Thursday, 25 January 2024 — Melbourne, Australia

By James Cooper Editor, Mining: Phase One and Diggers and Drillers

Twitter (X): @JCooperGeo

[4 min read]

Dear Reader,

MINING versus TECH…

Two high risk, high reward sectors with a diverse pool of small-cap stocks vying for investor interest.

No doubt, tech has won the popularity contest over the last decade, absorbing the bulk of investor capital.

Speculators hunting multi-bag gains as they chase the next Brainchip [ASX:BRN], Appen [ASX:APX] or Altium [ASX:ALU].

Risk capital…an arena traditionally dominated by junior mining stocks, now has a new home in tech.

It’s one of the reasons small-cap miners continue to underperform.

But, we can’t blame it all on tech!

In fact, the tech industry may very well be the spark that ignites a resurgence in the small mining stocks.

Now more than ever, the industry needs to innovate.

That will give the sector at least some chance of meeting the vast quantities of copper, silver, rare earths and other critical metals needed to meet future demand.

After all, we live in a consumer-obsessed economy that adds around 1 billion people every 12 years!

Achieving the impossible, means finding enough raw materials to sustain rampant global growth amid a once-in-a-century energy transition.

That task can only take place with colossal innovation in the mining sector.

Where new technologies enable geologists to uncover orebodies.

Or, where metallurgists can unlocknovel methods for ore recovery.

But, according to insiders, mining remains stuck in the dark ages…that’s the assessment from mining insider Robert Friedland.

Yet, mining has an ancient history brimming with examples of innovation.

As far back as 7,000 years ago, ancient Sumerians discovered a technique of refining copper ore.

Crushing and heating the rock in a process we now call ‘smelting.’

And several thousand years later, we watched another major leap forward…

Until a few decades ago, modern miners relied on processing techniques not too dissimilar from the ancient smelters.

But to smelt ore you need fresh rock, sulphide ore.

Accessing that rock means digging 50 metres or more below the surface, beyond the weathered zone.

You see, shallow rock tends to oxidise and breakdown, making it unsuitable for processing and is why billions of copper bearing rock was relegated to mining waste dumps.

But that changed in the mid-1980s, following a revolution in copper processing.

Known as solvent extraction and electrowinning (SX-EW), it gave miners the means to economically process shallow oxidised ore.

Simply put, SX-EW uses a process known as leaching…a method of dissolving ‘useful ingredients’ with a solution, using sulphuric acid.

This purified solution then undergoes copper electrolysis.

The breakthrough handed miners a windfall…the weathered ‘waste’ rock was suddenly a valuable resource.

Sitting close to surface meant it was far more accessible and cheaper to extract.

The oxidised ore is also soft and relatively easy to dig up.

Importantly, that means less energy to crush, reducing costs at processing facilities.

Electrowinning was a game changer in copper supply…stockpiles of ‘waste’ rock suddenly entered the global feedstock.

Of course, there are some innovators already pushing mining forward into the modern era...

One of these is developing a technique known as bioleaching, where scientists use microbes to leach valuable metals from sulphide ores.

Using nature to do the work traditionally performed by large scale energy-intensive processing facilities!

No doubt, this will barely scratch the surface in terms of what’s needed for future supply.

But an exponential lift in commodity prices could be the catalyst that drives a new wave of tech innovation in the mining industry.

In fact, mining could be one of the last great frontiers for the tech movement.

A sector RIPE for disruption.

From bioleaching to artificial intelligence, the mining industry is bracing for a tidal wave of new tech that promises an unwinding of the traditional business paradigm.

Tech billionaires are already onboard.

Recognising the problem, Jeff Bezos and Bill Gates recently backed a startup integrating AI in mineral exploration to drive target generation.

The privately held company, Kobold Metals, doesn’t offer an opportunity for small-time investors…but this is an emerging sector to watch.

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle.

With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.

