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THE NORTHERN MINER | OCTOBER 2023
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Industry puzzles over historic gap between mining valuations and commodity prices | Gold expected to play key role in financial ‘reset’
PRECIOUS METALS SUMMIT
he mining sector, a longstanding pillar of the global economy and even more important now with rising attention to critical metals and secure supply in Western nations, is facing emerging challenges on multiple fronts — including access to finance. This means that despite the hype surrounding the industry, it has not translated into tangible investments or capital inflows, the Precious Metals Summit heard in September. During the first day of the industry conference (Sept. 12-15) in Beaver Creek, Colo., industry observers highlighted the urgent need for fresh perspectives, techno-
logical innovations, and substantial capital investments to bridge the existing disconnect and allow the sector to fulfill its important role. One of the perplexing trends experts pointed out is a surprising regression in industry valuations. “A lot of the companies we own today, in terms of valuations, are back to levels prior to discovery holes,” said Otavio ‘Tavi’ Costa, a partner and portfolio manager at Crescat Capital. This necessitates a reassessment of their investment strategies and a stronger focus on innovation, Costa said. Diving deeper into the economics of the mining sector, another panelist at the summit, Haytham Hodaly, senior vice-president at Wheaton Precious Metals (TSX:
2020
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BY HENRY LAZENBY
Tımes change. Has your mine plan?
WPM; NYSE: WPM), highlighted the glaring disparity between mining company valuations and commodity prices. “This is probably the worst disconnect I’ve seen in over 20 years,” Hodaly noted. Analysis by San Francisco-based Merk Investments, manager of the ASA Gold and Precious Metals (NYSE: ASA) fund, showed gold equities have been underperforming bullion for more than a decade and in April were near the all-time lows of 2015. Toronto-based Sprott in July listed company share dilution, misallocation of funds, jurisdictional risk, low margins and longer permitting times as reasons for the discrepancy. Gold’s key role During another panel discussion, mining magnates Frank Giustra and Rob McEwen outlined the key role they expect gold to play in a coming global financial ‘reset.’ Giustra and McEwen presented a bleak picture of the current economic landscape, and suggested there will be big economic ramifications from the potential end of a 70-year super debt cycle. “Never listen to what a central bank has to say — watch what they do,” Guistra said. “Right now, they’re screaming, ‘buy gold.’ They’re loading up. And it is my belief they’re loading up because there will be a monetary system reset that we don’t know what it looks like yet. But gold will play a role, otherwise they wouldn’t be loading up this way,” he told the session. While younger investors have been seduced by cryptocurrencies and other non-traditional assets, Giustra, CEO of Fiore Group, labelled crypto as a speculative investment that lacks transparency and is prone to market manipulation. In contrast, he emphasized gold as a viable investment avenue for younger generations, suggesting buying physical gold coins as a stable and relatively safe investment route. Giustra’s advice is grounded in the historical consistency of gold in times of economic instability. “You look in Argentina, which experiSee COMMODITIES / 10
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Ana Cabral is The Northern Miner’s Person of the Year for 2022 | Sigma Lithium CEO brings tech mindset to mining
AWARDS
Ana Cabral, CEO and cofounder of Sigma Lithium. SIGMA LITHIUM
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BY ALISHA HIYATE
igma Lithium’s (TSXV: SGML; NASDAQ: SGML) advance from IPO in 2018 to first production at its Grota do Cirilo mine in Brazil this year has been impressive — as reflected in the tripling of its share price since January 2022, as well as takeover rumours earlier this year (involving Tesla, no less). The now $5.3-billion market cap company expects to churn out 130,000 tonnes spodumene concentrate this year for a hungry lithium market, and near-term expansion plans to triple production. But to get here, it’s had to consistently deliver on its promises, not an easy thing to do in a nascent and volatile market. That’s why Sigma Lithium CEO and co-founder Ana Cabral is The Northern Miner’s Mining Person of the Year for 2022. Cabral, a Brazilian with a background in banking, including as a managing director and head of Latin American Capital Markets at Goldman Sachs, has been central to Sigma’s success, shepherding the company to its newfound status as one of the biggest hard rock producers in the Americas. When the US$130-million initial mine in Minas Gerais state reaches full production this year, an annualized 270,000 tonnes spodumene concentrate at 5.5% lithium oxide (Li), it will be the largest hard rock spodumene producer outside of Australia. And, if it goes ahead with planned phase 2 and 3 expansions — an announcement was expected at press time in late September — Grota do Cirilo
CANADIAN MINING HALL OF FAME NAMES FIVE NEW INDUCTEES / 12
would become a top five producer as soon as 2025, scaling up to 104,000 tonnes lithium carbonate equivalent (LCE) annually over a 13-year mine life from 37,000 tonnes LCE this year. ‘Obsession with discipline’ Influenced by her time in banking, Cabral has sought to run Sigma See CABRAL / 10 PM40069240