ORENINC INDEX increases as financings bounce back
ORENINC INDEX – Monday, February 5th, 2018
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Last week index score: 33.21 (Updated)
This week: 52.08
The Oreninc Index picked up in the week ending February 2nd, 2018, as some life returned to the market with the index rising to 52.08 from an updated 33.21 a week ago.
Gold’s recent six-week tear came to an abrupt end and a marked pull back occurred as profit taking and a market correction set in. A positive US Non-Farms Payroll jobs report at the end of the week followed the final meeting of the US Federal Reserve by outgoing chair Janet Yellen. These combined to give a favourable US interest rate outlook and US bond yields four-year highs.
Gold and gold miner investors saw this pullback as a value buying opportunity. Coupled with continuing weakness of the US dollar—and despite the US Federal Reserve looking at making another interest rate increase at its March conference, the outlook for gold remains bullish. The next couple of weeks are traditionally a good time for gold due to the lead up to the Chinese New Year.
A relatively quiet week on the geopolitical front in the wake of the Davos conference. Relative is the word as China suggested that the US should back away from what it called a Cold War mentality after Washington announced that it plans to develop smaller nukes to diversify its nuclear armoury. Apparently, the Trump administration thinks its nukes are too big to be used and therefore it wants to develop low-yield bombs.
On to the money: total fund raises announced increased more than three-fold to C$73.5 million, a four-week high, which included one brokered financing for C$25.5m, a seven-week high, and one bought-deal financing for C$25.5m, also a seven-week high. The average offer size more than doubled to C$2.2 million, a four-week high, whilst the total number of financings increased to 33, a six-week high.
Gold saw its recent growth spurt come to an end closing at US$1,337/oz down from US$1,357/oz a week ago. The van Eck managed GDXJ closed down at US$32.29 from US$34.79 last week. The index is down 5.4% so far in 2018. The US Global Go Gold ETF also saw a sharp pullback to close down at US$12.37 from US$13.06 a week ago. It is down 4.9% so far in 2018. The SPDR GLD ETF saw selling to close at 841.35 tonnes from 848.14 tonnes a week ago.
In other commodities, silver saw a sell off to close down at US$16.71/oz from US$17.44/oz a week ago. Copper had a flat week to close a smidge down at US$3.18/lb from US$3.19/lb last week. Oil had a flat, volatile week to close down slightly at US$65.45 a barrel from US$66.14 a barrel a week ago.
Has the steam finally run out of the Dow Jones Industrial Average? The week saw a sharp decline as it fell below the 26,000 level to close at 25,520 from 26,616 last week. Canada’s S&P/TSX Composite Index also saw a sharp decline to close down at 15,606 from 16,239 the previous week. The S&P/TSX Venture Composite Index closed down at 811.68 from 890.80 last week.
· Number of financings increased to 33, a six-week high.
· One brokered financing was announced this week for C$25.5m, a seven-week high.
· One bought-deal financing was announced this week for C$25.5m, a seven-week high.
· Total dollars grew to C$73.5m, a four-week high.
· Average offer size also grew to C$2.2m, a four-week high.
Orla Mining (TSXV:OLA) announced a bought deal financing for C$25.5 million that was subsequently increased to C$26.8 million.
· 15.3 million units @ C$1.75
· Each unit will comprises one share and half a warrant exercisable @ C$2.35 for three years.
· Syndicate of underwriters led by GMP Securities, and including Paradigm Capital, Cormark Securities, TD Securities, Desjardins Securities and Raymond James.
· Goldcorp and Agnico Eagle Mines intend to subscribe to maintain their ownership position of 19.9% and 9.9%.
· The net proceeds will be used for exploration and development activities at the Cerro Quema and Camino Rojo projects in Panama and Mexico.
Major Financing Openings:
· Orla Mining (TSXV:OLA) opened a C$25.48 million offering underwritten by a syndicate led by GMP Securities on a bought deal basis. Each unit includes half a warrant that expires in 36 months. The deal is expected to close on or about February 15th.
· Darien Resource Development (TSXV:DRR) opened a C$4.5 million offering on a best efforts basis.
· American Lithium (TSXV:LI) opened a C$4.2 million offering on a best efforts basis. Each unit includes 1 warrant that expires in 24 months.
· Lithium Chile (TSXV:LITH) opened a C$4 million offering on a best efforts basis. Each unit includes half a warrant that expires in 24 months.
Major Financing Closings:
· Rye Patch Gold (TSXV:RPM) closed a C$20 million offering underwritten by a syndicate led by PI Financial on a bought deal basis. Each unit includes a warrant that expires in 24 months.
· Liberty Gold (TSX:LGD) closed a C$10.47 million offering underwritten by a syndicate led by National Bank Financial on a bought deal basis. Each unit included half a warrant that expires in 36 months.
· European Electric Metals (TSXV:EVX) closed a C$4.75 million offering on a best efforts basis. Each unit included half a warrant that expires in 12 months.
· American Lithium Corp. (TSX-V:LI) closed a $4.2 million offering on a best efforts basis.