A Weekly Recap of All Things Resources to Friday, July 26th
‘That’s a Wrap’
By Rod Blake
As the brokers, investors, traders and portfolio managers vacated their terminals after the markets closed last Friday afternoon, July 19th – many were left with the feeling of “What the heck just happened”, as the major North American markets, that were all at or near record highs early in the week (Here’s where we say – “What can possibly go wrong”) suddenly turned turtle as sellers went to cash ahead of what could be, another uncertain weekend.
The way I see it – What could go wrong? Just about everything went wrong late last week. Equity markets at extreme highs mainly influenced by the ‘Magnificent Seven’ artificial intelligence (AI) big caps, an assassination attempt on a former President of the United States, an incumbent U.S. President that seemed to be losing the support of his party, sticky inflation numbers and then, just to add fuel to the fire, on a computer glitch on Friday that shut down much of the free world’s commerce and transportation networks. Even the highflying gold bugs got hit with the price of bullion retreating from its fresh new all-time closing high of US$2,468 to plunge by over $70 to end the week at US$2,395.
The longer I was a broker, the more I understood that new bull markets tended to start quietly while corrections or bear markets usually came out of nowhere and often changed the market’s direction seemingly overnight. The quickest and worst correction for me was the disastrous tsunami that hit Japan in March of 2011. This event took out four nuclear reactors and collapsed the price of uranium and uranium equities overnight, some of which I sponsored and held along with clients. Some uranium companies went right off the board as the price of uranium only recovered some 10-years later. This is why I always told my clients to take profits on the way up even though the markets looked to be going higher. Take it from me – one never knows what could go wrong.
The equity markets stabilized on both sides of the boarder going into the new trading week, as the computer issues were rectified and the U.S. Presidential race gained some clarity.
Commodity markets continued their downturn during the week with –
Copper falling to a new 4-month closing low of US$4.07 a pound (lb).
Which no doubt helped the share price of Capstone Copper Corp. ‘CS-T’ and Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N’ to close a respective new 3-month lows of $8.73 and $2.90.
Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ released 2nd-quarter financial and production figures which included record quarterly copper production of 110,400 tonnes at an average price of US$4.42 a pound (lb). Teck’s share price fell to a new 3-month closing low of $62.36 early in the week only to rally on Friday by $2.46 or 3.89% to end the week at $65.63 on rumours the giant, Vancouver, BC based miner might be a takeover target.
First Quantum Minerals Ltd. ‘FM-T’ stock rose by $0.42 or 2.57% to $16.76 after the Toronto, ON based copper miner reached a shareholder’s rights agreement with the company’s second largest shareholder, China’s Jiangxi Copper, whereby Jiangxi cannot buy or sell 5% or larger blocks of First Quantum stock without First Quantum’s consent.
Nickel closed at a new 5-monrth low of US$7.19 a pound (lb).
The low price of nickel probably encouraged investors to sell the price of Cuban nickel miner Sherritt International Corp. ‘S-T’ down to a new 33/4-year closing low of $0.215.
Zinc fell to a new 3-month closing low of US$1.21 a pound (lb).
Platinum closed at a new 3-month low of US$935 a troy ounce (toz).
Lithium fell to close at a new 3-year low of US$11,717 a tonne (t).
All of which encouraged the market to force the closing share price of Patriot Battery Metals Inc. ‘PMET-T’ down to a new 2-year low of $4.48.
Century Lithium Corp. ‘LCE-V’ changed the name of its flagship Clayton Valley Lithium Project in Nevada to the Angel Island Mine – using the name of a local topographical feature to better distinguish the project from other like projects in the area.
Uranium fell to a new close at a new 7-month low of US$82.25 a pound (lb).
As uranium giant Cameco Corporation’s ‘CCO-T’ & ‘CCJ-N’ share price fell to a new 4-month closing low of $62.52.
And the CRB Commodities Index dropped to close at a new 4-month low of 329.
Gold and silver stocks continued to capture investor interest with:
OceanaGold Corporation ‘OGC-T’ joined a growing list of resource companies increasing shareholder returns, as the Vancouver, BC based miner announced the company will buy back up to 35.5-million or about 5% of its shares in the open market over the next 12-months.
