Key Gold Indicator Still Mired in Bear Country

The Grasberg-Saville Gold Rating (GSGR) spent its 10th week in bearish territory below 50 with little indication of respite (Actual Reading = 40).

The Grasberg-Saville Weekly Gold Rating measures the following fundamental drivers:

  1. Treasury Inflation-Protected Securities (TIPS)
  2. KBW Bank Index Inverse Change Ratio
  3. 30-Year/Dollar Ratio
  4. 30s/5s Yield Curve Change Ratio

$TGB : Florence Copper Project Low Level Analysis

Long-Term Price Case$3/lb. Cu
ProjectFlorence Copper Project
Estimated Indicated Resources2.8B lbs.
Average Annual Production96.8M lbs.
Payable Product2,517,480,000 lbs.
LoM26 Years
True All-in Costs (TAIC)$1.98/lb.
Gross Revenue$7,552,440,000
State Royalty (~5%)($377,622,000)
Net Revenue$7,174,818,000
Total Operating Costs ($2,265,732,000)
Income Taxes (Effective Rate 24%)($1,178,180,640)
Conoco Inc. Net Returns Royalty (~3%)($147,272,580)
BHP Copper Inc. Royalty (2.5%)($93,272,634)
Total Capital Costs($917,000,000)
Net Income$2,573,360,144
Net Profit Margin34%
Absolute Cost Structure (ACS)66%
MTQ Score (Higher is Better)0.5
Estimated Average Net Annual Cash Flow Contribution at the Long-term Price Case$98,736,000

The Florence Copper Project will be profitable at today’s Cu price and will prove a veritable cash cow at the long-term price case and above.

Our estimated Total All-in Costs (TAIC) of $1.98/lb. is stellar and will result in a healthy Net Profit Margin of 34%.

Florence is a well-timed Project with a bright future that will generate the cash required to self-fund the advancement of Yellowhead, Aley and Harmony.

Fahy Capital Management initiated a stake in Taseko Mines on 12 November 2019.

$MUX : Los Azules Low Level Analysis

Long-Term Price Case$4/lb. Cu, $1,700/oz. Au, $24/oz. Ag
ProjectLos Azules
Estimated Indicated Resources11,256,700,000 CuEq lbs.
Average Annual Production276.9M lbs.
Payable Product10,243,597,000 CuEq lbs. Cu (4.6 Mt CuEq)
LoM37 Years
True All-in Costs (TAIC)$2.92/lb.
Gross Revenue$40,974,388,000
Treatment Charge($394,945,445)
Refining Charge($870,705,745)
Net Revenue$38,479,505,170
Total Operating Costs ($15,160,523,560)
Income Taxes($8,161,643,564)
Total Capital Costs($4,072,000,000)
Net Income$11,085,338,046
Net Profit Margin27%
Absolute Cost Structure (ACS)73%
MTQ Score (Higher is Better)0.4
Estimated Average Net Annual Cash Flow Contribution at the Long-term Price Cases$299,052,000

Los Azules is a good Project at $4/lb. Cu and higher, with manageable True All-in Costs of $2.92/lb.

I go on for ever…


Miles Mathis bumps into a handful of recurring numbers in his research: 1, 8, 33, 47.

I don’t think anyone has done this before, so let me try to demystify them. 1 may also be written as ‘I,’ the first person singular subject personal pronoun, (e.g., “I go on for ever.”) , not the numeral.

And 8, 33, and 47 are three ways of saying the same thing: Infinity. Once again, “I go on for ever.”

The numeral 8 may be rotated clockwise or counter-clockwise in order to be transformed into a lemniscate (inifinity symbol). Similarly, a 33 is simply a lemniscate broken into halves. Finally, the safe prime number 47 also represents a lemniscate when the 4 is rotated counter-clockwise and the 7 clockwise and the two numbers joined.

To better understand the employment of the aforementioned numbers as meaningful signifiers, one may start by reading Baron Alfred, Lord Tennyson’s poem, The Brook (1886).

