Frequent quarantine stays could be hard on a miner's well being, warns the CEO of Fireweed Zinc, Brandon Macdonald.
Macdonald joined Kitco correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae, to record a podcast on Friday.
Macdonald noted that some miners travel outside of Canada for work then have to return to a 14-day quarantine with no access to a gym or recreation. Meals must be eaten in the hotel room.
"So they're three-weeks on and two-weeks off. They come back to Canada and [start] a 14-day quarantine. Rinse and repeat. How sustainable is this?" asked Macdonald.
Harris noted that some mining companies are providing counseling to workers who travel off-site.
Macdonald noted that Fireweed operations are in Western Canada.
The group also discussed the Northern Star and Saracen merger, the biggest deal in the gold space in the past two years. The deal is valued at A$5.76 billion ($4.14 billion) and the newly-formed entity will be a global top-10 gold miner by market value. The panel also turned to Osisko Gold Royalties and its spin out of its Barkerville project.
Links:
Welcome to kick a round table. I am your host. Michael McCray with me is editor Niels Christianson. Hi, Niels. Hello, happy weekend. Happy Thanksgiving weekend, actually for the Canadian listeners. Yes, exactly. with us as a kicker correspondent. Paul Harris. Welcome Paul.
Good afternoon, everybody. And special guest Brandon McDonald. Brandon is a great follow on Twitter. He also runs a pretty good exploration and development company. Last check. The company has tripled its value off its March. Lowe's. Brandon May be can introduce yourself and fireweed sync. Yeah. Happy to be here.
Uh, as you said, CEO of fireweed, zinc, uh, st. Cloud silver, uh, exploration development play and Yukon territory, Canada. that might be just the quickest explanation for a company we've ever had. That's fantastic. Well, it's, I don't know, like I have this belief that, uh, like if I was on here to sell fireweed, uh, you look, you get, you get the long pitch, right?
Um, But, you know, as a background, that's always necessarily, it always bugs me. Like you go to a technical conference and someone gives us a 10 minute technical presentation and they spend six minutes on their share structure. That's like, what are you doing? Just spit it out and move on to the stuff you're here for.
Right. So
let's switch to precious metals as well as lead off with Niels. , then precious metals were rocked by stimulus talks this week, uh, up and down.
, we're actually, so I just want to mention that. I mean, we're heading into the, the weekend with gold up about 1% on the week to week high right now. , sort of one 80 from where we were starting the week, you know? Trump comes out, uh, tweets, uh, stimulate stinks. Let's talks are off until after the election.
Gold drops 2%. We're seeing headlines that, Oh, well maybe there's a piecemeal deal to be made. Maybe there's this, maybe there's that. Then he comes out today saying, uh, There's chance for a comprehensive stimulus package again, , and Gold's up dollars down gold up. And I think that is what we're going to continue to see.
, the only thing that I think though is that I don't think we see a breakout because I don't think we actually see a stimulus package. I don't think either side right now wants to give the other, uh, some sort of victory three this close to the election, Paul. Pardon? He's the spoofer
he needs to be, he needs to be fined. A billion dollars is that
is spoofing. We're talking about the callback to the JP Morgan story, where they had that huge penalty, uh, regarding a spoofing and precious metals. Uh, the other thing is this is. That, uh, we did have the, a world gold council. I had the report on gold ETFs and we can send you to see a strong performance into investing in gold.
Well, yeah, I think that's, that's the name of the game that's been in the, the, the story all year is just how big investment demand into gold is. And in September like that, this is a prime example. September, uh, gold saw its worst month in what four years dropped nearly 4% in September. And yet investors were still buying gold, you know, net inflows of 68, 68, tons of, of gold.
It's okay. You can't fight this trend and this trend is not going to end anytime soon. I don't think, I mean, you have interest rates at negative. You have uncertainty just everywhere you look and, you know, in, in. If you're looking for a safe Haven place, can you really buy a 10 year bond? That's trading less than 1%.
I don't know. It's in this environment. Gold is, is really stands out as that insurance policy, that safe Haven play. , you know, it's not often that we have somebody here that, , can, , talk knowledge will be about base metals. , I think kind of a mystery for us would be a zinc and housing moves. We always hear about, uh, copper prices, doctor copper, and how that actually has an impact upon the economy or how that's linked to the economy.
