QUARTER 1 written on wooden blocks

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What has happened so far this year in the precious metals sector? INN reviews the major updates for gold, silver, platinum and palladium.

The first quarter of 2022 was a profitable one for the precious metals sector, with all four primary metals (gold, silver, platinum and palladium) registering value increases over the three month period.

Palladium was the primary gainer, adding 22.77 percent to its value over the quarter, driven higher by constrained supply and demand fundamentals. In fact, between January and March 8, the automotive metal rose by 72 percent, starting the year at US$1,849 per ounce and rising to US$3,198.60.

By the end of March, palladium had shed some of the positivity to hold in the US$2,270 level.


Volatility inserted into markets stemming from Russia's invasion of Ukraine added tailwinds to all the precious metals, with palladium and platinum especially impacted by the war.

As the second largest producing country for both metals, concern over future supply was an impactful catalyst to price performance early in the year.

Platinum made more modest gains during the first three months of the year, up just 2 percent by the end of March. The metal made its most significant uptick between January and March 8, when values rose 23 percent from US$957.42 per ounce to US$1,154.80.

March 8 proved to be an important date in the sector with all four metals recording their biggest gains for the quarter on that day. The second week of March was punctuated with increasing concerns over inflation, which were reflected in the surging cost for energy, grain and base metals.

The realization that the worsening situation in Ukraine would not be quickly resolved also added to the uncertainty that sent precious prices higher.

“Commodity prices reached record high levels in 2021 due to the pandemic and the war has further pushed prices upwards,” said Paul Mitchell, global mining and metals leader at EY.

“Inflationary fears triggered a rush for safe haven investments during the ongoing market volatility that pushed the gold price up to US$2,000 per ounce," he continued. "Rising cash flows have enabled gold miners to improve their reserves through M&A, expansion of existing operations through exploration or developing new projects.”

Australia precious metals update: Gold price marks another high 

The yellow metal saw its biggest increase between January 30 and March 8, adding 14 percent to an 18 month intraday high of US$2,053.

gold's q1 2022 price performance

Gold's Q1 2022 price performance.

Chart via Trading Economics.

Despite commodity prices soaring over the first 10 weeks of the year, as Rob Murdoch of Austex Resources explained there was a disconnect between gold’s rising value and the price of gold shares on the index.

“Gold shares have been dragged up by the market plus 4 percent, with the ASX resource sector overall up plus 12 percent,” the principal consultant said. “At the beginning of the year, I thought gold might do well with inflation, but the boycott of Russian mineral exports and the war in Ukraine have lifted the demand for other minerals, particularly oil, gas, coal, aluminum, fertilizers etc., resulting in interest elsewhere, and that demand has overridden inflation impacts so far this year.”

The broad interest across the resource sector has had another knock-on effect as well.

“The result has been that a number of Western Australia gold explorers have turned their hand to lithium exploration,” Murdoch said.

Diversifying a project not only makes it more economical, but it also entices investors looking to maximize their investment dollars.

“Everyone in business wants to grow. We have 30 percent more ASX resource companies today than three years ago,” he said, noting that mergers and acquisitions (M&A) across the entire Australian resource sector are likely to continue.

“In Western Australia, mills are hungry (for gold),” he added. “The cost of successful intersections has doubled in recent times. Gold producers will continue to have a look across the back fence and if they like what they see, they will acquire it.”

Gold will remain big business, with annual production estimated to grow an average of 6.8 percent annually over next three years, reaching an annual peak production of 390 tonnes in 2025 to 2026.

Demand is also on an upward trajectory. According to the Australian Government’s Resource and Energy Quarterly, global gold consumption increased by 9.9 percent year-on-year to 4,021 tonnes in 2021.

“The economic recovery from the pandemic provided support to gold jewelry demand in 2021, up 52 percent year-on-year, to 2,124 tonnes,” the March report reads. “China and India have led this recovery, as lower and more stable gold prices (compared with 2020) and rising personal income lifted gold demand.”