I come from haunts of coot and hern,
   I make a sudden sally
And sparkle out among the fern,
   To bicker down a valley.

By thirty hills I hurry down,
   Or slip between the ridges,
By twenty thorpes, a little town,
   And half a hundred bridges.

Till last by Philip’s farm I flow
   To join the brimming river,
For men may come and men may go,
   But I go on for ever.

I chatter over stony ways,
   In little sharps and trebles,
I bubble into eddying bays,
   I babble on the pebbles.

With many a curve my banks I fret
   By many a field and fallow,
And many a fairy foreland set
   With willow-weed and mallow.

I chatter, chatter, as I flow
   To join the brimming river,
For men may come and men may go,
   But I go on for ever.

I wind about, and in and out,
   With here a blossom sailing,
And here and there a lusty trout,
   And here and there a grayling,

And here and there a foamy flake
   Upon me, as I travel
With many a silvery waterbreak
   Above the golden gravel,

And draw them all along, and flow
   To join the brimming river
For men may come and men may go,
   But I go on for ever.

I steal by lawns and grassy plots,
   I slide by hazel covers;
I move the sweet forget-me-nots
   That grow for happy lovers.

I slip, I slide, I gloom, I glance,
   Among my skimming swallows;
I make the netted sunbeam dance
   Against my sandy shallows.

I murmur under moon and stars
   In brambly wildernesses;
I linger by my shingly bars;
   I loiter round my cresses;

And out again I curve and flow
   To join the brimming river,
For men may come and men may go,
   But I go on for ever.

The Brook, essentially, is blood.

An exclusive club named after the poem was founded in 1903 and is presently situated at 111 East 54th Street in Manhattan, a lovely building designed by Delano & Aldrich. Notable members include John F. Kennedy, Henry Kissinger, John Jacob Astor IV, William K. Vanderbilt, Fred Astaire, Michael Bloomberg, as well as my own cousin, U.S. Ambassador to the United Kingdom, John Hay Whitney*, who had honorary status, rather than a traditional membership. On closer examination of membership, one is under the distinct impression that the club is a shelter for elite gays, both yesterday and today.

Other Members

Gay Talese, the literary journalist (Read: Fiction) who helped manage the Manson hoax, is a member. The brand of literary journalism that Talese traffics in is now referred to as New Journalism, which is simply another way of saying State-sponsored propaganda.

I can’t confirm this here, but I believe Anthony Lejeune, who died last year, was a member. Pretty sure he was gay. Additionally, he got educated at Merchant Taylor’s, Northwood, which should tell you an awful lot about his pedigree and mission. He may very well be regarded by peers as The Brook’s unofficial biographer. Doubtless he had socked away copious notes on fellow members. I don’t know if OMT status was ever conferred on this Merchant Taylor’s alum, but it’s safe to say other OMTs were awarded entrée.

The Brook — Notice the Arrows/Rays in the Transom. What is a ray? A line with one endpoint — infinite in one direction, like a bloodline, if everything goes according to plan.

*John Hay Whitney bears the name of my 10G grandfather (his 9G), Puritan John Whitney, sometime member of the Worshipful Company of Merchant Taylors**, one of the 12 Great City of London Livery Companies, prior to emigrating to the United States with his wife Elinor in 1635. I’m descended from John’s son Joshua, b. 15 July 1635 in Watertown, Mass., while John Hay is descended from Joshua’s brother Richard, born 12 years earlier in Isleworth, Middlesex, England.

In my research, I have taken the Whitney’s back to my 11G grandfather, Thomas Whitney, a gentleman, who was born c. 1550 in Westminster, England, though he is of unknown parentage. It has been suggested that Thomas is the son of Sir Robert Whitney, Knight, born 1525, Icomb, Gloucestershire, but the suggestion is apocryphal.

**As early as the end of the 17th century, the WCMT had morphed in function from a bona fide guild of tailors with ties to Savile Row into a philanthropic organization. Then, as now, philanthropic organizations were established as money laundering fronts.

