Tag: #AndrewHecht

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Energy Exclusive Interviews Junior Mining Oil & Gas

Andy Hecht – Oil & Gas, Supply-Side Inflation Q&A

Integrous- Oil & Gas- Drilling & Exploration- The Answer to Supply-Side Inflation

  • Crude oil at the highest price since 2008- Inventories and product prices support higher highs
  • Natural gas is also at a fourteen-year high- Inventories, and European prices support the continuation of a very volatile bull market
  • The four reasons for higher fossil fuel prices- SPR releases are a temporary band-aid
  • Drilling and exploration are the answer to supply-side economic woes
  • XOP outperforming the stock market in 2022- The trend is your best friend

Throughout most of 2021, the US Federal Reserve called the rising inflationary pressures “transitory.” Late last year, increasing consumer and producer price data convinced the central bank that the economic condition was not a temporary event. The Fed told markets it was preparing to shift to a more hawkish approach to monetary policy to address the economy’s demand-side pressures. The artificially low interest rates, liquidity, and government stimulus in 2020 and 2021 planted the inflationary seeds which sprouted during the second half of 2020, throughout 2021, and into early 2022.

In early 2022, the geopolitical landscape threw a curveball at the central bank when Russia invaded Ukraine, launching the first major war in Europe since WW II. Sanctions on Russia and Russian retaliation began to cause even more upside pressure on commodity prices as Russia is a leading producer of energy and other raw materials. China and Russia’s “no-limits” support agreement complicated matters, setting the stage for the invasion.

Crude oil and natural gas prices had already been rising by the end of 2021. The leading benchmark crude oil futures are the Brent and WTI contracts. After falling to a record low below zero in April 2020, nearby WTI crude oil futures at $75.21 per barrel. Brent futures fell to $16 per barrel, the lowest price of this century in April 2020, and closed 2021 at the $77.78 level.

Meanwhile, nearby natural gas futures dropped to $1.44 per MMBtu in June 2020 and were at the $3.73 level on December 31, 2021. The oil and gas futures markets had been rising, making higher lows and higher highs throughout the second half of 2020 and in 2021. In 2022, they took off on the upside, reaching fourteen-year highs.

Increasing inflation and post-pandemic demand created a bull market in crude oil and natural gas that turned into a perfect bullish storm in 2022. The war and a dramatic geopolitical shift made dynamics shift from demand to supply-side concerns. The Fed has few if any tools to deal with supply-side economic events, and the only answer could be increasing supplies, which is a challenge in the current environment.

Just as the Fed mischaracterized inflation as “transitory,” US and European policies addressing climate change have played a role in the ascent of hydrocarbon prices. Since energy prices are inflation’s root cause, exploration and drilling could be the only answer to address the economic condition. Fossil fuels continue to power the world, and the price action is screaming that monetary policy has taken a backseat to the energy debacle.

Crude oil at the highest price since 2008- Inventories and product prices support higher highs

Nearby NYMEX WTI futures rose to $130.50 per barrel on March 7 after Russia invaded Ukraine on February 24, and the war escalated.

Source: Barchart

The chart highlights that the WTI futures were sitting at just above the $115 level on May 27. Brent crude oil hit a high of $139.13 in early March.

Source: Barchart

The chart shows the price was at around the $119.43 per barrel level in late May 2022. The all-time 2008 peaks in WTI and Brent were at $147.27 and $147.50.

While crude oil missed an all-time high, gasoline and heating oil hit record prices in 2022.

Source: Barchart

The chart shows that gasoline futures prices reached $4.0640 per gallon wholesale in May, an all-time high. July gasoline was sitting at over the $3.90 level on May 27.

 Source: CQG

Heating oil is also a proxy for distillates like diesel and jet fuels. The chart shows the spike to a record peak in distillate in April at $4.7072 per gallon wholesale. Heating oil was also over the $3.90 per gallon level on May 27.