Last year, Australia’s gold sector contributed AU$23 billion to the economy from heightened demand paired with a gold price holding above US$1,775 an ounce for much of 2021.

Inside the gold sector there was also a lot of activity with several key mergers and acquisitions.

“In 2021 there were AU$13.65 billion gold deals completed and of those, AU$6.2 billion targeted Australian gold projects/companies,” EY’s Mitchell said. “Gold company valuations stabilized through 2021 as the gold price averaged US$1,800 for most of the year, and as a result, execs have been more willing to consider deals or acquisitions to increase their gold project pipeline.”

The country’s status as second largest producer of gold and its favourable jurisdiction also benefited the sector.

“Australia has the world’s largest gold mine reserves,” he said. “Currently, there are 100 gold projects under development in Australia, of which 11 are currently undergoing construction, with anticipated operation commencement dates between 2022 to 2025.”

Gold’s overall market fundamentals for the next three years are another factor Mitchell believes makes the yellow metal alluring for miners and explorers.

“The scarcity of gold assets, market pressure to bulk up firm valuations and depleting gold reserves should prompt large mining companies to consider the acquisition of smaller miners in 2022, to access higher-quality projects with large reserves and active mines,” Mitchell told INN.

“We are seeing interest from investors in Western Australia’s goldfields region, in particular on St. Barbara (ASX:SBM).”

Australia precious metals update: Silver price growth could drive investment 

As for sister metal silver, despite having some of the largest global silver reserves, Australia ranks fifth in annual production.

Output of the white metal often takes a back seat to other more profitable metals. Of the 1.3 thousand tonnes of silver that were mined across Australia in 2021, the vast majority was a by-product of underground lead-zinc or copper mines.

Although this trend could change as miners look to optimize deposits through diversification and sustained silver price growth.

“The price is actually up 11 percent over the past 12 months whereas the price of gold has fallen 4-5 percent,” Austex’s Murdoch said. “But all other metals have done better than silver, so it has lagged behind. Maybe silver will catch up should the increased interest in gold prices occur.”

Silver prices started 2022 hovering just below US$23 an ounce and rose 19 percent by March 8. By the end of March prices consolidated at the US$24.85 level an 8.33 percent increase from January.

Australia precious metals update: Platinum, palladium benefit from mounting demand 

Bolstered by soaring demand and the precarious production situation, palladium and platinum are forecasted to see more price upside in the months ahead, especially if the Russia/Ukraine conflict is not resolved.

“War in Ukraine has impacted global demand supply dynamics of commodities. Speculative buying and commodity hoarding are leading to supply tightness,” Mitchell said.

“Platinum supply is tight as most platinum stockpiles have been processed. Russia represents about 10 percent of the world's platinum supply, and demand is set to rise as companies look to substitute it for palladium.”

palladium's q1 2022 price performance

Palladium's Q1 2022 price performance.

Chart via Trading Economics.

With an ounce of platinum selling for US$918 (April 26) compared to an ounce of palladium trading for US$2,203, the transition may be sooner than later.

In fact, platinum demand from the auto sector, in which it is a critical component in catalytic converters, is anticipated to grow 19 percent this year to 3.2 million ounces.

Consistent price growth across the platinum group metals (PGM) suite has led to increased interest from explorers and miners.

“There is a lot more interest in PGM not only due to the price of platinum rising 17 percent over the last 12 years, but the exploration success of Chalice Mining (ASX:CHN) at Julimar in Western Australia,” Murdoch explained. “Exploration success like that in a certain geological province will always stimulate other exploration in the hope of finding a ‘look alike.’”

Chalice’s multi-metal Julimar project is poised to be a significant addition to the region's resource mix.

