ORENINC INDEX jumps as financings rebound
ORENINC INDEX - Monday, October 19th 2020
North America’s leading junior mining finance data provider
Last Week: 35.85
This week: 66.64
The Oreninc Index jumped in the week ending October 16th, 2020 to 66.64 from 35.85 a week ago as the number of deals rebounded, despite being a shortened week for the Canada Thanksgiving Holiday.
The COVID-19 virus global death toll has exceeded 1.1 million with almost 40 million cases reported worldwide, with Europe and other parts of the world experiencing a second wave of contagion.
The International Monetary Fund reduced its estimate of the impact on the global economy from COVID-19 although stating the cost of the pandemic would be about US$28 trillion in lost output, despite stronger than expected performance in the second and third quarters. It forecast global output would fall by 4.4% in 2020 compared with a 5.2% drop forecast during the summer. The impact on the USA is forecast at $16 trillion, four times the cost of the Great Recession, according to former Treasury Secretary Lawrence Summers and fellow Harvard University economist David Cutler.
In the USA, inflation is on the rise with the US Labour Department reporting that its Producer Price Index increased 0.4% in September following a 0.3% rise in August. US mortgage rates are moving in the opposite direction however with the average rate for a 30-year, fixed loan falling to a new record low of 2.81% from 2.87%, its lowest in almost 50 years. Notably, this is the 10th record low this year.
Unemployment continues to be a concern with millions seeking work and an increasingly number moving to longer-term jobless aid. However, the possibility of more economic stimulus seems increasingly unlikely until after the presidential election.
In Europe, crunch time is rapidly approaching for the UK government in its negotiations with the European Union about their future economic relationship. EU leaders have refused to budge on tenets of EU economic policy such as state aid rules leading UK prime minister Boris Johnson to conclude that the future relationship will be governed by principles of global free trade.
On to the money: the aggregate financings announced increased to $76 million, a two-week high, which included three brokered financings for $30 million, a two-week high, and two bought deal financings for $25 million, a four-week high. The average offer size fell to $2.17 million, a seven-week low, while the number of financings increased to 35.
With less than a month to go before the US presidential election, the gold price continues to exhibit volatility around the US$1,900/oz level as the spot price closed down at $1,899/oz from $1,930/oz a week ago. The yellow metal is up 25.18 so far this year. The US dollar index strengthened as it closed up at 93.68 from 93.05 a week ago. The VanEck managed GDXJ increased as it closed down at $57.67 from $59.50 a week ago. The index is now up 36.46% so far this year. The HUI Arca Gold BUGS Index also closed down at 333.49 from 340.18 last week. The SPDR GLD ETF inventory sold down a little, closing the week up at 1,272.56 tonnes, or 40.91 million ounces, from 1,271.52 tonnes last week.
In other commodities, Silver fell as it closed the week down at $24.16/oz from $25.15/oz a week ago. Copper closed down at $3.06/lb from $3.08/lb a week ago. Oil continued to strengthen as WTI closed up at $40.88 a barrel from $40.60 a barrel a week ago.
The Dow Jones Industrial Average jumped higher as it closed down at 28,606 from 28,586 a week ago. Canada’s S&P/TSX Composite Index also moved down to close at 16,438 from 16,562 the previous week. The S&P/TSX Venture Composite Index closed down at 725.31 from 732.25 last week.
Summary
- Number of financings increased to 35.
- Three brokered financings were announced this week for $30 million, a two-week high.
- Two bought-deal financings were announced this week for $25 million, a four-week high.
- Total dollars increased to $76 million, a two-week high.
- Average offer decreased to $2.17 million, a seven-week low.
Financing Highlights
Major Financing Openings
- Superior Gold (TSXV:SGI) opened a $15 million offering underwritten by a syndicate led by PI Financial on a best efforts basis. The deal is expected to close on or about November 5th.
- Newcore Gold (TSXV:NCAU) opened a $10 million offering underwritten by a syndicate led by Haywood Securities on a bought deal basis.
- Kesselrun Resources (TSXV:KES) opened a $8 million offering on a best efforts basis. Each unit includes half a warrant that expires in two years.
- Skarb Exploration (CSE:SKRB) opened a $6 million offering on a best efforts basis. Each unit includes half a warrant that expires in two years.
Major Financing Closings
- Argonaut Gold (TSX:AR) closed a $11.5 million offering underwritten by a syndicate led by Canaccord Genuity on a bought deal basis.
- Galleon Gold (TSXV:GGO) closed a $8 million offering underwritten by a syndicate led by Red Cloud Securities on a best efforts basis. Each unit included a warrant that expires in three years.
- Maple Gold Mines (TSXV:MGM) closed a $6.2 million offering on a best efforts basis. Each unit included a warrant that expires in three years.
- Scorpio Gold (TSXV:SGN) closed a $6 million offering on a best efforts basis.
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