. Low interest rates, a weakening US dollar, rising inflation concerns globally, and an array of simmering geopolitical conflicts should all conspire to keep safe haven demand elevated.

“There is simply less leverage this time around versus 2011 in gold,” said Nicky Shiels of MKS PAMP, noting that the current dynamics put $2,200/oz within reach. Other experts concur, with UOB strategist Heng Koon How targeting $2,200 gold by end-2024, and TD Securities anticipating average prices around $2,100 in Q2 2024.

Fueling this gold fever has been robust central bank buying, especially across emerging markets. Recent data shows 24% of central banks worldwide intend to pad their gold reserves over the next year as economic uncertainty persists. With these institutions showing waning faith in traditional reserve assets like the US dollar, their bullion accumulation provides a sturdy pillar of support.

Geopolitical Flare-Ups Stoke Safe Haven Appeal

Mounting geopolitical tensions represent another propellant behind gold’s rise. The bloody conflict between Israel and Palestine has recently stoked investor fears, driving many towards gold’s relative stability. Looking ahead, strategists believe various other hotspots could flare up and lift bullion demand more.

Besides the Middle East, worsening frictions between China and Taiwan or a resurgence of the crisis in Ukraine could shock markets. And if the US gets dragged into any new foreign entanglements, it may have to ramp up defense spending and borrowing, potentially weakening both growth and the dollar.

With so many risks swirling, portfolio managers and retail buyers appear increasingly eager to hedge with gold. Notably, demand has climbed even as gold prices touched multi-year highs. This underscores bullion’s unique status as a tried-and-true safe haven asset.

Fed Policy Outlook Could Offer Further Boost

Though gold has powered higher despite a spate of Fed rate hikes, any change in this tightening cycle would provide another major catalyst. After lifting interest rates rapidly from near-zero, policymakers must now decide whether to keep tightening or ease off the brakes.

Several officials, including Governor Christopher Waller, have hinted rates may not rise much further if inflation keeps slowing as expected. Markets thus see potential Fed rate cuts arriving sometime in 2024.

If implemented, this dovish shift would likely hamstring the dollar and bond yields, stirring more demand for non-interest-bearing gold. Hence analysts view Fed pivots as a probable linchpin that keeps prices locked above $2,000 over the next couple of years.

With stars aligned for gold both fundamentally and geopolitically, all the ingredients seem in place for its dazzling run to continue. That leaves bulls dreaming ever more ambitiously of how high prices could yet soar. However, given gold’s inherent volatility, traders should steel themselves for pullbacks as well while enjoying the ride upwards.

Metals & Mining Third Quarter 2023 Review and Outlook

Posted on by cpatches

Monday, October 2, 2023

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the bottom of the report for important disclosures

Mining companies outperform the broader market. During the third quarter, mining companies (as measured by the XME) rose 3.3% compared to a decline of 3.6% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were down 10.6% and 9.6%, respectively. Gold, silver, and copper futures prices fell 3.3%, 1.6%, and 0.6%, respectively, while zinc and lead were up 8.7% and 6.2%. Gold was likely negatively impacted by the Federal Reserve’s higher rates for longer messaging coupled with a 3.2% increase in the U.S. Dollar Index. Year-to-date through September 30th, the XME, GDX, and GDXJ have all lagged the S&P 500 index return of 11.7%.  

Looking ahead to 2024. While we expected weakness in the second half of 2023, prices have remained relatively resilient, and we are increasingly bullish going into 2024. Factors supporting our view include: 1) the Federal Reserve appears to be nearing the end of its tightening cycle, 2) a new norm of heightened geopolitical uncertainty, 3) unsustainable growth in U.S. deficit spending and national debt, and 4) increasing investments in gold by central banks. Given the level of uncertainty reinforced by a dysfunctional U.S. political environment, we think portfolio allocations to precious metals could increase. While much will depend on monetary policy which appears to be working, we think the higher for longer mantra makes for nice messaging but actual policy will be data driven.

Outlook for industrial metals. While a potential economic downturn in the U.S. coupled with sluggish growth abroad could weigh on industrial metals demand and prices, longer-term secular trends such as electrification remain supportive of supply and demand fundamentals for metals such as copper. In the intermediate term, government support for infrastructure spending and strong demand from certain sectors such as aerospace, defense, and electronics are supportive of industrial metals.

