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Oreninc Index Update: December 26, 2017

Oreninc Index Update: December 26, 2017

ORENINC INDEX falls as financings slow for holiday period

 

ORENINC INDEX - Tuesday, December 26th, 2017

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Last week index score: 94.81 (Updated)

This week: 64.88

 

Zinc One Resources (TSXV:Z) reported additional results from an ongoing surface-sampling program at its Bongará zinc mine project in north-central Peru.

 

The Oreninc Index fell in the week ending December 22nd, 2017, the last trading week before the Christmas holidays in North America and Europe, to 64.88 from an updated 94.81 as financings slowed with the approach of the year-end holiday season. That said, gold continued to mount a strong finish to the year and closing in on the US$1,300/oz mark once again.

US president Donald Trump looks set to achieve his first major policy victory as the Senate approved his drastic reform to the US tax code—its most major reform in 30 years—that includes US$1.5 trillion in tax breaks. The bill will reduce the top individual tax rate from 39.6% to 37% and cuts the corporate tax rate from 35% to 21%. Trump believes this will stimulate the US economy and result in generating benefits to all Americans through the trickle-down effect. Real estate businesses, such as the ones owned by Trump, will be one of the main beneficiaries of the tax reform.

On the international front, tensions ratcheted up another notch in southeast Asia as the United Nations agreed additional trade embargos on North Korea to dissuade it from continuing to develop its nuclear missile capability, including further restricting sales of oil to the country. North Korea said that the additional embargos is tantamount to a declaration of war.

Total fund raises announced fell to C$124.7 million, a three-week low, which included four brokered financings for C$16.1 million, a three-week low, and three bought-deal financings for C$15.0 million, also a three-week low. The average offer size fell again to C$2.7 million, a three-week low, whilst the total number of financings announced fell again to 46, a four-week low.

Gold continued its recent growth spurt to close at US$1,274/oz from US$1,256/oz a week ago. Gold is now up 11.04% since the start of the year. The van Eck managed GDXJ followed suit with a strong week and closed up at US$33.53 from US$31.46 last week. It is now up 6.3% so far in 2017. The US Global Go Gold ETF showed a similar chart to close at US$12.83 from US$12.22 last week. The SPDR GLD ETF sold off during the week to close at 837 tonnes from 844 tonnes a week ago.

In other commodities, silver had a more subdued week than its yellow metal counterpart to close at US$16.32/oz from US$16.05/oz a week ago. Copper had another strong week to close at US$3.23/lb from US$3.13/lb last week. Oil also had a week of continued price growth to up at US$58.47 a barrel from US$57.30 a barrel a week ago.

The Dow Jones Industrial Average saw modest growth to close at 24,754 from 24,651 last week. Canada’s S&P/TSX Composite Index saw a stronger week to close at 16,165 from 16,041 the previous week. The S&P/TSX Venture Composite Index saw growth to close at 810.30 from 801.23 the previous week.

 

Summary:

  • Number of financings fell to 46, a four-week low.
  • Four brokered financings were announced this week for c$16.1m, a three-week low.
  • Three bought-deal financings were announced this week for c$15.0m, a three-week low.
  • Total dollars decreased to c$124.7m, a three-week low.
  • Average offer size also decreased to c$2.7m, a three-week low.

 

 

Financing Highlights

 

Sabina Gold & Silver (TSX:SSB.T) opened a C$66.06 million offering on a strategic deal basis.

  • Chinese gold producer Zhaojin International Mining agreed to purchase 24.9 million shares @ C$2.65 for a total investment of about C$66.1 million.
  • Zhaojin will own about 9.9% of Sabina with an option to increase its shareholding up to 19.9%
  • The financing provides Sabina with a cornerstone investor for the development of its Back River project in Nunavut, Canada that is at pre-construction stage.
  • Back River has the potential to produce ~200,000 ounces a year for ~11 years with an initial CAPEX of C$415 million.

 

Major Financing Openings:

  • Sabina Gold & Silver (TSX:SSB.T) opened a C$66.06 million offering on a strategic deal basis.
  • Barkerville Gold Mines (TSXV:BGM) opened a C$10 million offering underwritten by a syndicate led by Haywood Securities on a bought deal basis. The deal is expected to close on or about December 28th.
  • Red Eagle Mining (TSX:R) opened a C$5.62 million offering on a best efforts basis. Each unit includes a warrant that expires in 56 months. The deal was expected to close on or about December 21st.
  • GoviEx Uranium (CSE:GXU) opened a C$5 million offering on a best efforts basis.  Each unit includes a warrant that expires in 24 months. The deal was expected to close on or about December 22nd.

Major Financing Closings:

  • Cobalt 27 Capital (TSXV:KBLT) closed an C$85.05 million offering underwritten by a syndicate led by TD Securities on a bought deal basis.
  • McEwen Mining (TSX:MUX) closed a C$12.88 million offering underwritten by a syndicate led by Cantor Fitzgerald Canada on a bought deal basis.
  • Adventus Zinc (TSXV:ADZN) closed a C$10 million offering underwritten by a syndicate led by Cormark Securities on a bought deal basis.
  • SilverCrest Metals (TSXV:SIL) closed a C$10 million offering underwritten by a syndicate led by National Bank Financial on a bought deal basis.

Company news

Zinc One Resources (TSXV:Z) reported additional results from an ongoing surface-sampling program at its Bongará zinc mine project in north-central Peru.

  • Highlights included 32.2m @ 31.92% Zn

Analysis

With drill permits now in hand, the company will begin shallow drilling at Bongara in the new year and looking to replicate both its high-grade sampling results and the 20% zinc grades achieved from historical mining activity.

Positions

  • 1 (685X328) px

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