Merchant Taylors’ Hall, London

I started this post in order to quickly demystify the signifiers 8, 33 and 47. But what does it all mean? In a word, with a little help from the Fates (or a lot + Money), bloodlines may be made to ‘murmur under moon and stars’ practically forever, at least in name and mandate. This wasn’t the case with John Hay, who did not have offspring of his own. Instead he married the ex-wife of James Roosevelt (son of FDR), Betsey Cushing, and adopted her children Kate and Sara.

But it remains the case with the this descendant of John Whitney…

I chatter, chatter, as I flow
   To join the brimming river,
For men may come and men may go,
   But I go on for ever.

My Descent from John Whitney:

Thomas Whitney, 1550/Mary Bray, 1564 → John Whitney, 1592/Elinor, 1595 → Deacon Joshua Whitney, 1635/Abigail Tarbell → Cornelius Whitney, 1680/Sarah Shepard, 1690 → Matthias Whitney, 1720/Alice Robbins, 1723 → Matthias Whitney, 1746 → Celia Whitney, b. 1785, of Litchfield, CT, my 5G Grandmother, who married James Jackson, 1778, NYC → Willet Jackson, 1812/Betsy Fanning Cummins, 1816 → James Adelbert Jackson, 1846/Alice Rosella Glidden, 1847 → Avis Gertrude Jackson, 1869/John Prescott McCrillis, 1869 → Alice May McCrillis, 1911/Samuel James Merring, 1911 → Linda Ann Merring, 1944/Thomas Walter Fahy, 1943 → Thomas Robert Fahy, 1977/Christina Jeanette Fahy, 1973 → Thomas Robert Fahy II, 2016

The descent from John Whitney is surely interesting, but there are others equally so, including my Glidden line, which finds an historical terminus in Bean MacDhomhnil, c. 1275, Scotland, first chief of Clan MacBean, through Jonathon Glidden’s (b. 1696, Exeter, Rockingham, NH) wife, Margaret Bean, my 7g Granny. I was happy to learn that John Bean, her grandfather and my 9g Grandfather, who was exiled to Exeter by the English, fought for the Royalists against Cromwell’s New Model Army. In other words, he fought for the right side in the English Civil War.

So far, I have been able to trace the Glidden’s back to my 12g Grandfather, John Glidden, b. 1550, Pancras, Bideford, Devon, England.

In future posts, I will be fleshing out my understanding of the Glidden and Whitney lines, as well as the Olmsteads, Jacksons, Sherwoods, Carters, Mays, and others.

Speaking of Miles Mathis, he has been a great inspiration to me. Were it not for him, my passion for genealogy mightn’t have been rekindled. He also gives great cat advice.

† Tennyson mentions ‘Philip’s Farm,’ by which I suggest he is alluding to Metacomet’s final resting place, Misery Swamp, a stone’s throw away from Mount Hope Farm, Bristol, RI, the summer encampment of the Pokanoket Tribe of the Wampanoags. Which is to say, I am of the opinion that The Brook is an oblique retelling of King Philip’s War, the aftermath of which served to anneal the character of the Puritans, hardening their hearts, tempering their spirits and renewing their singular devotion to the cause of the Merchant class.

Joshua Whitney and his son Joshua Whitney Jr. both fought in King Philip’s War and I would assume that had no uncertain impact on the both of them as men, brothers, sons, and fathers.

$SBGL : Sibanye-Stillwater Updated High Level Analysis

5 November 2019 Updated Global Reserve Model
Discounted Global Gold Reserve Value *$3,704,036,400
Discounted Global 4PE Reserve Value **$16,582,170,000
Discounted Global 4PE Reserve Value, Lonmin ***$6,798,330,000
Discounted Global Copper Resource Value ****$7,589,744,040
Discounted Global Uranium Resource Value *****$286,861,500
Aggregate Net Global Reserve Value$34,961,141,940
Estimated Reserve Lifespan
PGM32.5 Years
AU13 Years
2020 Estimated Net Income$1,165,371,398
2020 Estimated Market Cap$11,653,713,980
2020 Projected Market Cap Growth133%
FCM Target Price$17.45/sh.