Putting it all together. We think precious metals equities may be poised for outperformance in 2024. While well-diversified portfolios should have exposure to precious metals, mining equities may offer a stronger current alternative to bullion. In our opinion, junior companies remain attractive based on valuation and we expect industry consolidation to increase as senior producers seek to replenish reserves and resources. For industrial metals stocks, investors may need to be more selective by focusing on suppliers to end use markets with favorable demand growth fundamentals.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest
Neither I nor anybody in my household has a financial interest

Metalla and Nova Royalty Agree to $190 Million Merger

Posted on by slightbourne@noblecapitalmarkets.com

Metalla Royalty & Streaming Ltd. (TSXV: MTA) (NYSE American: MTA) and Nova Royalty Corp. (TSXV: NOVR) (OTCQB: NOVRF) have announced a definitive agreement to combine in an all-stock deal valued at approximately $190 million. The merger will create a larger royalty and streaming company focused on precious and base metals.

Under the agreement, Nova shareholders will receive 0.36 shares of Metalla for each Nova share they own. This represents a premium of 25% based on recent share prices.

The combined company will hold a portfolio of over 100 royalties and streams on mine projects operated by major miners like Barrick, Newmont, and Glencore. The deal is intended to boost scale, diversify assets, and enhance access to capital.

Nova recently conducted a strategic review process with the goal of maximizing shareholder value. After considering options, the Nova Board determined the merger with Metalla offered the best opportunity.

Both companies’ Boards have unanimously approved the transaction. It still requires shareholder and regulatory approvals before expected completion in late 2023. The merged entity will trade on the NYSE American exchange.

An investment firm called Beedie Capital is investing $15 million and expanding Metalla’s convertible loan facility by $35 million in conjunction with the deal. This will provide capital to fund further acquisitions and growth.

Brett Heath, CEO of Metalla, said the combination creates a clear path to becoming an intermediate royalty company. Nova interim CEO Hashim Ahmed noted the merger provides improved scale, cash flow, and trading liquidity.

The companies believe the increased diversification into copper along with gold and silver will give shareholders exposure to critical metals needed for the energy transition. According to management, the merged portfolio will have peer-leading growth potential.

Take a look at other companies in the materials and mining sector by exploring Mark Reichman’s coverage list.

Metals & Mining Second Quarter 2023 Review and Outlook

Posted on by cpatches

Monday, July 3, 2023

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the bottom of the report for important disclosures

Mining companies trail the broader market. During the second quarter, mining companies (as measured by the XME) declined 4.4% compared to a gain of 8.3% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were down 6.9% and 9.7%, respectively. Gold, silver, copper, and zinc futures prices fell 2.0%, 5.6%, 8.2%, and 15.6%, respectively, while lead increased 1.2%. Year-to-date through June 30, gold futures prices were up 5.7%, while silver was down 5.1%. Copper, lead, and zinc prices declined 1.40%, 3.1%, and 19.9%, respectively.

Precious metals headwinds. While gold prices crossed $2,000 an ounce during the second quarter on the back of turmoil in the banking sector, concerns moderated, and the resiliency of the U.S. economy seemed to favor risk-on assets. Additionally, rising short-term interest rates have provided investors with an alternative haven for their funds. During the January, March, and May Federal Open Market Committee (FOMC) meetings, the Federal Reserve served up three 25 basis point rate increases and paused in June keeping the target federal funds rate in the range of 5.00% to 5.25%. Expectations are for additional increases in 2023. Precious metals may be challenged as real yields rise, along with the potential for a stronger U.S. dollar. While we expect precious metals prices to remain at levels that are economic for producers, we expect some weakness in pricing during the second half of 2023.

Outlook for industrial metals. While the long-term investment case for owning industrial metals mining companies remains favorable, it is still too early to offer a bullish call due to near-term concerns about economic growth in the U.S. and abroad. Longer-term secular trends, including electrification, remain supportive of supply and demand fundamentals for copper.