Inventories and US production have supported prices:

Source: US Energy Information Administration

So far, in 2022, US crude oil stockpiles rose by 1.9 million barrels, but the data includes strategic stockpile releases. Meanwhile, gasoline inventories declined by 12.9 million barrels, and distillate stocks fell by 19.9 million barrels from the beginning of 2022 through May 20. Consumers require oil products, and the data supports higher prices. While US daily output rose from 11.7 to 11.9 million barrels per day in 2022, they remain below the March 2020 13.2 mbpd record peak.  

Natural gas is also at a fourteen-year high- Inventories, and European prices support the continuation of a very volatile bull market

NYMEX natural gas futures fell to a twenty-five-year low in June 2020, reaching $1.432 per MMBtu.

Source: CQG

The long-term chart shows that natural gas futures moved over six times higher by May 2022, reaching a high of $9.447 per MMBtu and sitting at over the $8.70 level on May 27.

Natural gas inventories are at low levels, with the price at a fourteen-year high.

Source: EIA

At the 1.812 trillion cubic feet level on May 20, natural gas in storage across the US was 17.6% below last year’s level and 15.3% under the five-year average.

Over the past years, natural gas liquefication opened a burgeoning export market for the US energy commodity as it now travels worldwide via ocean vessels. Natural gas’s addressable market expanded far beyond the US pipeline network.

While US natural gas exports have sold LNG to Asian consumers under long-term contracts, the war in Europe and Russian retaliation for sanctions have sent European natural gas prices to record levels.

Source: Barchart

The chart shows that ICE UK natural gas futures rose to the 800 pounds per 1,000 thermals level in March 2022. Before 2021, the all-time high was at the 117 level, and at the 171.61 level on May 27, the price was well above the pre-2021 record peak. Russian natural gas travels by pipeline to European consumers. The Russians have demanded payment in rubles and have cut off “unfriendly” countries that support Ukraine. Moreover, Sweden and Finland’s plans to join NATO only increase Russian export bans, and European consumers are turning to the US for supplies. The bottom line is that

US natural gas has become an international energy market, and the supply shortage is lifting worldwide prices.

In the US, natural gas is heading into the volatile hurricane season. In 2005 and 2008, Hurricanes Katrina and Rita wreaked havoc along the Louisiana coast.
The NYMEX futures delivery point is the Henry Hub in
Erath, Louisiana, along the Gulf Coast hurricane corridor. Storms in 2008 and 2005 lifted the price to $13.694, and $15.65per MMBtu, respectively. Even if the natural gas market makes it through the annual hurricane season without category four or five storms, the 2022/2023 winter season in worn-torn Europe will likely push prices higher, with $10+ NYMEX futures prices on the horizon.

The four reasons for higher fossil fuel prices- SPR releases are a temporary band-aid

At least four factors favor higher oil and gas prices in late May 2022:

  • The Biden administration’s green energy initiative favors alternative and renewable fuels while inhibiting fossil fuel production. The US energy policy since early 2021 handed the pricing power to OPEC, the international oil cartel, and Russia. After years of suffering under low prices and lower US demand because of US shale oil and gas production, OPEC+ now controls supplies and owes the US and European consumers no favors. US requests for production increases fell on deaf ears in Riyadh, Moscow, and other production capitals.
  • The February 4 “no-limits” agreement between China and Russia creates a bifurcation of the world’s nuclear powers, with the US and Europe on the other side. Russia’s invasion of Ukraine could lead to Chinese reunification attempts with Taiwan. Hostilities and geopolitical tensions make hydrocarbons a political tool for the Russians and allied world oil and gas producers.
  • The crude oil and natural gas prices have been rising despite a COVID-19 lockdown in China. When the Chinese economy reopens, the global energy demand will likely rise, putting more upside pressure on oil and gas prices. Meanwhile, a historic heatwave in India is causing increased energy demand in the world’s second-most populous country. India has not cooperated with the US and Europe with sanctions on Russia.
  • Even if the US were to shift back to a drill-baby-drill and frack-baby-frack approach to traditional energy production, labor shortages and higher input and equipment prices put upside pressure on production costs. Moreover, the Biden administration has doubled down on its green initiatives, so the potential for production increases remains low.