“We have seen some interest in PGMs in Australia, e.g. Chalice’s large Julimar discovery, (which has) a mix of platinum, gold, palladium, nickel, copper and cobalt,” Mitchell said. “PGM exploration is likely to increase as countries seek alternative sources as Russian supply is removed from the market due to sanctions.”

The global mining and metals leader at EY went on to point out that the New South Wales government is experiencing increased demand for exploration licenses.

“Demand for licenses for gold, critical minerals and high-tech metals reached a 10 year high last year,” he said. “So far this year, more than 226 applications have been granted or approved — the highest figure since 2008, and only the third time it has passed 200 in two decades.”

Australia precious metals update: Geopolitical tensions and jurisdictional ranking drive foreign investment 

As the supply of goods coming out of Russia and Eastern Europe becomes more unstable, Australia becomes more attractive as a safe jurisdiction for mining and investment. This has been reflected in Western Australia's recent ranking atop the list of best mining investment destinations.

“The Fraser Institute’s mining survey is the most comprehensive report on government policies that either attract or discourage mining investors, and Western Australia ranks highest of anywhere in the world,” Elmira Aliakbari, co-author of the report, wrote in the press release.

South Australia also made the list, ranking 10th.

The nation’s provinces ranking in the best jurisdictions for mining investment is already evident through the enhanced exploration for battery and critical metals in Australia, which are needed for new, rapidly evolving industries, according to Rob Murdoch.

“Exploration for lithium and rare earths are booming at present, also nickel,” Murdoch said. “(There is also) great research going on here in Australia that will hopefully lead to cheaper and better ways to explore, mine and produce metals.”

For Mitchell, the mounting geopolitical uncertainty elsewhere will be a key factor in bringing new investment dollars to Australia.

“Australia is attractive geologically, has a mature mining industry and expertise in extraction/processing, robust standards and is a stable jurisdiction,” Mitchell said. “With the exception of 2020, foreign investment into Australia has been steadily increasing and we expect this to continue as demand rises for minerals critical to the energy transition, and government policy supports the building of a safe and productive mining industry.”

Australia precious metals update: What’s next for precious metals? 

Both experts INN spoke to see the duration and impact of the war having a significant effect on the metals sector in the months ahead, as well as inflation and the monetary policy used to combat it.

“Inflation is at record highs, and this is likely to continue into Q2, keeping commodity prices high,” Mitchell told INN. “We expect central banks to continue increasing interest rates and this will have the effect of slowing economic growth, which would mean less demand for commodities, potentially pushing prices down over the medium-term.”

Continued supply chain and transport issues lingering from the pandemic could also impact the broader resource sector. Longer term, the energy transition will play a key role in demand and supply.

While investment is on the rise, Murdoch warned, “As far as resources specifically are concerned, the lack of exploration success could be an issue for many companies should funds become harder to source.”

He added, “We have 30 percent more explorers hunting for treasure on the same area of land.”

Don’t forget to follow us @INN_Australia for real-time news updates!

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Global News
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"Buy the dip and hold on for dear life, as the crypto kids say — HODL," said Frank Holmes of US Global Investors.

Frank Holmes: Gold Advice as Price Falls — Buy the Dip and HODL youtu.be

The gold price has tumbled since last week's US Federal Reserve meeting, which saw the central bank raise rates by 50 basis points for the first time since 2000 in an effort to combat inflation.

Speaking to the Investing News Network, Frank Holmes, CEO and chief investment officer at US Global Investors (NASDAQ:GROW), pointed out that the yellow metal's decline is a buying opportunity.

"Buy the dip and hold on for dear life, as the crypto kids say — HODL," he said. HODL is a term that originated in the cryptocurrency community, although it’s since gained mainstream usage through popular memes.

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mining cart in a tunnel

Driven by foreign investment, mining has become one of Argentina's fastest-growing sectors; Australian companies make up a particularly large segment of this industry.

Mining in Argentina has become one of the fastest-growing sectors in the nation’s economy. Argentina’s ample and comparatively underexplored gold and precious metals resources are a valuable opportunity, and will likely drive considerable growth in the country’s mining sector in the coming years.

