A Weekly Recap of All Things Resources to Friday, May 24th

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‘That’s a Wrap’

By Rod Blake

When the brokers, investors, portfolio managers and traders closed down their terminals last Friday, there was an overwhelming sense that the strength in the markets was rotating away from the artificial intelligence (AI) issues that started the current bull market back in last October and was moving towards of all things – commodities.

The way I see it – When I was a broker, the industry almost always shrugged off the premise that some new market leader would change everything and go on indefinitely because – “This time it’s different.”  – but, inevitably – it was never different. Markets rise and fall on the same cycles and for the same reasons again and again. It is not very often that commodities are market leaders, and it’s almost nonexistent when more than one commodity is contributing to that leadership. In my time I’ve see copper markets, gold and silver markets, uranium markets, diamond markets, oil & gas markets and so on. Most of those markets were one off events that carried investor interest for a period of time then petered out after that particular commodity price or event peaked. The resource space would then go back into hibernation waiting for the next commodity to rise to the top. This commodity cycle – although I hate to say it – seems to be different. Different in that as far as I can recall there have never been so many commodities trading at or near multi-month, multi-year or even all-time highs. We used to say that resource companies blew their treasuries down a drill hole and then had to go back to the market to raise more cash, which depressed shareholder value. Now, many companies are returning value to shareholders through dividends and share buy backs. It seems that the current surge in artificial intelligence (AI) has put additional upside pricing on commodities. This bull market in commodities began quietly with the zero-emission alternative energy movement and then continued to include electric vehicles (EV), and now AI. Each sector by itself put some upward pressure on commodity prices but accumulatively they have been a force. The world is figuring out that to clean up the effects of hundreds of years of the industrialization in a short time frame will require base metals, industrial minerals, precious metals, energy minerals in amounts never before imagined. The current cycle may peter out as before, but with so many metals and minerals in play, perhaps – this time it is different.

The previous week’s enthusiasm for commodities and resource equities spilled over to the new week with many moving higher as –

Nickel reached a new 10-month closing high of US$9.73 a pound.

Talon Metals Corp. ‘TLO-T’ shares rose by $0.02 or 11.77% to $0.19 after the Tamarack, MN mineral explorer reported the drilling discovery a new CGO East Waterfall nickel (Ni), copper (Cu), cobalt (Co) and platinum group elements (PGE) zone at the company’s Tamarack Nickel Project in central Minnesota.

Zinc closed at a new 11/3rd-year high of US$1.43 a pound.

Which helped Fireweed Metals Corp. ‘FWZ-V’ to close at a new 4-month high of $1.25.

Copper reached a new all-time closing high of US$5.11 a pound.

Which helped Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N.A’ to rise to a new 12-year closing high of $4.12, and Hudbay Minerals Inc. ‘HBM-T & N’ to close at a new 13-year high of $14.15 and Ivanhoe Mines Ltd. ‘IVN-T’ to achieve a new all-time closing high of $21.28.

Gold bullion rose to a new all-time closing high of US$2,426 a troy ounce (t oz) and –

Kinross Gold Corp. ‘K-T’ & ‘KGC-N’ closed at a new 41/2-year high of $11.21, while Eldorado Gold Corp. ‘ELD-T’ & ‘EGO-N’ rose to a new 7-year closing high of $22.55 and Lundin Gold Inc. ‘LUG-T’ reached a new 16-year closing high of $20.52.

Going the other way – IAMGOLD Corp. ‘IMG-T’ & ‘IAG-N’ shares’ fell by $0.63 or 10.28% to $5.50 after the Toronto, ON based miner took advantage of a rising gold market and announced US$300-million all-cash bought deal financing to increase the company’s ownership of its flagship Côté Gold Mine in central Ontario.

i-80 Gold Corp. ‘IAU-T’ & ‘IAUX-N’ shares’ fell to a new all-time closing low of $1.53.

