Month: January 2014

By MoneyMorning.com.au

Iceland isn’t famous for much.

It fought the ‘Cod Wars’ with Britain during the 1950′s and 1970′s, over, that’s it, fishing rights in the North Atlantic.

It’s the home of screechy singer Bjork.

And who can forget the eruption of Iceland’s Eyjafjallajökull volcano. It shut down Europe’s airspace in 2011 causing flight delays and cancellations for a week.

But Iceland is famous for something else. While governments and central banks around the world ran to prop up failing banks using taxpayer money, Iceland’s government did the unthinkable — it let its banks fail…

Now, you may think, ‘So what, it’s Iceland. Big deal.’

Remember, everything is relative. Sure, we’re not about to compare Iceland’s banking system with that of the US, Europe, or even Australia.

But for Iceland, the collapse of the banking system was a big deal in terms of the size of the banking system relative to the size of the economy. A report from Bloomberg News spells this out:

‘The island’s sudden economic meltdown in October 2008 made international headlines as a debt-fueled banking boom ended in a matter of weeks when funding markets froze. Policy makers overseeing the $14 billion economy refused to back the banks, which subsequently defaulted on $85 billion.’

What’s happened since then? It turns out Iceland’s economy is doing just fine. The unemployment rate in Iceland stands at just 4%. Compare that to many parts of Europe where the unemployment rate remains in the double digits.

Banks Fail, Life Goes On

Now, we won’t give Iceland a complete pass. Letting the banks fail was a great idea. What isn’t so great is the rest of the government’s plan. Again, Bloomberg News notes:

‘Of creditor claims against the banks, [Prime Minister] Gunnlaugsson says “this is not public debt and never will be.” He says his main goal while in office is “to rebuild the Icelandic welfare state.”‘

Yuk!

For ‘welfare state’ read ‘redistribution of wealth’. Although we guess a bunch of the people who benefited from the welfare handouts were taxpayers too. So in a way they simply got back some of the cash the government had taken from them in the first place.

And if we had to express a preference, we’d rather the cash went to Icelanders than to investors who deserved to lose money for taking part in a giant banking Ponzi scheme.

Even so, it still leaves us with somewhat of a bitter taste in our mouth. Especially when we read that Iceland’s policies have the full support Keynesian economist-in-chief, Paul Krugman.

But whatever you think of the fine details, the fact that Iceland let its banks collapse proves the deception of those in the US, Europe and Australia who claimed allowing banks to collapse would be catastrophic.

The opposite is true. Iceland now has the lowest unemployment rate in Europe, and a rate that’s even lower than Australia’s ‘miracle’ economy!

Mass Selling Creates Buying Opportunity

It’s a cast iron fact that markets (by markets we mean the free interaction of individuals just like you) will always come to a better solution on anything than a bureaucracy that always acts with a vested interest in mind.

This is what other Western nations should have done. If they had followed Iceland’s lead it’s more than likely that the ‘Crash of 2008′ would be a distant memory.

Everyone could have moved on with their lives. Those who wanted work would have work. Interest rates would be at a level determined by the market — high enough to encourage savers, but low enough to encourage borrowers.

The rates would fluctuate according to supply and demand, just as every other price fluctuates according to supply and demand.

Importantly, you wouldn’t have the constant ebb and flow of booming and busting markets. You wouldn’t have the paradox of bad economic news being good for the market and vice versa.

But, it is what it is. As we’ve explained for at least the past three years, it’s important for investors to acknowledge the situation and deal with it. There’s no point whinging about the manipulators. Make a note of it and then look for great investments that the market has unfairly beat into the ground.

One of those investments is the emerging markets investments we wrote to you about yesterday. Another is the resource sector — more on that later in the week.

The market is treating emerging market economies as though they are still economic backwaters full of good-for-nothing layabouts. The reality is far different.

Many — if not all — of the emerging market economies have an exciting story to tell and a promising future. And yet the markets are selling these economies in droves. And for what? That’s right, they’re after the safety of the US dollar.

To us this looks like a great opportunity to speculate on emerging markets and other beaten-down stories. In fact, we can’t think of too many other places where we’d rather put our money for a punt today.

Cheers,
Kris.

PS. Our old pal Nick Hubble likes the emerging markets story too. He has identified five ways to invest in some of the most exciting (and risky) of these opportunities. He calls these investment his ‘Tiger Cubs’ portfolio. Check out more here…

Special Report: 2014 Predicted

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By MoneyMorning.com.au

By MoneyMorning.com.au

The next stage of the shale boom is underway…overseas.

While US producers are going gangbusters — shale oil and gas production are way up year over year — the rest of the world is getting its collective act together.

Where’s the next Bakken or Eagle Ford? It’s time to think globally….

According to the US Energy Information Administration (EIA), the rest of the world is littered with ‘technically recoverable’ shale. Concentrating on shale gas, for many import-heavy countries there’s huge incentive to get production underway. After all, importing liquefied natural gas (LNG) from the Middle East or piping gas from the likes of Russia isn’t high on anyone’s list. It’s only a matter of time before swaths of the ‘trapped’ shale gas start making a mark.

How much gas is hiding underground? According to the US EIA, a lot!

Using the Advanced Resources International (ARI) estimate for US shale reserves, the US has 1.16 quadrillion (with a Q) cubic feet of recoverable resource. At current consumption levels that represents nearly 40 years’ worth of shale gas (not counting our remaining conventional resources.)

However that huge resource only represents 14% of the world’s recoverable shale gas. There are massive deposits located in China, Argentina, Algeria, Australia and Russia. The way I see it, it’s not ‘if’ this shale gas will be produced, but rather ‘when.’

Demand for clean-burning natural gas is one the rise. Indeed, when it comes to this abundant resource we’re quite literally talking about the energy of the future.

Asia, Europe, South America and even the Middle East are poised to ramp up natural gas demand. Besides being an abundant fuel of choice, natural gas is also much cleaner burning than coal. It’s only a matter of time before the climate-change crowd starts backing this bridge fossil fuel.

