A Weekly Recap of All Things Resources to Friday, October 21st

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‘That’s a Wrap’

By Rod Blake

Investors, brokers, and portfolio managers began the week on a positive note on word that the financial issues that had rocked Great Briton were stabilizing which eased the upward pressure on the U.S dollar and sent North American futures into the green.

The Pathway Alliance, a consortium of Canada’s largest oilsands companies announced they will spend a total of $24.1-billion by 2030 on a massive carbon capture & storage facility and other emission reduction projects.

Denison Mines Corp. ‘DML-T’ shares’ shot up by $0.16 or 10.53% to $1.68 after the Saskatchewan based company announced it had achieved an historic event by successfully recovering an uranium bearing solution from its Phoenix deposit in Saskatchewan’s Athabasca Basin.

BP ‘BP-N’ strengthened its alternative fuels platform by announcing the acquisition of U.S. based renewable natural gas (RNG) company Archaea Energy Inc. ‘LFG-N’ in a cash & debt deal valued at some US$4.1-billion.

The price of IAMGOLD Corp. ‘IMG-T’ & ‘IAG-N’ stock surged up by $0.27 or 18.37% to $1.74 on word Canadian based gold miner had sold its 95% interest in the Rosebel Gold Mine in Suriname to China’s Zijin Mining Group in a cash and debt deal totaling some $401-million. IAMGOLD will use the funds to advance its prized Côté Gold project in Ontario.

Going the other way – Sierra Metals Inc. ‘SMT-T’ & ‘SMTS-N’ shares plunged by $0.295 or 42.75% to $0.395 after the junior miner announced it faced liquidity challenges due to the suspension of operations of its Yauricocha copper/zinc mine in Peru as well as operating losses and negative cash flows from the Bolivar copper and Cusi silver operations in Mexico.

The way I see it – Junior mining can be precarious business, especially working complicated or low-grade orebodies a long way from home or in foreign jurisdictions. As a young miner, I was lucky enough to discover a major copper/gold orebody (Afton) literally only a few feet below a dried-up alkaline pond just 10-miles from Kamloops B.C. I carried this experience with me in my brokerage business and tried to focus junior miners that were developing or operating orebodies that were near surface and relatively close to home. I found that the magnitude for error increased greatly with lower grades or deep complicated structures far away from the companies’ home base.  

Canfor Pulp Products Inc. ‘CFX-T’ announced a temporary curtailment of operations at its Intercontinental Pulp Mill in Prince George, B.C. due to a lack of available economic fibre.

While Interfor Corporation ‘IFP-T’ said the B.C. based forest company would be cutting back its 4th-quarter lumber production by 200-million board feet or 17% due to current economic conditions and market uncertainty.

In a continuing effort to hold down fuel prices – U.S. President Joe Biden authorized the release another of another 15-million barrels of oil from the country’s Strategic Petroleum Reserve.

Precision Drilling Corp. ‘PD-T’ & PDS-N’ shares’ rose by $5.42 or 6.69% to $86.44 after the Calgary based energy service company announced new drilling contracts in Kuwait and Saudi Arabia that will add about US$600-million in backlog revenue.

The price of Natural gas plunged by $1.48 or 22.28% to a 7-month low of US$5.02/mmbtus on word that European winter storage levels were much higher than originally anticipated.

For the Week – the DJI gained 4.89% to 31,083 with the S&P 500 up by 4.74% to 3,753 and the NASDAQ higher by 5.22% to 10,860. North of 49 – the TSX rose by 2.92% to 18,861 while the TSX Venture gained 2.07% to 593. The CBOE Volatility Index or VIX dropped by 7.28% to 29.69.

With currencies – the Canadian dollar rose by 1.76% to 0.7332 and the U.S. dollar ‘DXY’ fell by 1.03% to 111.88.

With commodities Gold bullion gained 0.48% to US$1,658 with silver up by 4.75% to US$19.40 and copper ahead by 1.44% to US$3.52. In the oil patch – the key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 2-rigs to 771, an increase of 229 from this time last year. In Canada – the number of active rigs fell by 6-rigs to 210, an increase of 46 in the past year. Crude oil lost 2.14% to US$84.97 as natural gas fell 22.28% to US$5.02. Overall – the CRB Commodities Index fell by 3.62% to 293.

And Finally – It is amazing how a new reality has taken hold since the start of the Russian – Ukraine conflict. Point being – in a recent speech, Canada’s usually anti-energy Liberal government Deputy Prime Minister Chrystia Freeland said that Canada will have to fast-track energy and mining projects if it is to help its democratic allies and achieve its own net-zero ambitions.

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