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‘That’s a Wrap’

By Rod Blake

Upon reviewing last week’s markets, the one thing that stood out to me was the colour red. Not the red of the third consecutive weekly drop of the American markets – although that is significant. No, the red that caught my eye was the colour red of copper. From early February, the red metal has climbed from $0.81 or 22% from US$3.68 to last Friday’s close of over US$4.49 a pound. Not only is copper at a 2-year high but is only 40-cents away from its all-time high of US$4.90 reached two years ago in February. To me it looks like two opposing scenarios are trying to play out here. On the one hand, we have the world’s central bankers trying to put their economies into recession in order to lower interest rates back down to the 2% range. On the other hand, we have copper – the metal that is said to have a PhD on the economy because it is used in almost every industrial process -threatening to break through to a new all-time high, which signals economic expansion. I think we’re about to get a front row seat of how this will play out.

The way I see it – I cut my mining teeth in the copper markets of the late 1960s and 1970s. These were exciting times for a young man in British Columbia as it was the time of the large porphyry copper discoveries that transformed copper mining when copper was languishing at about US$0.50 a pound. It was a time of discoveries that became mines that have come and gone such as Brenda, and many that are still producing to this day such as Afton – now New Afton ‘NGD-T & N.A’, Copper Mountain – now Hudbay Minerals ‘HBM-T & N’, Gibralter – now Taseko Mines ‘TKO-T’ & ‘TGB-N’, while the biggest of them all, Bethlehem, Lornex, Highmont, and Valley Copper merged into one super pit that became Highland Valley Copper (now Teck Resources ‘TECK.B-T’ & ‘TECK-N’). It was also an exciting time for investors as some companies saw their share price rise from pennies to multi-dollar values. Plus, there were many area plays around the main discoveries that kept trading volumes of the Vancouver Stock Exchange very active. Investors are taking note once again and copper stocks are moving higher with some trading at multi-year or all-time highs. I’m not sure if there will a resurgence of those heady copper days of the 60s & 70s again? But, if the red metal does get above US$4.90 – I sure wouldn’t bet against it.

Copper continued to attract investor interest during the week as –

Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N.A” closed at a new 12-year high of $3.55 after closing a US$500-million debt financing. The proceeds of which will help reduce aged debt and advance the company’s Florence Copper Project in Arizona.

The share price of First Quantum Minerals Ltd. ‘FM-T’ rose by $0.42 or 2.71% to $15.94 after the beleaguered copper miner’s 1st-quarter financials were not as bad as the street had feared.

And with potentially the biggest mining deal in over a decade – Australia’s BHP Group Ltd. ‘BHP-N’ proposed a US$38.8-billion all-stock takeover of fellow British multi-national miner Anglo American Plc ‘AAL-L’ that would create the world’s largest copper miner. To which Anglo immediately dismissed the proposal for putting a discounted value on the company’s assets.

Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ stock rose by $5.42 or 8.71% to close at $67.65 after the Vancouver, BC miner, helped by increased copper production, impressed investors with the company’s 1st-quarter production and financial figures.

Copper producer Hudbay Minerals Inc. ‘HBM-T & N’ rose to a new 6-year closing high of $11.80, while Capstone Copper Corp. ‘CS-T’ and Ivanhoe Mines Ltd. ‘IVN-T’ closed at respective new all-time highs of $10.29 and $20.36.

And if getting into copper is good for senior gold producers then it should be for juniors, as Minera Alamos Inc. ‘MAI-V- announced a subsidiary of the junior gold producer was entering into a 50% joint venture on the Los Verdes, Potreritos and Sauqua Verde copper projects in Mexico.

This as the red metal rose to close at a new 2-year high of US$4.57 a pound.

Trading volumes continued to improve on the TSX Venture Exchange – reaching 57.41-million shares a day.

Tesla Inc. ‘TSLA-N’ shares’ fell by another $4.98 or 3.39% to US$142.07 after the predominant electric vehicle (EV) manufacturer announced another series of price cuts of up to US$2,000 on its Model Y,X & S autos.

Energy Fuels Inc. ‘EFR-T’ & ‘UUUU-N’ shares’ fell by $0.81 or 10.05% to $7.25 after the Lakewood, CO uranium producer announced the acquisition of Australia’s Base Resources Ltd. ‘BSE-A’ and its flagship Toliara critical mineral project in Madagascar in a cash & stock deal valued at some A$375-million. (Note that the acquirer’s stock sometimes falls in these deals due to the dilution of its cash and/or share base.)

