A Weekly Recap of All Things Resources to Friday, February 16th

‘That’s a Wrap’

 By Rod Blake

As the big cap brokers, investors, portfolio managers and traders leaned back, put their feet up on their desks and reviewed the previous weeks North American major markets, they had a collective satisfaction of the easy money being made, in that the magnificent seven induced rally that began last October was into an unprecedented 15^th-week, with every indication there was more to come.  Meanwhile, those that followed resources, or worse yet junior resources were scratching their heads and wondering, save for those holding physical U₃O₈ and uranium issues, if their big rally was ever going to come.

The way I see it – 23-million. That was the volume of trading on the TSX Venture Exchange to finish of the week last Friday. And, that was up from earlier in the week when trading volumes on the Venture were only about 20-million shares a day. Looking back, trading volumes on the Venture have been about 25-million shares a day for almost 2-years now when the index broke down in April 2022. The Venture Exchange and by extension, resource issues will be hard pressed to have any sustained rally on just 25-million shares a day. I can remember days when the Venture, or the predecessor Vancouver Stock Exchange would trade hundreds of millions of shares a day and would easily out trade the senior Toronto Stock Exchange. In fact, many thought the Venture was having a healthy day when trading volumes topped 400-million shares a day. Now I know times change and perhaps 400-million share days on the Venture are a thing of the past. But 25-million shares is way too low and should be higher. Keep an eye on the Ventures daily trading volumes. If TSX Venture trading volumes begin to edge up over 30-million and start to approach 50-milliom shares a day, then perhaps that long awaited junior resource rally will be in play. If Venture trading volumes stay down around 25-million – not so much.

Part of the previous week’s big-cap rally carried over into the new week when the TSX Composite closed at a new 2-year high of 21,256, while the Dow 30 and S&P 500 reached respective new all-time closing highs of 38,797 and 5,030.

Diamondback Energy Inc. ‘FANG-Q’ stock gained $14.24 or 9.38^% to close at US$165.98 after announcing the Midland, Texas based petroleum company and fellow Midland private company Endeavor Energy Resources L.P. had agreed to merge in a stock & cash deal of some US$26-billion.

This as the price of natural gas fell to a new 3^1/2-year low of US$1.59 per million British thermal units (MMBtu).

All of which helped to pull the closing price of Calgary, AB based Birchcliff Energy Ltd. ‘BIR-T’ down to a new 2^1/2-year low of $4.65.

TC Energy Corp. ‘TRP-T & N’ shares’ rose by $1.32 or 2.54^% to $53.32 after the Calgary, AB based pipeline and energy company pleased the street with its 4^th-quarter and full-year 2023 financials.

Meanwhile – Saudi Aramco estimates that global oil demand will grow this year by about 1.5-million barrels per day (MMbpd).

The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 4-rigs in the past week to 621, down by 139-rigs from this time last year. Up north – the number of Canadian active rigs rose by 2-rigs to 234, down by 14-rigs from one year ago.

The CBOE Volatility Index or VIX rose early in the week to a new 3^1/2-month closing high of 15.85.

Under the heading of ‘Hit ‘Em When They’re Down’ – as if mining today isn’t tough enough – now we have Mexican President Andés Manual López Obrador – sighting environmental damage and excessive water use – proposing to ban the granting of open pit mining concessions in that country and well as banning any exploration and other activities related to open pit mining methods.

SSR Mining Inc. ‘SSRM-T & Q’ shares’ plunged by $7.00 or 53.52^% to a new 9-year closing low of $6.08 after the company announced suspension of mining of its key Çöpler gold mine in east-central Tϋrkiye due to a land slippage at the heap leach portion of the operation.

Probe Gold Inc. ‘PRB-T’ released a enhanced Preliminary Economic Assessment (PEA) on the company’s flagship Novador Project near Val-d’Or, Quebéc that showed among other things – a projected 23^% increase in annual gold production to 255,000 ounces.