Instead of increasing production over the past months, President Biden released a historical level of crude oil from the strategic petroleum reserve. Past SPR releases have not weighed on the price in challenging times. Moreover, the US will eventually need to replace its resources, leading to buying in the oil market. The administration released 30 million barrels in early 2022 and has been releasing one million barrels per day from the SPY. The price remains around the $115 per barrel level as the SPR sales have been a short-term, ineffective band-aid. Meanwhile, crack spreads, a real-time demand indicator rose to new all-time highs in May. The level of refining margins are a warning sign that higher crude oil prices are on the horizon. 

Drilling and exploration are the answer to supply-side economic woes

The Fed is increasing interest rates and reducing its balance sheet to address the highest inflation in over four decades. The central bank’s toolbox contains monetary policy tools that deal with the economy’s demand-side. In 2020, slashing interest rates and government stimulus encouraged borrowing and spending and inhibited saving.

The Fed now faces supply-side economic factors caused by the war in Ukraine, sanctions, and geopolitical bifurcation. There are few, if any, tools that can deal with the supply-side issues that will continue to fuel inflation. While core inflation data excludes food and energy, food and energy are critical inflationary factors that impact individuals and businesses. Moreover, energy is a crucial cost of goods sold input in all sectors of the economy. Therefore, the only answer to dealing with supply-side inflationary pressures in the current environment is to increase supplies. Just as the Fed woke up from its “transitory” trance, the administration will likely realize that encouraging fossil fuel exploration and drilling is the only route out of the current inflationary spiral. The US is blessed with rich oil reserves in the shale regions, Alaska, and other oil-producing areas. The Marcellus and Utica shale contains quadrillions of cubic feet of natural gas. A hostile Russia and China could cause a reversal of the current path of US energy policy. Rising oil and gas prices will eventually choke all economic growth, and the administration may have no choice but to put climate change initiatives to the side while it deals with the inflationary spiral.

XOP outperforming the stock market in 2022- The trend is your best friend

The war, rising interest rates, a strong US dollar, increasing geopolitical turmoil, and other factors have weighed on the stock market in 2022.

Source: Barchart

The S&P 500 is the most diversified US stock market index. After closing at 4,766.18 on December 31, 2021, the index was 12.8% lower at 4,158.24 on May 27.

The S&P Oil & Gas Exploration and Production ETF product (XOP) holds many of the top US companies that explore, drill, and produce crude oil and natural gas, including:

 Source: Barchart

While the S&P 500 is 12.8% lower in 2022, the XOP performance has been impressive:

 Source: Barchart

The XOP closed at $95.87 at the end of 2021. At the $157.04 level on May 27, the ETF was over 63.8% higher this year.

Existing oil and gas exploration, drilling, and production companies have experienced a profit bonanza in 2022, but they are struggling to meet the growing worldwide hydrocarbon requirements. The bull market in oil and gas opens the door for newcomers in exploration and drilling. Dealing with inflation requires addressing the root cause, energy shortages, and high prices. An epiphany that shifts US energy policy is the path of fighting inflation. The supply-side problems are beyond the Fed’s reach, and SPR releases are only a band-aid on a worldwide gapping ax wound.

Written By: Andrew Hecht, on behalf of Maurice Jackson of Proven and Probable.

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.

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Diamcor Mining Energy Exclusive Interviews Junior Mining Precious Metals

Diamonds Are Forever, But The Market For Diamonds Just Underwent A Massive Change

  • Russia is the leading producer- Canada is third
  • Russia causes a dramatic change in the global diamond market
  • Mountain Province Diamonds- a top-tier company with significant scale
  • Diamcor Mining- A junior diamond miner with potential
  • A potential bottom in DMI/DMIFF shares

A diamond is a pure solid form of the element carbon with its atoms arranged in a crystal structure, a diamond cubic. At room temperature and pressure, another solid form of carbon is graphite, a chemically stable form of the element. Diamonds form under high temperatures and pressure that cause the carbon atoms to bond and form crystals.

It takes carbon up to 650 million years to become fossil fuels. Transforming carbon into a diamond takes one to 3.3 billion years, approximately 25% to 75% of the earth’s age.

