A Weekly Recap of All Things Resources to Friday, May 5th
‘That’s a Wrap’
By Rod Blake
When the investors, traders, brokers and portfolio managers closed down their terminals at the end of last week many were feeling very complacent in that the markets were playing out much like the pundits had predicted. That is, the last U.S. Fed interest rate increase was just few days away, and so far the economy and markets seemed to have pushed through any meaningful recession. Now all they had to do was make sure their favourite positions were all filled and sit back and wait for the next bull market to take them higher….And then on Monday – First Republic Bank failed.
The way I see it – In the brokerage business we often quoted Warren Buffet’s “There is never only one cockroach” rule when referring to a corporate scandal or some type of economic event. In this case it refers to the banking industry. Only 2-months ago the Silicon Valley Bank failure was brushed off as a one-off event and the markets moved higher. Then 2-weeks later Germany’s Deutsche Bank went down and the markets once again absorbed the event and moved higher. Now First Republic Bank goes down and the markets seem to be taking this in stride as well. Is this truly the end of the bad news and will the markets keep going higher – or are there more cockroaches to come?
NexGen Energy Ltd. ‘NXE-T & N’ took advantage of a rising uranium price to announce the Vancouver, BC based company had received over US$1-billion in expressions of interest to finance its Rook 1 Uranium Project in the Athabasca Basin region of Northern Saskatchewan.
This as the price of uranium rose by another $1.60 or 3.07% to a new 1-year high of US$53.70 a pound.
The price of MEG Energy Corp. ‘MEG-T’ stock fell by $1.40 or 6.30% to $20.82 after the Calgary, AB based oilands producer’s 1st-quarter profits fell short of the market’s expectations.
This as the price of crude oil dropped to a 1-month low of US$68.07 per barrel.
Meanwhile, Vermillion Energy Inc. ‘VET-T & N’ shares’ rose by $0.48 or 3.07% to $16.11 after the Calgary, AB based natural gas producer’s 1st-quarter report beat analysts’ expectations.
The industry Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 7-rigs over the past week to 748, up by 43 from this time last year. Across the line – the number of Canadian active rigs was unchanged at 93, a gain of 2 in the past year.
One of the necessities of a junior mining company developing a mineral deposit is to de-risk the project by recouping cash or bringing in a senior partner with an established mining team as it grows in size and complexity towards a production decision – or both. Such was the case with Osisko Mining Inc. ‘OSK-T’ as the Toronto, ON mineral developer sold 50% of its flagship Windfall gold project in the James Bay region of Quebec to South Africa’s senior gold producer Gold Fields Ltd. ‘GFI-N& J’ in a cash and payments 50/50 joint venture (JV) deal of some $709-million.
Mexican junior heap leach gold producer Minera Alamos Inc. ‘MAI-V’ turned a 2021 net loss of $1.75-million into a 2022 net profit of $5.6-million.
This as the price of gold rose to 14-month high of US$2,049 per troy ounce (t oz).
And silver also rose to a new 14-month high of UD$26.05 t oz.
Clean Air Metals Inc. ‘AIR-V’ shares’ gained $0.01 or 14.28% to $0.08 after the beleaguered junior explorer reported an updated New Mineral Resource estimate for the company’s platinum group minerals Thunder Bay North Critical Metals Project.
Lumber fell to a new 3-year low of US$341 per 1,000 board feet (mbf).
After a mostly choppy week – the markets rallied going into the weekend on the back of stronger than expected payroll numbers on both sides of the border – with the NASDAQ climbing to a new 8-month closing high of 12,235.
For the Week – the DJI lost 1.24% to 33,674 and the S&P 500 fell by 0.81% to 4,136 while the NASDAQ gained 0.07% to 12,235. In Canada – the TSX lost 0.46% to 20,542 and the TSX Venture gained 0.33% to 615. The CBOE Volatility Index or VIX rose by 8.94% to 17.19.
With currencies – the Canadian dollar gained 1.29% to US$0.7477 while the U.S. dollar ‘DXY’ lost 0.46% to 101.21.
With commodities – gold bullion rose by 1.41% to US$2,016, as silver gained 2.48% to US$25.66, while copper improved by 0.52% to US$3.89, and lithium rose by 2.99% to US$25,648. Crude oil lost 7.14% to US$71.35 and natural gas fell by 12.08% to US$2.11, while uranium gained 3.07% to US$53.70. With soft commodities – lumber rose by 3.46% to US$359. Overall – the CRB Commodities Index fell by 1.03% to 289.
And Finally – Is Crypto the new ‘Scam Capital if the World’? Just last week – the RCMP reported that a Burnaby, BC woman, on her own, lost over $7.5-million to crypto scammers. And the B.C. Securities Commission recently reported that British Columbians lost nearly $24-million in Crypto scams in 2022. Way back in 1989 – this young broker cringed when the elitist media took great pleasure in labeling the Vancouver Stock Exchange as ‘The Scam Capital of the World’ due to investors losing money – mostly in junior stock plays. Now, I wonder if or when the media will start to label Crypto for what it really is?