Gold bullion dropped down below the key psychological support level of US$2,000 to US$1,993 a troy ounce and investors threw in the golden towel, forcing of the world’s largest gold miner, Newmont Corporation ‘NEM-N’ to a 5-year closing low of US$32.04. Other gold producers fallowed suit.

Silver producers didn’t fare any better with IMPACT Silver Corp. ‘IPT-V’ falling to a new 8-year closing low of $0.15.

And having copper with your gold didn’t help as Western Copper and Gold Corp. ‘WRN-T & N.A’ closed at a new 3^1/2-year low of $1.32.

Company directors tend to know when their company’s stock is undervalued. And in that light Barrick Gold Corp. ‘ABX-T & N’ Board of Directors announced the world’s second largest gold miner would purchase up to US$1-billion of its own shares over the next 12-months. Over double the value of ABX stock it bought in 2022.

But after the darkness comes the light – and the price of Centerra Gold Inc. ‘CG-T’ & ‘CGAU-N’ rose by $0.44 or 7.17^% to $6.52 after the Toronto, ON based miner projected an 11^% increase in 2024 gold production to 410,000 ounces.

RHO Motion reported that global electric vehicle (EV) sales reached 1.1-million units in January. Up by some 69^% from the same month just one year ago.

This as Tesla Inc. ‘TSLA-Q’ announced price cuts of $1,000 or 2.3^% to US$42,900 for its Model Y and $1,000 or 2^% to US$47,900 for its Model Y Long Range sedan.

Nouveau Monde Graphite Inc. ‘NOU-V’ & ‘NMG-N’ stock surged up by $0.60 or 21.42^% to $3.40 after the Saint-Michel-des-Saints, PQ based mineral developer announced the company had signed a supply and US$150-million investment agreement with General Motors Holdings LLC ‘GM-N’ to deliver 18,000 tonnes per year of active graphite battery material to GM’s and Panasonic Energy’s North American facilities, from the company’s operations in Quebec.

Perpetua Resources Corp. ‘PPTA-Q & N’ announced the Boise, ID mineral developer had received another US$34.6-million commitment from the U.S. Department of Defence to help advance the company’s Stibnite Antimony & Gold Project in central Idaho.

Cascades Inc. ‘CAS-T’, sighting operational realignment and optimization – announced the Kingley Falls, QC based paper company’s Trenton, Ontario plant would not reopen and its Belleville, ON and Newton, Connecticut operations would permanently close, and affecting 310 employees.

Copper and silver were the leading commodities over the week, while natural gas and uranium were lagging the most.

The Dow 30, S&P 500 and NASDAQ were all down going into the weekend, while surprisingly, the resource heavy TSX Composite and TSX Venture were ahead.

For the Week – the DJI lost 0.11^% to 38,628 with the S&P 500 down 0.42^% to 5,006 and the NASDAQ off 1.34^% to 15.776. In Canada – the TSX gained 1.17^% to 21,256 and the TSX Venture rose 1.83^% to 557. The CBOE Volatility Index or VIX rose 10.13^% to 14.24.

With currencies – the Canadian dollar fell 0.19^% to US$0.7415, while the U.S. dollar ‘DXY’ rose 0.18^% to 104.27. 

With commodities – gold bullion lost 0.54^% to US$2,013, while silver gained 3.49^% to US$23.40, and copper rose 3.52^% to US$3.82, as lithium gained 0.11^% to US$13,521. Crude oil rose 3.38^% to US$79.13, while natural gas lost 13.98^% to US$1.60, and uranium fell 2.64^% to US$103.20. With soft commodities – lumber roe 2.17^% to US$564. Overall – the CRB Commodities Index fell 0.33^% to 314.

And Finally – in what seems too brainless to be true. A young York Region, Ontario driver recently lost his full driver’s license for 30-days just 10-minutes after receiving it, for getting caught doing 131km/h in a 50km/h zone!