In comparison to its neighbour Chile, Argentina’s mining sector has a lot of room to grow. Attractive incentives, including favourable mining policies, competitive mining investment laws and mineral-rich geology, have been seen as positive steps towards a strong Argentinian mining industry.

Mining giants are definitely attracted. Barrick Gold (TSX:ABX,NYSE:GOLD) has staked a claim in Argentina alongside its partner Shandong Gold Mining (HKEX:1787), extending the life of the country's largest gold mine, Valadero, with a US$75 million investment. On the other hand, Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO), the second largest metals and mining company in the world, recently acquired the Rincon lithium project. Formerly owned by Rincon Mining, the undeveloped lithium brine project is situated in Argentina's Salta province. It represents the latest in a series of acquisitions and developments in the region by Australian businesses.


Mining in Argentina: A brief history 

Unlike other regions, Argentina's mining sector doesn’t have a particularly long history. A 2016 study released by KPMG International notes that the Argentina mining sector's first significant milestone was the 1813 enactment of the Mining Promotion Law. Designed to encourage exploration, research and production of the country's extensive mineral wealth, this law ultimately laid the foundation for modern-day Argentina's welcoming attitude towards mining.

Argentina went on to adopt the Argentine Mining Code in 1887, a regulatory framework that established state ownership of the country's subsoil while still allowing for private exploration. The fledgling industry developed slowly over the next several years. Although it received some benefits due to increased demand and mineral prices during the First and Second World Wars, this was not enough to inspire significant growth.

It was not until near the end of the 20th century that the sector began to flourish. Constitutional reform in 1994 shifted ownership of natural resources from state to province, while a new regulatory framework attracted considerable investment from both Canada and Australia. Notably, from 1990 to 1999, joint production of minerals increased by 104 percent. During this period, the gross domestic product of Argentina's mining industry grew at a rate of between 5 and 7 percent per annum.

Mining in Argentina soon became the primary target of foreign direct investments. The production of common metals such as steel and aluminium were the primary beneficiaries of this surge of investment.

Unfortunately, growth soon slowed to the point of stagnation, the result of several factors. First, the country's mining code was unnecessarily complex and cumbersome to navigate. Second, socioeconomic strife created more risk than some investors were willing to accept. And finally, the introduction of controversial legislation such as the 2002 Glacier Protection Law alienated the mining sector, leading to multiple high-profile exits.

Mining in Argentina: The revitalization

In 2017, Argentina further deepened its trade relationship with Australia, signing a memorandum of understanding that saw the two countries collaborate on building education, research and capacity across multiple sectors. This agreement, which placed particular emphasis on mining, established a strong foundation for any Australian company looking to conduct exploration or production in the country. The 2019 election of a new president only further moved the dial, with President Alberto Fernández swearing to revise the country's mining code and reconsider its Glacier Protection Law.

Moreover, as the world has continued the push for cleaner energy and carbon neutrality, demand for battery materials such as copper and lithium — both of which are abundant throughout the country — has sharply increased.

Because Argentina is currently at the heart of a global lithium rush, it's easy to forget the fact that it also houses significant mineral wealth in both gold and precious metals. These ample, comparatively underexplored resources represent an incredibly valuable opportunity. It is likely that, alongside lithium, they will drive considerable growth in the country's mining sector.

Political instability in Chile may also contribute to Argentina's rise, as investors seek an alternative to its well-developed mining sector. Ultimately, Argentina has set a goal of US$10 billion in mining exports by 2030.

Mining in Argentina: ASX gold companies

Australian mining and exploration companies have a significant presence in Argentina and exert considerable influence over the country's mining industry.

Challenger Exploration (ASX:CEL) has also established itself in the gold-rich province of San Juan with the Hualilan project. Consisting of 15 mining leases and an exploration licence application over 26 square kilometres, Hualilan contains a high-grade historical resource of 627,000 ounces of gold that remains open in all directions.