Notes: All Values in U.S. Dollars

*Rustenburg, Kroondal, Mimosa, Rustenburg Tailings, Stillwater, East Boulder

**Beatrix, Cooke, Driefontein, Kloof, WRTRP, DRDGOLD, SA

***Marikana, Tailings

****Altar, Marathon, Rio Grande

*****Beatrix, WRTRP

$BKIRF : Black Iron Inc. — Independent Economic Analysis

Long-Term Price Case$97.19/dmt
Flagship ProjectShymanivske
Shares Outstanding186,300,000
Market Cap$11,178,000
Average Annual Production7,065,000 dmt
Payable Product141.3M dmt
LoM20 Years
True All-in Costs (TAIC)$56.26/dmt.
Gross Revenue$13,732,947,000
Ukrainian Federal Government Royalties($863,300,000)
Net Revenue$1,286,9647,000
Total Operating Costs ($4,446,200,000)
Operating Cash Flow (EBITDA)$8,423,447,000
Income Taxes($1,516,220,460)
Total Capital Costs($1,124,200,000)
Net Income$5,783,026,540
Net Profit Margin42%
Absolute Cost Structure (ACS)58%
MTQ Score (Higher is Better)0.7
True Value$31.04/sh.
True Value Discount (TVD)100%
Cash Flow Multiple5x
Net Annual Cash Flow$289,151,327
Future Market Cap$1,445,756,635
Future Market Cap Growth12,834%

Notes: All Values in U.S. Dollars

Black Iron Inc. enjoys an MTQ Score of 0.7, which places it within the 80th percentile of companies under investigation. In other words, Black Iron’s projected Net Profit Margin potential is high, while its projected Absolute Cost Structure is low, a combination for which Fahy Capital Management looks when placing a prospective investment under the microscope.

MTQ Scores (BARS — Higher is Better) Vs. Absolute Cost Structure (LINE — Lower is Better)
Update, 27 September 2019

Ukraine’s Defence Minister, Andriy Zagorodniuk, has agreed to the transfer of land required for the development of Shymanivske. A Memorandum of Understanding will be signed next month.

$FCUUF : Fission Uranium — Independent Economic Analysis (U/G PFS Update)

U/G PFS, 23 September 2019
Long-Term Price Case$50/lb. U308
Flagship ProjectPLS (Triple R)
Mineral Reserves81.4M lbs.
Shares Outstanding486,014,642
Market Cap$141,867,674
Average Annual Production13.1M lbs.
Payable Product78.7 lbs.
LoM7 Years
True All-in Costs (TAIC)$35.26/lb.
Gross Revenue$3,935,000,000
Provincial Revenue Royalties($287,142,555)
Net Revenue$3,647,857,445
Total Operating Costs ($567,803,677)
Operating Cash Flow$3,080,053,768
Provincial Profit Royalties($328,593,580)
Income Taxes($492,136,715)
Total Capital Costs($1,099,582,645)
Net Income$1,159,740,828
Net Profit Margin29%
Absolute Cost Structure (ACS)71%
MTQ Score (Higher is Better)0.4
True Value$2.39/sh.
True Value Discount (TVD)88%
Cash Flow Multiple10x
Net Annual Cash Flow165,677,261
Future Market Cap1,656,772,610
Future Market Cap Growth1,068%

Notes: All Values in U.S. Dollars

$DNN : ISR Field Tests, Early Results

In a word, in Test Areas 1 & 2, hydraulic responses were observed where hydraulic responses were expected and no hydraulic responses were observed where hydraulic responses were unwanted. That’ll give the naysayers of ISR at Phoenix something to chew on.

Next Step: Commercial Scale Well at Test Area 1.

We believe Phoenix will prove a game-changer, with the potential to soon demonstrate that EBITDA may be generated by select operators in a world of sustained low spot and LT contract prices.