But I'm Brandon, I think it's. I think, could you just a thumbnail zinc for us? Um, I do see that, um, I think when I was looking at the numbers, uh, copper is up about 50% off of its lows. Just stop over $3. Uh, I think that zinc has gained about 40%, I think offer the marshmallows as well. Um, can you tell us what investors should know about zinc and zinc demand and sinks supply?
Yeah. I mean, zinc demand by and large, probably I would say it's going to be over 50% of it is really down to galvanization. Right? So that's, that's automobiles and infrastructure being the large share of that. Right. So that's, you know, that's how zinc demand mostly. Lives and dies. Uh, you've got some other niche uses, you know, alloys, brasses, fertilizers, potential emerging technologies and, you know, zinc air batteries, et cetera.
But, um, really it's, it's going to be down to infrastructure and automobiles is, is what, you know, it's going to be that the demand drivers. Um, so I think in terms of the bounce, back to technical bounce back, like all the base metals work, right? Like, um, it got beat up. I was. Do you know, I kind of surmised broadly that I thought about on a cash basis at the low about 30% of the industry was under water.
Um, and perhaps on a sustaining basis, as much as 50%. Right. And, and you, you, you can defer sustaining capital for a while, but obviously if 50% of the industry's under, you know, the miners are underwater on a sustaining basis, then, then that's eventually blows up. Right. So we bounced back now and I think it's a little bit more comfortable for, for most of the players out there.
production, if it dips a gain, you know, you, you, you risk. You know, some of these bigger players failing, you know, I think that, uh, there's some, some of the bigger producers out there that are what I'll say marginal, and then you've got a whole lot of marginal small producers. Um, you know, the Chinese production of zinc plus lead is I think about 4 million tons a year, their second largest zinc producer after, uh, Australia.
Um, yeah, they don't have a single large mine, so, so it's a handful of medium sized mines. Uh, and I think at the large mine, uh, the international st cloud study group defines us, I think a hundred thousand plus tons of, uh, Connie year. Maybe it's a hundred thousand plus tons of metal contained. I mean, whichever the case, um, you know, they're really driven by, by, uh, a massive amount of small operations, which you've seen, um, are first off, easy on, easy off.
They're the marginal producers. Uh, they're not low cost operations. They're probably not even permitted in a lot of China. Uh they're they're environmentally bad. And you have States, like, I think the state has to Schwann, for example, shut down a whole bunch of these small operations. And I think you're going to continue to see that in China.
Um, they love their economic growth, but if they find ways to, you know, they don't love pollution, they may have a lot of it, but they, they do not love it. They've they've placed it. Behind economic growth for a while, but I think it's going to change when they reach sort of a minimum level of, of wealth across the country.
Uh, people are going to start crying out for clean air and fresh water. Um, and that's going to shut down those operations. So you just shut down that much supply. Um, and suddenly you'd be in a massive, uh, deficit globally. Paul just is following on from that, you know, China, I think is just past week, um, committed to, or said it would invest something like $5 trillion to reach carbon neutrality by 26 weeks.
So echoing Brandon's point about starting to care for the environment it's environment, the government is starting to make some very big, uh, capital deployments to that end. Yeah. And look in terms of emerging zinc demand or changes in upcoming sank demand. The monetary stimulus obviously has been the short term tool of choice of governments and central banks around the world.
Um, but there's going to be a fiscal stimulus coming, and there's not a lot of places other than infrastructure that you can drop a trillion or two. Right. So, um, that's, what's going to be, yeah, yeah, yeah. That would, would get spent. I promise. Right. It's going to be some sort of stimulus. Um, but yeah, so, so, you know, uh, I think Trump's talked about, did he talk about at one point.
2 trillion for infrastructure. I think he was a number he was bandying about. Um, I think certainly it is not beyond the realm of possibility that globally we see 10 trillion of, uh, of fiscal stimulus with, with the majority of that being infrastructure. And they don't look, that's going to be announced now and there'll be an it kind of a momentum effect on that.
But the deployment's going to come in the next five to 15 years fundamentally. Right. So I'm still, you know, that that's, it's bullish, right? That's sort of infrastructure you want to see? Uh, it's good for the economy, obviously in good for metals, man. I want to switch to, , juniors and minors. , Paul, can you, , tell us about, uh, maple goldmines?
Maple goldmine signed an agreement with Agnico Agnico Eagle mines this week to create a 50, 50 joint venture combining Maples Dre, project and acne curves detail projects in, in Quebec. , as part of the deal I can curve is gonna invest into, you know, 6 million, 6.3 million Canadian dollars. Into maple.