Add these two trends together (abundant underground supply, burgeoning demand) and you’ll see there’s a huge pressure gradient at work — that is, the incentive for countries outside of North America to develop shale is getting higher by the day.

The mainstream is starting to ramp up the coverage, too. This time last week, several stories hit the airwaves about some of the most promising non-US shale plays. Let’s separate the wheat from the chaff.

In no particular order Russia, China and the UK have the capability (and underground assets) to become the next game-changing shale players. Here’s why…

We’ll start with the most shocking front-runner: the UK.

‘Hey Matt, the UK isn’t even on the top 10 list for recoverable resources,’ you say. Well, that’s true! But, sometimes the demand/need for gas can boost an opportunity to the forefront. That’s precisely the case with the UK.

As it stands the United Kingdom is a net importer of natural gas, which has been the case for the past eight years or so. That said, the 26 trillion cubic feet (tcf) of recoverable gas that lays under the soil in Northern England could be a crucial part to balancing the nat gas trade deficit. When you do the math that 26 trillion — all else held equal — could make the UK “import free” for an additional 17 years.

And last week, the politicos showed their aggressive hand…

According to the Wall Street Journal, ‘U.K. Prime Minister David Cameron said on Monday that local authorities that allow shale-gas development to go ahead will be able to keep the entirety of business taxes they collect from shale gas sites, up from the current 50%. This commitment will be directly funded by the government, the prime minister’s office said in a statement.’

Tax benefits, to the tune of $2.8 million per well? That could get things kick-started in short order. Keep an eye out, here.

Next on the hit parade is a no-brainer in the case of future shale development, China.

As you can see on the table above, China is #1 or #2 on the list of recoverable shale reserves (depending on what estimate you use for the US). Either way, China is in the ‘quadrillion’ club, which means the natural gas under their soil is an absolute game changer.

What’s more, the gas isn’t in some far off ‘middle of nowhere’ deposit. As of the latest US EIA estimates, much of the gas lies in the Sichuan Basin, smack dab in the middle of the country.

Once China cracks the code on this massive shale find, you better believe producers, service companies and pipeline players are all going to play a role. With China’s net imports of natural gas skyrocketing in the past few — from a trade balance in 2006 to current net imports of nearly a trillion cubic feet — you better believe the Chinese will be making moves towards shale production.

The last country we’ll highlight shouldn’t come as a surprise, either. After all the Russians are just as strategic as the Chinese, and they’ve got plenty of shale gas to go around!

‘Russia alone has the technology, infrastructure, water and political will to be the next revolutionary shale venue — not to mention a lot of sparsely-populated space in which to drill without public backlash,’ Oil Price reports.

The other factor that will add to Russia’s soon-to-boom shale gas is the country’s abundant shale OIL reserves. With more shale oil production on the docket from the state-owned Rosneft, you can expect to see more “byproduct” shale gas production. A trend very similar to what we saw here in the US — with booming Eagle Ford oil, the natural gas started to flow as well.

Once an economic model is figured out, expect to see a blast of production from Russia.

There are several ‘runners up’ awards to hand out here, too…

Canada – The only reason I didn’t mention Canada in the top-3 was that the country already very closely resembles the US shale boom. Massive resources, established resource laws and an able and willing workforce make Canada the natural extension to what’s happening in the US. That said, the opportunities in the US are currently overshadowing any plays up north. Once we see a changing of the guard it’ll be time to take our greenbacks north!

Mexico – Above I asked where the next Bakken or Eagle Ford will be found. Well, clearly since the Eagle Ford formation runs past our southern border, the easy answer is Mexico! If Mexico’s plan to open its energy markets to outside investment holds true, it’s only a matter of time before the big players from the U.S. start jumping over the Rio Grande. When that happens, this black horse in the shale game will gallop ahead.

Argentina – Over the past five years Argentina went from being a natural gas exporter to a natural gas importer. You better believe that Argentina’s government wants nothing more than to tap the massive shale gas reserves hiding below much of the southern part of the country. Behind only China and the US, Argentina has massive recoverable resources, and upside in this shale game.

Australia – If it wasn’t for Australia’s conventional and offshore natural gas production I think the country would have much more incentive to crack the shale code beneath its resource-rich soil. Australia has the gas and the know-how, but unlike the US Australia is (and has been) a very strong exporter of natural gas. Keep an eye on this player, but wait for incentive or a mother lode-type deposit for this shale game to kick into high-gear.

Getting an outside opinion on the global shale race, our resident geologist, Byron King, has this to say:

‘In many other locales around the world, governments want to promote development, and especially repeat U.S. success in fracking. For example, there are large areas of Russia, China, the Middle East and Argentina that look promising in terms of geology and shale deposits, etc.

‘But “just” good geology is not enough. Outside of the US, most other nations lack the legal environment — let alone the oil service industry and equipment — to make fracking for shale oil and gas worth the cost.

‘Consider this metric. In 2012 in the US and Canada, the energy industry drilled over 6,000 wells for unconventional oil. Outside North America, fewer than 100 unconventional wells poked the earth in 2012. So the rest of the world has much catching up to do.

‘Indeed, the key behind the US’s success in shale was the free market, plain and simple.

‘Property rights, resource rights, transparency in the law, tax breaks for energy producers, lack of early government intervention, tons of private seed capital and a willing and able workforce. Without that, and bountiful underground assets, this boom wouldn’t been a bust.

‘Will other countries be able to replicate the exact same run? Of course not. But we’re in the early innings of the global shale gas game, and as the players take the field there will surely be some investable action.

Although the production numbers may not come fast and furious, there will be a lot of long-term opportunities flashing across our screen in the coming years. The global shale game is underway!

Keep your boots muddy,’

Matt Insley,
Contributing Editor, Money Morning

Ed Note: The above article was originally published in Tomorrow in Review.