Grid Status reported that for 2-hours on the evening of April 16thBattery Storage, with a peak output of 6,177-megawatts (MW), accounted for the largest portion of California’s electric power supply – out producing natural gas, hydro, nuclear and renewable as the state’s greatest source of electricity.

Staying with batteries – Honda Motor Co. ‘HMC-N’ announced the Japanese automaker planned to build a $15-billion electric vehicle (EV) assembly plant as well as a new EV battery plant at the company’s facility in Alliston, Ontario that will produce about 240,000 EVs per year starting in 2028.

Lithium Americas Corp. ‘LAC-T & N’ shares’ fell to a new 2-month closing low of $6.05 after the Vancouver, BC based mineral developer closed a dilutive $275-million equity financing to further the development of the company’s flagship Thacker Pass lithium project in Humboldt County, Nevada.

Lumber stocks were out of favour with Weyerhaeuser Company ‘WY-N’ trading down to a new 4-month closing low of US$31.05, while Canfor Corp. ‘CFP-T’ closed at a new 6-month low of $14.21 and Western Forest Products Ltd. ‘WEF-T’ tested a 131/2-year closing low of $0.55.

This as the price of lumber fell to a new 6-month low of US$501 per 1,000 board feet (MBF).

Equinox Gold Corp. ‘EQX-T & N’ stock fell by $0.61 or 7.80% to $7.21 after the Vancouver, BC miner announced the purchase of a further 40% interest in the Greenstone Gold Mine. The $995-million cash & share purchase deal will give Equinox 100% ownership of prized northern Ontario gold project. (Again, the purchasers’ share price often drops on these deals based on cash & share dilution.)

Going the other way – Snowline Gold Corp. ‘SGD-V’ shares’ rose by $0.34 or 6.34% to $5.70 after the Vancouver, BC based junior explorer closed an oversubscribed $31.9-million financing to help develop the company’s very promising Rogue Gold Project in Yukon.

MAG Silver Corp. ‘MAG-T & N’ shareholders’ were pleased to see their investment rise by $1.15 or 6.95% to $17.70 after the Vancouver, BC based miner announced better than expected 1st-quarter silver production from the company’s joint venture Juanicipio mine in Mexico.

Record gold prices are going right to the bottom line for Lundin Gold Inc. ‘LUG-T’ as the Vancouver, BC based miner announced the company would pay off the last of its US$330-million of debt taken down just 4-years ago for the construction of its Fruta del Norte gold mine in Ecuador.

Two senior gold producers had a good week after releasing 1st-quarter reports, with Newmont Corporation ‘NEM-N & ‘NGT-T’ rising to a new 1-year closing high of US$43.41, while Agnico Eagle Mines Ltd. ‘AEM-T & N’ closed at a new 2-year high of $89.55.

Crescent Point Energy Corp. ‘CPG-T & N- closed at a new 2-year high of $12.38.

The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 6-rigs in the past week to 613, down by 142 rigs from this time last year. Across the line – the number of Canadian active rigs fell by 9-rigs to 118, up by 25-rigs from one year ago.  

Copper and lumber the most improved commodities over the week, while natural gas and uranium fell the most.

All five of the North American markets were ahead going into the weekend as for the most part; the Israel/Iran rhetoric went silent.

For the Week – the DJI gained 0.67% to 38,240, while the S&P 500 rose 2.68% to 5,100, and the NASDAQ gained 4.23% to 15,928. Up north the TSX rose 0.74% to 21,969 and the TSX Venture gained 3.53% to 587. The CBOE Volatility Index or VIX fell 19.72% to 15.02.

With currencies – the Canadian dollar gained 0.69% to US$0.7318, while the U.S. dollar ‘DXY’ lost 0.09% to 106.02.

With commodities – gold bullion fell 2.21% to US$2,340, while silver lost 0.51% to US$27.21, as copper rose by 1.78% US$4.57, and lithium lost 0.26% to US$15,202. Crude oil gained 0.65% to US$83.72, while natural gas fell 8.52% to US$1.61, and uranium dropped 3.58% to US$86.10. With soft commodities – lumber rose 0.98% to US$513. Overall – the CRB Commodities Index was flat at 346.

And Finally – Although electric vehicles (EV) sales keep rising, it seems that Canadian interest in purchasing an EV is waning, as according to a recent AutoTrader survey – interest in buying an EV has fallen from 68% in 2022, to 56% last year, and now down to 46% this year. Concerns over limited range, insufficient charging infrastructure, higher costs and cold weather performance were the main deterrents to purchase. Most importantly, a majority of respondents thought it was unlikely that the federally mandated zero-emission standard for new vehicles by 2035 would be realized.

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