Oreninc Index Rises but Remains in Late Summer Slump

The Oreninc Index rose, but remained fully entrenched in the depths of a summer slump for the week ending August 21, 2014. While it increased a decent margin from the week before, this marks week three of the worst three-week stretch of the past few years. Total dollars jumped to $67.6m, a four-week high. Four brokered deals were announced for $18.5m, a three-week high; one bought deal was announced for $12.5m, a four-week high. 

The biggest news of the week came with BHP announcing their intentions to spin off non-core assets into a new company that will be run independently (100% of the shares of the new company will be distributed to their current shareholders). BHP says they are demerging assets that they consider not part of the future of their core business (many of these are operations gained in the 2001 merger). Shares fell 5% on the news. Gold prices hit a two-month low after the United States Federal Reserve’s July meeting minutes indicated that the organization was slightly more likely to increase interest rates if the economy continued to gain strength. The TSX-V composite index did rise marginally this week, though junior miner North American Nickel (TSX-V:NAN) fell 40% on news of their summer drill results.

While the Oreninc Index’s numbers are certainly disappointing, Labour Day can be seen in the distance, and with it the promise of bankers back at their desks and companies back trying to raise money. The question is whether this unusually poor August is just part of a lazy summer or a sign of an equally disturbing September to come.

Oreninc Index Falls to Worst Week Since January 

The Oreninc Index fell to its lowest level since January for the week ending August 14, 2014. Total dollars raised fell to $35.8m, an eight-week low. No brokered or bought deals were announced, 33-week and four-week lows respectively. Obviously, returning to a full five-day trading week did not increase activity or inspire any real movement in the space.

Deals were light; among them was Anglo’s deal with Redhawk Resources, giving Anglo the right to buy into Redhawk’s Copper Creek project on one of the lone deals involving the majors this week. Still, with copper prices dropping to an eight-week low, this is probably a week the industry would like to forget. 

Oreninc Index Falls to Seven-Week Low in Holiday-Shortened Week

The Oreninc Index fell to a seven-week low in the holiday-shortened week ending August 7, 2014. Total dollars for the week dropped to $50.2m, a seven-week low. One brokered deal, led by Macquarie, was announced for 10m shares on terms that are TBA. For the first time in three weeks, no bought deals were announced. The shortened week underscores the tone of what appears to be one of the quietest weeks of the year.

The tailings pond spill at the Mount Polley mine in British Columbia stoked fear across North America of a possible backlash against mine development. While it is easy to attribute a down week in financing activity on such a disaster, it could be premature blame given its marginal effect on the S&P/TSX-V composite index over the course of the week. That being said, disasters in the resources space have caused investor skittishness before (such as the down uranium and general resource markets after the Japanese tsunami in 2011) and it is not a stretch to think that shades of similar sentiment could appear in the coming weeks. 

Oreninc Index Holds Steady

The Oreninc Index rose marginally for the week ending July 31, 2014. The main positive for the week, and our only metric that actually fared better than the previous week, was the number of deals announced: 36, a four-week high. Total dollars announced fell to $62.5m, a six-week low. Eight brokered deals were announced for $36m, a six-week low; three bought deals were announced for $10m, a two-week low.

Deal activity was still down in the Canadian markets, as again things seemed to have slowed with the hot weather upon us. It would be surprising to see any continuous positive shift in the industry until September at the earliest, and even then there is no guarantee that things will be that much better.

Oreninc Index Falls to Least Active Week Since January

The Oreninc Index fell for the week ending July 25, 2014. The main culprit for the drop was the number of deals announced, 18, a 28-week low. Total dollars announced fell to $101.5m, a two-week low. Five brokered deals were announced for $77.1m, also a two-week low; one bought deal was announced for $13m, a two-week high. While total dollars are down, the decrease is dwarfed by the drop in the number of deals announced, resulting in an average deal size of $5.64m, a six-week high that ranks this week as the third highest of 2014 for deal size.

Deal making seems to have cooled along with the private placement activity, giving us the impression that golf courses and swimming pools were more active than board rooms this week. As we have been saying, this is prototypical of summer activity, but gives less credence to the idea that this summer has been better overall than last; at this point, it is becoming less and less true every week. We’ll see if the summer can finish off strong in August, giving the industry some confidence as it heads into fall, where both activity and expectations will likely be up, if not necessarily in equal amounts.

Oreninc Index Stays Positive 

The Oreninc Index remained positive for the week ending July 17, 2014. Total dollars announced on the week rose to $175.3m, a three-week high. Four brokered deals were announced for $80.3m, a three-week high. No bought deals were announced for the first time in four weeks. 

Despite the metal falling to almost a four-week low on Tuesday, a number of gold deals occurred this week, with Barrick’s deal to Joint Venture with Saudi Arabia Mining on their Jabal Sayid copper mine near Medina, Saudi Arabia leading the way.

Oreninc Index Remains Level

The Oreninc Index remained flat for the week ending July 10, 2014. The week included America’s Fourth of July holiday; while it did not affect the amount of trading days, deal flow slowed with less than $3m announced on four deals that day. Total dollars announced for the week were $83.4m, a three-week low. Brokered and bought dollars announced were both $44m on four deals, both two-week highs.

The run of copper deals continued this week with Boliden purchasing Altona Mining’s Kylylahti copper mine in Finland for US$95m. The activity seen this July is encouraging, given the month’s history of being one of the two worst months of the year for financing.

Oreninc Index Remains Strong in Holiday-Shortened Week

The Oreninc Index remained strong in the holiday-shortened week ending July 3, 2014. This week’s performance is characterized by good numbers, although it clearly does not match the previous week as indicated by a slew of two-week lows. Total dollars announced fell to $93.6m, a two-week low. Brokered dollars announced dropped to $36.5m, a two-week low, and bought dollars announced dropped to $32m, also a two-week low.

While financing activity remained up this week, deal-making subsided, which is unsurprising given the holidays in the US and Canada. It is a good sign that companies are able to raise cash in the first week of summer; a couple more weeks like the previous two, and the stronger weeks will become less of a surprise and more of an expected performance.

Oreninc Index Scores Biggest Uptick of 2014

The Oreninc Index increased by its largest margin of 2014 for the week ending June 26, 2014. After last week’s implosion, this type of performance, where all metrics have increased by an impressive margin, is a welcome sight. Total dollars announced exploded to $188.4m, a 15-week high. Brokered dollars announced rose to $122.3m, a 15-week high; bought dollars announced increased to $92m, a 16-week high. 

In addition to the positive fundraising news, HudBay announced its long-awaited acquisition of Augusta Resources (and with it their Rosemont Copper project), in what is a follow-up of sorts to last week’s deal making in the copper space. While it is always good to see activity like this, it is important to remember that the positive fundraising numbers are likely a direct result of companies wanting to get news out before next week’s holiday-filled work week and the uptick in spot gold prices this week. Don’t expect the Index to stay at this level for very long, with it likely to trend down to a more modest level after next week.

Oreninc Index Crashes in Deal-Heavy Week

The Oreninc Index crashed for the week ending June 19, 2014. This is a significant drop in activity in the financing space after last week’s rebound. Total dollars announced dropped to $19.8m, a YTD-low. One brokered deal was announced for $0.5m, a 25-week low; no bought deals were announced. While financing activity was down, there were a number of copper deals in the space, specifically First Quantum’s purchase of Lumina Copper and Aston Bay Holdings’ announced partnership with Antofagasta.