The company has had nine rigs drilling at the project for almost a year, and is due to release its maiden resource estimate shortly. The project will use the same rail shipping methods as the highly successful Josemaria copper project, recently acquired by Lundin Mining (TSX:LUN,NASDAQ:LUMI).

Another ASX-listed explorer in Argentina, E2 Metals (ASX:E2M), which has the El Rosillo and Conserrat projects in Patagonia, counts Eric Sprott as one of its largest shareholders. This follows his decision to cornerstone a capital raise in March 2022. Sprott is a well-recognized investor with a strong history in mining.

When referring to its efforts to promote mining efforts, San Juan’s mining ministry said, “It has become a state policy. We provide the fiscal conditions, social licences and the legal certainty schemes necessary for the full development of mining. Our territory concentrates 50 percent of the country’s mining potential.”

Finally, Austral Gold (ASX:AGLD,OTC Pink:AGLDF) in 2019 acquired a 100 percent interest in the Casposo silver-gold mine through a share purchase agreement with Troy Resources (ASX:TRY). A combination open-pit and underground mine, Casposo began production in 2011. It is currently undergoing care and maintenance, and a reopening date has yet to be announced.

Takeaway

Despite a troubled political history, Argentina is incredibly well-positioned to turn this around, and the country maintains a strong relationship with Australian mining companies. Favourable mining policies and competitive mining investment laws, combined with mineral-rich geology, have the potential to greatly strengthen the country's mining industry.

This INNSpired article is sponsored by Challenger Exploration (ASX:CEL). This INNSpired article provides information that was sourced by the Investing News Network (INN) and approved by Challenger Exploration in order to help investors learn more about the company. Challenger Exploration is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

This INNSpired article was written according to INN editorial standards to educate investors.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Challenger Exploration and seek advice from a qualified investment advisor.

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The gold price is trading lower than some market watchers would prefer, but the top-performing ASX gold stocks so far this year are making leaps.

Click here to read the previous best ASX gold stocks article.

While 2021 was a disappointing year for gold, analysts are optimistic about the outlook for 2022.

The yellow metal passed the US$2,000 per ounce mark as tensions between Russia and Ukraine heated up, but has since pulled back to trade closer to US$1,800. However, diverse factors could combine to push it higher.

Demand for gold jewellery, gold bars and coins, and the metal’s use in the technology sector are still going strong, and supply is also a growing concern due to decreased gold exploration efforts in recent years.


Against this backdrop, many Australian gold stocks are doing well. And with the precious metal generally considered a safe investment, it's worth being aware of the county's top-performing companies.

Here the Investing News Network looks at the best ASX gold stocks of the year so far by year-to-date gains. The list of stocks below was generated on April 29, 2022, using TradingView’s stock screener, and all companies included had market caps over AU$30 million at that time.

1. Xantippe Resources

Year-to-date gain: 180 percent; market cap: AU$107.3 million; current share price: AU$0.01

Xantippe Resources (ASX:XTC) is focused on Western Australia's Southern Cross region, which is widely known for its past gold production. The precious metals explorer's Southern Cross project is made up of 20 prospecting licences and six exploration licences, and holds a number of key priority targets.

In late April, Xantippe confirmed the acquisition of lithium tenements in Argentina with the hope of commencing exploration activities in the third quarter.

2. Minrex Resources

Year-to-date gain: 55.81 percent; market cap: AU$63.05 million; current share price: AU$0.07

Minrex Resources’ (ASX:MRR) assets include five gold and base metals projects in Western Australia, four of which are in the mineral-rich East Pilbara region.

The company started off the year with high-grade gold drill results from its work at the Queenslander gold prospect within its Sofala project. The prospect is centred around the past-producing Queenslander mine.