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By MoneyMorning.com.au

By CentralBankNews.info
    Turkey’s central bank raised its key interest rates, including the one-week repo rate that was raised to 10 percent from 4.50 percent, and said a “tight monetary policy stance will be sustained until there is a significant improvement in the inflation outlook.”
     

Source: Brian Sylvester of The Mining Report  (1/28/14)

http://www.theaureport.com/pub/na/the-numbers-dont-lie-why-the-industrial-minerals-sector-is-here-to-stay

There are two ways to visualize the critical metals and industrial minerals sector. Some see a hostile climate, where junior mining companies compete for scarce financing dollars. But there’s a sunnier side to this story: more than ever, companies, government and academia are forming partnerships to solve a global problem—the ongoing need for scarce critical materials. In this Mining Report interview, Luisa Moreno, industrial minerals analyst with Euro Pacific Capital, discusses the challenges and the prospects for players in a sector she insists is here to stay.

The Mining Report: Let’s start with some macro events in the rare earth elements (REE) space. The Wall Street Journal recently reported that Inner Mongolia Baotou Steel, the world’s largest REE supplier, bought nine regional REE mining companies in a move to consolidate China’s REE industry. The article called that consolidation a sign of market weakness. Do you agree?

Luisa Moreno: I don’t necessarily agree. China set a domestic REE production quota of about 90,000 tons in 2011, according to United States Geological Survey (USGS) Chinese production was about 120,000-130,000 tons per year, between 2006 and 2010. The production ceiling represents more than a 25% decrease in production from the world’s largest producer of REEs.

The move to consolidation in China has two aspects: First, China expects to control domestic output and prices through consolidation. Second, China wants to decrease the negative environmental impact of mining and processing. There are many artisanal miners in China across the different metals and minerals and in particular REEs. Many are working with toxic reagents and chemicals that when poorly handled and disposed off, have a very negative impact on the environment. I think consolidation is positive and bullish in the long-term for the mining space. When there is less production in China, it opens up opportunities for producers elsewhere.

TMR: A recent Euro Pacific Capital research report suggests REE demand will grow 6-10% annually through 2020. Is that enough growth to bring investment capital back into the sector?

LM: It should be. A 6–10% growth profile means that to meet demand, production should reach 175,000 tons to north of 200,000 tons by 2020. If China maintains its output at 90,000 tons, it will give new players the opportunity to come in and fill the gap.

I think that opportunity for new producers is tremendously bullish for the sector. It should attract investment capital once the capital markets understand and believe in this potential.

We may see signs of market improvement when prices stabilize or when prices of the less common REEs, like some of the heavy rare earth elements (HREEs) start increasing, as we believe they might. Rise in demand and prices over the next couple of months should give the capital markets confidence that this sector is here to stay.

TMR: Along those lines, a December 2013 Pentagon report suggested that U.S. reliance on Chinese rare earths is waning. That is a big change from a few years ago. What changed?

LM: Yes, the world’s reliance on Chinese REEs may be waning with the increase in production from a number of countries, including Molycorp Inc. (MCP:NYSE) in the U.S. and Lynas Corp. (LYC:ASX) in Australia, but China is still the largest producer (80–85%) and consumer, and still controls most of the supply (>95%) of HREEs. The Pentagon is likely dependent on a number of HREEs. It has been suggested that the Pentagon may be uncomfortable letting the rest of the world know that there are elements that are critical, that a shortage of these elements could affect them. It is likely that when REE prices were climbing in 2011, the Pentagon may have stockpiled at the time, like many other end-users. The Pentagon may have continued stockpiling when prices fell, to the point that it may be self-sufficient for a number of years, thanks to stockpiling, but we really don’t know.

The U.S. Department of Energy (DOE) has always sent a different message. It works with a different budget and its forecasts are usually very long-term, especially those related to the adoption of emerging energy technologies that are expected to support the America energy needs and economy. It has to be thinking about the available supply of elements in sustainable amounts for long periods of time.

TMR: Reports suggest that the Canadian government wants to control 20% of the global REE market by 2018. Is this political grandstanding or is there any substance to that idea?

LM: That idea emerged from a series of workshops put together by Natural Resources Canada (NRCan) over the last two years; I was fortunate to participate. These meetings brought together a number of industry players: junior companies in the Canadian REE space, end-users like General Electric Co. (GE:NYSE) and academics. They created what is called the Canadian Rare Earth Elements Network (C.R.E.E.N.). The objective is to bring the industry and academia together to fast-track solutions to the common challenges the industry is facing.

The guideline for reaching 20% of the global REE market came from C.R.E.E.N. The group met with Canada’s Minister of Natural Resources, Joe Oliver, to discuss the plan ahead and seek support. As you mentioned, reports out of Ottawa seem to suggest that there is significant interest on the part of the government to support the REE industry across the supply chain, which is promising.

TMR: What could that mean for Canada-based companies and their investors?

LM: If demand does increase 6–10% annually, there will be a need for additional REE production outside China. Canada has deposits with high percentages of the less common elements. It’s a unique opportunity for Canada to contribute to the global supply of HREEs in particular.

If everything goes according to plan, the miners, the end-users and the academics will be able to collaborate to fast-track solutions to some of the most pertinent issues, such as those related to chemical processing. Players like GE, Siemens and others can educate future producers as to their needs. REEs are not exactly commodities; they’re specialty materials. It is important for producers to understand how to customize the materials for different applications to properly accommodate end-users’ needs.

I think the industry is doing the right thing: coming together to solve the critical issues, and interacting with end-users to better understand the global market’s needs.

TMR: Has that changed your analysis or your outlook on some of the Canadian REE deposits?

LM: At first, there was a great deal of competition among junior mining companies, which is not totally unusual. By coming together and combining their technical resources, there is a real opportunity for the Canadian and international companies to solve some major issues. C.R.E.E.N. will also be looking at the impact that these processes might have on the environment and how to minimize that impact.

