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‘That’s a Wrap’

By Rod Blake

As the brokers, investors and portfolio managers took up their posts to start the new trading week they couldn’t help but wonder – based on the previous week’s action- that perhaps the 2023 New Year’s rally might be over.

The way I see it – From the start of the year to their recent highs – the S&P 500 Index has gained 7.74%, with the TSX Composite Index up by 7.13% an even the lowly TSX Venture Exchange (the resource index) is ahead by 10.70% – all gains that most portfolio managers would accept as good for an entire average year. One could say that the New Year’s rally has come as expected and the easy money has been made. To move up from here will require positive earnings and economic news from the big board companies, while the Venture will need rising resource prices, positive drill bit news, or new mineral discoveries to hold the interest of wary investors.

Sabina Gold & Silver Corp. ‘SBB-T’ shares’ rose by $0.16 or 10.13% to $1.74 after the Vancouver, BC based mineral developer agreed to an $1.1-billion all-stock takeover offer from senior gold miner B2Gold Corp. ‘BTO-T’ & ‘BTG-N’ that will see B2Gold getting complete control of the prized Back River Gold District in Nunavut, Canada.

Many analysts scoffed a few years ago when Kinross Gold Corp. ‘K-T’ & ‘KGC-N’ paid top dollar to acquire the early-stage Great Bear gold project near Red Lake, ON but the senior gold miner may be getting the last laugh as Kinross announced the project’s total resource just topped most analysts expectations at 5.0-million ounces of gold and counting.

Stratabound Minerals Corp. ‘SB-V’ stock surged up by $0.01 or 20% to $0.06 after the Toronto, ON based junior mineral developer reported a robust Preliminary Economic Assessment (PEA) for the company’s key Fremont Gold Project in the Mother Lode Gold Belt of north central California.

Meanwhile, the shareholders of Clean Air Metals Inc. ‘AIR-V’ were shocked to watch their investment plunge by $0.07 or 63.64% to just $0.04 after management of the Thunder Bay, ON based rare earth mineral explorer/developer warned that following an internal review of data – the previous preliminary economic assessment (PEA) of the company’s Current Deposit of the Thunder Bay North Project could no longer be relied on and was being retracted.

Ford Motor Co. ‘F-N’ announced the iconic American automaker will team up with China’s Contemporary Amperex Technology Co. (CATL) and invest US$3.5-billion to build a lithium iron phosphate battery plant in Marshall, Michigan that will employ 2,500 workers and be  producing in 2026.

This as Ford paused production and shipments of its electric F-150 Lightning pickup due to a “potential undisclosed battery issue”.

North America’s largest lithium producer – Albemarle Corporation ‘ALB-N’ reported that the company’s 2022 sales grew by 120% to US$7.3-billion while earnings rose by an amazing 299% to US$3.3-billion

This as the price of lithium fell to a new 8-month low of US$68,693 per tonne.

Just one week after Russia cuts oil production by 500,000 bbls/day and the U.S. Biden Administration announced the release and sale of an additional 26-million barrels of oil from the country’s Strategic Petroleum Reserve – which will potentially drop the reserve down to a 1983 low of 372-million barrels.

Canada’s largest oil sands operator, Calgary, AB based Suncor Energy Inc. ‘SU-T & N’ reported 4th-quarter production from its Oil Sands assets increased to 688,100 barrels per day, while adjusted operating earnings more than doubled to $1.81 per common share.

The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs dropped by 1-rig over the past week to 760, up by 115 from this time last year. Up north – the number of Canadian active rigs fell by 2-rigs to 248, an increase of 28 in the past year.

This as the price of natural gas fell to a new 2-year low of US$2.28/mmbtus.

While the price of uranium rose to a new 31/2-month high of US$51.80/lb.

And just one week after announcing further mill closures  – Vancouver, BC based forestry giant West Fraser Timber Co. Ltd. ‘WFG-T & N’ reported a 4th-quarter loss of US$94-million as opposed to a quarterly profit of US$334-million just one year ago.

Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ stock moved up by $2.80 or 4.98% to $59.05 on word the Vancouver, BC based Canadian multi-mineral mining giant was contemplating spinning off its very profitable coal mining division into a still to be clarified separate entity

Conversely, the share price of Agnico Eagle Mines Ltd. ‘AEM-T & N’ fell by $4.04 or 6.09% to $62.31 after investors were disappointed in the Toronto, On based gold miner’s conservative growth projections for this year and next.

For the Week – the DJI lost 0.12% to 33,827 with the S&P 500 down 0.27% to 4,079 while the NASDAQ rose by 0.59% to 11,787. On the Canadian side – the TSX fell 0.47% to 20,515 as the TSX Venture gained 2.45% to 628. The CBOE Volatility Index or VIX fell by 2.44% to 19.99.

 With currencies – the Canadian dollar lost 0.95% to US$0.7422 and the U.S. dollar ‘DXY’ improved by 0.29% to 103.87.

With commodities gold bullion lost 1.13% to US$1,843, as silver lost 1.23% to US$21.75, while copper gained 2.99% to US$4.14, and lithium lost 0.68to US$68,765. Crude oil dropped 4.23% to US$76.39 as natural gas fell by 10.94% to US$2.28, and uranium rose by 2.57% to US$51.80 . With soft commodities – lumber fell by 9.22% to US$381. Overall – the CRB Commodities Index was unchanged at 295.

And Finally – It was only a matter of time before big unions started to take advantage of the latest inflation figures in their negotiations. Case in point – the Public Service Alliance of Canada is demanding a new 3-year deal with wage increases of up to 14%-a-year that, when compounded, represents a 47% increase in pay over 3-years that could potentially cost Canadian taxpayers an additional $9.3-billion.

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