And I think this really highlights or starts to really highlight the fact that, , Agnico is going to face some kind of, , project crunch or ounce replacement crunch, , in, within the next five or 10 years or so. , And so this is a very positive development, obviously for maple, but also for the junior space in general, one of the big gold producers is starting to deploy capital in juniors to get other minds into projects towards production.
We're going to talk about that theme regarding a capital deployment in a minute where we talk about some of the big M and a, but I just want to stick with the juniors for a moment. , Keiko is a media sponsor for a June Yukon alliances. Invest Yukon. That's the virtual site series that show runs from October 20th to 23rd.
During the week I interviewed about eight juniors that was attack resources, Banyan gold, strategic metals. Alexco unfortunately I didn't get to a fireweed, uh, but, uh, that was due to a scheduling technical issue about, uh, we will have our conversation shooting. Brandon, just a couple of thoughts from actually being at the show.
It's just really nice seeing people, you know, it was just a being in a room and just sitting down and across with them. And then we were doing social distancing. We were doing the whole masks and we were making sure that we had a wide, a wide studio, but there's something about actually being in a presence with a person and seeing the person in front of you.
It just makes a real impression. And you really impart the news. You really take the news as opposed to if it's something, you know, um, you know, if it's, if it's, if it's just all screen time again, Did you have to do the sour toe shot as well?
Aye. Aye. Well, we'll, we'll see, we'll see how they manage that. Uh, virtually. Um, I'm also glad that I have Brandon here because I want to get to the Yukon, but just some other notes. Uh, when I was, when I was talking to people. Everyone was just confident. Um, you know, it was just because there was such a law long slog, uh, back in the last decade.
And, you know, you had a lot of people that were kind of putting on a brave face, but everybody has a real mood change and it was just right across the board. You just see everybody that, because they're finally get financing because we see the strong metal prices. Uh, it's a real mood booster. And the third factor on that would also be the opening of the mines, uh, the Victoria gold mine and the coming up Alexco.
Everybody was mentioning it. Everybody was happy about it. And it really shows that the kind of the Yukon is on the move. And the one thing that, uh, everybody else was saying to a T when do I get my assays, Brandon? What's happening with the labs? Yeah. I mean, look at it's. This is a twofold problem. last year, reasonably slow year.
So labs are perhaps cutting back on staff, et cetera. Um, I find that with a very busy year, this year in Vicky, the late summer as people get their financing a little late this year. Right. So you've got usual ramp-up issue is at the labs and then you throw covert into the mix. Right? So, , staffing issues as a result of COVID.
, is, is just means it's, it's gonna be a long time for assets. You know, we dropped off some samples. Uh, I think one of my, uh, GL was just saying they dropped somebody off last week and it was just like samples everywhere. Hadn't even made it to the prep lab at the facility. Right. So, um, I, you know, I, I hesitate to make a prediction, but I suspect it's, it's going to be seven to eight weeks plus for a lot of people from when they drop their labs or samples off with the lab to when they get, get it back.
, and I've certainly heard some people suggest that investors are going to be like picketing the labs, you know, demanding results. , it's frustrating, but I think the key thing is for management to be able to. Bundling clear and signal that. Right? Cause it was the old expression that, you know, um, uh, good results or by, you know, what is it that batteries, the results are by Rocketship bad results by dog sled or something.
I don't know. Anyway, the point being that, you know, everyone thinks that if it's taking a while, it's because it's bad. , and you know, everyone listening needs to understand. That's certainly not the case. And that's a part of, you know, we, we. For the first time released a description or very simplistic description of a drill hole saying it was mineralized, which we don't normally like doing.
Um, but we needed to kind of clear the decks a bit, or else we risk, like effectively being locked out on material, corporate actions, including fundraising until the assets came back and could be the new year for the last of my essays. Is this, uh, is this a worldwide, uh, is this a worldwide issue? I honestly don't know.
Um, I, I'm hearing a lot about Western Canada and Ontario, but I'm not hearing a lot elsewhere now. I've heard it in times past, um, where it's it's localized. I had heard of like, Samples going through a prep lab in Canada and being sent to like a Peru, believe it or not to be assayed. Um, just because there was, that was actually a quicker way to do it.
