A Weekly Recap of All Things Resources to Friday, November 4th
‘That’s a Wrap’
By Rod Blake
As the brokers, portfolio managers and investors alike prepared for the trading week to come they were well aware that while the overall market had enjoyed an encouraging rally for the last half of October – the resource sector had been noticeably left behind.
Interesting note – after peaking at over US$2,050 in early March – gold bullion has now fallen for seven consecutive months – the first time that’s happened since 1869.
The way I see it – Longterm investors in commodity stocks have learned to be patient, as the resource markets usually lag the major markets until the end of the bull cycle, and then they tend to outperform. Case in point – the current market rally in the last half of October has seen the broad-based S&P 500 index move up by over 10% and the TSX up by about 9%. Compare this to the resource weighted TSX Venture Exchange that has only seen a marginal gain of some 3%. Resource stocks will once again have their day, and investors would be wise to use this time to reaffirm their positions in companies they feel will do well when that time comes.
After reporting its 2nd best ever quarterly profit – BP Plc ‘BP-L & N’ announced the giant British petroleum/energy company would buy back US$2.5-billion of its shares by February 3rd of next year.
The list of Canadian petroleum companies raising or paying special dividends increased by another two with Cenovus Energy Inc. ‘CVE-T & N’ announcing a variable dividend of $0.114 per common share and Tourmaline Oil Corp. ‘TOU-T’ raising its quarterly dividend by 11% to $0.25/share and declaring a special dividend of $2.25/share.
After years of suffering thru the oil patch downturn Calfrac Well Services Ltd. ‘CFW-T’ bounces back with a vengeance and announced its best quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) since 2012.
Enbridge Inc. ‘ENB-T’ announced the giant pipeline/energy company will spend up to $3.6-billion to add 300-million cubic feet per day (mmcf/d) of throughput to its T-South pipeline that transports natural gas from Chetwynd B.C. south to the U.S. border at Huntington-Sumas.
The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs increased by 2-rigs to 770, an increase of 220 from this time last year. Across the line – the number of Canadian active rigs fell by 3-rigs to 212, an increase of 49 in the past year.
Not to be outdone by the oil & gas sector – Gold mining giant Barrick Gold Corp. ‘ABX-T & GOLD-N’ announced a performance dividend of $0.05 per share to go along with its regular quarterly dividend of $0.10/share.
Standard Lithium Ltd. ‘SLI-V’ received encouraging endorsement of their lithium recovery technology after the United States Patent and Trademark Office (USPTO) issued the Vancouver based pre-commercial lithium company ‘Notices of Allowance’ for the first two of the company’s patent applications for Continuous Direct Lithium Extraction (CDLE) from lithium brines. Notices of Allowance are usually precursors of patents to come at a later date.
Meanwhile – Power Metals Corp. ‘PWM-V’, Lithium Chile Inc. ‘LITH-V’ and Ultra Lithium Inc. ‘ULT-V’ saw their share prices fall by 12.77%, 2.86% and 12.50% respectively after a surprise move that saw the Canadian government order three Chinese companies to divest their interest in the three Canadian junior lithium companies.
Nutrien Ltd. ‘NTR-T’ share price dropped by $15.90 or 13.97% to $97.93 after the Saskatchewan based potash giant warned of 4th-quarter profit shortfalls due to a current downturn in potash prices.
One week after ceasing mining operations Pure Gold Mining Inc. ‘PGM.H-V’ applied for and received creditor protection by the Supreme Court of Canada.
Yamana Gold Inc. ‘YRI-T’ & ‘AUY-N’ shares’ surged up by $1.01 or 18.10% to C$6.59 after the Vancouver based gold miner (currently in takeover talks with South Africa’s Gold Fields Ltd. ‘GFI-N’) announced it had received what it deemed as a ‘Superior Buyout Proposal’ offer from Agnico Eagle Mines Ltd. ‘AEM-T’ and Pan American Silver Corp. ‘PAAS-T’ with a joint cash & stock deal of US$5.02 for each Yamana share.
For the Week – the DJI lost 1.39% to 32,405 with the S&P 500 down by 3.33% to 3,771 and the NASDAQ off by 5.65% to 10,475. In Canada – the TSX fell by 0.11% to 19,450 and the TSX Venture lost 0.50% to 594. The CBOE Volatility Index or VIX fell by 5.69% to 24.55.
With currencies – the Canadian dollar rose by 0.95% to US$0.7421 while the U.S. dollar ‘DXY’ rose by 0.04% to 110.74.
With commodities – Gold bullion improved 2.25% to US$1,681 with silver up by 8.47% to US$20.87 and copper higher by 7.18% to US$3.73. Crude oil gained 4.61% to US$82.35 as natural gas rose by 11.72% to US$6.48. Overall – the CRB Commodities Index rose by 5.44% to 310.
And Finally – A government expenses review has found that a recent 1-week trip by Canadian Governor General Mary Simons, her husband and 28 dignitaries to visit Expo 2020 in Dubia cost taxpayers over $1.3-million including in-flight meals of $218/person and room services totaling $7,500.