Delays and trade wars impacting Midas Gold
In his latest Discovery Watch interview, John Kaiser from Kaiser Research Online reviews new developments at the NioBay Metals (NBY) James Bay Niobium Project and assesses the proposed Sun Metals (SUNM) takeover of Lorraine Copper (LLC). He kicks off the interview looking at the negative and potentially positive implications of the Trump trade war on Midas Gold's (MAX) Stibnite Gold Project in Idaho.
On January 29th, Midas Gold said that it now expects a final United States Forest Service Record of Decision for its Stibnite Gold Project in Q3 of 2020 to accommodate agency requests for more information and analysis. While that is disappointing news as it delays the release of the project's feasibility study, Mr. Kaiser explains that the extended agency process is not the only challenge facing Midas.
Since Trump stated his trade war with China and imposed tariffs on steel and aluminum there is concern the capital costs have gone up significantly.
Mr. Kaiser suggests the market is concerned that Trump's efforts to make America great again have increased the costs of putting the project into production. Mr. Kaiser also says there is another problem: the risk of another government shutdown. As the company notes in its January 29th release, the recent shutdown impacted the project's permitting process. That leads Kaiser to point out:
On February 15th there is a risk of another shutdown happening and even worse in mid-March the suspension of the debt ceiling also ends.
On the bright side, if the debt ceiling does not get resolved Kaiser suggests:
The US government will completely have to shut down because it won't be able to pay any of its bills. Gold of course will go way up, and such a nasty outcome would actually be good for Midas gold
For now, Mr. Kaiser says we have to wait for the permitting body to plod through. Meanwhile, even though Kaiser believes the resource sector is still pretty flat, he thinks the way things are going, gold is going to launch into an uptrend, and projects like the Stibnite project could do very well. Moreover, Kaiser notes that antimony is expected to be mined from the Stibnite project. According to Kaiser, antimony is important for the military as it is a flame retardant and paints a picture where things could get very interesting for Midas Gold.
If we end up with a supply problem of antimony from China which provides 85% off all the stibnite in the world, and we get into a shoving match and a very serious trade war and the United States wants to open up new military fronts elsewhere as it pulls out of Syria and Afghanistan, we are going have to think where is the antimony going to come from to support a war effort. So, we may see things really start to happen quicker at the Stibnite permitting process.
Later in the interview, Mr. Kaiser walks through the proposed Lorraine Copper takeover by Sun Metals which he describes as a win-win. He ends by reviewing the implications of NioBay Metals receiving a permit for its James Bay Niobium Project.