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‘That’s a Wrap’

By Rod Blake

Based on the overall negative close to last week’s North American markets it looks like investors, traders, brokers and portfolio managers alike were taking a cautious or wait and see attitude to begin 2024 and were locking in profits where they could find them.

The way I see it – The market experienced an exceptional rally to end 2023 and now many indicators are in an overbought condition. A short-term pull back or consolidation would be healthy in order to form a base for which to rise again. Resource stocks that have lagged the overall market for over a year now may get their day in the sun as investors with profits look to acquire lower hanging fruit.

Japan’s Nikkei News reported that Honda Motor Company ‘HMC-N’ was investigating the building of a $13.83-billoin electric vehicle (EV) and battery plant in a yet to be determined Canadian site.

This as the price of lithium fell to a new 21/2-year low of US$13,291 a tonne (t).

Which no doubt helped to pull the price of Standard Lithium Ltd. ‘SLI-Y’ down to a new 3-year closing low of $2.06 and Lithium Americas Corp. ‘LAC-T&N’ to close a new all-time low of $7.21.

Hertz Global Holdings Inc. ‘HTZ-Q’ said the Estero, FL based auto rental company will sell 20,000 units or one-third of its EV fleet due to lack of demand and high repair costs, and reinvest in gasoline powered vehicles.

Meanwhile – International Battery Metals Ltd. ‘IBAT-C’ shares surged up by $0.16 or 19.05% to close at $1.00 after the Vancouver, BC based company announced the signing of an unspecified term sheet to deliver the company’s direct lithium extraction plants to a customer in the western United States.

Vizsla Silver Corp. ‘VZLA-V’ shares’ rose by $0.38 or 7.00% to close at $1.38 after the Vancouver, BC based mineral developer released a positive Updated Mineral Resource Estimate for the company’s flagship Panuco silver-gold project in Sinaloa, Mexico.

Also, with silver – Endeavour Silver Corp. ‘EDR-T’ &’EXK-N’ stock rose by $0.14 or 5.76% to a closing price of $2.57 after the Vancouver, BC based miner’s impressed investors with the company’s 4th-quarter and year-end 2023 production figures.

With gold & copper – the closing price of Vancouver, BC based K92 Mining Inc. ‘KNT-T’ stock rose by $0.60 or 9.66% to $6.81 after the miner reported record 4th-quarter gold/copper production from the company’s Kainantu Gold/Copper Mine in Papua New Guinea.

And Lundin Gold Inc. ‘LUG-T’ shares’ rose by $0.30 or 1.99% to $15.39 after the Vancouver, BC based miner beat the streets’ expectations with the company’s 4th-quarter and year-end 2023 production from its prized Fruta del Norte gold mine in southeast Equador.

Going the other way – the share price of Vancouver, BC based  Northern Dynasty Minerals Ltd. ‘NDM-T’ & ‘NAK-N’ plunged lower by $0.185 or 35.58% to close at $0.335 on word the US Supreme Court had denied Alaska’s petition to review the state’s claims that the Environmental Protection Agency (EPA) veto of Northern Dynasty’s Pebble Project was illegal.

Energy giant Shell Plc. ‘SHEL-N’ has signed a long-term deal to buy liquefied natural gas (LNG) from a proposed Ksi Lisims first nations’ sponsored floating LNG facility to be built off shore in northern British Columbia.

Meanwhile, as cold Arctic air blew down from the north, the price of natural gas rose to a new 2-month high of US$3.34 per million British Thermal Units (mmBtu).

Alberta’s crude oil production rose by over 336-thousand barrels per day (bbl/d) in November to a 13-year high of 4.16-million bbls/d.

The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 2-rigs this week to 619, down by 156 rigs from this time last year. Up north – the number of Canadian active rigs increased by 88 rigs to 213, down by 14-rigs from one year ago.

The stealth bull market in uranium continued into the New Year with the price of Yellowcake rising to new 16-year high of US$92.50 a pound.