TMR: What are some companies with projects in Canada that you have Speculative Buy ratings on?

LM: I cover Matamec Explorations Inc. (MAT:TSX.V; MRHEF:OTCQX). We have a Speculative Buy recommendation for $0.22/share. Matamec is one of the most developed companies in the REE junior mining space. The company is developing the Kipawa deposit in Quebec, which contains the HREE-enriched eudialyte mineral. Matamec has completed its bankable feasibility study and is optimizing its flow sheet.

Matamec has a collaboration with Toyota Tsusho Group (TYHOF:OTCPK), a partner that is co-funding the development of the project and is providing technical support. Matamec expects to complete optimization in H1/14 and start working on the financing to build the mine and processing facilities.

Because this project reaches into the HREEs, it will give Toyota and potentially other end-users a supply of elements in addition to the light rare earth elements (LREEs). It should be noted that Molycorp and Lynas both produce predominantly LREEs, and do not refine individual HREEs.

TMR: Do you have other companies with Speculative Buy ratings that you would like to talk about?

LM: We cover Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.MKT; TASXF:OTCPK; T61:FSE). Tasman operates in Sweden. We have a Speculative Buy recommendation and $1.70/share target price. Eudialyte is also the main mineral at its Norra Kärr deposit. If Matamec can develop an economic process, it will be highly positive for Tasman as well. Infrastructure around the Norra Kärr deposit is very good.

Tasman plans to merge with Flinders Resources Ltd. (FDR:TSX.V), a company with an advanced graphite project in Sweden. Tasman’s strategy is to become a diversified industrial minerals company. It already has a REE deposit and a tungsten deposit; it will have a graphite deposit after the merger. The stock performed well after the announcement of the merger negotiations.

TMR: Does the merger make Tasman more or less attractive to investors?

LM: More attractive—I think the stock’s good performance indicates that. It seems that the market sees a diversified portfolio of REEs, graphite and tungsten as a positive. A business combination with Flinders may be seen as a liquidity merger, as Flinders is relatively well cashed at the moment. The merger will strengthen the combined company’s balance sheet.

TMR: Is it likely that Tasman will be the name of the new entity?

LM: Yes. The surviving company is going to be Tasman. Flinders will cease to exist.

TMR: What else do you have a Speculative Buy rating on in the REE space?

LM: We have a Speculative Buy on Frontier Rare Earths Ltd. (FRO:TSX) at $1/share. The company has advanced the metallurgy at its Zandkopsdrift deposit in South Africa. The deposit is rich in monazite, a mineral that has been processed in the past to recover REEs, and thus the expectation is that there are less metallurgy challenges. Frontier is working on the prefeasibility study right now and has already issued a very comprehensive preliminary economic assessment (PEA).

It’s important to note that Frontier has KORES as a partner. Frontier and Matamec are the only companies in the REE space listed in Canada that have been able to secure strategic partners for project development.

TMR: We last spoke in detail about REEs nearly a year ago, in your April 2013 interview. Can you give us an update on some of the newsworthy events among the companies you talked about then?

LM: The financing market has been quite tough. As a result, a number of the junior mining companies, including those in the REE space, have slowed down their projects. Companies that had good cash positions were able to advance. Quest Rare Minerals Ltd. (QRM:TSX; QRM:NYSE.MKT) is an example. The company has completed a positive prefeasibility study, supported in part by the potential to recover a number of desirable byproducts, including zirconium and niobium.

Great Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX) also moved its project forward. The company started a metallurgy study after defining the resources in 2012. Earlier this month, Great Western announced that it had produced a rare earth carbonate product. The market reacted well to that. The company is moving with caution and minimizing expenses as much as possible, given that it has more than $90 million ($90M) in financial liabilities.

We also follow Northern Minerals Ltd. (NTU:ASX) in Australia. Its deposit contains xenotime, a rare mineral that is very high in HREEs, such as yttrium. Xenotime sometimes has as much as 90% HREEs. The company is continuing to define the resource. It has attracted a number of partners and investors, and has raised $30M in the last 12 months—which is positive, given the market conditions.

Namibia Rare Earths Inc. (NRE:TSX, NMREF:OTCQX)also has a xenotime deposit under development. Namibia’s Lofdal REE project is also attractive, as it has the potential to produce large amounts of these less common elements.

TMR: Commerce Resources Corp. (CCE:TSX.V; D7H:FSE; CMRZF:OTCQX) recently put out numbers on its total rare earth oxide concentrate and recovery of REEs on its Ashram REE deposit. What did you make of those results?

LM: I think they’re very positive. Being able to produce a mineral concentrate 43.6% TREO usually means using less reagents in the next processing step. That accomplishment is very positive, but it is not enough, on its own, to reach conclusions as to the economics of the whole project. The next step is to produce, for instance, a mixed REE carbonate product. Individual REEs may then be recovered in a separation plant (e.g. by solvent extraction). I noticed that in the production of the mineral concentrate, Commerce introduced what is described as a weak HCl step after floatation and before the magnetic separation. We don’t yet know the cost benefit of using a leaching step before magnetic separation. I am sure we will learn more when the new economic study results are released, giving investors a better idea of the economics of Commerce’s Ashram project. It seems that the company is happy about the project’s metallurgical improvements and the impact on operating and capital costs, which is encouraging.

TMR: Is there any news of a strategic partner for Commerce?

LM: I think the company is actively looking. I think there is less worry now than in early 2011, when many end-users thought China was going to further decrease exports. As demand increases and prices start to rise, end-users will start reconsidering their options and might be more willing to collaborate again. I expect that to happen between now and 2020.

TMR: Another noteworthy merger is Canada Lithium Corp.’s (CLQ:TSX; CLQMF:OTCQX) takeover ofSirocco Mining Inc. (SIM:TSX), which means Canada Lithium will become a supplier of both lithium and iodine. Are these mergers simply a result of market forces or is there a deeper theme at play?