Diamonds occur in greater number and quality in the ocean, but the extraction process is expensive and challenging. Ocean miners dredge the ocean floor, bring the material onto mining ships, and sift it for diamonds. Mining diamonds from the earth’s crust involves releasing igneous emplace rocks with explosives as the encased diamonds are carried up with intrusive rocks from the earth’s mantle. Most diamond mines are around one hundred miles below the earth’s surface.

Rough diamonds look like shiny pebbles. Experts cut and polish the rocks that become the centerpiece of jewelry cherished worldwide. Only 20-30% of mined diamonds have a suitable quality for jewelry; the remainder goes to industrial applications. The industrial diamonds are too badly flawed, irregularly shaped, poorly colored, or too small for gems. However, they are critical for cutting, grinding, drilling, and polishing procedures because of a diamond’s hardness and heat conductivity.

The first Soviet leader, Vladimir Lenin, once said, “There are decades where nothing happens, and there are weeks where decades happen.”

The international diamond business is experiencing that phenomenon in early 2022, courtesy of his successor.

Russia is the leading producer- Canada is third Like many commodities, diamond production occurs in regions where the earth contains minable reserves.


Source: Statista

The chart highlights that Russia has the largest diamond reserves with approximately 650 million carats, over double the country with the second-most reserves, Botswana. While diamonds are synonymous with South Africa, the nation is home to the fourth leading reserves behind Russia, Botswana, and the Democratic Republic of Congo. While the DR Congo has the third most reserves, Canada is the third-leading diamond-producing country.


Source: bizvibe.com

As the chart illustrates, in 2020, Canada produced 17.2% of the worlds’ diamonds.

Russia causes a dramatic change in the global diamond market

On February 24, 2022, the world changed as the Russian military invaded Ukraine. President Vladimir Putin does not consider Ukraine a country but a part of Western Europe. Meanwhile, the watershed event occurred on February 4, 2022, when President Putin and Chinese President Xi signed a $117 billion trade agreement and shook hands on “no-limits” support. The Chinese-Russian alliance paved the way for Russia’s invasion of the country that the US, Europe, Canada, Australia, Japan, and allies worldwide consider a sovereign country in Eastern Europe. Russian success in Ukraine could pave the way for China’s reunification with Taiwan.

Sanctions on Russia leading to retaliatory measures are likely to choke off commodity supplies to the west. Russia is a leading producer and exporter of diamonds, oil, nickel, wheat, fertilizer, and a host of other raw materials.

The geopolitical landscape has deteriorated to the most dangerous level since World War II. War, sanctions, and trade embargos distort market prices, impacting the global supply chain and creating fundamental supply and demand imbalances. The dark cloud of war and tensions between Russia-China and the West may have a diamond lining for companies producing commodities to fill the gaps created by supply shortages and rising prices.

On February 24, the diamond market underwent a substantial change.

Mountain Province Diamonds- a top-tier company with significant scale

The DeBeers Group controls companies in the diamond mining, diamond processing, and diamond trading sectors. Still, it is the second-leading diamond company behind Alrosa, the Russian mining giant that distributed 38.5 million carats in 2021. De Beers distributed 30.78 million carats.

When most people think of diamonds, De Beers is the brand name that glistens like the stones. De Beers has been around since 1888 with South African roots. Today, the company calls London home, with the mining giant Anglo American (NGLOY)owning 85%. While price transparency in the diamond market can be opaque, prices have appreciated.


Source: diamondse.info

The price index rose from 204.20 in July 2020 to 230.30 in March 2022, a 12.8% increase.

Mountain Province Diamonds is a Canadian diamond producer that operates a joint venture with De Beers, owning the world’s fifth-largest diamond mine, Gahcho Kue, in Canada’s Northwest Territories. Mountain Province Diamonds also owns 100% of the Kennady North Project and explores for diamonds in the Northwest Territories through targeted drill programs with 13.6 million carat reserves and inferred resources of 7.35 million carats ten kilometers from the Gahcho Kue mine. A summary of some of the company’s other highlights includes:

  • The highest-grade diamonds in the De Beers portfolio at 1.55 carats per ton of reserves.
  • The second most favorable mining jurisdiction in Canada.
  • A commitment to sustainability through environmental stewardship.
  •  Exploration territory of 107,000 hectares of 100% owned claims/leases surrounding Gahcho Kue.

