Pinnacle Activity Ticker
POST-PDAC Timely Cu Commentary & RDK
The Metals & Mineral Overview Volume 23 of March 12, 2012 by Terence S Ortslan is a 36 page independent analysis worth reviewing in whole. It is written via TSO & ASSOCIATES CP 99, Succ. St. Jacques Montreal, Quebec, Canada H3C 1C5 Tel 514-844-8344 firstname.lastname@example.org ...worth a subscription to some of you or as a referral source when appropriate.It is not just about Cu either!
Some highlighted topic matter is as follows: STRATEGY & HIGHLIGHTS: The mining industry challenges with excess volumes in some commodities, higher operating and capital costs and a change in the mineral policy scene are secular issues. And China is being overplayed! PDAC with another record attendance has become an overwhelming event for most to participate and visit. The multiple sessions, dozens of agencies, governments and hundreds of suppliers and companies, may as well be a month long EXPO! PDAC is a success story of Canadian mining and it is amazing how few had been attending for the first time! Will the euphoric conditions continue? Well, there are serious underlying currents which will require a re-assessment. The mining landscape as we know it has withdrawn the welcome mat to the industry. This change is entering a permanent phase.
Indonesia, Guinea, Democratic Republic of Congo (DRC), Zambia and even Quebec -- the mining and resource gravy train has gathered too much steam for governments to grab more revenue for themselves; some for “social justice”. The host country change of rules and regulations for higher corporate income taxes, duties, VAT, royalties and project & property ownership and even renegotiating the existing mining contracts, are all “worrisome” background fundamental issues. The favorable & welcoming trend that started in the early to mid-1980’s with Chile, Peru, Mexico, Brazil etc., typical strong mining culture countries, has been regressing and it will get worse! It is simply over!!! Mining companies and their projects are being welcomed to most countries “conditionally”!!
The host countries, most of them are already in financial difficulties, will change the pie chart distribution more for their benefit irrespective of the risk profile of the mining sector which requires a lot of skills, equity capital, project financing, uncertain price profile, shareholder demands, just to list a few. In short, with unfavorable host country policies added to the equation, the outlook for the mining and metals scene continues to remain worrisome. (***Boy doesn't that bode well for companies with blossoming projects in friendly jurisdictions like RDK in Arizona or what. All eyes will be looking to gems right in our own North American backyard ramping up their 43-101 safe haven resources be it Cu , Mo, Au , etc. Pinnacle really did their homeowork on RDK especially back-checking their research with the 2 editions of the CIBC World Markets Copper Juniors and M&A Candidate Reports***) Back to the report....
The corporate M&A activity will continue for the foreseeable future and this will perk up equity values occasionally. Trading of equities in the market place in an active matter continues without any consideration of long term apparent values. ...(***We've had RDK intorduced to us for DD for all the right reasons most notably the friendly jurisdiction tag and if they indeed come out with a big boost in their pending 43-101 estimated before the end of April....then Pinnacle pointed us in the right direction at a critical juncture indeed. I take heart that RDK is trading only at its $0.75 PP from spring 2011 that raised them $21M which presumably is leading towards the pending 43-101 update. this was when Cu fell out of bed for a short term. Do some intense timely homwork everyone. This report is indepth and needs a couple of read throughs to benefit from info provided., well worth the exercise.***) More: COPPER: Spot treatment and refining charges (TC/RCs) for copper concentrates have risen by two thirds since the end of 2011 as the outage at Glencore¡¦s Pasar refinery in the Philippines has freed up the supply of material.
The restart of the Grasberg mine in January also helped ease the supply balance, but with fresh violence erupting on site last month, smelters are questioning whether the market will tighten once more. The news is yet to have a bearing on spot TC/RCs of around $50 per tonne/5 cents per lb for clean concentrates. TC/RCs were around $30/3 cents per lb at the end of December, but improved after production was halted at Pasar and the Saganoseki refinery in Japan following fires at both plants in January. Aurubis and Jiangxi Copper agreed to benchmark copper TC/RCs of $63.5 per tonne/6.35 cents per lb with Freeport McMoran in December and the smelter officials indicated that the spot market may continue to move towards benchmark terms while Pasar is offline and copper prices remain high. However, TC/RCs may come under pressure later in the year as Pasar reopens, while the potential restart of Doe Run Peru¡¦s La Oroya plant could also increase competition for concentrates. The Peruvian polymetallic smelter complex shut in 2009 after Doe Run Peru ran into financial problems.
In September of that year, the Peruvian government ruled that Doe Run must complete a $163 million clean-up operation at the plant within 30 months. La Oroya is a natural home for blended concentrates from Mexico and Peru, which since its closure have been moving to China. If the smelter is brought back online that could leave buyers of Mexican and Peruvian material in China searching for new sources of supply. Spot copper premiums in Shanghai are likely to remain under pressure for the remainder of the first quarter as hidden stockpiles balloon and consumers refrain from purchasing. Premiums for refined copper delivered to Shanghai have dipped as low as $50 per tonne, amid signs that the Chinese market is failing to digest high import volumes in previous months. Off-exchange stockpiles of copper may amount to as much as 600,000 tonnes, according to estimates nearly three times the amount held in official Shanghai Futures Exchange warehouses.
Premiums for copper delivered to Shanghai are at $50-90 per tonne, compared with a high of $120-150 per tonne in the fourth quarter last year. European copper premiums have risen by about $20 per tonne in the past month, due to low stocks, tight forward availability and stronger than anticipated demand. While Shanghai stocks have swelled to ten-year highs, LME stocks in Rotterdam have fallen to the lowest level since August; LME copper spreads have tightened since the start of the year, while Shanghai Futures Exchange contracts have traded in a broad contango; Shanghai premiums have dropped 46% since the start of the year, while Rotterdam premiums have jumped 57%. (***Lots that I cannot cut and paste, just too much info, and this posting keeps getting hung up as a result but hopefully the snippets above help you to consider the above source for inclusion into your various sources of Due Diligence Materials. Really straight up discussion.. Hard not to be bullish on RDK going forward.***)