ORENINC INDEX tumbles post PDAC
ORENINC INDEX - Monday, March 12th 2018
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Last week index score: 42.07 (updated)
This week: 26.73
Zinc One Resources (TSXV:Z) mobilized a second drill rig at its Bongara zinc project in Peru.
Avrupa Minerals (TSXV:AVU) signed a non-binding LOI with a subsidiary of an international mining company to option three copper-zinc exploration projects in Portugal’s Pyrite Belt.
The Oreninc Index fell in the week ending March 9th, 2018, with the index falling to a 26.73 from an updated 42.07 a week ago as the financing drought continued following a lack-lustre PDAC. Interviewed by Kitco, junior mining magnate Rick Rule, commented that there is tons of money out there looking for a home but gold and gold stocks currently lack the excitement factor to appeal to generalist investors.
Unusually, only one key deal was announced during PDAC (the Prospectors and Developers Association Conference) last week, with Victoria Gold (TSXV:VIT) completing the financing it needs to build its Eagle mine in Yukon, Canada.
PDAC has traditionally marked the close of the first quarter financing season, with the financing drought that follows labelled the PDAC curse. One could argue that the curse began prior to the event this year as it is difficult to believe that the number of financings can fall any lower than recent weeks have shown.
On the geopolitical front, relations seem to be thawing between the USA and North Korea with the possibility of bilateral talks between the two nations taking place at some point soon thus ending a chapter of mutual threats and warlike rhetoric.
But maybe the warlike rhetoric from the USA is just being directed to another quarter as the government pushes ahead on implementing tariffs against the importation of steel and aluminium. Canada and Mexico have been exempted and a slew of other nations are seeking similar treatment, as most nations argued that resolving issues of overcapacity require multilateral talks rather than unilateral actions that could result in a tit-for-tat trade war.
Gold had another up-and-down week but appeared to shrug off better than expected US Non-Farms Payroll data for February that said 313,000 new jobs were added, the biggest increase in 18 months.
On to the money: Parsing out the Victoria Gold financings because they exceeded the limit to be included in the index, left very slim pickings as the total fund raises announced fell to scant C$10.6 million, a 165-week low, which included one brokered financing for C$6.0m, a nine-week low, and no bought-deal financings, also a nine-week low. The average offer size fell to C$1.0 million, a ten-week low, whilst the total number of financings fell to just 10, a 112-week low.
After a volatile week, gold was basically even with a slight increase to US$1,323/oz from US$1,322/oz a week ago, with a mid-week high of UC$1,334/oz. The van Eck managed GDXJ closed down slightly at US$31.72 from US$31.73 last week. The index is down 3.79% so far in 2018. In similar fashion, the US Global Go Gold ETF also closed down at US$12.43 from US$12.47 a week ago. It is down 4.46% so far in 2018. The HUI Arca Gold BUGS Index closed down at 172.92 from 172.99 last week. This index features 15 companies involved in gold mining and is an indication of how well gold companies perform relating to the gold price. The SPDR GLD ETF saw a slight fall to close at 833.73 tonnes from 833.98 tonnes a week ago.
In other commodities, silver closed up at US$16.58/oz from US$16.52/oz a week ago. Copper also closed slightly up at US$3.13/lb from US$3.12/lb last week. Meanwhile, oil closed up at US$62.04 a barrel from US$61.25 a barrel a week ago.
The Dow Jones Industrial Average recovered from the tariffs shock of the previous week to close up at 25,335 from 24,538 last week. Likewise, with Canada’s S&P/TSX Composite Index closed up at 15,577 from 15,384 the previous week. The S&P/TSX Venture Composite Index increased slightly to close at 828.90 from 826.02 last week.
Summary:
· Number of financings dropped to ten, a 112-week low.
· One brokered financing was announced this week for C$6.0m, a nine-week low.
· No bought-deal financing was announced this week, a nine-week low.
· Total dollars also dropped to C$10.6m, a 165-week low.
· Average offer size decreased to C$1.0m, a ten-week low.
Financing Highlights
Chakana Copper (TSXV:PERU) opened a C$6 million offering underwritten by a syndicate led by Eventus Capital on a best efforts basis.
· 6.7 million shares @ C$0.90.
· Proceeds will be used to accelerate a Phase I drill program at its Soledad copper-gold project in Peru.
Major Financing Openings:
· Chakana Copper (TSXV:PERU) opened a C$6 million offering underwritten by a syndicate led by Eventus Capital on a best efforts basis.
· Canuc Resources (TSXV:CDA) opened a C$1.11 million offering on a best efforts basis. Each unit includes half a warrant that expires in 24 months.
Major Financing Closings:
· Renaissance Oil (TSXV:ROE) closed a C$11.14 million offering underwritten by a syndicate led by Haywood Securities on a best efforts basis. Each unit included a warrant that expires in 36 months.
· Cornerstone Capital Resources (TSXV:CGP) closed a C$8.2 million offering on a best efforts basis.
· K92 Mining (TSXV:KNT) closed a C$6.5 million offering underwritten by a syndicate led by Clarus Securities on a best efforts basis. Each unit included half a warrant that expires in 18 months.
· Rupert Resources (TSXV:RUP) closed a C$4.9 million offering on a best efforts basis.
Company News
Avrupa Minerals (TSXV:AVU) signed a non-binding LOI with a subsidiary of an international mining company to option three copper-zinc exploration projects in Portugal’s Pyrite Belt.
· The funding partner will provide a first stage earn-in amount of €13 million (C$20.3 million) for exploration over the three years to acquire a 51% interest.
· Avrupa also announced a C$500,000 private placement financing of 6.25 million units @ C$0.08. Each unit is comprised of one share and one warrant exercisable @ C$0.12 for two years. The proceeds will be used for exploration and operations in Portugal, Kosovo and Vancouver.
Analysis
The partner will provide funding and expertise for the exploration including greater technical experience to potentially develop large-scale mining operations. If this agreement becomes definitive it will result in significant future exploration at three projects in Portugal. This will help the company focus its own efforts on other projects in its portfolio.
Zinc One Resources (TSXV:Z) mobilized a second drill rig at its Bongara zinc project in Peru.
· To date, 31 drill holes have been completed by the first drill rig and seven at Mina Grande Sur by the second. Once drilling at Bongarita and Mina Grande Sur is completed, the rigs will be moved to the Mina Chica and Mina Grande Centro areas.
Analysis
Drilling at Bongará continues to provide high-grade zinc results and with 124 drill platforms approved to test the 1.4km trend that includes the Bongarita, Mina Chica and Mina Grande the company is seeking to accelerate progress as it works towards calculating an initial resource estimate and then a preliminary economic assessment.
