A Weekly Recap of All Things Resources to Friday, August 25th
‘That’s a Wrap’
By Rod Blake
As the brokers, investors, portfolio managers and traders viewed the previous week’s market data there was a sense that perhaps the lengthy artificial intelligence (AI) technology led rally was coming to an end and barring a significant correction, this might leave an opportunity for a new market leader would come to the forefront.
The way I see it – the current AI market started very quickly last October when very few pundits were talking about the explosive growth of AI. Over many years as a broker, I saw many new bull markets come out of nowhere in much the same manor. The most recent being the cannabis market that suddenly caught fire in early 2014. One common theme to these new entity bull markets is that there are usually very few companies in that space at the start so investors are forced to focus on only a few names, which can cause their share price to rise much more dramatically than normal. Is there a new market poised to capture investors’ attention and more importantly for our purposes, could the new bull come from the resource sector? One possibility might be the uranium sector where yellowcake is trading near a 16-month high of US$57 and with only a handful of public companies in this sector – uranium might be one to watch.
No sooner said and the price of uranium reached a new 17-month high of US$58.25 a pound, all of which no doubt helped the price of uranium giant Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ to rise to a new 16-year high of $49.50 per share.
The price of NexGen Energy Ltd. ‘NXE-T & N’ rose by $0.40 or 6.07% to $6.99 after the Vancouver, BC based uranium developer reported the company had submitted the Final Provincial Environmental Impact Statement for its flagship Rook uranium Project in Saskatchewan’s uranium rich Athabasca Basin.
Meanwhile, Uranium Energy Corp. ‘UEC-NA’ increased the Corpus Christi, TX company’s presence in the Athabasca basin by acquiring all or part of three prospective parcels of uranium claims from Rio Tinto Inc. ‘RIO-N’ for a cash consideration of $1.5-million.
Century Lithium Corp. ‘LCE-V’ shares’ gained $0.05 or 7.25% to $0.74 when the Vancouver, BC based lithium developer reported several fold increases in lithium recoveries during pilot plant work with samples taken from the company’s prized Clayton Valley Lithium Project in west-central Nevada.
Nikola Corporation ‘NKLA-Q’ stock fell by $0.48 or 24.12% to US$1.51 after the Phoenix, AZ big rig truck electric vehicle (EV) manufacturer warned of potential delivery shortfalls due to ongoing problems with the company’s battery packs.
Northvolt AB raised US$1.2-billion from a consortium of investors including the Canada Pension Plan Investment Board on word the Swedish battery maker is looking to build another EV battery facility somewhere in Canada.
When one pictures large cities in India, the vision is often thousands of 2-stroke scooters maneuvering crowded streets and polluting the air. It seems that the pollution aspect of this image is changing rapidly as Indian EV scooter manufacturer Ather Energy reported sales of the company’s EV scooters has risen from about 200 per month 3-years ago to an amazing current sales level of 15,000 a month.
To me – Something seems amiss in the lithium markets – as we keep hearing predictions of exponential lithium demand, yet the price of lithium carbonate just fell to a new 15-month low of US$29,769 per tonne.
The TSX venture traded down to a new 7-month low of 581.
Crescent Point Energy ‘CPG-T & N’ announced the sale of the company’s non-core North Dakota assets to a private operator for a cash consideration US$500-million that will allow the Calgary, AB based petroleum company to focus on core operating areas and increase debt repayment.
Only a few months after assuring Canadians that the very expensive Trans Mountain Pipeline Expansion was close to completion, and the crown owned company asks regulators for a last minute 1.3-kilometer route deviation south of Kamloops, BC due to unforeseen unstable ground conditions.
The closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 10-rigs over the past week to 632, down by 133 from this time last year. In Canada – the number of active rigs rose by 1-rig to 190, down by 11 from a year ago.
Other than some optimism in the uranium space – the resource markets entered the weekend with a negative bias.
For the Week – the DJI lost 0.45% to 34,347 while the S&P 500 gained 0.82% to 4,406 and the NASDAQ rose by 2.26% to 13,591. In Canada – the TSX gained 0.09% to 19,836 and the TSX Venture fell 0.85% to 581. The CBOE Volatility Index or VIX dropped 0.94% to 15.68.
With currencies – the Canadian dollar lost 0.41% to US$0.7352 while the U.S. dollar ‘DXY’ rose by 0.74% to 104.19.
With commodities – gold bullion gained 1.32% to US$1,914, with silver up by 6.28% to US$24.20, as copper rose by 1.89% to US$3.77, while lithium dropped 7.06% to US$29,826. Crude oil lost 1.47% to US$80.18 and natural gas fell 0.78% to US$2.55, while uranium rose by 2.19% to US$58.25. With soft commodities – lumber lost 3.20% to US$515. Overall – the CRB Commodities Index was up by 1.63% at 312.
One Last Thought – As noted above, the current conversion to EVs is attributed with going a long way in cleaning up the air pollution in major cities caused by internal combustion engines (ICE). Now, go back in time to the early 1900s and ICEs were credited with helping to clean up another type of pollution – namely horse manure. It seems that there were so many horses carrying people, pulling wagons and buggies etc. at that time that large cities throughout the world were having to deal with millions of pounds of horse droppings….now wait for it….per day.