ORENINC INDEX hits nadir as COVID-19 suppresses financings
ORENINC INDEX – Monday, April 13th 2020
North America’s leading junior mining finance data provider
Last Week: 26.86
This week: 9.14
The Oreninc Index plummeted to a record low in the week ending March April 3rd, 2020 to 9.14 from 26.86 as financing activity ground to a halt with North America on COVID-19 preventative lockdown.
Easter weekend culminated a sombre week of COVID-19 virus news with the global death toll now over 104,000 and more than 1.7 million cases reported, including significant increases in the USA and UK, among others. Many countries have extended mandatory quarantine periods in efforts to curb the spread of the virus.
In the UK, British prime minister Boris Johnson was admitted to hospital and spent a couple of nights in intensive care after he contracted COVID-19. Meanwhile, China reported no new cases for the first time since the country started publishing the number of infections in January.
The US saw another dramatic increase in unemployment with 6.6 million people filing initial jobless claims, with some 17 million people filing claims since mid-March, some 10% of the country’s workforce.
With much of the global economy shutdown, more government financial assistance packages have been agreed. The US Federal Reserve announced another US$2.3 trillion stimulus/lending plan to support states, counties, cities and businesses reeling from COVID-19 impacts. In Europe, the European Union agreed a €500 billion support package for countries hit hardest by the coronavirus pandemic.
In the US, former VP Joe Biden looks set to win the Democratic nomination for the November presidential election after Vermont senator Bernie Sanders dropped out.
Finally, some good news in the oil space as OPEC members and some non-member producing countries including Russia agreed to cut output by around 10% to counter the slump in demand caused by coronavirus lockdowns. Output is to be cut in May and June by 10 million barrels a day, some 10% of global supply. From July until year-end some 8 million barrels a day will be cut.
On to the money: total fund raises withered to $6 million, a 65-week low, which included no brokered financings and no bought-deal financings. The average offer size fell to $900,000, a three-week low, while the number of financings plummeted to nine.
With an increasing amount of government bailout funds announced spot gold rocketed to US$1,696/oz from US$1,620/oz a week ago as inflation expectations increase. The yellow metal is up 11.82% so far this year. The US dollar index pared back to 99.48 from 100.67 last week. The VanEck managed GDXJ saw strong growth as it closed up at $35.65 from $29.71 a week ago. The index is down 15.64% so far in 2020. The US Global Go Gold ETF also saw strong growth as it closed up at $14.88 from $13.00 a week ago. It is down 15.26% so far in 2020. The HUI Arca Gold BUGS Index closed up as well at 232.74 from 200.41 last week. The SPDR GLD ETF inventory continued to increase as it closed up at 994.19 tonnes from 978.99 tonnes a week ago, its highest level since June 2013.
In other commodities, spot silver added a dollar as it closed up at $15.57/oz from $14.38/oz a week ago. Copper showed some life as it closed up at $2.25/lb from $2.17/lb a week ago. The oil price made back some lost ground as WTI increased to $22.76 a barrel from $19.27 a barrel a week ago.
The Chicago Board Options Exchange Volatility Index (VIX or fear index) continued to fall, closing down at 41.67 from 46.80 a week ago.
The Dow Jones Industrial Average saw strong growth as it closed up at 23,719 from 21,052 a week ago. Canada’s S&P/TSX Composite Index followed suit as it closed up at 14,166 from 12,938 the previous week. The S&P/TSX Venture Composite Index closed up at 421.97 from 383.94 last week.
- Number of financings decreased to nine.
- No brokered financings were announced this week.
- No bought-deal financings were announced this week.
- Total dollars decreased to $6 million, a 65-week low.
- Average offer lessened to $0.9 million, a three-week low.
Major Financing Openings
- Winston Resources (CNSX:WRW) opened a $1.5 million offering on a best efforts basis.
- Plateau Energy Metals (TSXV:PLU) opened a $1.4 million offering on a best efforts basis. Each unit includes a warrant that expires in four years.
Major Financing Closings
- Orla Mining (TSX:OLA) closed a $75.03 million offering on a bought deal basis.
- Northern Superior Resources (TSXV:SUP) closed a $3.92 million offering on a best efforts basis.
- Gold X Mining (CVE:GLDX) closed a $2.5 million offering on a best efforts basis. Each unit included a warrant that expires in three years.
- Essex Minerals (TSXV:ESX) closed a $1.5 million offering on a best efforts basis.