LM: I think there is a combination of factors behind these mergers. When well cashed mining management teams look at the market, they may find interesting projects. Current valuations are attractive and it is a good opportunity to start consolidating some of these industrial mineral companies.

Sirocco, perhaps more so than Canada Lithium, might have seen that opportunity as well. Some have suggested that this business combination is almost a reverse takeover. The surviving company is indeed Canada Lithium, but the surviving management team is from Sirocco. Sirocco’s CEO, Richard Clark, will replace Peter Secker as CEO of Canada Lithium. Sirocco’s CFO will be CFO of Canada Lithium. The Sirocco team has a strong connection with Lundin Mining Corp. (LUN:TSX), and the company is partially owned by the Lundin Group.

From what we understand, this could be a vehicle for the Sirocco management team to consolidate projects in the industrial or energy minerals space. It already has the iodine; it has the lithium. We believe management may be looking to attract other projects, such as graphite, vanadium, manganese, you name it. That may be the theme for this management team. By the way, the new proposed name for Canada Lithium upon completion of the merger will be RB Energy Inc. (or Énergie RB Inc.in French).

TMR: Could you give us an overview of the lithium market in 2014?

LM: I think the market for lithium in 2014 will be very positive. Tesla recently announced that Q4/13 sales of its Model S electric cars were 20% higher than expected.

This month, the World Bank increased its estimates for global economic growth, particularly for developed countries. We might see that also reflected in an increase in demand for electric cars, tablets, cell phones—all powered by lithium. I think there will be increased demand for lithium, and potentially higher prices.

TMR: What amount of growth do you expect?

LM: Our base-case forecast is for an average of 5% demand growth per year until 2020.

TMR: What lithium companies do you cover with Speculative Buy ratings?

LM: We really like the to-be-formed RB Energy, meaning Canada Lithium, most of the revenues will still come from lithium.

We also like Nemaska Lithium Inc. (NMX:TSX.V; NMKEF:OTCQX). It has a good-sized, high-grade deposit in Québec. The company is working on its feasibility study and is looking to raise funds to build the first module commercial plant. Nemaska has an agreement with Phostech Lithium (private), which will take 100% of the production from its first plant. Sichuan Tianqi Lithium Industries Inc. (002466:Shenzhen), the leading Chinese lithium company, owns 16% of Nemaska shares.

Nemaska is targeting the hydroxide market, rather than the carbonated market that Canada Lithium is in. Lithium hydroxide sells at higher price than lithium carbonated. This story has great potential.

TMR: Do you have any parting thoughts on the industrial metals space?

LM: Demand for industrial minerals is returning. Demand for many of these minerals is connected to demand for emerging technologies and electronic devices, including health care and biotech devices. For instance, some industry estimates show that demand for smart devices will increase 7–8% in developed markets, and 17% in emerging markets between 2012 and 2017. If these sectors continue to perform as expected, the demand for key industrial minerals should follow.

We haven’t yet seen a comeback in prices, but as end-users deplete the stockpiles they built up in 2011, they will return to the market. As demand rises, we anticipate prices will go up. We anticipate this will send a positive signal to the capital markets and have a positive impact on junior mining companies, some of which are close to production. Just as importantly, it may support the many companies that are struggling with financing to advance to production.

TMR: Luisa, thanks for your time and your insights.

LM: My pleasure.

Luisa Moreno is a mining and metals analyst. She covers industry metals with a major focus on electric and energy metal companies. She has been a guest speaker on television and at international conferences. Luisa has published reports on rare earths and other critical metals and has been quoted in newspapers and industry blogs. She holds a bachelor’s and master’s in physics engineering as well as a Ph.D. in materials and mechanics from Imperial College, London.

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DISCLOSURE:
1) Brian Sylvester conducted this interview for The Mining Report and provides services to The Mining Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Mining Report: Namibia Rare Earths Inc., Tasman Metals Ltd. and Commerce Resources Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Luisa Moreno: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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USDCAD: With the pair ending its one–day weakness and strengthening for two days in a role, further bullish offensive is envisaged. However, it will have to break and hold above the 1.1172 level, its Jan 23’2014 high to trigger that trend. A turn above here will activate additional strength towards the 1.1200 level where a breach if seen will set off further gain towards the 1.1250 level. Further out, resistance comes in at the 1.1300 level followed by the 1.1350 level and subsequently the 1.1400 level. Its daily RSI is bullish and pointing higher suggesting further strength. On the other hand, support comes in at the 1.1116 level where a violation will aim at the 1.1050 level. Further down, support lies at the 1.1000 level and followed by the 1.0950 level and then the 1.0900 level, its psycho level. All in all, USDCAD continues to face further upside threats in the long term.

Article by fxtechstrategy.com

Article by Investazor.com

Yesterday, I was expecting Apple to show some good earnings report and to put on a stellar performance, surging towards $588 in two days. An EPS better than expected didn’t matter as the revenue forecast for the second, $42-44 billion, fell short to the market expectation of $46 billion and the shares took a dive and reached $505 in after-market trading hours.

Today we have the social media giant, Facebook, ready to post its earnings report and the question is what should we look at? Definitely, revenues is the key word and for the 4Q 2013 period they are forecast to come in at $2.34 billion, an increase of about 47% over the year-ago period. Another key metric is represented by the mobile market as Facebook is one of the big names along Google and Twitter on this market. Mobile MAUs (monthly active users) are seen jumping from 874 mln last quarter to 928 mln.

From a technical perspective, Facebook managed to make a new high around $58 after it completed a falling wedge pattern. The new high plays the role of a resistance line and it has been tested several times. The shares are 8% below the recent 52-week high, and up 75% over the past year, so the expectations for Facebook are pretty high coming into this quarter’s earnings release. So, if the Apple situation repeats, we can see a drop in Facebook shares price around 61.8 Fibonacci level at $49.22 and on the other hand, a pleasant surprise could be the trigger for setting a new high around the psychological level at $60.

The post Will Facebook have the same fate as Apple? appeared first on investazor.com.

