A Weekly Recap of All Things Resources to Friday, September 2nd

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‘That’s a Wrap’

By Rod Blake

Resource enthusiasts were once again envious of and frustrated at the strength of the U.S dollar that, as measured by the Dollar Index ‘DXY’, hovered during the week at a new 20-year high above 109. A strong greenback is usually negative for most commodities that are traditionally quoted in terms of U.S. dollars.

Germany may avoid acute natural gas shortages this coming winter as Economy Minister Robert Habeck said that Europe’s largest economy’s natural gas storage facilities were filling up faster than previously anticipated.

Conversely – French Prime Minister Elisabeth Borne urged businesses to cut energy use or face the possibility of rationing this winter if Russia restricts natural gas deliveries.

To get an idea of how intertwined the oil markets are – the price of crude oil shot up by $4.07 or 4.37% to US$97.03 when civil unrest in Libya shut down about 450,000bbls/d of the North African country’s 770,000 bbl/d current rate of crude oil production.

Japan’s Honda Motor Co. ‘HMC-N’ and South Korea’s LG Energy Solution Ltd. jointly announced they will invest US$4.4-billion to build a 40-gigawatt hour (GWh) lithium-ion battery plant in a so far undisclosed U.S location to supply batteries exclusively to Honda and Acura North American electric vehicles (EVs) by the end of 2025.

Osisko Mining Inc. ‘OSK-T’ pleased its shareholders with a new mineral resource estimate (MRE) update for its prized Windfall gold deposit in James Bay, Quebec which showed a 26% increase in the measured & indicated (M&I) resource to 4.1-million ounces of gold with an 8% increase in average grade to 11.4g/t Au.

The way I see it – As a broker, I hated August and what we called its ‘Summer Doldrums’. Not only were clients away or in holiday mode but there was also an overall lack of company news – especially from the junior resource sector. Stock quote bids on junior resource stocks were thin and offers were usually large and as a result the markets tended to move lower throughout the month. The markets usually normalized after Labour day, but August was definitely a month for the beach or golf.

Gran Tierra Energy Inc. ‘GTE-T & N’ share price surged up $0.14 or 8.38% to $1.81 after the Colombia and Ecuador focused petroleum producer announced it received approval to buy back up to 10% of company’s outstanding float.

Rio Tinto Group ‘RIO-N’ and Turquoise Hill Resources ‘TRQ-T & N’ finally came to an agreement that would see Rio Tinto take over their minority partner in the prized Oyu Tolgoi copper mine in Mongolia for $43-per-share or about $3.3-billion – a 26% premium over original $34-a-share offer Rio made in March.

Sighting a decrease inEuropean market demand – Canfor Corporation ‘CFP-T’ announced the British Columbia based forest products company will reduce operating schedules in its Swedish facilities by 15%.

Bear markets are often defined by stock prices that go down on good news. Case in point – the share price of Marathon Gold Corp. ‘MOZ-T’ fell by $0.31 or 18.34% to $1.38 even though the company announced a formal decision to proceed with the construction of its key Valentine Gold Project in Newfoundland and Labrador.

For the Week – The important Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 5-rigs to 760, an increase of 263 from this time last year. On the Canadian side – the number of active Canadian rigs rose by 7-rigs to 208, an increase of 56 in the past year.

The DJI fell by 2.99% to 31.318 with the S&P 500 down 3.30% to 3,924 as the NASDAQ lost 4.21% to 11,631.Up north – the TSX lost 2.59% to 19,271 and the TSX Venture dropped 2.17% to 632.

Gold bullion lost 2.17% to US$1,712, while silver fell by 4.29% to US$18.06 and copper lost 8.11% to US$3.40. With petroleum – crude oil fell by 6.28% to US$87.12 and natural gas lost 4.71% to US$8.90. The Canadian dollar lost 0.77% to 0.7673.  Overall – the CRB Commodities Index dropped 4.69% to 305.

And Finally – It used to be that mineral royalty or streaming financings were almost the exclusive domain of emerging precious metal producers, but now even the senior producers are taking advantage of these unique cash against production loan arrangements, as Barrick Gold Corp. ‘ABX-T’ & ‘GOLD-N’ announced the sale of gold royalties totaling up to  US$87.5-million from an assortment of its mines to Gold Royalty Corp. (US$27.7-mm) and Maverix Metals Inc. (US$60-mm).

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