Oreninc Index: October 1, 2018

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ORENINC INDEX plummets as big September hopes fizzle

ORENINC INDEX - Monday, October 1^st 2018
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Last week index score: 54.58

This week: 14.04 

Avrupa Minerals (TSXV:AVU) reported final results from first pass exploration drilling at the Alvito iron oxide copper-gold (IOCG) project in south Portugal. 

The Oreninc Index plummeted in the week ending September 28^th, 2018 to 14.04 from 54.58 a week ago, as markets failed to recover interest in precious metals despite the announcement of a mega merger between Barrick Gold and Rangold Resources whilst precious metals investors were arriving for the Denver Gold Forum (DGF) in Colorado Springs.

The US$6.5 billion all-share, non-premium deal will create the world’s largest gold miner with a combined 78 million ounces of proven and probable gold reserves and the ownership of five of the world’s top ten tier one gold assets by cash costs, with the new company likely to have cash costs estimated at $538/oz. It will also produce over 413 million pounds of copper.

Gold saw yet another volatile week, spending most of it fighting to claw back towards the US$1,200/oz level after falling hard early in the week. The US Federal Reserve Open Market Committee raised interest rates by 25 basis points, bringing the federal funds rate to a range of 2.00% and 2.25%, their highest level in nearly a decade. US President Donald Trump again failed to respect the independence of the organisation by criticising the rate increase and stating that he is “not happy about that.” Analysts believe there will be one more rate increase this year, followed by more increases into 2019.

Gold appears to be stuck in its horse latitudes, garnering little investor interest whilst it waits for a bug gust to drive it upwards, despite positive market signals such as signs of a weakening US dollar index early in the week.

On to the money: total fund raises announced plummeted to C$14.5 million, a 29-week low, which included no brokered and no bought-deal financings. The average offer size also plummeted to C$1.1 million, a two-week low, whilst the number of financings decreased to 13, a 29-week low.

Another wild week for gold as closed down at US$1,190/oz from US$1,200/oz a week ago, recovering from a mid-week low of US$1,182/oz. It is now down 8.59% this year. The US dollar index overcame a stagnate start to the week to close with a bang, ending the week up at 95.13 from 94.22 last week. The van Eck managed GDXJ closed down at US$27.36 from US$28.08 a week ago. The index is down 19.84% so far in 2018. The US Global Go Gold ETF closed down at US$10.57 from US$10.90 a week ago. It is now down 18.75% so far in 2018. The HUI Arca Gold BUGS Index also closed down at 141.07 from 142.87 last week. The SPDR GLD ETF had a neutral week with its inventory falling a smidge to 742.23 tonnes from 742.53 tonnes a week ago.

In other commodities, silver continued to gain as it closed up at US$14.66/oz from US$14.30/oz a week ago. Copper lost a few cents to close down at US$2.80/lb from US$2.85/lb last week. Oil also continued to grow as WTI closed up at US$73.25 a barrel from US$70.78 a barrel a week ago.

The Dow Jones Industrial Average pulled back from the prior week’s record levels as it closed down at 26,458 from 26,743 last week. Canada’s S&P/TSX Composite Index followed suit as it closed down at 16,073 from 16,224 the previous week. The S&P/TSX Venture Composite Index also pulled back as it closed down at 709.16 from 719.95 last week.

Summary

·      Number of financings decreased to 13, a 29-week low.

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

·      No bought-deal financing was announced this week, a three-week low.

·      Total dollars plunged to $14.5m, a 29-week low.

·      Average offer size fell to $1.1 m, a two-week low.

 

Financing Highlights

Telson Mining (TSXV:TSN) arranged a non-brokered private placement financing to raise gross proceeds of up to C$6.5 million to finalize construction of its Tahuehueto Au-Ag-Cu mine in Mexico.

·      8.7 million units @ C$0.75. Each unit consists of one share and half a warrant exercisable @ C$1.25 for two years.

·      The net proceeds will be used to cover the company’s requirement to contribute funding to the Tahuehueto mine’s construction under its funding agreement with Trafigura Mexico.

      Major Financing Openings

·      Telson Mining (TSXV:TSN) opened a C$ 6.5 million offering on a best efforts basis. Each unit includes half a warrant that expires in two years.

·      Golden Arrow Resources (TSXV:GRG) opened a C$ 2.63 million offering on a best efforts basis. Each unit includes a warrant that expires in two years.

·      Benchmark Metals (TSXV:BNCH) opened a C$ 1 million offering on a best efforts basis. 

·      Medgold Resources (TSXV:MED) opened a C$ 1 million offering on a best efforts basis. Each unit includes a warrant that expires in two years.

 Major Financing Closings

·      Regulus Resources (TSXV:REG) closed a C$ 20.6 million offering underwritten by a syndicate led by PI Financial on a best efforts basis. 

·      Ascot Resources (TSXV:AOT) closed a C$ 3 million offering on a best efforts basis.    

·      Galantas Gold (TSXV:GAL) closed a C$ 2.69 million offering on a best efforts basis.    

·      Tudor Gold (TSXV:TUD) closed a C$ 0.86 million offering on a best efforts basis.

 Company News

Avrupa Minerals (TSXV:AVU) reported final results from first pass exploration drilling at the Alvito iron oxide copper-gold (IOCG) project in south Portugal. The program totaled 2,438m of diamond drilling in 18 holes in eight separate targets. 

·      Work was funded by OZ Minerals that is spending A$ 1 million on exploration to earn-in to 51% of the project.

·      Highlights came from the Entre Matinhas target area where copper values in six of eight holes came in at 0.1% Cu and greater over intervals of 1.5m to 86m. Highlights included 86.3m @ 0.16% Cu in hole EMS001 and 44.65m @ 0.21% Cu in hole EMS005.

Analysis

Mineralization style and alteration patterns at Entre Matinhas fit into the general characteristics and parameters for IOCG deposits. First-pass drilling covered a limited area at shallow depths but demonstrated near-surface potential for IOCG mineralization.