By Grant Williams – Things That Make You Go Hmmm: Behold, Politics

Gibraltar is a British Overseas Territory.

It has an area of 2.6 square miles and juts from the southern tip of the Iberian Peninsula, overlooking the entrance to the Mediterranean Sea. Roughly 30,000 people live in the territory, whose sole distinguishing feature is the very large rock which runs along the eastern edge of the territory and culminates in a dramatic promontory in the northeastern corner.

That’s it there, on the right … see?

Gibraltar was captured by an Anglo-Dutch force in 1704 during the War of the Spanish Succession, in which European countries fought each other over who had the right to succeed King Charles II as ruler of Spain.

Charles (or Carlos) had died without heirs, bringing to its final extinction the mighty House of Habsburg, which had dominated European royalty for three centuries. In his will, Charles had designated his 16-year-old grandnephew Philip, Duke of Anjou, as his successor.

Philip was the grandson of the reigning French king, Louis XIV, the famous “Sun King”; and the prospect of an early 18th-century Franco-Spanish alliance at the heart of Europe was unnerving to others, who saw it as potentially destabilizing the delicate balance of power; and so, as Europeans tended to do in the days before they got around to creating the EU, they opted to fight a war.

This war turned out to be quite the bar brawl, spilling out of Spain and into Germany, the Netherlands, and, somehow, America, as the French and the English fought each other in Florida, New England, Newfoundland (huh?), and Carolina.

(Thankfully, the prospect of an Hollande/Rajoy alliance at the heart of today’s Europe would provoke nothing more than uncontrollable laughter, so Europe is far safer now; but then it was a different world.)

Anyhoo, as part of the Treaty of Utrecht, which ended the Spanish War of Succession in 1713, Spain got a French king after all (Philip V), but he was required to relinquish all future claims by his family on the French throne; various French princelings were forced to give up all present and future claims to the Spanish throne; Savoy was given Sicily; Charles VI of Austria received the Spanish Netherlands, Naples, Sardinia, and most of Milan; Portugal was handed a chunk of the Amazon rainforest … and Great Britain got Gibraltar.

Big whoop!

Personally, if I’d been negotiating the deal, I’d have stuck it out for Naples, Sardinia, and Milan, but … whatever. Gibraltar was better than nothing. Probably.

Funnily enough, as the years have passed, the Spanish have from time to time reasserted their claims to the rocky promontory that juts out from mainland Spain, 80-odd miles southwest of another town annexed (albeitUNofficially) by the British — Marbella. And who can blame them?

Gibraltar is to Spain as Cape Cod is to Massachusetts or Baja is to California — only with more monkeys.

Referenda proposing a return to Spanish sovereignty were held in Gibraltar in 1967 and 2002, and one would have to say that the results could certainly be classified as “conclusive.”

The 1967 referendum on whether to pass under Spanish Sovereignty or remain part of Great Britain left little room for doubt:

Choice	Votes	%
British Sovereignty	12,138	99.64
Spanish Sovereignty	44	0.36
Invalid/Blank Votes	55	–
Total	12,237	100
Registered Voters/Turnout	12,672	95.67

Thirty-five years later, the 2002 referendum, which asked “Do you approve of the principle that Britain and Spain should share sovereignty over Gibraltar?” was equally one-sided:

Choice	Votes	%
No	17,900	98.48
Yes	187	1.03
Valid Votes	18,087	99.51
Invalid/Blank Votes	89	0.49
Total	18,176	100
Voter Turnout		87.9
Electorate		20,678

Whatever your view on the Gibraltar issue (assuming you can be bothered to have one), it’s pretty hard to argue with 98.48% of the voters in a (supposed) democracy; but with things in Spain being quite tight and Catalonia looking to become a new Gibraltar all of its own, the Rajoy government clearly felt that a little distraction was in order; and so “tensions” in the Strait have escalated in recent months, with Spanish-imposed delays at border crossings that would make Chris Christie’s staff salivate (no need for subterfuge HERE). And, of course, in response quite by coincidence, there have been the requisite “naval exercises” conducted by the British Royal Navy off the coast of “The Rock.”

In early January, however, after the mood had darkened considerably over waiting times to cross the border between the Territory and the Mainland having stretched to four hours (Fort Lee residents, the people of Gibraltar feel your pain), another amazing coincidence occurred when certain diplomatic documents relating to discussions on Gibraltar were declassified by the British Foreign Office. Within these documents detailing exchanges between King Juan Carlos of Spain and the then-British Ambassador to Madrid, Sir Richard Parsons (no relation to Nicholas), was a revelation:

(UK Daily Telegraph): King Juan Carlos of Spain told Britain that Spain “did not really want” Gibraltar back as it would lead to claims from Morocco for Spanish territories in North Africa, newly declassified documents from the 1980s released by the Foreign Office reveal.

The King of Spain admitted privately in a meeting with the then British ambassador to Madrid, Sir Richard Parsons, that it was “not in Spain’s interest to recover Gibraltar in the near future.”

If it did so, “King Hassan would immediately reactivate the Moroccan claim to Ceuta and Melilla,” the monarch, who celebrated his 76th birthday on Sunday, reportedly said during the meeting in Madrid in July 1983.

Fascinating stuff, but that’s not the passage that contains the revelation.

This is:

In a confidential dispatch from Madrid to Geoffrey Howe, the then Foreign Secretary, Ambassador Parsons wrote: “The King emphasised, as he had done with me before, that that requirement was to take some step over Gibraltar which would keep public opinion quiet for the time being.

“It should be clearly understood in private by both governments that in fact Spain did not really seek an early solution to the sovereignty problem.

“If [Spain] recovered Gibraltar, King Hassan of Morocco would immediately activate his claim to Ceuta and Melilla.

“The two foreign ministers should reach a private understanding between each other, differentiating between their actual aim and the methods used to propitiate public opinion on both sides.”

Did you spot it? No?