Mining giant Newmont Corporation ‘NEM-N’ & ‘NGT-T’ reported 2nd-quarter gold equivalent production of 2.1-million ounces.
Snowline Gold Corp. ‘SGD-V’ released more extraordinary gold assays from the company’s Rogue Project’s Valley Deposit in Yukon including drill hole V-23-071 that reported 449.7 meters (m) averaging 1.77 grams per tonne gold (g/t Au) and drill hole Y-23-072 that reported 404.8 m of 2.27g/t Au. Timing is everything – and as these assays came out just ahead of a mid-week market meltdown – Snowline’s stock fell to close at a new 11/2-year of $4.52.
The shareholders of Vizsla Silver Corp. ‘VZLA-V’ were pleased to see the share price of their investment rise by $0.09 or 4.74% to $1.99 after the Vancouver, BC based mineral developer released a robust independent Preliminary Economic Assessment (PEA) for the company’s flagship Panuco Silver-Gold Project in Mexico.
Jaguar Mining Inc. ‘JAG-T’ shares’ rose to close at a new 2-year high of $3.83.
Mag Silver Corp. ‘MAG-T & N.A’ reported robust 2nd-quarter production and recoveries from the company’s 44% owned Juanicipio silver/gold/lead/zinc mine in Mexico – and better yet – increased grade guidance for the year ahead.
Going the other way – Victoria Gold Corp. ‘VGCX-T’, still dealing with a recent heap leach pile failure – saw its stock drop to a new all-time closing low of $0.61.
Falling Canadian interest rates are turning investor attention to high dividend paying pipeline stocks with TC Energy Corp. ‘TRP-T & N’ rising to a new 11/2-year closing high of $57.30 and Pembina Pipeline Corp. ‘PPL-T’ & ‘PBA-N’ closing at a new 2-year high of $52.88.
Superior Plus Corp. ‘SPB-T’ share price fell to a new 4-year closing low of $7.94.
Meg Energy Corp. ‘MEG-T’ declared an inaugural quarterly dividend of $0.10 a share.
The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 3-rigs in the past week at 589, down by 75-rigs from this time last year. Up north – the number of Canadian active rigs was up by 14-rigs to 211, up by 18-rigs from one year ago. Â
This as the price of natural gas fell to a new 3-month closing low of US$1.99 per million British Thermal Units (mmBtu).
Western Forest Products Inc. ‘WEF-T’ share price fell to a new 131/2-year closing low of $0.415.
Going the other way – the stock price of  West Fraser Timber Co Ltd. ‘WFG-T & N’ rose by $7.72 or 7.06% to a new 4-month closing high of $117.23 after the Vancouver, BC based forest giant beat the street’s expectations with its 2nd-quarter financials.
The CBOE Volatility Index or ‘VIX’ climbed to a new 3-month closing high of 18.17.
Lumber and lithium were the only commodities higher on the week, while natural gas and crude oil fell the most.
The North American markets that were stable to start the week, suddenly melted down mid-week, led by the Magnificent Seven stocks that, all of a sudden, weren’t so magnificent anymore. The markets then changed course once again on Friday and rallied going into the weekend.
For the Week – the DJI gained 0.75% to 40,589, while the S&P 500 fell 0.84% to 5,459 and the NASDAQ was off 2.08% to 17,358. Across the line – the TSX gained 0.55% to 22,815 and the TSX Venture lost 0.17% to 579. The CBOE Volatility Index or VIX fell 0.79% to 16.39.
With currencies – the Canadian dollar lost 0.076% to US$0.7228, while the U.S. dollar ‘DXY’ fell 0.06% to 104.32.Â
With commodities – gold bullion lost 0.33% to US$2,387, while silver fell 4.41% to US$27.93, and copper lost 3.54% to US$4.09, as lithium gained 0.30% to US$11,773. Crude oil lost 4.55% to US$76.44, while natural gas fell 6.13% to US$1.99, and uranium dropped 2.89% to US$82.25. With soft commodities – lumber rose 1.80% to US$510. Overall – the CRB Commodities Index fell 2.08% to 329.
One Last Thought – As The Bank of Canada forces the country’s unemployment rate for June up to 6.4% – a Maru Public Opinion survey found that the number of people 35 – 54 years old worried about being laid off from their work rose last month by 5% to 15%.