Silver closed at a new 11-year high of US$32.02 a t oz. and –

Endeavour Silver Corp. rose to close at a new 1-year high of $5.38, as Pan American Silver Corp. ‘PAAS-T & N’ closed at a new 2-year high of $22.22, and Fortuna Silver Mines Inc. ‘FVI-T’ & ‘FSM-N’ reached a new 3-year closing high of $7.98.

Meanwhile the stock price of Vizsla Silver Corp. ‘VZSA-V’ gained $0.16 or 9.82% to close at a new 2-year high of $1.79 after the Vancouver, BC based mineral developer released encouraging diamond drill hole assays from the company’s flagship Panuco silver-gold project in Mexico.

Which no doubt helped the resource weighted TSX Venture Exchange rise to a new 10-month closing high of 621.

Uranium issues continued their upward trend with Denison Mines Corp. ‘DML-T’ & ‘DNN-N.A’ closing at a new 13-year high of $3.15 while industry standard Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ closed at a new all-time high of $73.38.

Natural gas continued its current bull run and rose to a new 6-month closing high of US$2.76 per million British thermal units (MMBtus).

Suncor Energy Inc. ‘SU-T & N’ stock closed at a new 2-year high of $56.03.

This as the key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 4-rigs in the past week to 600, down by 111 rigs from this time last year. Across the line – the number of Canadian active rigs grew by 6-rigs to 120, up by 33-rigs from one year ago.  

Patriot Battery Metals Inc. ‘PMET-T’ stock fell by $0.91 or 9.48% to $8.69 after the Vancouver, BC based mineral developer announced a $75-million all-cash flow through financing to help develop the company’s prized Corvette Lithium Project in the James Bay region of Quebec.

The price of Lithium Americas Corp. ‘LAC-V’ fell to a new 31/2-month closing low of $5.21.

Lucid Group, Inc. (LCID-Q) announced the luxury electric vehicle (EV) maker would lay off approximately 400 workers or about 6% of the company’s workforce.

The TSX Composite Index rose to a new all-time closing high of 22,468.

And, to the south – the S&P 500 and NASDAQ Exchanges reached respective new all-time closing highs of 5,321 and 16,833.

Meanwhile, the CBOE Volatility Index or VIX dropped to a new 4-year closing low of 11.86.

Commodities fell in tandem late in the week, going against a strong (interest rates will stay higher for longer) U.S. dollar.

Uranium was the only commodity ahead on the week while copper and natural gas fell the most.

The equity markets were mixed at the end of the week as traders cut back exposure going into the American Memorial Day long weekend.

For the Week – the DJI lost 2.33% to 39,070, while the S&P 500 rose 0.02% to 5,304, and the NASDAQ gained 1.41% to 16,921. Up north the TSX lost 0.64% to 22,321 and the TSX Venture fell 1.14% to 608. The CBOE Volatility Index or VIX fell 0.50% to 11.93.

With currencies – the Canadian dollar lost 0.38% to US$0.7318, while the U.S. dollar ‘DXY’ rose 0.25% to 104.75.  

With commodities – gold bullion lost 3.36% to US$2,333, as silver fell 3.62% to US$30.35, while copper dropped 6.30% US$4.76, and lithium lost 0.40% to US$14,529. Crude oil lost 2.75% to US$77.80, as natural gas fell 5.32% to US$2.49, while uranium gained 1.21% to US$91.75. With soft commodities – lumber was unchanged at US$528. Overall – the CRB Commodities Index was rose by 1.48% 343.

One Last Thought – Metro Vancouver’s transit service Translink seems to ride a double-edged sword. On the one hand Translink, which encourages people to take its buses and trains rather than driving, was pleased to report that riderships are now greater than in pre-pandemic levels of 2019. On the other hand, Translink also reported a $34-million drop in 2023 fuel tax revenue due to people switching to transit and purchasing more electric or hybrid vehicles.

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