Weekly Nugget

Mining News Roundup, Feb 3 2021

Mining billionaire Gina Rinehart buys into a German lithium project being developed to bring the battery chemical to Europe for the continent’s emerging EV auto sector.

Australian Mining Billionaire Targets German Lithium Project for Development

Mining billionaire Gina Rinehart buys into a German lithium project being developed to bring the battery chemical to Europe for the continent’s emerging EV auto sector

Rinehart’s Hancock Prospecting invested A$120 million (US$92 million) in Vulcan Energy Resources Ltd. (ASX: VUL), with the proceeds for development of the Offenburg lithium project.

Vulcan hopes to benefit from rising demand for lithium in Europe, which is trying to build a local battery-manufacturing industry to reduce dependency on Asia. 

The company’s pre-feasibility study values its lithium resources near Offenburg at 2.8 billion euros (US$3.4 billion). It plans to have a definitive feasibility study by 2022.

Vulcan claims it can produce battery-grade lithium without emitting carbon dioxide by extracting lithium using a geothermal power plant in southern Germany.

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USGS: US Mines Produced $82.3 billion in Minerals in 2020

The United States Geological Survey “USGS” published its annual survey of mineral production. US mines produced approximately $82.3 billion in minerals in 2020, about $1.5 billion lower than the 2019 revised total of $83.7 billion. 

The estimated value of U.S. production of industrial minerals in 2020 was $54.6 billion, approximately 4% less than that of 2019 while metal mine production in 2020 was estimated to be $27.7 billion, 3% higher than in 2019.

The main metals produced in 2020 were gold (38%), copper (27%), iron ore (15%) and zinc (6%).

The report also revealed that the US relies on foreign sources for many raw and processed minerals. In 2020, imports made up more than one-half of U.S consumption for 46 nonfuel mineral commodities, and the U.S. relied entirely on imports for 17 of those. 

Many of these imported minerals are key materials for renewable energy generation and storage, and for infrastructure technologies.

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Silver Squeezed and Juiced: Silver Companies Briefly Benefit from Retail Market Enthusiasm

Silver mining companies are giving back double-digit share price gains from Monday trading as online retail investors floundered to sustain interest on the back of a Gamestop-induced market raid. 

TD Securities commodity strategist Daniel Ghali in a note to clients said the attempted run-up of silver appears to be over, with Google searches trending lower, apparently defeated by more than adequate liquidity within the silver market.

However, he adds that fundamental forces should eventually support silver prices above US$30 an ounce, but it won’t be due to the squeeze.

“Well that was quick,” said Endeavour Silver CEO Brad Cooke in an email to a Toronto Star reporter.

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SilverCrest Plans Construction of Las Chispas Silver-Gold Project, Mexico

SilverCrest Metals (TSX: SIL, NYSE-AM: SILV) has released its feasibility and announced a positive construction decision for its Las Chispas silver-gold project. The company plans to construct a 1,250 tonne-per-day mine in Sonora, Mexico.

The feasibility study envisions an underground mine producing an average of 5.2 million oz. of silver and 56,000 gold oz. annually over an 8.5-year period at an average of 12.4 million silver-equivalent ounces per year, beginning in 2023. 

All-in sustaining costs are expected to average US$7.07 per oz. of silver-equivalent over the life of the mine. 

The feasibility study estimates at US$137.7 million in capital requirements, with US$123.9 million for sustaining capital over the mine life.

The after-tax net present value is estimated at US$486.3 million, based on US$19 per oz. silver and 1,500 per oz. gold and with a 5% discount rate, an internal rate of return of 52% and a one-year payback.

The company also announced a reserve estimate for Las Chispas. Proven and probable reserves total 3.4 million tonnes grading 461 grams silver per tonne and 4.81 grams gold per tonne (879 grams silver-equivalent per tonne) for a total of 94.7 million silver-equivalent ounces.

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