Well here it is again in slow motion:

“T h e t w o f o r e i g n m i n i s t e r s s h o u l d r e a c h a p r i v a t e
u n d e r s t a n d i n g b e t w e e n e a c h o t h e r, d i f f e r e n t i a t i n g
b e t w e e n t h e i r a c t u a l a i m a n d t h e m e t h o d s u s e d t o
p r o p i t i a t e p u b l i c o p i n i o n o n b o t h s i d e s.”

… and here’s the super-slo-mo close-up frame (if you have 3D glasses, put them on now):

“… P R O P I T I A T E P U B L I C O P I N I O N …”

Let’s go to the dictionary:

pro·pi·ti·ate transitive verb \prō-pi-shē-āt\ :
to make (someone) pleased or less angry by giving or saying something desired

Behold, politics.

To continue reading this article from Things That Make You Go Hmmm… – a free weekly newsletter by Grant Williams, a highly respected financial expert and current portfolio and strategy advisor at Vulpes Investment Management in Singapore – please click here.

 

 

 

By CentralBankNews.info
   India’s central bank raised its policy rate by 25 basis points to 8.0 percent, its third rate rise since September 2013, but said it did not expect to tighten its policy further in the near term as long as inflation evolves as expected.
    The Reserve Bank of India (RBI), which last month said it was poised to raise rates if inflation didn’t decline, acknowledged that wholesale price inflation had fallen significantly in December due to lower vegetable prices but excluding food and fuel inflation had risen.
    It is the second month in a row that the RBI has surprised financial markets. Economists had expected the RBI to maintain rates today given the drop in wholesale price inflation to 6.16 percent in December from 7.52 percent the previous month. The decision to maintain rates in December also took markets by surprise as November inflation had risen and the RBI was expected to raise rates.
    But the RBI has now adopted consumer prices instead of wholesale prices as its main inflation gauge, following a recommendation last week by a committee chaired by Urjit Patel.
    The committee recommended that the RBI should set an objective of CPI inflation below 8 percent by January 2015 and below 6 percent by January 2016. In the long term, the committee recommended an inflation target of 4 percent, plus/minus 2 percentage points.
    In December India’s CPI inflation fell to 9.87 percent from November’s 11.16 percent and the RBI said the projections “indicate that over the ensuing 12-month horizon, and with the current policy stance, there are upside risks to the central forecast of 8 percent.”
    “An increase in the policy rate will not only be consistent with the guidance given in the mid-quarter review but also will set the economy securely on the recommended disinflationary path,” the RBI said.
    It added that the “extend and direction of further policy steps will be data dependent, though if the disinflationary process evolves according to this baseline projection, further policy tightening in the near term is not anticipated at this juncture.”
    In its accompanying report on economic developments, the RBI said CPI inflation is expected to remain above 9 percent in the fourth quarter of the fiscal year 2013-14, which ends March 31, and range between 7.5 and 8.5 percent in the fourth quarter of FY 2014-15, with the balance of risks tilted to the upside.
    If the RBI is succeeds in reducing inflation to its target, India’s economic growth is expected to improve to around 5.5 percent in FY 2014-15, which begins on April 1, compared with a little below 5 percent for the current 2013-14 year.
    “A pick-up in investment in an environment in which external demand continues to be supportive of export performance could impact an upside to this forecast,” the RBI said.
    India’s Gross Domestic Product expanded by an annual 4.8 percent in the third calendar quarter, up from 4.4 percent in the second quarter.
    The RBI expects some loss of growth momentum in the October-December quarter with industrial activity still contracting, weaker consumer demand and lackluster capital goods production due to stalled investment demand. Fiscal tightening is also likely to exacerbate the weak demand.
    But although the global recovery is gaining traction that will help boost demand, the RBI said “uncertainty continues to surround the prospects for some emerging economies, with domestic fragilities getting accentuated. Financial market contagion is a clear potential risk.”
    India’s trade deficit for the first nine months of fiscal 2013-14 has shrunk by 25 percent from its level last year and the current account deficit for 2013-14 is expected to be below 2.5 percent of GDP compared with a deficit of 4.8 percent in 2012-13.
    “The recent resumption of portfolio flows, both equity and debt alongside the pick-up in FDI and external commercial borrowings that is underway should help finance the currency account deficit comfortably,” the RBI said.
    In its third quarter review, the RBI did not make any comments about the rupee.
    The rupee weakened sharply from May through August, along with many other emerging market currencies, before bouncing back in September. 
    Since then it has been largely stable until last week when concern over China triggered weakness in many emerging market currencies and the rupee again fell. Earlier today the rupee was trading at 63.07 to the U.S. dollar, down 1.8 percent since last Monday. Compared with the end of 2012, the rupee has lost 13 percent.
    While the RBI raised its policy rate, it held the cash reserve ratio (CRR) steady at 4.0 percent. But in line with the rise in the policy rate, the marginal standing facility rate and the Bank Rate were raised by 25 basis points to 9.0 percent and the reverse repo rate is now at 7.0 percent.
    In its economic report, the RBI also said there were foreign disinvestments of over US$13.4 billion ($10.5 billion in debt and $2.8 billion in equity) from the first sign of tapering of asset purchases by the U.S. Federal Reserve and Sept. 3, with the rupee depreciating by 17 percent and foreign exchange reserves depleting by nearly $17 billion.
    But since then, the rupee has appreciated by 6.7 percent, the loss of reserves has been more than fully recouped and capital flows have resumed, with net investment of $9.1 billion in equities from Sept. 3 to Jan. 24, and debt flows have turned positive, with net investments of $3.8 billion.

    http://ift.tt/1iP0FNb

By WallStreetDaily.com

You know that mustache you grew to raise awareness for prostate cancer as part of the “Movember” movement? Well, it just crushed Procter & Gamble’s (PG) business.

At least, that’s what the executives want us to believe.

Last Friday, Chief Financial Officer, Jon Moeller, tried to pin the company’s disappointing results for its grooming business on the fact that four million men ditched shaving for a month.