Mountain Province Diamonds traded on the TSX in Canadian dollars under MPVD.TO. The company trades in the over-the-counter market in the US under the symbol MPVDF.


Source: Barchart

As the chart highlights, MPVDF shares fell to a low of 17.41 cents in March 2020 as the global pandemic gripped markets across all asset classes. The stock has moved higher with diamond prices and production success, making higher lows and higher highs with the price at 62.83 cents on March 16, over 3.6 times higher than the March 2020 low.

Diamcor Mining- A junior diamond miner with potential

Diamcor Mining Inc. is a junior diamond mining company that identifies, acquires, and operates unique projects with “near-term production potential.”

While many people think of De Beers synonymously with diamonds, the other name that comes to mind is Tiffany & Company. Diamcor established a long-term strategic alliance and the first right of refusal with Tiffany & Co, Canada, a subsidiary of Tiffany & Co in the US, for the purchase of up to 100% of the future production of rough diamonds from the Krone-Endora at Venetia Project at current market prices. Tiffany & Co. provides financing for the project. Diamcor acquired the Krone-Endora at Venetia project from DeBeers. The mine is co-located directly adjacent to the De Beers Venetia Diamond Mine in the Limpopo province of the Republic of South Africa. The project is a rare eluvial deposit, a direct shift of material from the higher grounds of the Venetia Kimberlite clusters onto the lower surrounding areas of Krone-Endora. The property is approximately 500 kilometers north-northeast of Johannesburg. The Venetia mine is the world’s third-largest diamond mine and South Africa’s leading mining, accounting for over 50% of annual production.

Some of Diamcor’s highlights include:

  • Accelerated phase two of a three-phase processing upgrade to increase volumes as the demand for rough diamonds has continued to be robust.
  • Diamcor’s most recent rough diamond sale yielded an average price of over $300 per carat, a 60% increase from the December 2021 price.
  • The project has revenue flows with demonstrated profitability.
  • The project has $70 million in development to date with significant infrastructure in place and a 30-year mining right.
  • A high percentage of the project’s diamonds are gem quality and can be found just 50 feet below surface.
  • Diamond reserves are likely on 95% of the project area that has not been defined, leading to significant growth potential.

US and European sanctions will limit the number of industrial and gem-quality diamond flows from Russia, pushing prices higher and availability lower. The world will be looking for new sources, and Diamcor’s project is far enough along and positioned to meet the increasing demand.  

A potential bottom in DMI/DMIFF shares Diamcor Mining Inc trades on the TSX under the symbol DMI.VN. On the Us over-the-counter market, the symbol is DMIFF. The shares have moved appreciably higher since the late 2020 low.


Source: Barchart

As the chart highlights, DMIFF shares rose from a low of $0.046 in late December 2020 to $0.2425 on March 16, over five times higher. In October 2021, the shares peaked at 43.0 cents, over nine times higher than the late 2020 low. DMIFF returned a higher percentage gain than Mountain Province Diamonds (MPVDF) since its 2020 low.

It takes over a billion years for a diamond to form, making the stones a forever asset. Meanwhile, sanctions on Russia will limit the precious stones supplies, which could create an exciting opportunity for Diamcor, a mining company with lots of upside potential.

Written By: Andrew Hecht, on behalf of Maurice Jackson of Proven and Probable.

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.

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Base Metals Energy Exclusive Interviews Junior Mining Nevada Copper

Andrew Hecht – Copper Fundamentals and Stock Pick

https://soundcloud.com/proven-and-probable/andrew-hecht-copper-fundamentals-and-stock-pick

Nevada Copper As We Head Into 2022

  • Copper reached a new high in 2021
  • Higher highs are on the horizon in 2022 for three critical reasons
  • A favorable jurisdiction in Nevada- Momentum build and the value proposition is improving
  • Two groups in the know have made significant investments
  • The shares continue to offer value, risk-reward favors the upside for Nevada Copper

The leading stock market indices have been bumpy over the past weeks. The prospects for higher interest rates and taxes in 2022, new COVID-19 variants, inflation at the highest level in decades, and other factors have created uncertainty, which tends to cause indigestion in the stock market. However, many leading stocks remain near or at record highs.

