A Weekly Recap of All Things Resources to Friday, December 2nd
‘That’s a Wrap’
By Rod Blake
The new trading week began with investors feeling somewhat optimistic as the Dow and TSX, while still down on the year, have both rallied up from their October lows and are now at respective seven and 6-month highs. Now the question remains – does this uptrend fail as before or continue thru year end?
The way I see it – The next 5-weeks should be very interesting. Call it a year-end or Santa Clause rally, but barring a major economic event – the markets do tend to trend higher during the last month of the year. After tax loss selling, fund managers and investors alike re-enter the market to position themselves in sectors they feel will do well going into the New Year ahead. This increase in seasonal buying is the underlying cause of the rally.
E3 Lithium Ltd. ‘ETL-V’ shares’ surged up by $0.39 or 18.75 % to $2.47 on word the Federal Government was investing $27 million in the company’s Clearwater Direct Lithium Extraction (DLE) Technology Project near Red Deer, Alberta.
And still with lithium – the price of Queensland Gold Hills Corp. ‘OZAU-V’ shot up by $0.125 or 40.98% to $0.43 after the Australian focused junior miner changed course and acquired a 100% interest in the Mia Lithium Property in the James Bay area of Quebec.
Meanwhile – Volkswagen AG signed an agreement with the Government of Canada allowing the giant German auto company to begin searching for a battery cell factory location somewhere in Canada as part of its “rapid expansion to North America”.
Lundin Gold Inc. LUG-T’ pleased its shareholders when the Vancouver, BC based miner announced an enhanced 2023 – 2025 gold production outlook for the company’s prized Fruta del Notrte gold mine in southeast Equator.
Similarly – gold focused Rupert Resources Ltd. ‘RUP-V’ released the Preliminary Economic Assessment (PEA) for the company’s flagship Rupert Lapland Project in Northern Finland that included among other things – an after-tax Net Present Value (NPV) of $1.6 billion, with an Internal Rate of Return (IRR) of 46% and a payback of only two years if gold holds at US$1,650 or better.
The price of gold climbed by $46 or 2.62% to a new 5-month high of US$1,802-an-ounce and silver rose by $1.69 or 7.88% to a new 7-month high of US$23.14-anounce.
Western Forest Products Inc. ‘WEF-T’ announced that in order to reduce inventory levels – the Vancouver based forestry company would cut back lumber production from British Columbia operations by about 20-million board feet for the remainder of the year.
Forest companies are feeling a pinch as the price of lumber fell by $26 or 6.16% to a new 3-year low of US$396 per million board feet (mmbf).
Pipeline and energy giant Enbridge Inc, ‘ENB-T & N’ announced it had completed its 30% buy in of the proposed Woodfibre Liquid Natural Gas (LNG) project near Squamish, B.C. that is projected to be in service by late 2027.
Long suffering shareholders of Northern Dynasty Minerals Ltd. ‘NDM-T & ‘NAK-N’ received another setback after the U.S. Environmental Protection Agency (EPA) sighted fishery concerns and vetoed any mining at the company’s key Pebble Copper/Gold Project in Southwest, Alaska.
The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs was unchanged at 784, still up by 215 from this time last year. In the north – the number of Canadian active rigs rose by 1-rig to 195, an increase of 15 in the past year.
For the Week – the DJI was up by 0.24% to 34,430 with the S&P 500 higher by 1.14% to 4,072 and the NASDAQ better by 2.10% to 11,462. In Canada – the TSX rose by 0.50% to 20,486 and the TSX Venture gained3.99% to 599. The CBOE Volatility Index or VIX fell by 7.02% to 19.06.
With currencies – the Canadian dollar fell by 0.79% to US$0.7420 and the U.S. dollar ‘DXY’ lost 1.22% to 104.67.
With commodities – gold bullion gained 2.22% to US$1,795 with silver up by 7.88% to US$23.14 as copper rose by 6.37% to US$3.84 and lithium improved by 1.51% to US$82,155. Crude oil improved by 4.79% to US$80.05 while natural gas lost 5.74% to US$6.41. Lumber fell by 6.16% to US$396 and overall – the CRB Commodities Index was up by 1.00% at 302.
And Finally – The Bank of Canada sheepishly reported that the combination of 2-years years quantitative easing in a low interest rate environment and the cost to recover those funds with today’s high interest rates has left it with a 3rd-quarter loss of some $522-million – the first such loss in the central bank’s 87-year history. And now the Central Bank is now looking to the debt-ridden Federal Government to help fix the problem. What could go wrong?