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‘That’s a Wrap’

By Rod Blake

As investors, brokers and investment advisors poured over their charts from the previous week in preparation for the week to come a curious anomaly seemed to appear. While most of the North American markets all enjoyed significant run ups to start the year (S&P 500 +6.85%, DJI +3.50%, NASDAQ +16.57%, & TSX +7.05%) – most have also given back a good portion of those gains over the past few weeks (S&P 500 -5.02%, DJI – 4.33%, NASDAQ – 6.60%, & TSX – 2.64%). But one little index – the TSX Venture Exchange seems to be standing out from its senior siblings. While the Venture gained an impressive 10.70% to start the year, it has only given back 2.2% in the recent 3-week downturn. Based on this comparative short term outperformance could the Venture become a market leader?

The way I see it – There is a saying in the brokerage community that goes something like – “A market that won’t go down with bad news is looking to go higher.” and by inference should be bought. While the 2023 advance for the Venture Exchange has stalled – it has for the most part held its gains while its senior siblings have lost about one-third of their gains and in the case of the Dow – given back all if its gains and more. While the big boards – especially the U.S indexes, are following the U.S. Fed – the Venture tends to follow commodity prices and the drill bit. Should commodities regain their upward momentum or a significant discovery or assay be announced – then the lowly Venture Exchange – after so many years – could become a market leader once again. It doesn’t happen very often, but in times when commodities outperform, being exposed to a resource dominated index is very interesting indeed.

Argonaut Gold Inc. ‘AR-T’ shares’ plunged by $0.11 or 20.91% to $0.435 after the Toronto, ON based junior gold producer’s 4th-quarter and full 2022 financials – and worse yet – 2023 production and cost guidance disappointed an already sceptical market.

The price of Bravo Mining Corp. ‘BRCO-V’ stock rose by $0.10 or 3.13% to $3.30 after the Vancouver, BC based junior explorer/developer reported encouraging diamond drill hole assays from its flagship Launga platinum group (PGM), gold & nickel project in the Carajás Mineral Province, state of Pará, Brazil.

Canada’s largest diamond drilling company, Major Drilling Group International ‘MDI-T’ reported 3rd-quarter financials that highlighted a 7.5% year over year revenue increase to $149.2-mullion and a net earrings increase of 11% to $6.3-million.

Worldwide automakers continue to make strategic alliances with the mining industry. The latest saw the price of Toronto, ON based McEwen Mining Inc. ‘MUX-T & N’ stock surge up by $1.09 or 14.67% to $8.52 after Stellantis N.V. ‘STLA-N’ (Alfa Romeo, Chrysler, Fiat, Peugeot, and others) took a ARS $30-billion investment in MUX’s subsidiary McEwen Copper and its prized Los Azules copper project in San Juan, Argentina.

Frontier Lithium Inc. ‘FL-V’ announced an updated mineral resource estimate (MRE) for the Sudbury, ON based junior explorer/developer’s Spark deposit north of Red Lake, ON that included a 30% increase in Indicated Lithium Oxide (Li2O) and a 64% increase in Inferred Li2O.

This as the price of lithium fell to a new 1-year low of US$52,565 a tonne.

And the lowly TSX Venture Exchange rose to a new 51/2-month high of 643.

Calgary, AB based Baytex Energy Corp. ‘BTE-T & N’ announced the company was acquiring Houston, TX based Ranger Oil Corp. ‘ROCC-Q’  and its prized South Texas Eagle Ford shale assets in a cash & debt deal valued at some $3.4-billion.

Petroleum companies continued to give back more to investors with global energy giant Chevron Corporation ‘CVX-N’ announcing it intends to buy back up to US$17.5-billion of its common stock this year. US$17.5-billion is greater than the market cap of many companies.

Crescent Point Energy ‘CPG-T & N’ stock rose by $0.25 or 2.60% to $9.88 after the Calgary, AB based producer reported much better than expected 4th-quarter and year end 2022 financials – and better still – declared an additional one-time special dividend of $0.032 per share.

Meanwhile, Parkland Corporation ‘PKI-T’ reported the Calgary, AB based petroleum refiner and retailer would not be proceeding with a previously announced stand-alone renewable diesel complex in Burnaby, BC due to increased costs and U.S government incentives that gave advantages to American producers.  

Suncor Energy Inc. ‘SU-T & N’ announced the Calgary based Canadian petroleum giant was selling its British subsidiary Suncor Energy UK Ltd. including its North Sea assets to Equinor UK ‘EQNR-N’ for approximately C$1.2-billion.

This as the influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 4-rigs over the past week to 749, up by 99 from this time last year. Up north – the number of Canadian active rigs rose by 2-rigs to 246, an increase of 29 in the past year.

For the Week – the DJI gained 1.75% to 33,391 with the S&P 500 up by 1.91% to 4,046 and the NASDAQ ahead by 2.58% to 11,689. In Canada – the TSX rose 1.80% to 20,582 and the TSX Venture gained 4.21% to 643. The CBOE Volatility Index or VIX fell by 14.67% to 18.49.

With currencies – the Canadian dollar rose 0.05% to US$0.7354 while the U.S. dollar ‘DXY’ fell by 0.67% to 104.52.

With commodities gold bullion gained 2.48% to US$1,856, as silver rose by 2.51% to US$22.26, and copper improved by 3.03% to US$4.08, while lithium fell 6.75to US$52,565. Crude oil gained 4.60% to US$79.97 and natural gas surged up by 17.51% to US$3.02, while uranium lost 2.42% to US$50.45 . With soft commodities – lumber lost 3.13% to US$372. Overall – the CRB Commodities Index was up by 1.71% to 297.

And Finally – Further to last week’s comments on Canadian immigration – The Department of Citizenship and Immigration – in an effort to clear the backlog of citizen applications – is considering allowing new citizens to fast-track their applications and affirming their citizenship oath online as opposed the tradition of raising of their hands and doing the same while attending a citizenship ceremony in person.

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