Copper is a bellwether commodity that many market participants look to for clues about the health and wellbeing of the global economy. Copper’s nickname is Dr. Copper because it tends to move higher during economic expansion and lower when the global economy contracts. In May 2021, copper rose to its highest price in history when nearby COMEX futures rose to just shy of $4.90 per pound, and LME forwards moved to over $10,700 per ton for the first time. Over the past year, copper has taken on a new role, increasing the demand side of its fundamental equation. The red nonferrous metal is a critical requirement for decarbonization, leading Goldman Sachs to call copper “the new oil.”

In the world of commodities, higher prices and growing demand lead to more production. However, the global copper market faces a challenge as it will take years for new supplies to come to market, creating deficits that push the price higher. While copper corrected since the May high, the price remained around $4.40 per pound level as of December 24.  

Locating value in the US stock market is not easy these days. Nevada Copper Corp. (NEVDF) is a promising emerging US producer. Two seasoned commodity groups recently invested in NEVDF, seeing tremendous value in the burgeoning producer.

Copper reached a new high in 2021 Copper closed 2020 at the $3.52 per pound level on the nearby COMEX futures contract and $7,757 per ton on the three-month LME forwards.

Source: CQG

The chart highlights COMEX copper futures move to a high of $4.8985 in May. With the active month March contract at the $4.40 level on December 24, the price moved 25% higher in 2021 with only one week until 2022.

Source: LME

Three-month copper forwards rose to a high of $10,724.50 in 2021 and was at the $9,568 level on December 24, 23.35% higher than at the end of 2020.

While copper is closing 2021 below the year’s high, the trend remains bullish with impressive gains since the end of last year.

Higher highs are on the horizon in 2022 for three critical reasons

Three reasons support higher highs and new all-time peaks in the copper market in 2022 and beyond:

  • Copper is critical for electric vehicles (EVs), wind turbines, and other clean energy initiatives. The red metal is a crucial ingredient for decarbonization, making the fundamental equation’s demand-side grow.
  • It takes eight to ten years to bring new copper production online from exploration to output. Copper is still in the early phases of expanding global production, with the leading mining companies scrambling to find new ore deposits. As demand increases, supplies will struggle to keep pace over the coming years.
  • Inflationary pressures will continue to rise, putting upward pressure on all commodities, and copper is no exception. At the latest December FOMC meeting, the US central bank forecast a 0.90% Fed funds rate for 2022 and a 1.60% rate for 2023. Even if inflationary pressures recede, real interest rates are likely to remain negative, which is bullish for raw material prices in the coming years.

Copper faces an almost perfect bullish storm for the coming years. Goldman Sachs’s forecast of $15,000 per ton by 2025 would put nearly COMEX futures over the $6.80 per pound level. While higher prices will encourage more production, existing mines cannot keep pace with the rising demand.

Chile is the world’s leading copper producer. The recent election of Gabriel Boric, a 35-year-old former student activist who carries a new generation’s socialist dreams to the presidential palace, threatens Chile’s capitalist economy fueled by copper output. Taxes are likely to rise along with wages and addressing climate change could cause a new wave of regulations that weigh on copper output over the coming years. Moreover, the new Chilean government could move to nationalize copper mines, which would impact output and efficiency. The bottom line is that a supply-demand deficit in the global copper market is likely to widen over the coming years, putting upward pressure on the red nonferrous metal’s price.

A favorable jurisdiction in Nevada- Momentum build and the value proposition is improving

The world’s leading copper producers are searching the globe for new reserves and output. Australian mining giant BHP recently said it is considering a challenging Democratic Republic of Congo copper project. The DRC is notorious for political and regulatory issues.

Meanwhile, the US remains a friendly mining environment, and Nevada is a state that supports the industry and is mineral-rich.

