The coming supply shock in mining – by Marin Katusa (Kitco News – April 14, 2020)

No country is immune to the spread of COVID-19. The virus has killed over 95,000 people and infected over 1.6 million people in 209 countries globally. The virus has put many major mining operations at risk.

Mines are being shut down across the world, either by government mandate or by the company due to the virus. The knock-on effects of the mine shutdowns will be significant.

For example, in Namibia, mining contributes to 25% of the country’s income and the whole industry has been put on hold. Despite mining being an essential service in many regions… “Over 500 Gold, Silver, Copper, Iron, Coal and Uranium mining, development and exploration assets across the globe have ceased or scaled back production (meaning operating stockpiles and with limited workforce).”

This has had a significant impact on many companies that are not well capitalized to weather the storm. The virus has put a company like First Quantum in a serious predicament.

First Quantum has current total liabilities of over $11 billion while it has a market cap of $5 billion. First Quantum’s largest operating mine, Cerro Panama, has been put on care and maintenance this week because of the virus.

I visited this project in 2007, back then its name was Cerro Petaquila. After spending 3 days at the site and going through all the drill core and data, I wrote in my report to subscribers an alert that the project would be a producing mine within a dozen years.

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