Oreninc Index Update: January 12, 2017

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Oreninc Index pops as gold passes $1,200 USD

The Oreninc Index rebounded strongly in the week ending January 13, 2017 with total dollars announced jumping to $285.6m. This included seven brokered financings for a total of $192.5m, a 28-week high, and one bought-deal financing for $33.1m, a 13-week high. Perhaps more important, the average offer size increased to $11.9m, a 245-week high.

Although the total number of financings fell to 24, the increase in total funds and average offer size reflects the fact that Gold moved above the 1,200 USD mark again, continuing the rally that began in late December 2016. The industry’s leading benchmark index, the van Eck managed GDXJ continued its upward trend and is up 16.2% so far in 2017.

With Donald Trump a week away from being sworn in as US President, the honeymoon period of being president elect is over, which means it is time to turn his blustering hyperbole into actual deeds and management of the largest economy on the planet. Reflecting this fact, the ten-year Treasury Inflation Protected Securities (TIPS) yield continues to come down and is essentially back to its pre-election level, with some observers believing that gold still has room to run if TIPS continues its downward trend to return to its general 3Q16 level.

Financial news highlight

Of particular note this week, Leagold Mining (TSX-V: LMC-H) announced a $71m raise and as it struck a $350m deal with Goldcorp (TSX: G) to buy the Los Filos gold mine in Mexico, which will be its first mine. $279m will be paid in cash and $71m in stock that will see Goldcorp own 30% of Leagold upon completion. Leagold engaged UBS Investment Bank to arrange the debt and BMO Capital Markets to arrange the equity. Leagold—with Frank Guistra as non-executive chairman—aims to become a new mid-tier gold producer with a focus on Latin America. Los Filos produced 272,900 oz Au in 2015 and 194,000 oz Au at an AISC/oz of $854 through the first nine months of 2016 to September 30th.

Summary:

  • Number of financings dropped to 24
  • Seven brokered financings were announced for $192.5m, a 28-week high.
  • One bought-deal financing was announced for $33.1m, a 13-week high.
  • Total dollars increased to $285.6m, a 24-week high.
  • Average offer size expanded to $11.9m, a 245-week high.

Major Financing Openings:

  • Leagold Mining Corp (TSX-V:LMC.H) opened a $71m offering underwritten by a syndicate led by BMO Capital Markets on a strategic deal basis.
  • Auryn Resources Inc. (TSX-V:AUG) opened a $58.02m offering on a strategic deal basis. The deal is expected to close on or about January 31, 2017.
  • Bluestone Resources Inc. (TSX-V:BSR) opened a $39.36m offering on a best efforts basis.   
  • Itafos (TSX-V:IFOS) opened a $35m offering underwritten by a syndicate led by Raymond James Ltd. on a best efforts basis.    

Major Financing Closings:

  • Darnley Bay Resources (TSX-V:DBL) closed a $9.95m offering on a best efforts basis.  Each unit includes a 1/2 warrant that expires in 24 months.
  • Kaizen Discovery Inc. (TSX-V:KZD) closed a $7.27m offering on a best efforts basis. The deal was expected to close on or about November 18, 2016.
  • Golden Reign Resources Ltd. (TSX-V:GRR) closed a $4.38m offering on a best efforts basis. The deal was expected to close on or about December 30, 2016.
  • Zenith Energy Ltd. (TSX-V:ZEE) closed a $3.75m offering underwritten by a syndicate led by Optiva Securities Ltd. on a best efforts basis. 

Oreninc sponsor news

AuRico Metals (TSX: AMI) C$1.18, Mkt Cap C$176.7m – updated Kemess FS

  • AuRico upgraded the resources at its Kemess East orebody in north-central British Columbia of 1.7moz Au & 1bn lb Cu with indicated resources of 113.1mt @ 0.38% Cu & 0.46 g/t Au and inferred resources of 63.8mt @ 0.34% Cu & 0.31 g/t Au
  • Resources in the high-grade core increased 250% compared to the March 2016 resource announcement and it remains open to the north and to the south as does the overall deposit.
  • Kemess East is about 1km east of the Kemess underground deposit and 6.5 km north of the Kemess South facilities
  • Kemess South produced 3moz Au between 1998-2011 and has C$1bn of infrastructure on care and maintenance.
  • AuRico commenced the final 30-day public comment period for an environmental assessment report for its Kemess underground project. The company expects a final decision for the issuance of an environmental assessment certificate by the end of 1Q17.
  • The Kemess underground feasibility study deposit contemplates the development of a panel-caving operation with a 12-year mine life with an IRR of 12.6%, after-tax NPV (5%) of C$289m with life-of-mine production of 1.4moz Au, 573mlb Cu & 4.5moz Ag at an average annual rate of 129Koz Au & 52mlbs Cu over first five years with a C$450m capex.

Conclusion: With a great deal of infrastructure already in place and the Kemess underground environmental permitting processing advancing, the increase in the Kemess East resource adds to the future mining potential.

 

 

 

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