Nevada Copper (NEVDF) is an emerging producer with a lot going for it these days. The company mines copper in Nevada in the USA, and the Canadian Fraser Institute ranks the state as the world’s #1 mining jurisdiction. In 2021, momentum has been building for NEVDF:

  • Underground mine operation improvements have resulted in 100% growth in development rates.
  • New equipment in the second half of 2021 has accelerated development.
  • An operational efficiency plan took effect in the second half of 2021 and is forecasted to increase output in H1, 2022.

To put more meat on the bone, in a December 21 press release, the company provided updates on its Pumpkin Hollow underground mine project:

  • Nevada Copper is on track to advance over 1,100 lateral equivalent feet of development in December 2021.
  • Development is running at the highest rate for 2021, with December nearly 50% higher than November and almost 100% above the level in August 2021.
  • New equipment should enhance further development and growth in January 2022.
  • Ventilation fan infrastructure should be completed in Q1 2022.
  • Mining of the Sugar Cube, the first high-grade area in the East North Zone of the underground mine, is on schedule for Q1 2022.

In December, CEO Randy Buffington said, “We are on track to complete 1,100 feet of lateral development this month, which puts the Company in a position to mine the first stope of high-grade Sugar Cube as planned next month.”

Accelerated development increases NEVDF’s value proposition:

  • The current enterprise value is less than the value of the company’s machinery and equipment.
  • NPV at current prices is close to the US $3 billion level.
  • The company will be cash-flow positive in 2022.
  • Open-pit mining development will accelerate in 2022.

The company’s prospects are compelling, leading two influential groups to invest in NEVDF.

Two groups in the know have made significant investments

Solway Investment Group is a private international mining and metals group with headquarters in Switzerland. Solway specializes in nickel production with mines and smelting plants in Guatemala, Ukraine, Russia, Indonesia, and Macedonia. The group has over 5,000 employees, is expanding its focus in battery metals, and recently invested US$30 million for a 10% stake in Nevada Copper.

Mercuria Energy Group Ltd. is a multinational commodity trading company active in global energy, metals, and agricultural markets. The company dates back to 2004 when two ex-Phibro executives, Marco Dunard and Daniel Jaeggi departed after Citigroup sold Phibro to Occidental Petroleum. The company recently closed an oversubscribed $2.2 billion multi-year secured borrowing base credit facility with a collection of international financial institutions. Mercuria is one of the world’s leading and growing commodities trading companies, with core exposure in energy. Mercuria’s goal is a 50% portfolio in renewable energy over the coming five years and invested US$30 million for a 10% stake in Nevada Copper.

Solway and Mercuria are top organizations in the international commodities business, with tentacles reaching across the globe. Both companies put their capital up as they see the compelling potential for Nevada Copper’s properties and business plan.

The shares continue to offer value, risk-reward favors the upside for Nevada Copper

Nevada Copper shares remain inexpensive at the end of December 2021. Aside from the Solway and Mercuria investments, insider buying is another bullish sign for the company. After a recent blackout period, CEO Randy Buffington purchased 200,000 shares, and the company’s directors have been buyers of the shares. Nevada Copper shares (NEVDF) peaked at $2.40 value in May when copper prices reached the high at nearly $4.90 per pound. Copper closed around the $4.40 level on December 23, and NEVDF shares having fallen dramatically in early December hitting yearly lows, could be a golden opportunity for investors that see the same potential as Solway and Mercuria.

Source: Barchart

The chart shows that NEVDF shares corrected to a low of 38.78 cents on October 1 as nearby copper futures moved to test the $4 per pound level. At 53.0 cents per share on December 23, Nevada Copper had a $236.328 million market cap.

Development companies are risky businesses as their future depends on delivering from their mines. The backing of two well-established commodities trading and investment companies, insider buying, and accelerated progress are positive signs for the company as we head into 2022.

New copper production is scarce, and mining companies are scouring the globe for new reserves. Nevada copper’s location, proven and probable reserves, management, progress, and investors bode well for the company’s future. Further progress could transform NEVDF from an emerging producer to a takeover candidate or established producer as the world’s leading miners are hungry for output. Risk is always a function of reward with any investment. At 53.0 cents per share, NEVDF’s potential compensates for the risk.

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.