Oreninc Index Update: April 3, 2017

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ORENINC INDEX CONTINUES TO SLIDE IN Q2 DOLDRUMS

 

ORENINC INDEX – Monday, April 3, 2017

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AuRico Metals (TSX: AMI) reported significant increases in mineral reserves and resources at properties upon which it holds royalty agreements.

Last week index score: 67.02

This week: 58.79

The Oreninc Index fell in the week ending March 31, 2017 to 58.79 following the previous week’s 67.02 as the second quarter doldrums bit hard despite gold continuing to consolidate and closing the week up slightly at US$1,249.

Gold, silver and copper continued to slowly strengthen, with silver ending the week at US$18.26 whilst copper closed the week at US$2.65 a pound. The week ahead sees the copper sector come together at the 2017 World Copper Conference in Santiago, Chile, where red metal experts and CEO’s will give their thoughts on how 2017 will play out for the metal.

The number of financings decreased to 28, a two-week low, whilst the total dollars fell to C$74.8m, a twelve-week low and the average offer size fell to C$2.7m, a three-week low. Of the 28 financings announced, there were five brokered financings for C$52.3m and two bought-deal financings. The week saw several sub C$1 million financings announced.

The US reported an improving consumer confidence index posting its best figures since December 2000 at 125.6 from 116.1 the previous month, which bolstered stock market confidence. Surrounded by representatives from coal mining companies, US President Donald Trump signed an executive order that removed and/or weakened environmental legislation by ordering the Environmental Protection Agency to replace the Clean Power Plan implemented in 2014 by President Barrack Obama. The order reversed a moratorium on coal-leasing on federal lands and brushed aside rules to curb methane emissions from oil and gas sites. The news was enough to lift oil back over the $50 mark and it closed the week at $50.60.

This week was a sad week for the European Union as UK prime minister, Theresa May, provided notice to Brussels that the UK government was triggering Article 50 of the Lisbon treaty to begin the process of the UK’s succession from the European Union.

Although gold had another robust week, the industry’s leading benchmark index, the van Eck GDXJ fell a tad more and is now up 14.04% so far in 2017, as did the inventory of the SPDR GLD ETF which fell a smidge to 832.3 tonnes this week. Whilst gold is slowly rising gold stocks continue to be volatile with profit taking stunting share price growth.

WTI crude remains under US$50 and fell 2.35% to US$48 per barrel.

With confidence brimming the Dow Jones Industrial Average closed up on the week at 20,663. In Canada, the S&P/TSX Composite Index also closed up on the week at 15,547. In the junior space, the S&P/TSX Venture Composite Index also gained to close the week at 815.77.

Financial news highlights

Seabridge Gold (TSX: SEA) announced a bought deal for one million shares @ C$14.30 to raise C$14.3 million, with the underwriters also agreeing to one million flow-through shares @ C$20.00 to raise C$20.0 million. Seabridge intends to use the proceeds to continue to advance its KSM and Iskut projects.

Golden Dawn Minerals (TSX-V: GOM) announced a financing to raise C$10.0 million @ C$0.36 per unit that includes a warrant and flow-through units @ C$0.40. The proceeds will be used for development of existing or acquired mineral properties, working capital requirements, funding negative cash flow from operating activities in future periods or for other general corporate purposes.

Summary:

  • Number of financings decreased to 28, a two-week low.
  • Five brokered financings were announced for $52.3m, a three-week low.
  • Two bought-deal financings were announced for $34.3m, a two-week high.
  • Total dollars dropped to $74.8m, a 12-week low.
  • Average offer size fell to $2.7m, a three-week low.

 

Major Financing Openings:

  • Seabridge Gold (TSX:SEA) opened a C$ =INT( 34,300,000.00 )/1000000 34.3 million offering underwritten by a syndicate led by Canaccord Genuity on a bought deal basis. The deal is expected to close on or about April 27, 2017.
  • Golden Dawn Minerals (TSX-V:GOM) opened a C$10 million offering underwritten by a syndicate led by Secutor Capital Management on a best efforts basis. Each unit includes a warrant that expires in 48 months.
  • Novo Resources (TSX-V:NVO) opened a C$8 million offering underwritten by a syndicate led by Red Cloud Klondike Strike on a best efforts basis. Each unit includes a warrant that expires in 24 months. The deal is expected to close on or about April 27, 2017.
  • Wealth Minerals (TSX-V:WML) opened a C$4.86 million offering on a best efforts basis.

 

Major Financing Closings:

  • Highland Copper Company (TSX-V:HI) finally closed a C$ =INT( 30,023,058.00 )/1000000 30.02 million offering on a best efforts basis. Each unit included half a warrant that expires in 12 months.
  • Renaissance Oil (TSX-V:ROE) closed a C$11.22 million offering underwritten by a syndicate led by Haywood Securities on a best efforts basis. Each unit includes a warrant that expires in 27 months.  
  • Algold Resources (TSX-V:ALG) closed a C$7.5 million offering underwritten by a syndicate led by Beacon Securities on a bought deal basis. Each unit includes half a warrant that expires in 24 months.  
  • Millennial Lithium (TSX-V:ML) closed a C$5.94 million offering on a best efforts basis.

 Company news

AuRico Metals (TSX: AMI) C$1.17, Mkt Cap C$184.9 million

Reported significant increases in mineral reserves and resources at Fosterville, Hemlo and Eagle River, properties upon which it holds royalty agreements.

  • At Fosterville, where it has a 2% NSR, Kirkland Lake Gold increased mineral reserves 66%, to 643,000 ounces of gold accompanied by a 27% increase in grade to 9.2 g/t Au. Measured and indicated mineral resources, including reserves, increased 23% to 2.79M ounces with a 25% increase in grade to 5.7 g/t Au.
  • At Hemlo, where it has a 0.25% NSR on the Williams mine and a 1.5% NSR on the David Bell property, Barrick Gold announced a 73% increase in mineral reserves at Hemlo to 1.58M ounces. Measured and indicated mineral resources, excluding reserves, increased 19% to 1.72M ounces. 2016 production at Hemlo totalled 235,000 ounces of gold, a 7% increase over 2015.
  • At Eagle River where it has a 0.5% NSR, Wesdome Gold Mines announced a 15% increase in mineral reserves to 344,000 ounces.
  • AuRico closed the acquisition of Kiska Metals adding six additional royalties as well as six wholly-owned properties with potential for organic royalty creation.
  • AuRico entered into an agreement with First Quantum for the Kliyul property in British Columbia. First Quantum has twelve months to evaluate Kliyul and then enter into an option to earn a 51% interest that can increase by 29% (80% total) when a decision to mine is made. Upon a mining decision, AuRico will receive advance royalty payments of C$2M a year until the commencement of commercial production and a 0.5% NSR once production commences.
  • AuRico also acquired royalties with Abitibi Royalties, whereby each party acquired a 1.0% NSR on two exploration properties near Goldcorp’s Red Lake mine and a 0.75% NSR on nine exploration properties located near New Gold’s Rainy River project, all in Ontario.
  • AuRico’s royalty portfolio now consists of 18 royalties.  

Conclusion:

AuRico continues to strengthen its royalty portfolio by adding both producing royalties and royalties in highly prospective areas that will add to cash flow generation.

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