A Weekly Recap of All Things Resources to Friday, February 2nd
‘That’s a Wrap’
By Rod Blake
As the brokers, investors, portfolio managers and traders reviewed their accounts for the year to date, and with the major North American markets at or near multi-year or all-time highs, it seemed the market pundits were right in that the bull market that started last October would carry on into 2024, as the combined indications of lower interest rates along with a good economy keeps new money coming to the large cap sector. Meanwhile, the resource sector, save for uranium and perhaps some copper issues, is still waiting to be invited to the party.
The way I see it – I’ve said it before but it’s worth repeating. Bull markets in resources, unless there’s been a major discovery, tend to start quietly and go almost unnoticed by the mainstream media until the bull is well underway. Case in point – uranium. One of the key components of powering a greener world, has more than doubled in less than a year (US$50 -$106) and the media barely gives it a mention. The mainstream media instead focuses more on the virtues of renewable energy. Now, copper is starting to look much like uranium a year ago. The price of copper is up some 22% (US$3.18 – $3.88) in the past 6-months and nary a word from the media. Again, a 22% increase in the price of one of key minerals in the production of electric vehicles (EVs) goes unnoticed while the media focuses on the unfortunate shutdown of a copper mine in Panama. Gold bullion at US$2,027 is within $50 of an all-time high set only a few short weeks ago, but the media treats the world’s true currency as if it’s nearing a multi-year low and the price of gold stocks are priced accordingly. I’m an old farm boy and to me – this resource market reminds me of a bull quietly eating grass in a field but noticing that the farmer has forgotten to secure the gate. Take a look at the charts. I think it’s only a matter of time before this resource bull market is out the gate and a surprised media is reporting it running down the road.
Copper stocks continued to catch a bid with the price of Vancouver, BC based Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N’ reaching a new 8-month closing high of $2.10.
Calibre Mining Corp. ‘CXB-T’ hit for a double when the Vancouver, BC based miner announced the completion of its all-stock takeover of Marathon Gold Corp. ‘MOZ-T’ and its flagship Valentine Gold Project in Newfoundland & Labrador. Following that, the company released encouraging diamond drill gold assays, including 111.92 grams per tonne gold (g/t Au) over 4.1metres, from its Limon Mine Complex in Western Nicaragua.
The shareholders of Artemis Gold Inc. ‘ARTG-V’ were pleased when the Vancouver, BC based miner reported the company’s key Blackwater Mine southwest of Prince George, BC was still fully funded and on track for its first gold pour in the 2nd-half of this year.
Sometimes Mother Nature gives up a pleasant surprise during a drill program. I can remember drilling the Afton copper deposit near Kamloops, BC, and as we got deeper into the oxide zone relatively high gold values started to appear in grades that significantly enhanced the value of the orebody. Dakota Gold Corp. ‘DC-N.A’ had a similar surprise and its shares’ rose by $0.06 or 2.86% to US$2.16 after the Lead, South Dakota exploration and development company reported up to 12.9% Rare Earth Oxides (REO) over 4.9-feet from a diamond drill hole in the new TD Zone of its Richmond Hill Gold Project in South Dakota.
General Motors Co. ‘GM-N’ revised downward its previously lofty target of building 400,000 electric vehicles (EVs) by mid-2024 down to a more realistic 250,000 units for the entire year, but still double the 125,000 EVs that GM produced in 2023.
This as global electric vehicle (EV) sales rose by 34% in 2023 to 14.1-million units.
Lithium issues continued to be depressed with Sigma Lithium Corp. ‘SGML-V&Q’ falling to a new 11/2-year low of $26.90 despite upgrading the audited mineral resource of the company’s flagship Grota do Cirilo lithium deposit in Sigma, Brazil by 27% to 109-million tonnes.
Uranium issues continued to attract investor attention with Sprott Physical Uranium Trust closing at a new 21/2-year high of $33.79, as Fission Uranium Corp. ‘FCU-T’ rose to a new 83/4-year closing high of $1.30, while Denison Mines Corp. ‘DML-T’ & ‘DNN-N.A’ closed at a new 13-year high of $2.86 and NexGen Energy Ltd. ‘NXE-T & N’ closed at a new all-time high of $11.04.
The major North American markets continued their rally during the week with the TSX reaching a new near 2-year closing high of 21,228, the NASDAQ closed at a new 21/2-year high of 15,629, while the DJI and S&P 500 closed at respective new all-time highs of 38,520 and 4,928.
Big oil continued to do well with Imperial Oil Ltd. ‘IMO-T’, Exxon Mobil Corp. ‘XOM-N’ and Chevron Corporation ‘CVE-N’ all reporting solid 4th-quarter results and better yet – raised their quarterly dividends accordingly.
This as the closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 2-rigs in the past week to 619, down by 4-rigs from this time last year. Up north – the number of Canadian active rigs increased by 2-rigs to 232, down by 17-rigs from one year ago.
Commodities that did well to start the week hit a US dollar wall midweek when the U.S. Fed indicated that a cut in interest rates may still be a way down the road. Gold bullion was the only commodity in the black at the end of the week while natural gas and crude oil were furthest in the red. Uranium had it first losing week since early November.
The American major markets rallied going into the weekend, while Toronto sagged but the lowly TSX Venture held onto early gains.
For the Week – the DJI gained 1.08% to 38,520 with the S&P 500 up 0.31% to 4,906 and the NASDAQ ahead by 1.13% to 15.629. Up north – the TSX lost 0.19% to 21,085 while the TSX Venture gained 1.09% to 557. The CBOE Volatility Index or VIX dropped 0.58% to 13.05.
With currencies – the Canadian dollar fell by 0.11% to US$0.7428 while the U.S. dollar ‘DXY’ gained 0.39% to 103.88.
With commodities – gold bullion gained 0.84% to US$2,035, as silver lost 0.88% to US$22.60, and copper fell 0.78% to US$3.82, while lithium lost 0.32% to US$13,243. Crude oil dropped 7.47% to US$72.26, and natural gas lost 25.45% to US$2.08, while uranium was down 5.66% to US$100.00. With soft commodities – lumber lost 3.65% to US$555. Overall – the CRB Commodities Index fell by 2.23% to 3107.
One Last Thought – The Canadian Liberal federal government’s plan to make the country’s electrical grid carbon neutral by 2035 may be overkill, as according to the National Post – 84% of Canada’s electricity is already produced carbon free and killing off the remaining 16% will be extremely costly to consumers, producers, employers and workers while hardly moving the needle on total world carbon emissions.