Puh-lease!

What’s next, Jon, the dog ate your homework?

I don’t expect this to be the last excuse offered up on an earnings call, either.

Thanks to the record cold temperatures that much of the country has been enduring for a solid month, I’m sure that the weather will get blamed a few times, too.

Why bring any of this up?

Because we’re about to get bombarded with earnings. This week alone, over 225 companies are scheduled to report results.

While I want you to be on the lookout for the most laughable excuses (please submit your candidates for consideration here), I also want to make sure that you understand why individual earnings reports are more important than they’ve ever been this entire bull market.

In the process, I promise to share one corner of the market that’s poised for outsized gains. Even if the broader market continues to stumble. So let’s get to it…

A Stock Picker’s Market

When it comes to discerning the future direction for the stock market, I typically tell you to focus on the averages. Specifically, the average percentage of companies that beat earnings expectations.

The higher, the better. After all, stock prices ultimately follow earnings.

So far, so good…

As Bespoke Investment Group notes, 64% of companies have beat expectations this quarter, which puts us on pace for the best quarter in nearly three years.

Under normal circumstances, I’d be ecstatic about the early reading. Not this time around, though. And that’s simply because the averages don’t matter this quarter.

As Chris Verrone at Strategas Research Partners notes, correlations among S&P 500 stocks rest at their lowest level in over a year.

That means stocks aren’t moving in unison anymore. Instead, companies are going to rise or fall on the merits of their individual fundamentals.

Or, more simply, we’re in a stock picker’s market. And we need to make sure we pick wisely.

You see, companies missing expectations are getting throttled, dropping an average of almost 4% on their report days.

Big misses, like Sallie Mae’s (SLM), are prompting double-digit selloffs.

Meanwhile, companies reporting better-than-expected results are responding to the upside. Like server technology company, Super Micro Computer, Inc. (SMCI).

Not only did it beat earnings expectations by tripling profits in the last quarter, it raised expectations for the next quarter. Shares jumped more than 24% on the news. And therein lies the opportunity for us…

Keep Betting on Tech

As investors scrutinize individual company results, earnings season is yielding clear-cut losers and winners. In such an environment, we need to tip the odds in our favor by focusing on the corner of the market with the highest probability of winners.

And that distinction belongs solely to the technology sector.

There’s no arguing with the data…

According to FactSet, a chart-topping 85% of technology companies have reported better-than-expected earnings and sales this quarter.

Not only that, but the technology sector is reporting the largest increase in earnings growth out of any sectors.

Bottom line: In this jittery and excuse-laden market, companies in the technology sector keep putting up impressive profit growth. That should translate into big profits for investors, too. So keep betting big on tech.

Ahead of the tape,

Louis Basenese

The post Stock Market’s “Mustache Effect” Claims Its Latest Victim appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Stock Market’s “Mustache Effect” Claims Its Latest Victim

SaxoBank Launches New Social Trading Platform

On Thursday January 23rd, Saxo Bank, the award-winning online trading specialist, announced the beta-launch of TradingFloor.com, the first multi-asset social trading portal which will attract both expert traders and first-time investors.

The new site will integrate social media with the financial industry, building an online community of traders and facilitating a stream of quality content centered on Saxo’s multi-asset capabilities. The launch will revolutionize investment and promotes an innovative social element which connects like-minded traders online.

To mark the launch, Saxo hosted a global press conference on Thursday 23rd at Saxo Bank HQ, Copenhagen, with attendance from international journalists representing worldwide news agencies spanning seven different countries, including the BBC and Denmark’s Børsen. The announcement was followed by a live demonstration of TradingFloor to reveal the platform’s main features. This innovative release will signal new ground for investors, transforming trading into a social experience.

Saxo’s mission is to evolve TradingFloor, remodelling the service to become the definitive social trading market. By combining social features with Saxo’s leading trading platform, traders will be able to interact online with experienced investors, participating anonymously or sharing activity openly. Either way, the TradingFloor portal exclusively features full trading accounts to ensure a communal social trading base of serious investors. Social trading is a product which encourages idea sharing and intelligent interaction, and the new dashboard compares performance data with other investors in the #socialtrading community, meaning inexperienced traders can learn from big players.

This launch reinforces Saxo Bank’s status as the foremost online trading platform, with TradingFloor offering a unique blend of Community, Content and Trading. Trading strategies can be shared, comments can be posted, and performances can be evaluated. For the first time, a social trading portal will make sense of the relentless flow of social media insights, filtering pertinent trading analysis while assembling an audience from which it will be possible to draw inspiration and collect relevant data. TradingFloor will be the most sophisticated social trading hub online, building a forum in which investors can take advantage of Saxo’s multi-product offering.

Traders can circulate trading perspectives online and contribute to a real-time current of transient market sentiments. Performance data is evaluated, analysed and verified, developing a reliable compilation of practical information across all asset classes applicable to trading and fund management. Expert investors can streamline trading strategies to share with peers, while novice traders will access a ground-breaking social platform that promotes engagement and provides a foundation on which active trading talent can excel.

Major features will be announced over the coming months and, throughout 2014, Saxo will unveil several more language sites for the new TradingFloor. Fully functional sites in Russian, French, Spanish and German will become active and each language roll-out will signify a milestone in social trading. TradingFloor will change the way investors approach fund management, across all branches of trading: FX, options, futures, CFDs, bonds and equities.

In order to take full advantage of the social trading features, users can maximise the service by registering for an account. Non-account holders will still be able to access the online community, but Saxo recommends a full account to benefit from their valuable digital resources and rich spread of content, including up-to-date market news and data from Saxo’s own research teams and industry experts.

TradingFloor will grow as an agile industry player, penetrating online social space and assimilating fund management with social media. As a beta launch, Saxo Bank awaits feedback from the trading community when revealing exciting new features and upgrades over the next year.

Visit the New Social Network here.