Antimony: The Gift that Keeps Giving
Amongst specialty metals Antimony (Sb) is one of the least talked about, mainly because it is dominated by Chinese production (around 93%) and because there are so few listed plays in the metal in Western equities markets.
In recent years though the sneaking suspicion has developed that a REE-style crisis in brewing in the less than scintillating Antimony space. This crisis has crept up largely in the same manner as the REE crisis did, but in this case the “metal” has none of the high-tech glamour of REE and thus has largely slid under the radar of politicians looking for a quick soundbite.
The first sign that something was up was when Antimony was ranked first in a Criticality Risk List published by the British Geological Survey in the second half of 2011. The list provided an indication of the relative risk to the supply of chemical elements or element groups required to maintain the current British economy and lifestyle. The list rapidly became the gold standard of critical metals rankings largely because the US and its functionaries dared not speak publicly of the way in which they were so massively wrong-footed in just about every critical metal out there.
Like so many other critical metals under the tender mercies of Chinese domination, the price took off, spiked and then eased back. It was trading at around $6,000 per tonne in 2008. It then soared in the first half of 2011 to just over $18,000, and then eased off, spending most of last year between $12,000 and $14,000. Currently it stands just below $10,000 per tonne.
The metal that “doesn’t run out”
We shall digress briefly into a bit of Antipodean cultural history, but, rest assured, it has a purpose. Any Australian child knows the story of the Magic Pudding, which was invented by the eccentric Australian author/artist, Norman Lindsey in the early part of last century. The story is about a pudding, indeed a magic one which, no matter how much one eats it, always reforms into a whole pudding again. He is called Albert, has thin arms and legs and is a bad-tempered, ill-mannered so-and-so into the bargain. His only pleasure is being eaten. The pudding also has the ability to be a main course (steak & kidney) and/or a dessert (plum pudding) upon request. Here, at the right, Albert can be seen in true form.
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In some ways this eternally giving pudding is somewhat like the Australian (or Canadian or Argentine) natural endowment which seems bottomless and endless with only the local populations meddling to screw things up. However, the pudding with its ability to regenerate and provide endless returns comes to mind when we turn to the subject of Antimony.
One of the problems (though to us it is an advantage) of the Antimony space is that proving up a reserve is such a hard thing. To delve into unprofessional jargon we might say that Antimony veins are like long straggly occurrences that stretch over long distances. With the veins ranging from 0.1 metre to maybe two metres in width it is very easy to drill for Antimony and miss the obscure object of desire. If the ore is at surface then it’s very easy to trench and rockchip sample. Grades can be fantastic at 25% or more. Stibnite can be very “in your face” and obvious to the naked eye. But it remains impervious to large-scale resource identification. One could spend a very large amount of money missing the veins by inches and the veins direction could be lost underground even if it gets wider and deeper and richer. Thus Antimony remains largely elusive to the typical Canadian modus operandi of drilling the hell out of the deposit and having expensive consultants come up with a resource.. wash and repeat… ad nauseam.
On the contrary the way Antimony has been mined since time immemorial is to find an outcrop and start a mine. The mine then follows the vein(s) and wends its way underground merrily collecting the ore and sending it off for concentration and production. How can this be so?
On the Road to Mandalay
A good example of this is Mandalay Resources (MND.v). This company mines the Costerfield Mine outside Melbourne in the state of Victoria in Australia. This company produced 3,275 tonnes of Antimony in 2013 (and 50,000 oz per annum of gold). However the resource at the mine is only 15,300 tonnes. That is less than five years mine life (however up from a 16 month mine life in early 2013). The earlier resource was enough to give traditional mining investors a case of the vapors. And yet the stock soared from a market cap of $160mn in July 2012 to over $300mn in early 2013 when the mining markets had headed in the opposite direction. It is even slightly higher now despite the addition of substantial extra mine life. Why were investors not spooked by the low mine life? Maybe it helps to know that the deposit has been mined since the 1860s on and off…
Adroit (ADT.v) – But Not Dexterous
Adroit’s Antimony assets consisted of the past-producing (up until the 1980s) mines in southern Tuscany. Before one rejects this idea with visions of ancient monasteries, vineyards and NIMBYs we would point out that this is the faded industrial part of Tuscany off the tourist’s beaten path. Adroit have unfortunately “lost altitude” like so many others and seem to have drifted off in the direction of projects (non-Antimony) in Canada. At worst this leaves Adroit’s Italian assets as open for other players to pick up.
Straits Resources (SRL.ax) – Dire Indeed
This ASX-listed stock has fallen on very hard times indeed. It was long the owner of Hillsgrove gold/antimony mine (on care and maintenance since 2008) in northern New South Wales. Several attempts were made to float off the asset but they coincided with dire financing conditions in the mining space (even though Antimony prices were good). They eventually succumbed to a low-ball sale last year. With some luck this mine will be back in operation in the not too distant future and might even pop up back in the public equities markets as an investable opportunity.
Reef on the Rocks?
The largest Antimony mine outside China is the Consolidated Murchison mine in South Africa, which is owned by Village Main Reef (VIL.jse). It produces gold and antimony and is a deep mine, a relative rarity in Antimony. Large scale mining began here in 1937, so again we have an example of a very long-lived Antimony deposit. When fully operational the mine adds around 6,000 tpa to global Sb supply. However Antimony production was only 1,289t for the six months ended 31 December 2013 compared to 2,728t for the six months ended 31 December 2012, a decrease of 53%, which was a direct result of a strike at the mine in July 2013. Strong murmurs exist that Village Main Reef has this asset up for sale. It supposedly has an 11 year LOM.
The Exception – China’s Mega-mine
The granddaddy of Antimony mine is the Hsikwangshan Twinkling Star Antimony Mine in China. It was originally found in 1541 when mining began and it has been mined “formally” since 1897. This mine alone produces 25% of global supply. It is this mine that gave China the 90% market dominance in the Antimony space since the 19th century. Admittedly this mine is special in that it is not only long-lasting but also high volume. However, even Antimony mines don’t last forever and it is a widely held view that this mine is now in terminal decline with higher extraction costs and declining grades.
Thus Antimony is a truly wonderful product to be mining when the price is up (as it is now, historically speaking). It also has a force field around it because the volumes are always too small to excite a major, while being impervious to any sort of large scale resource identification it becomes anathema to the “drill it to death” crowd in Vancouver. Likewise as the best exploration in Antimony is mining itself it scares off the faker crowd who inhabited the Rare Earth space as they would be all too quickly exposed for the talkers (not doers) that they are. A typical Antimony mine is thus small, high-grade, underground with a short theoretical mine life which might very well go on “forever”.
Christopher Ecclestone is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten & Company in New York in 2003 ... <Read more about Christopher Ecclestone>