Um, so I'm not, I'm not entirely sure I'm not getting a lot of Intel about outside of Canada. Yeah, I, I think it's similar in other provinces in Canada and some of the other principles state in the U S and in addition to the reasons Brandon mentioned, because companies have been able to fund, um, there's some very big jewel campaigns going on.
So there's loads and loads of core coming through the process. Let's turn to some of those big deals that we teased earlier. They headline story of this week and the mining was obviously the Northern star resources and the Sarason mineral holdings, can you talk about that, Paul?
Yes, Northern star and Sarah's and minerals are getting together, um, which will create the sixth largest, publicly traded gold company by market capitalization, not including Chinese companies and consolidates the cow goalie district in Australia. Um, and this is the biggest. Deal in the gold space for about two years since , uh, Newmont and Goldcorp, uh, got together.
And, and it also has a North American aspect because Northern star owns the Pogo mine in Alaska and during its, um, Merger announcement. It's indicated that North America is going to be one of the focus for growth of the merged company going forward. Um, so that is likely to see it some point to jewel listing on the TSX.
Like it's Australian rival, new crest mining did this year. Um, So facilitate going on the acquisition trail and being able to use its paper rather than just potentially doing deals with cash. And, um, that's potentially good news for the Yukon because, um, the entire belt in which Pogo sits, obviously continues to Eastern to the South, into Yukon before going down into British Columbia.
Um, so, you know, I wrote this week looking at some potential. Takeover candidates, which mines or development stage projects would potentially fit with with their plans. Um, so yeah, exciting news shows that the appetite's there and the consolidation of assets. Uh, Mark Bristow made some headlines off of that deal as well, too, always congratulatory about it saying it's some of the, uh, mining solidation that is, uh, necessary within the industry.
Uh, interesting. Also off of his comments, uh, he was speaking at the Joe Bergen Dabo mining conference. Uh, he mentioned, uh, the serious reserve crisis. He hasn't been mentioning that much in past interviews, but he did seem to be mentioning it today. And then he was talking about gold production across the industry has only increased 1.6% every year for the past two decades.
Speaking at the same conference, uh, Mick Davis, that's the former CEO of a CEO. He said that the majors need to convince investors. That investment is, um, Paul, uh, what happened at a Cisco. Is this go? The overall Cisco group had a, had a busy week, a Cisco gold royalties. Announced the takeover of broader ventures to create a Cisco developer into which he plans to spin out its mining properties, including the caribou gold project in British Columbia and the portfolio of marketable securities valued at $160 million.
So this really cleans it up. Oh, Cisco gold royalties to just be focusing on voyages and its mining projects. Going into our Cisco development. Um, it's also doing a hundred million dollar boat financing and a share consolidation to get, um, a Cisco development up and running. So again, very positive mood consolidation, money looking to develop mines.
And we have a Q threes that are coming quickly. Those are, should be a stellar. Amanda had an announcement regarding dividends, Paul.
Yeah. So I think you're right. I think that the cashflow generation we'll see more companies, increasingly dividend Humana doubled its dividend to 10 cents. And he's looking to continue to increase that. And I think that's going to be reflected across the board. As more companies produce their three QS.
Uh, the other piece of news that stuck out to me is there seems to be a long line of stories of, uh, Elon Musk is talking to a minor. So, uh, these, uh, this week we had a Bloomberg, uh, saying that it got ahold that, uh, that, uh, Elon Musk. Because talking to BHP about a nickel supply. And then of course, uh, Elon Musk has been looking for a nickel supply as it targets higher production and seeks to avoid a supply crunch.
Earlier, we also had talks, a Reuters broke that they had been speaking to valet. We're going to go on to. Figure of the week. What is the number or figure of our industry that, uh, struck out to you? Uh, that, uh, how would you say that, um, that was of interest to you? We'd like to lead with guest, Brandon, what is your figure of the week?
I mean, he should be able to guess what I'm talking about, but maybe not the implication. So my number or my figure is 14.
Can you guess, can you, is it a dollar figure or is it a years or is it a date or is it, um, yeah, I mean, look, it's what's 14. I mean like what immediately jumps out at you when you think of 14, like it's easily divisible by something that's a, a unit, right?
Two seven. Yeah. So it's so it's two weeks. Okay. Oh, okay. Okay. So, so the reason two weeks, I've it makes up having a conversation with, um, some friends who are at a mining company. And this is a company that has a lot of the staff is based in Canada. They had an operation outside of Canada. Getting to the operation as a lot of these guys on rotation, do, um, they're able to get through and go to the mine.