By Bill Bonner Editor, Fat Tail Daily

[3 min read]

Dear Reader,

In private life, misinformation is a mischievous delight. We bluff at cards. We wear lifts in our shoes. We embellish our resumes and exaggerate our affections.

But, in public life, lies are a damned nuisance.

Hold on…

This morning, it is gray and rainy. Just as it was yesterday morning. And the day before.  

We escaped the winter of Maryland for the winter of Ireland. Here it is not as cold. It rarely snows.

‘If ye want snow, go back to America,’ explained a taxi driver. ‘If it snows here, the whole country comes to a halt. We have no snow ploughs. Not even any salt trucks. We just wait for it to melt.’

There were traces of snow in the mountains when we arrived. But it rained all weekend, a terrific storm, with high winds coming off the Atlantic and falling tree limbs. The West Coast — in County Clare and Galway — got hit hard, with power outages, trees down and flooding. For us…we just keep a cosy fire in the kitchen; and a pot of tea ‘on the hob.’

Meanwhile…

Fraud and Farce

In the news today, the Chinese are taking a page out of America’s Handbook for Fooling the Public. It’s the Greenspan Put! By law, the government is going to make stocks more valuable. Bloomberg:

China Weighs Stock Market Rescue Package Backed by $278 Billion

Chinese authorities are considering a package of measures to stabilise the slumping stock market, according to people familiar with the matter, after earlier attempts to restore investor confidence fell short and prompted Premier Li Qiang to call for ‘forceful’ steps.

In China, they are proposing to manipulate asset prices by taking money from a number of sources, including state-owned businesses, and buying stocks. In America, the authorities did a kind of trifecta of deception: printing fake money, lending it at fake rates, to produce fake prices on Wall Street.

Fraud is the key element of almost all public policy. It is not the icing on the cake; it is the sugar and the flour.

We have a ‘defense’ department that is expected to protect us from foreign attacks. But since foreigners rarely attack us, we attack them. And now, fresh from its victories in Iraq and Afghanistan, the US firepower industry begins a new war against its most pathetic enemy yet — a desert tribe that doesn’t even control its own sh*thole country. Maybe this one will be a winner.  

All for the Worse

At home, we spend trillions on various programs that are nothing more than boondoggles and giveaways. The Inflation Reduction Act, for instance, had nothing to do with reducing inflation; instead, it gave a big dollop of tooth-rotting subsidies to ‘green energy’ lobbyists while helping to raise consumer prices at the fastest rate in 40 years.  

Fraudulent, scammy, counterfeit — public policies almost invariably make things worse. And we can’t afford them anyway. We are supposed to have a marvellous economy, but that too is a scam; we cannot afford to pay for current programs, let alone pay off those from the past.

At the apex of so much tomfoolery is the money that enables it. No longer an asset, since 1971, the US dollar is a liability. It is a promise by the largest debtor on the planet to pay up. With what? More fake money. As much as needed.  

And now…investors, in keeping with the spirit of mendacity, are ready for it. They believe the Fed will cut its key lending rate. Yesterday, the Dow hit a new all-time high. USA Today:

Wall Street hits record high following a 2-year round trip scarred by inflation     

Wall Street returned to record heights and capped a punishing, two-year round trip dogged by high inflation and worries about a possible recession that seemed inevitable but hasn’t arrived.

A Fake Calm

Meanwhile, inflation is going down everywhere — imports, producer prices, retail prices, wholesale prices, energy, food, consumer expectations, business expectations — you name it. And according to the real-time Truflation index, it has dropped from over 6% in 2022 to just 1.85% today. That’s under the Fed’s 2% target.

What’s going on?  

We’ll know more later, but for now we seem to be in a saccharin spot…a fake calm somewhere between real disasters.

The big question is whether the Primary Trend really did change in July 2020…or whether that too was just another fake-out. After all, it’s an election year; you can’t take anything at face value. 

More to come…

Regards,

Bill Bonner,
For Fat Tail Daily