ORENINC INDEX down as deals drop

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ORENINC INDEX – Monday, September 28th 2020

North America’s leading junior mining finance data provider

Last Week: 78.84 (Updated)

This week: 55.67

The Oreninc Index fell in the week ending September 25th, 2020 to 55.67 from an updated 78.84 a week ago as the number of deals fell

The COVID-19 virus global death toll is closing on one million with almost 33 million cases reported worldwide, with many nations experiencing a resurgence of outbreaks.

We are in conference season! This past week saw mid-tier and senior miners present at the 2020 Americas Gold Forum and one of the key takeaways is that they are ramping up exploration budgets to increase resources and make discoveries near existing mines, rather than engage in M&A.

A tough week for precious metals as gold and silver sold down with gold hitting a two-month low and silver a seven-week low. Market observers and Americas Gold Forum keynote speakers said such volatility is to be expected even though macroeconomic fundamentals point to higher prices in the future. 

In the USA, Federal Reserve Chair Jerome Powell testified to Congress that the US economy has a long way to go before it is fully recovered from the impacts of the COVID-19 pandemic and that more support will be needed. There remains little progress on reaching a new stimulus deal. His comments came as the Congressional Budget Office forecast that US government debt will increase over the next 30 years to almost double the size of the economy, with a projection of debt reaching 195% of GDP in 2050.

The US Department of Labor said first-time jobless claims rose slightly more than expected to a seasonally adjusted 870,000. The four-week moving average for new claims fell to 878,250, down 35,250 from the previous week. Continuing jobless claims were at 12.58 million, down 167,000 from the previous week.

The biggest talking point of the past week focused on US president Donald Trump stating that he would not commit to a peaceful transfer of power in the event he loses the November election as he continued to criticize the legitimacy of mail-in voting. Other Republicans are aghast at this stance and countered that a transfer of power would occur in January the same as it has every four years since the eighteenth century.

The recent death of US Supreme Court judge Ruth Badar Ginsberg adds to the tension with Trump pushing to be able to appoint her replacement ASAP. In the event of a contested election result, the Supreme Court would be tasked with ruling on the result and he is clearly interested in trying to skew the Court in his favour.

On to the money: the aggregate financings announced almost halved to $80 million, a 14-week low, which included three brokered financings for $48.3 million, a two-week low, and one bought deal financing for $10 million, a six-week low. The average offer size fell to $3 million, a two-week high, while the number of financings fell to 27.

A torrid week for Gold as the spot price lost more than $100/oz to close down at $1,861/oz from $1,950/oz a week ago. The yellow metal is up 22.69 so far this year. The US dollar index strengthened as it closed up at 94.64 from 92.92 a week ago. The VanEck managed GDXJ pulled back as it closed down at $54.23 from $60.61 week ago. The index is now up 28.32% so far this year. The US Global Go Gold ETF  closed down at $21.82 from $24.01 a week ago. It is up 24.26% so far this year. The HUI Arca Gold BUGS Index also closed down at 320.09 from 342.84 last week. The SPDR GLD ETF inventory saw growth, closing the week up at 1,266.84 tonnes or 40.73 million ounces from 1,259.84 tonnes last week.

In other commodities, Silver also sold down heavily as it closed the week down at $22.89/oz from $26,78/oz a week ago. Copper also sold off as it closed the week down at $2.97/lb from $3.11/lb a week ago. Oil followed suit as WTI closed down at $40.25 a barrel from $41.11 a barrel a week ago.

The Dow Jones Industrial Average continued lower as it closed down at 27,173 from 27,657 a week ago. Canada’s S&P/TSX Composite Index closed down at 16,065 from 16,198 the previous week. The S&P/TSX Venture Composite Index closed down at 695.26 from 745.37 last week.

Summary

  • Number of financings decreased to 27.
  • Three brokered financings were announced this week for $48.3 million, a two-week low.
  • One bought-deal financing was announced this week for $10 million, a six-week low.
  • Total dollars lowered to $80 million, a 14-week low.
  • Average offer decreased to $3 million, a two-week low.

 

Financing Highlights

Argonaut Gold (TSX:AR) “) opened $10 million a bought deal private placement financing.

  • 2.6 million flow-through shares @ $3.83.
  • Syndicate of underwriters led by Canaccord Genuity.
  • Proceeds will be used for eligible Canadian exploration expenses related to its Magino project in Ontario.

Major Financing Openings

  • Africa Energy (TSXV:AFE) opened a $33.51 million offering underwritten by a syndicate led by Pareto Securities on a best efforts basis.    
  • Argonaut Gold (TSX:AR) opened a $10 million offering underwritten by a syndicate led by Canaccord Genuity on a bought deal basis. The deal is expected to close on or about October 14th.
  • Santacruz Silver Mining (TSXV:SCZ) opened a $6 million offering on a best efforts basis. Each unit includes a warrant that expires in three years. The deal is expected to close on or about October 9th.
  • EnCore Energy (TSXV:EU) opened a $4.8 million offering underwritten by a syndicate led by Clarus Securities on a best efforts basis. Each unit includes half a warrant that expires in three years. The deal is expected to close on or about October 8th.

Major Financing Closings

    • Africa Energy (TSXV:AFE) closed a $36.75 million offering underwritten by a syndicate led by Pareto Securities on a best efforts basis.    
    • GoGold Resources (TSX:GGD) closed a $34.5 million offering underwritten by a syndicate led by BMO Capital Markets on a bought deal basis.
    • Auryn Resources (TSXV:AUG) closed a $23 million offering underwritten by a syndicate led by Canaccord Genuity on a bought deal basis.    
  • Pasofino Gold (TSXV:VEIN) closed a $10.02 million offering underwritten by a syndicate led by Stifel GMP on a bought deal basis.

 

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