Putting it all together. While well-diversified portfolios should have exposure to precious metals, mining equities may offer a stronger current alternative to bullion. In our opinion, junior companies remain attractive based on valuation, and we expect industry consolidation to increase as senior producers seek to replenish reserves and resources. Longer-term, global central banks could increase gold reserves as they seek to move away from their reliance on the U.S. dollar as a reserve currency which could be supportive of gold prices. While the near-term outlook for industrial metals could be negatively impacted by near-term macroeconomic factors, an eventual return to economic growth could result in strong prices due to potential supply and demand imbalances.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to Noble Capital Markets, Inc. by an investment advisor, that advisor may receive a benefit in respect of
transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by Noble Capital Markets, Inc.. This report may not be reproduced, distributed or published for any purpose unless authorized by Noble Capital Markets, Inc..

RESEARCH ANALYST CERTIFICATION

Independence Of View
All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation
No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public
appearance and/or research report.

Ownership and Material Conflicts of Interest

Metals & Mining First Quarter 2023 Review and Outlook

Posted on by cpatches

Monday, April 3, 2023

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the bottom of the report for important disclosures

Gold shined during the first quarter. During the first quarter, mining companies (as measured by the XME) appreciated 6.7% compared to a gain of 7.0% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were up 12.9% and 10.8%, respectively. Gold, silver, and copper futures prices gained 7.8%, 0.5%, and 7.4%, respectively, while lead and zinc declined 3.6% and 4.3%, respectively. Despite continuing rate hikes by the Federal Reserve, turmoil in the banking sector, along with the market’s speculation of its potential impact on Federal Reserve monetary policy, enhanced gold’s appeal. Weakness in base metals, with the exception of copper, may be attributed to slowing economic growth and the potential for an economic downturn. In 2022, the price of copper declined 13.2% and so it was likely due for a rebound.

Further upside to the gold price? Assuming worries about the U.S. banking system abate, we think gold could give up some of its recent gains although we remain constructive on precious metals. After peaking in early March, the yield on the 10-year treasury note and the U.S. Dollar Index reversed course with the yield on the treasury ending at 3.49% compared to 3.88% at the end of 2022 and the U.S. dollar Index down 1% during the quarter. Most of this was the result of the recent banking turmoil. While we continue to believe interest rates could peak by mid-year, the big question is how long before they begin easing rates. This will obviously depend on economic conditions, the inflation rate, and employment.

Outlook for industrial metals. While the long-term investment case for owning industrial metals mining companies remains favorable, it may be too early to offer a bullish call due to near-term concerns about economic growth in the U.S. and abroad. During the recent Prospectors & Developers Association of Canada (PDAC) convention, key themes in the keynote presentations were electrification and growing demand for critical minerals and battery metals, including cobalt, copper, lithium, magnesium, and nickel, critical to securing a decarbonized future with broad applications in electric vehicles, charging infrastructure, solar power, and wind turbines.

Conclusion. We think precious metals mining companies, notably juniors, continue to offer attractive return potential. While the near-term outlook for industrial metals could be negatively impacted by near-term macroeconomic factors, an eventual return to economic growth could result in strong prices due to potential supply and demand imbalances.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc.(“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results. Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. (“Noble”). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst’s judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.
The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the “Company”) covered by the Noble Research Division and referred to in this research report.
Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis.
Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.”
FINRA licenses 7, 24, 63, 87

WARNING

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LithiumBank Resources (LBNKF) – An Emerging Lithium Producer in Western Canada

Posted on by cpereira@noblefcm.com


Thursday, November 17, 2022

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Initiating with an Outperform rating. We are initiating coverage of LithiumBank Resources Corp. with an Outperform rating and a price target of US$2.75 or C$3.65 per share. LithiumBank is advancing its flagship Boardwalk lithium brine project and is developing several other projects, notably Park Place and Kindersley, in parallel. The company expects to complete a preliminary economic assessment (PEA) for the Boardwalk Project by year-end 2022 to be published in early 2023. Boardwalk could go into production as early as 2026. We have assumed the company is able to upgrade the resource to support 30,400 tonnes of lithium carbonate equivalent production per day over a 20-year life.

Significant indicated and inferred resources. In November 2022, LithiumBank released results from an updated NI 43-101 mineral resource estimate for the Boardwalk project. Resources include 393,000 tonnes of indicated lithium carbonate equivalent resources grading 71.6 milligrams per liter lithium and 5,808,000 tonnes of inferred lithium carbonate equivalent at a grade of 68.0 milligrams per liter lithium. We think management has a credible path to upgrade additional resources to measured and indicated, along with adding resources.


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