3. Aston Minerals

Year-to-date gain: 38.1 percent; market cap: AU$164.19 million; current share price: AU$0.15

Gold and nickel-cobalt explorer Aston Minerals (ASX:ASO) is moving forward at its Edleston gold project, located in the Cadillac-Larder Lake fault zone of Canada's Abitibi greenstone belt. Edleston is its flagship asset, and according to the company, it is the first in over a decade to drill in this area.

Aston continues to focus on gold at Edleston, but its Boomerang nickel-cobalt target has come to the forefront in recent months, with the company announcing the results of its maiden hole there in early December.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Marlee John, currently hold no direct investment interest in any company mentioned in this article.

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Mako Gold: Exploring High-Grade Gold Deposits in Côte d'Ivoire
Mako Gold: Exploring High-Grade Gold Deposits in Côte d'Ivoire

Mako Gold Limited (“Mako” or “the Company”; ASX:MKG) is pleased to advise that it has commenced a 2,000m maiden RC drilling program at the Korhogo Nord Permit which, with the Ouangolodougou Permit constitute the Korhogo Project1 . The permits collectively cover 296km2 hosting 17km of faulted greenstone granite contact as shown in Figure 1. Both permits are 100% owned by Mako and are readily accessible from the Mako Field Office.


HIGHLIGHTS

  • 2,000m maiden Reverse Circulation (RC) drill program commenced on first high-priority target at Korhogo – Mako’s second project, in a previously undrilled land package
  • Primary target is a 2km-long +20ppb gold anomaly with high-grade cores over 60ppb gold coincident with faulted greenstone-granite contact
  • Additional targets identified for further exploration including auger and follow up RC drill testing
  • The 100% Mako owned Korhogo Project has no previously recorded drilling and covers 296km2 of prospective tenure located within 15-30 km of Barrick’s 4.9Moz Tongon Gold Mine
  • Exploration at Korhogo is on strategy for Mako -ensuring the Company continues to target discoveries on greenfield exploration projects, whilst moving its flagship Napié Project towards a Mineral Resource Estimate (MRE).
  • Drilling completed at the Gogbala Prospect on the Napié Project where a MRE is on-track for June 2022

Mako’s Managing Director, Peter Ledwidge commented:

“Mako is in the privileged position to be able to commence a maiden drilling campaign on its second project, whilst finalising its MRE on its flagship Napié Project. This leverages the core skillset of the management team; namely making discoveries on highly prospective greenfield projects in West Africa. The commencement of drilling at Korhogo marks an important milestone in the growth of the Company as we progress to the drilling phase on the project. Our previous work at Korhogo has culminated in the identification of several high-priority targets. We are pleased to commence drilling on the first target, a 2km-long +20ppb gold auger anomaly with high grade cores over 60ppb Au, coincident with a faulted greenstone/ granite contact. We look forward to announcing results from drilling at Korhogo as well as Napié, where we have completed our drilling ahead of the upcoming MRE

Korhogo is located in a fertile greenstone belt that hosts Barrick Gold’s 4.9Moz Tongon gold mine and Montage Gold’s 4.5Moz Kone gold deposit, both in Côte d’Ivoire, as well as Endeavour’s 2.7Moz Wahgnion gold mine just across the border in Burkina Faso (Figure 5).

Previous work completed by Mako includes airborne magnetics/ radiometric geophysics, soil geochemical sampling, and the recent 11,000m auger drilling program1 . Interpretation of the results on these previous programs has identified several high-priority targets. The maiden drilling program will focus on the first target, a 2km-long +20ppb gold auger anomaly with high grade cores over 60ppb gold, coincident with the faulted greenstone/ granite contact shown in Figure 2.

Drilling has commenced on the first of four fences of heel to toe RC holes (where the bottom of one hole when projected to surface is the collar of the next hole), covering approximately 900m of the highest auger anomalies (Figure 3).


