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Oreninc Index: February 4, 2019

 

ORENINC INDEX falls despite metals price growth

ORENINC INDEX - Monday, February 4th 2019

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Last week index score: 20.23

This week: 14.92

Nexus Gold (TSXV:NXS) entered into a letter of intent to acquire the McKenzie gold project in the Red Lake region of north-western Ontario, Canada.

The Oreninc Index fell again in the week ending February 1st, 2019 to 14.92 from 20.23 despite metal prices showing growth.

Gold continued to improve, hitting an eight-month high as US Federal Reserve chairman Jerome Powell stated that the case for further rate increments had "weakened". The US Labor Department reported that new unemployment claims increased 53,000, to 253,000 claims in January, above what economists were expecting. The unemployment rate rose to 8.1% from 7.6% a year ago. With gold having broken through the US$1,300/oz mark and held, its next resistance levels are at $1,330 and $1,350.

On the political front, US President Donald Trump said he would the pull nation out of the intermediate-range nuclear forces (INF) treaty, an important nuclear weapons treaty with Russia on the grounds that Russia has not complied with some of its provisions. In retaliation, Russian president Vladimir Putin, said he would pull his country out of INF.

On to the money: total fund raises announced increased to C$20.3 million, a two-week high, that included no brokered financings and no bought-deal financings. The average offer size increased to C$1.6 million, a two-week high, whilst the number of financings fell to 13, a three-week low.

Gold continued to build a base about the US$1,300/oz mark to close the week up at US$1,317/oz from US$1,305/oz a week ago after hitting a high of US$1.321/oz. The yellow metal is up 2.77% this year. The US dollar index continued to fall and closed down at 95.57 from 95.79 last week. The van Eck managed GDXJ put in some strong growth as it closed up at US$32.84 from US$30.60 a week ago. The index is up 8.67% so far in 2019. A similar tale at the US Global Go Gold ETF that added almost a dollar as it closed up at US$12.64 from US$11.77 a week ago. It is up 10.78% so far in 2019. The HUI Arca Gold BUGS Index also closed up at 169.25 from 154.64 last week. The SPDR GLD ETF added to its inventory and closed up at 817.4 tonnes from 809.76 tonnes a week ago. Its inventory saw its largest monthly gain since September 2017.

In other commodities, silver started to run as it briefly broke through the US$16/oz level before closing up at US$15.91/oz from US$15.77/oz a week ago. Copper continued to strengthen too and closed up at US$2.77/lb from US$2.71/lb a week ago. Oil also saw growth as WTI closed up at US$55.26 a barrel from US$53.69 a barrel a week ago.

The Dow Jones Industrial Average broke back over 25,000 again as it closed up at 25,063 from 24,737 last week. Canada’s S&P/TSX Composite Index also continued to grow as it closed up again at 15,506 from 15,366 the previous week. The S&P/TSX Venture Composite Index closed up at 622.86 from 604.56 last week.

 

Summary

·       Number of financings decreased to 13, a three-week low.

·       No brokered financings were announced this week, a one-week low.

·       No bought-deal financings were announced this week, a one-week low.

·       Total dollars increased to C$20.3m, a two-week high.

·       Average offer size augmented to C$1.6m, a two-week high.                

 

Financing Highlights

Premier Gold Mines (TSX:PG) opened and closed a financing arrangement with Orion Mine Finance for aggregate gross proceeds of about US$18.3 million.

·       Orion subscribed for 7.0 million shares @ C$1.58 for aggregate gross proceeds of about US$8.3 million.

·       Premier issued 2.0 million warrants exercisable @ C$2.05 for three years.

·       An amended and restated silver stream agreement pursuant to which Orion paid an additional deposit of US$10 million to Premier which will deliver to Orion 100% of silver production from the Mercedes mine and of the silver production from the South Arturo mine attributable to Premier until the delivery of 3.75 million ounces of silver after which the delivery will be reduced to 30%.

·       Orion has security over assets relating to South Arturo and Mercedes.

·       The proceeds will be used for the development, construction and working capital requirements for South Arturo.

·       Premier also obtained a US$50 million secured revolving term credit facility with Investec Bank.

 

Major Financing Openings

·       Premier Gold Mines (TSX:PG) opened a C$11.06 million offering on a strategic deal basis with Orion Mine Finance. Each unit includes a warrant that expires in three years.

·       Tethyan Resources (TSXV:TETH) opened a C$3.2 million offering on a strategic deal basis with Augusta Investments. Each unit includes a warrant that expires in five years.

·       Chatham Rock Phosphate (TSXV:NZP) opened a C$1.02 million offering on a best efforts basis. Each unit includes half a warrant that expires in two years.

·       Lupaka Gold (TSXV:LPK) opened a C$1.0 million offering on a best efforts basis. Each unit includes a warrant that expires in two-and-a-half years. The deal is expected to close on or about February 28th.

 

Major Financing Closings

·       Tethyan Resources (TSXV:TETH) closed a C$3.2 million offering on a strategic deal basis with Augusta Investments. Each unit included a warrant that expires in five years.

·       Miramont Resources (CSE:MONT) closed a C$1.65 million offering on a best efforts basis. Each unit included a warrant that expires in two years.

·       Wealth Minerals (TSXV:WML) closed a C$1.58 million offering on a best efforts basis. Each unit included half a warrant that expires in two years.

·       Victory Resources (TSXV:VR) closed a C$1.05 million offering on a best efforts basis.

 

Company News

Nexus Gold (TSXV:NXS) entered into a letter of intent to acquire the McKenzie gold project in the Red Lake region of north-western Ontario, Canada.

·       Nexus will issue 6.0 million shares and a one-time cash payment of C$150,000.

·       The McKenzie gold project is a 1,349-hectare property with a geological setting analogous to several past producers. It hosts nine documented historical gold occurrences with limited exploration.

·       In 2017, a ground reconnaissance program resulted in a prospecting discovery, with high-grade samples returning up to 313g/t gold.

Analysis

McKenzie represents a continuation of the company pivoting away from Africa and into Canada and follows a similar deal with the New Pilot project in British Columbia. With numerous high-grade showings, McKenzie presents a compelling exploration opportunity.

 

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