D E C E M B E R / J A N U A R Y 2 0 1 7
www.resourceworld.com
9
Rule was sceptical about the lithium nar-
rative too, although he added the caveat
that any first-class discovery would achieve
value almost regardless of whether a metal
or mineral happened to be in vogue. He also
noted that many of the larger, well-estab-
lished lithium producers, like SQM S.A
[SQM-NYSE], were confident of increasing
supply, albeit needing the time and capital
expenditure to achieve this.
"There's probably money to still be
made trading lithium, although not based
on the fundamentals but on the strength of
the story," Rule mused. "But in my expe-
rience, the speculative end of the mining
market has been the part most unrelated
to the economics. It almost always ends
poorly for those who buy narrative rather
than balance sheets and ore bodies."
nOT TOO bad
But for all the issues associated with 2016,
the run higher at least showed an impor-
tant part of the sector could gain traction
when the stars aligned, even if for a short
while. Rule also noted that a period of
drawback and consolidation was helpful.
"That some air has been let out of precious
metals equities is a good thing from my
point of view; there are several projects I
want to build positions in but was unable
to because of the enthusiasm of other
industry participants."
Plenty of companies had caught the
attention of Rule and Kaiser over the year.
This included NexGen Energy Ltd. [NXE-
TSX] and the work at its Arrow deposit in
southwest Athabasca Basin, Saskatchewan.
The company released encouraging explo-
ration and drill results across the year and,
on October 26, announced positive prelim-
inary metallurgical results, which included
leaching tests that yielded high uranium
recoveries exceeding 98%.
Ivanhoe Mines Ltd. [IVN-TSX; IVPAF-
OTCQX] was cited by both as well, with
Kaiser describing its Kamoa-Kakula cop-
per project in the Democratic Republic of
Congo (DRC) as first-class. "But Ivanhoe's
stock would be trading higher if the DRC
was a more stable country; it carries a
punitive discount because of the associ-
