A Weekly Recap of All Things Resources to Friday, August 19th
‘That’s a Wrap’
By Rod Blake
After a few weeks of steady gains – resources investors took one on the chin early in the week after reports out of China indicated that the world’s second largest economy was entering an economic downturn.
Further to my comments a few weeks back (July 22nd) re the price of crude oil versus the price of oil stocks – perhaps the price of crude has further to fall as the black gold fell to a 6-month low of US$86.45 per barrel.
Turquoise Hill Resources Ltd. ‘TRQ-T & N’ made the tough decision to reject Rio Tonto’s ‘RIO-N’ $34 all-cash offer to take over its minority partner in the highly profitable Mongolian Oyu Tolgoi copper mine. Many analysts value Turquoise Hills at a much higher evaluation.
In light of current and future supply constraints from Russia – Canadian and German business groups issued a joint statement calling for a stronger partnership between the two countries on liquefied natural gas, hydrogen and critical minerals.
Case in point – the price of natural gas rose to a new 14-year high of US$9.37/1mmbtus.
The way I see it – German leaders have some very serious economic questions to sort out in short order. On the one hand Europe’s largest economy is supposed to exit all nuclear power by the end of this year while on the other hand, as per the above natural gas restraints, Germany is also facing a potential severe electricity crunch. Now – does the country follow a philosophical doctrine and end nuclear production as scheduled or face reality and keep the reactors going until at least the natural gas situation stabilizes.
New OPEC Secretary General Haitham Al Ghais warns that the world is on thin ice when it comes to meeting global oil demand going into 2023.
And as if on cue – the U.S. Energy Information Administration (EIA) announced that last week the country’s crude oil inventories fell by a greater than expected 7.056-million barrels.
Stratabound Minerals Corp. ‘SB-V’ shares’ surged up by $0.015 or 37.50% to $0.055 after the junior miner released a much-improved Mineral Resource Estimate (MRE) on its flagship Fremont Gold Project in California’s Mother Lode Gold Belt.
Wheaton Precious Metals ‘WPM-T&N’ proves to be a team player as the streaming company agreed to terminate its silver stream on the Yauliyacu Mine in Peru for a cash payment of US$150-million to help facilitate the sale of the mine by Glencore plc ‘GLEN-L’.
For the Week – The closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling dropped by 1-rig to 762, an increase of 259 from this time last year. Up north – the number of active Canadian rigs was unchanged at 201 for an increase of 45 in the past year.
The DJI lost 0.16% to 33,707 as the S&P 500 fell by 1.21% to 4,228 and the NASDAQ lost 2.62% to 12,705. Up north – the TSX lost 0.34% to 20,111 and the TSX Venture fell by 4.55% to 650.
Gold bullion dropped by 2.17% to US$1,762, with silver off by 7.79% to US$19.18 while copper improved by 0.54% to US$3.69. Elsewhere – crude oil lost 1.33% to US$90.77 but natural gas rose by 5.71% to US$9.26. The Canadian dollar fell by 1.66% to 0.7699. Overall – the CRB Commodities Index fell by 0.95% to 313.