No problem. Going to the country. Um, and, and there, because of COVID um, no gym, no recreational facility eat your meals in your room. So they're on three weeks on two weeks off. Um, to come back to Canada and 14 day quarantine. So they're basically quarantining at the mine cause they're not basically other than working, they, they're not supposed to really leave the room for much.
Um, come back home and quarantine here, rinse repeat. Right. So what jumped out at me is like, how sustainable is this? Like people are going to go mat. Right. Um, and that's a, you know, we're lucky we're in. You know, I live in Vancouver, our projects in Yukon, we can travel freely, but, um, how many companies, you know, juniors that are, have projects in a, in a jurisdiction that they can, I can't travel to, um, or without quarantining are like, it's gonna eventually gonna become a crisis.
Right? That scenario doesn't sound very worrying. Sorry. Yeah, I think you can see some companies have talked about how the human resources, human resources team there. So getting so, uh, mental health experts, psychologists, uh, um, making them available because as you say, being locked up in a room for two weeks in quarantine, you're gonna go nuts staring at the wall.
Paul, what's your number of the week? My number of the week is 11.6 billion us dollars or 16 billion Australian dollars. And that's, uh, obviously the, uh, the deal we just talked about lone star and Sarason minerals. Uh, that's the, uh, proformer market capitalization of that company. Neil's um, 1,003 is my number.
I know that number, but I can't remember it's. Um, so it goes back to what we were talking about, uh, uh, ETF demands. Now how much gold is held. So 1,003 tons of gold is held. In ETFs so far this year, that that number is just staggering to me. Is that gold that's being added this year. Yeah. So that's the, well, that's the no, that's the total amount of holdings this year.
So a cumulative, I think, I think it was like, um, yeah, that's, that's the amount of gold that's being held in reserves. I can't, I can't remember. I'd have to go to the story to figure out how much. Of that was added this year, but we are looking at unprecedented demand. So whatever that number is, it's going to be a record.
Yeah. And I think, you know, you, you touched on it earlier, but there's so many momentum traders. I mean, like the markets really moves on based on momentum and, and probably, you know, AI algorithms, reading tweets, right. And then buying or selling. So, um, that's the noise and, and, but, you know, that's a fundamental figure you're talking about, right.
And that inflow and outflow of, of funds into precious metals or mining in general is, is really what we need to pay attention to because that's dictating the longterm trend. Exactly. And I think the longterm trend is, is you can't, you can't have, but be bullish longterm and that's on all commodities. You know, if inflation is going higher, um, you know, I've seen some studies actually gold, isn't the greatest inflation hedge, you know, it's, it's.
Uh, other base metals, uh, silver. These are, these are better, uh, inflation hedges. So you are going to see things like zinc, copper, silver nickel, all just sort of ride this, this fundamental wave, I think. Yep. My number is 18, and that is the platinum, uh, investment council says 18 countries have produced roadmaps or strategic documents setting up their intentions for the future regarding hydrogen.
For example, Germany announced a 7.9 billion plan to invest in renewable hydrogen economy, obviously bolster platinum, because that is the bet that there is going to be room for fuel cell vehicles. As we make the transition away from internal combustion engines. Um, that's it for us. Uh, I want to thank our special guests, uh, Brandon McDonald for joining us this week.
No problem. Thanks for having me. How do we find out more about firewood, uh, www dot fireweed, zinc.com or at fireweed zinc on Twitter? The good one. Uh, you mentioned about assay, but is there going to be any news that's uh, that we should take a look out for in the coming months? Yeah. I mean, look, we'll have some discussion of the last of our drill results and hopefully I'm guessing, uh, late November for first assays.
Uh, I may regret that statement, but, uh, that's, that's my current mind. They qualified it all with our talk about what was happening at the labs. So, uh, everything is, uh, everything is up in the air and, and, and with your, and with your excellent number of the week, uh, Paul, uh, I want to mention you have a conference coming up soon.
Yes, that's right. In, in November, the Columbia gold symposium tends to 13th, November. We're going to reprise her interview with Lynn Alden. Neil's a, why are we a reprising her, um, an interview with her? Well, I think it just goes to the it's all about inflation versus deflation and stimulus and the fed. I think it's just provides a really interesting scope of what's happening in financial markets and what's driving financial markets, including gold and, and commodity prices.
That's it for us now, our interview with Lynn Alden.