Ground Breakers: Gold nears US$2000 and Allkem posts major resource upgrade

Gold price inches ever closer to US$2000 as Deutsche Bank shareholders tremble
Materials sector near breakeven on Monday morning
Allkem readies stage 3 expansion studies at Olaroz on 27% resource upgrade

The London Bullion Marketing Association has reported gold prices closer to US$2000/oz than at any point in 2023’s yellow metal rally, ending Friday at US$1993.80/oz.

It came after fears of contagion risk from the global banking crisis, with Deutsche Bank the latest major financial institution facing the wrath of investors.

Its shares fell 14% in trade on Friday before recovering to 8% after a major run in prices for its credit default swaps, bets taken by investors against the company’s value.

Anything is making investors jittery these days, especially after the collapse of Silicon Valley Bank and Credit Suisse’s bailout by the Swiss Government and later UBS.

What’s bad for the world is good for gold, as they say.

In Australian dollar terms prices are currently at an eye-catching $2998/oz, oh so close to the $3000/oz mark, all depending on exchange rates of course.

It’s a margin game though. Investors have pumped up gold stocks so far this year.

Up just 0.56% today, the All Ordinaries Gold sub-index is up 12.04% year to date, well above the ASX 200’s 0.34% gain so far in 2023.

But it’s down 5.93% on a 12 month basis, with poor cost performance across the Australian gold sector and falling profits leaving a bitter taste in the mouth for many backers.

One of the top performers this morning was $13 billion capped Northern Star Resources (ASX:NST), up 2.3% to $11.80. NST is a 12-month gainer, up 10% over the past year.

Among the mid caps it was Sayona Mining (ASX:SYA) and Stanmore Coal (ASX:SMR) performing strongest, with the broader materials sector near break even at a 0.09%.

Energy on the other hand was worse off, down 1.6%.

Ground Breakers share prices today:

Allkem flags further expansion of Olaroz after major resource upgrade

ASX listed lithium producer Allkem (ASX:AKE) is one of the largest in the world and wants to maintain a 10% lithium raw materials market share going forward.

An early mover, it has been producing lithium carbonate since 2014 at its Olaroz facility in Argentina.

It has been a long slog to a rate of around 15,000tpa currently, with an expansion to a combined capacity of 42,500tpa currently underway representing a 25,000tpa ramp up on its 17,500tpa name plate stage 1 operation.

Could that grow even further?

A new update this morning shows Allkem has delivered a 27% increase in lithium carbonate equivalent tonnes at Olaroz to 20.7Mt.

That includes 7.6Mt of measured, 7.1Mt of indicated and 6Mt of inferred resources, taking its total basin resource at the Olaroz and Cauchari brine fields to 27Mt LCE.

As is expected of Tier-1 assets, Olaroz also boasts strong grades of 657mg/L lithium in its measured resource, and 612mg/L and 604mg/L in its indicated and inferred tonnes respectively.

The resource includes 2.8Mt from the recently acquired Maria Victoria to the north of Olaroz, while Allkem says extensive areas around Olaroz-Cauchari remain untested by drilling.

“This significant increase in the resource, and the upgraded resource classification, confirms the world class status of Olaroz,” Allkem MD Martin Perez de Solay.

“The combined 27Mt resource across Olaroz and Cauchari supports future material expansion of production and will form the basis for the Olaroz Stage 3/Cauchari expansion studies currently underway. Further exploration will be required to fully test the significant potential of the Olaroz/Cauchari basin.”

“Olaroz is complemented by the company’s high-quality Sal de Vida and James Bay Projects in Argentina and Canada. These projects will produce lithium chemicals for use in the EV supply chain in areas of low or no water stress, while contributing to the local economy and communities.”