Click here for the full ASX Release

This article includes content from Mako Gold, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

MKG:AU
business people stacking wooden blocks

Australian lithium miners continued to move ahead with their projects during the year's third financial quarter.

After hitting all-time highs in 2021, lithium prices started to stabilise in 2022's first quarter.

China’s lockdown measures to battle COVID-19 have disrupted the supply chain and impacted domestic demand in recent weeks, but this is expected to be temporary, according to William Adams of Fastmarkets.

“The lithium market is very tight. We don't see that easing anytime soon,” he said during a recent webinar about risks in the battery metals market. “We think the underlying fundamentals and the trends are still very strong.”


During the third quarter of the financial year, Australian lithium miners continued to move ahead with their projects, and despite the increased volatility in the markets, many ASX lithium stocks saw share price gains as well.

Perth-based Pilbara Minerals' (ASX:PLS,OTC Pink:PILBF) production for the quarter was 81,431 dry metric tonnes (dmt), slightly down compared to the previous three months, but within guidance. The company said the main factor impacting output was higher COVID-19 cases, which resulted in staff and contractor shortages.

“COVID-19 has (and may continue in the near term) to cause operational delays, including staffing shortages for both shut-down and operating staff (mining and processing),” the company said in a statement. Even so, Pilbara has decided to maintain its production guidance in the range of 340,000 to 380,000 dmt.

During its fourth battery material exchange auction, the company saw the highest bid ever at US$5,650 per dmt for a cargo of 5,000 dmt of spodumene, showing the critical shortage in lithium raw material supply.

Western Australia-focused Pilbara, which owns the lithium-tantalum Pilgangoora operation, has partnerships with Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460), General Lithium, Great Wall Motor Company (OTC Pink:GWLLF,HKEX:2333), POSCO (NYSE:PKX), CATL (SZSE:300750) and Yibin Tianyi.

Shares of Pilbara were trading at AU$2.53 on May 10, down 28.13 percent year-to-date, but up more than 100 percent compared to this time last year.

For its part, leading Australian lithium and iron ore miner Mineral Resources (ASX:MIN,OTC Pink:MALRF) saw its Mount Marion mine’s production reach 104,000 dmt during the quarter; it also shipped 94,000 dmt of spodumene concentrate. The company is maintaining its full-year production guidance at 450,000 to 475,000 dmt.

In April, Mineral Resources and partner Ganfeng agreed to optimise production and upgrade Mount Marion's processing facilities. Spodumene concentrate capacity at the operation is expected to increase from 450,000 dmt per year to 600,000 dmt annually.

“The decision to upgrade the plant reflects an expectation that the lithium market outlook will remain extremely strong for the foreseeable future,” the company said in a press release. A second stage increase, expected to be completed by the end of 2022, will see capacity rise further to reach 900,000 dmt.

Aside from Mount Marion, the company holds interests in Wodgina in partnership with another top producer — Albemarle (NYSE:ALB). The companies decided to restart Wodgina last year as a result of soaring global lithium demand. The mine produced its first spodumene concentrate on May 12.

“(We have) also agreed to review the state of the global lithium market towards the end of this calendar year to assess timing for the start-up of Train 3 and the possible construction of Train 4,” the company said. Each train has a nameplate capacity of 250,000 dmt of 6 percent product.

Mineral Resources’ share price was down 10.71 percent on May 10, trading at AU$52.71. That said, the stock is up 9.11 percent year-on-year.

During the March quarter, Argentina-focused Allkem (ASX:AKE,OTC Pink:OROCF) outlined its plans to increase lithium production threefold by 2026 and become a top three chemicals supplier.

In Western Australia, the company owns the Mount Cattlin mine, which produced 48,562 dmt of spodumene concentrate and shipped 66,011 tonnes in the March quarter.

“Strong conditions in the spodumene market are supporting advanced discussions for spodumene concentrate pricing in the June quarter of approximately US$5,000 per dmt SC6 percent CIF on sales of approximately 50,000 tonnes,” the company told investors in a note.