Denison Mines has a current weighting of 3.4% in the NuChem International Catalyst Fund.

Fahy Capital Management Q3 Updates

Our investment target in Alexco Resource Corp. was reached on 27 August 2019. We exited at U.S. $2.43 for a return of 87%.

We added to our position in Equinox Gold Corp. on 20 September 2019, raising its weighting in the NuChem International Catalyst Fund to 8%.

Subsequent to the release of an updated PFS, we raised our target in Vista Gold Corp. from U.S. $5.44 to U.S. $5.50.

On 26 September, we initiated a position in Black Iron Inc.

Fahy Capital Management does not have any additional Q3 Updates to report.

$NIOBF : NioCorp — Independent Economic Analysis

Standard Model10-Year Contracted Sales Model
Long-Term Price Case$3,676/kg Sc2O3 | $0.99/kg TiO2 | $46.55/kg NbLong-Term Price Case $3,676/kg Sc2O3 | $46.55/kg Nb
ProjectElk CreekProjectElk Creek
Payable Primary Product (Nb)168,861 tonnes (168,861,000 kg)Payable Primary Product (Nb) 35,180 tonnes (35,180,000 kg)
Payable Byproduct Metal (TiO2)418,841 tonnes (418,841,000 kg)Payable Byproduct Metal (TiO2) 418,841 tonnes (418,841,000 kg)
Payable Co-Product Metal (Sc2O3)3,410 tonnes (3,410,000 kg)Payable Co-Product Metal (Sc2O3) 947 tonnes (947,000 kg)
Shares Outstanding226,666,534Shares Outstanding226,666,534
Market Cap$95,993,277Market Cap $95,993,277
Average Annual Production7,220 tonnes FeNb (7,220,000 kg)Average Annual Production10,923,113 kg NbEq
Recovery93.14% Sc2O3 | 40.31% TiO2 | Nb 82.36%Recovery93.14% Sc2O3 | Nb 82.36%
LoM36 YearsContracted Sales Model Term10 Years
Payable Product (NbEq)447,052,463 kg NbEq Payable Product (NbEq) 109,231,128 kg NbEq
True All-in Cost (TAIC) $24.15/kgTrue All-in Cost (TAIC)$33.78/kg
Gross Revenue$20,810,292,140Gross Revenue$5,084,709,008
Total Operating Cost($6,717,578,000)Operating Cost($1,865,993,888)
Operating Margin (EBITDA)$14,092,714,140Operating Margin (EBITDA)$3,218,715,120
Income Taxes($2,467,634,246)Income Taxes($563,597,018)
Total Capital Cost($1,609,397,000)Capital Cost($1,260,504,167)
Cumulative Net Income$10,015,682,894Cumulative Net Income$1,394,613,935
Net Profit Margin48%Net Profit Margin 27%
Absolute Cost Structure (ACS)52%Absolute Cost Structure (ACS) 72%
MTQ Score0.9MTQ Score0.4
True Value$44.19/sh.True Value$6.15/sh.
True Value Discount (TVD)99%True Value Discount (TVD)93%
Cash Flow Multiple10xCash Flow Multiple 7.3x
Net Annual Cash Flow$161,728,000Net Annual Cash Flow $139,488,153
Future Market Cap$1,617,280,000Future Market Cap $1,018,263,517
Future Market Cap Growth1,585%Future Market Cap Growth 961%

Notes: All Values in U.S. Dollars

NioCorp has signed a commercial sales agreement with Traxys North America. Under the agreement, Traxys is obligated to purchase 12 tonnes of Sc over the course of Elk Creek’s first 10 years of production. Additionally, 75% of the Elk Creek Project’s primary product, Ferroniobium (FeNb), is under contract over the first 10 years of production: thyssenkrupp (OTC: TYEKF), 50%; Commercial Metals Company, 25%

Fahy Capital Management is not an investor in NioCorp. We may, however, initiate a position in thyssenkrupp this quarter.