Price

In commodity markets, the first thing the casual observer or the professional investor will look at is the “price”—the barrel of oil, an ounce of gold, a pound of copper, or a bushel of corn. Market commentators waste reams of digital paper daily trying to explain why the price of a certain commodity has done what it has done.

Economics 101 would dictate that the clearing market price is where a willing buyer meets a willing seller. However, if the only seller in the market packs up and goes home…..then what is the right price?

This week, the only global supplier of gallium (China, 98%) decided they weren’t selling anymore to the largest buyer (USA, 70%). Many articles have been written and we attach the Reuters article here: (https://www.reuters.com/markets/commodities/china-bans-exports-gallium-germanium-antimony-us-2024-12-03/).

Where to from here? We are unsure except to say that strategic minerals markets and supply chains will be changed forever. When markets become this dysfunctional – pricing may be redundant. We instead look to the first derivative ( f’(x)) of the price being market participants, their commentary, and where they will allocate their capital in search of new supply—particularly the end consumer of these strategic materials.

Strategic minerals in and of themselves due to their unique characteristics and defense uses act less like a commodity and more like a necessity. The miners of these metals should therefore be price makers and nice price takers. What a great position to be in.

In our September 1st Underneath the Radar (https://www.g50corp.com/under-the-radar/) we noted that the FT had written 2 articles that week on the reduced exports of strategic minerals out of China and the resulting stress amongst market participants.

We highlighted the following quote; “Markus Roas, metals business manager at Indium Corporation, a supplier to the electronics and semiconductor industries, said US companies such as his were finding it “really hard” to get export licenses and that it only had “a couple of weeks” worth of germanium and gallium in stock.”

Pretty serious words from a pretty serious person in the gallium market. It came as no surprise to us that in late November, Indium Corporation formed a strategic partnership with an Australian company to recover strategic metals like gallium and germanium from scrap. A strong f’(x) indicator if ever there was one. We note that November is more than just a “couple of weeks” since September so we assume Indium Corporations gallium cupboards are bare.

The gallium market is growing fast and early indications by consumers point to an 8x increase in demand out to 2032. New primary supply lines will need to be found and particularly in the USA where the bulk of the mineral is consumed. We believe Golconda in Northwest Arizona is well placed to potentially meet this market demand.

Golconda is an absolute treasure chest for G50 with a significant discovery of precious metals announced in June 2023 and historical (early 1900s) production of high-grade zinc, lead, gold, and silver to its name – the gallium halo discovery at the surface provides an exciting value proposition in the overall development of the project.

We look forward to interrogating Golconda in 2025 with both the drill rig and early bench scale mineralogy and metallurgical test work. While the price may react accordingly – we suspect following the first derivative strategic mineral consumers may be a better indicator of market stress and demand.

2025 is sure to offer plenty of grist for the strategic minerals mill.

Feliz Navidad………Go G50 Corp !