In Argentina, Allkem operates the Salar de Olaroz and is developing the Sal de Vida lithium brine. Additionally, in partnership with Toyota Tsusho (TSE:8015), Allkem is building a 10,000 tonne per year lithium hydroxide plant in Naraha, Japan. The company also owns the James Bay lithium pegmatite project in Canada.

On May 10, shares of Allkem were changing hands for AU$10.95, down 2.23 percent year-to-date, but up over 55 percent year-on-year.

Although its main focus is nickel, Independence Group (ASX:IGO) joined the lithium party last year after it bought a stake in Tianqi Lithium’s Australian assets. The companies, in joint venture, now control the majority of the biggest lithium mine in the world — Greenbushes.

Production at the mine was up 5 percent quarter-on-quarter at 270,464 tonnes of spodumene concentrate. By 2025, Greenbushes is expected to add around 800,000 tonnes per year to its output capacity.

IGO has seen its share price decline 4.63 percent year-to-date, trading at AU$11.34 on May 11. However, the stock is up 47.27 year-on-year.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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At the recent RIU Resources Round-Up event in Sydney, Harry Fisher of CRU Group shared key factors battery metals investors should keep an eye out for.

After 2021's big price increases for raw materials, all eyes are on what may happen next in the electric vehicle (EV) market ― the main driver of demand for battery metals such as lithium and cobalt.

EV sales had a stellar year in 2020, even as the world suffered through the brunt of the COVID-19 pandemic, and 2021 brought strong sales numbers as well.

“EV sales doubled last year alone, and we're expecting them to surpass 10 million this year,” Harry Fisher of CRU Group told the audience at the RIU Resources Round-Up in Sydney last week.


CRU Group is forecasting that EV penetration will reach 20 to 22 percent by 2026 ― that would translate to an additional 17 million in annual sales compared to today.

“Since 2017, we've had more than 50 percent annual growth for EV demand each year, and over the next 20 years EV battery demand will increase by more than 10 times,” Fisher said.

The analyst shared with the audience the main themes he believes will continue to be front and centre in discussions surrounding the battery metals industry.

“We've seen incredible price performance, particularly for lithium, and also for cobalt and nickel, in the last really 18 months, but even more so this year,” Fisher said. “I don't think many of us expected prices to go as high as they have gone, particularly for lithium and nickel.”

Lithium prices have increased north of 400 percent since 2021, with nickel prices on the London Metal Exchange reaching a historical high of more than U$100,000 per tonne earlier this year. These high levels have been hitting EV producers, many of which have increased prices.

“In the last week or so, we've seen that the battery producers' Q1 margins have fallen substantially, so they're really feeling the heat of this, and that is starting to have some tangible effects in the market,” Fisher said.

All in all, CRU is expecting prices to level off the current peak, but to remain strong in the medium term on the back of demand from the EV sector.

Another big theme to keep an eye on is the increasing regionalization of supply chains. Even though EV and battery makers in Europe and North America have made announcements about setting up gigafactories, there has not been a lot of movement in the upstream and the midstream parts of the supply chain.

Around 40 percent of lithium supply comes from South America, with another 45 percent coming from top-producing country Australia. For cobalt, 70 percent of supply comes from the Democratic Republic of Congo. But all that output ends mostly in China ― which controls over 70 percent of the midstream.

“That's obviously not ideal from a supply security perspective, but it also means the supply chains aren't particularly efficient from a cost perspective,” Fisher said. “Also, from a safety perspective, moving around battery chemicals, precursor batteries — it makes a lot more sense to have the upstream and midstream closer to market.”

With EV demand expected keep soaring, there’s a lot more that needs to be done to strengthen supply chains.

“We need to start seeing more investment to support the EV markets, and to prevent them from relying solely on China and Asia for all of their battery materials,” Fisher said.

Don't forget to follow us @INN_Australia for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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