Which no doubt helped the price of Fission Uranium Corp. ‘FCU-T’ rise to a new 83/4-year closing high of $1.24, Denison Mines Corp. ‘DML-T’ & ‘DNN-N.A’ to close at a new 14-year high of $2.64, Sprott Physical Uranium Trust ‘U.UN-T’ to reach a new closing high of $32.15 since its initial launch in 2021, and NexGen Energy Ltd. ‘NXE-T & N’ and Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ to close at respective new all-time highs of $10.50 and $66.96.

The way I see it – While it’s wonderful to see that the price of uranium has almost doubled in the past 9-months from US$49.85 to reach a new 16-year high of US$92.50, and watch uranium stocks trade at or near all-time highs – this action has hardly moved the needle on the Toronto Stock Exchange (TSX) or the junior TSX Venture (TSX-V). There are only a handful of companies in the uranium sector and most of those are working projects already in production or found years ago. So far, there is little anticipation of companies looking for a new discovery, or the excitement of one making a new discovery. I can only imagine how different this market would be if uranium was replaced with gold. You see – unlike uranium – gold stocks make up a good portion of the listings on the TSX and form the majority of companies on the TSX-V. Many of the juniors are working on or looking for new discoveries. Gold is near all-time highs but it has been at this level for some 31/2-years, so investors are in a wait and see mode to see if it can finally break higher with some magnitude. I’d place a sizable bet that if gold took a run like it did in 2019 – 2020 (US$1,275 – US$2,040) that the TSX and TSX-V would see gains that have not been experienced in years.

West Fraser Timber Co. Ltd. ‘WFG-T&N’ – sighting “high fibre costs and soft lumber markets” – announced the Vancouver, BC based forestry giant would close the company’s sawmill in Maxville, Florida and indefinitely curtail operations at its sawmill in Huttig, Arkansas.

This as the price of lumber fell to a new 2-year low of US$525 per 1,000 board feet (mbf).

During my carrier, it was always exciting when a junior exploration company would come up with a potentially company changing drill hole. American Eagle Gold Corp. ‘AE-V’ did just that in spades, after the Toronto, ON based explorer reported diamond drill hole NAK23-17 from its NAK Copper/Gold Porphyry Project in central British Columbia reported 302 metres of 1.09% copper equivalent within a mineralized zone of 606 metres of 0.74% copper equivalent beginning at 98 metres downhole. AE’s stock rose by $0.12 or 42.86% on the news to close at $0.40.

Chesapeake Energy Corporation ‘CHK-Q’ announced the Oklahoma City, OK natural gas and oil company will merge with fellow producer Southwestern Energy Co. ‘SWN-N’ in an all-stock deal valued at some US$7.4-billion.

Natural gas and uranium led commodities higher on the week, while crude oil and lithium were down the most.

The TSX rose to a new 13/4-year closing high of 21,076 while the S&P 500 Index rose to a new record high close of 4,784.

All of the four major North American markets and the junior TSX Venture Exchange were ahead on the week.

For the Week – the DJI gained 0.34% to 37,593 with the S&P 500 up 1.85% to 4,784 and the NASDAQ ahead by 3.09% to 14,973. In Canadathe TSX gained 0.25% to 20,990 and the TSX Venture rose 0.91% to 556. The CBOE Volatility Index or VIX dropped 4.87% to 12.70

With currencies – the Canadian dollar fell by 0.36% to US$0.7457 and the U.S. dollar ‘DXY’ lost 0.03% to 102.40. 

With commodities – gold bullion gained 0.20% to US$2,049, silver rose 0.04% to US$23.19, while copper fell 1.32% to US$3.74, and lithium lost 1.33% to US$13,291. Crude oil lost 1.53% to US$72.68, as natural gas rose 14.78% to US$3.34, and uranium gained 1.65% to US$92.50. With soft commodities – lumber rose 1.45% to US$558. Overall – the CRB Commodities Index fell by 0.33% to 303.

And Finally – The charging station cheap power bill era for EVs may be coming to an end as Electric Canada reports the EV charging station company will begin to charge by the how much power the vehicle consumes, as opposed to the simpler billing by the time it takes to recharge the vehicle.

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