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Oreninc Index Update: February 19, 2018

Oreninc Index Update: February 19, 2018

 

ORENINC INDEX slides as financings dwindle

 

ORENINC INDEX - Monday, February 19th 2018

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Last week index score: 63.23

This week: 41.75

 

NuLegacy Gold (TSXV:NUG) plans to begin a ~12,000m drilling and field exploration program in March with a budget of C$5.0 million.

 

The Oreninc Index fell in the week ending February 16th, 2018, with the index falling to a paltry 25.57 from 63.24 a week ago as financings all but dried up. British Columbia being closed for Family Day had an impact but the broader picture could be that recent volatility in general stock markets and metal prices has caused a blanket of caution to descend on investors and issuers, prompting companies to delay financings.

Several market commentators have commented that mining stocks have not responded (grown) in line with increases in metal prices. This could also be a factor behind the dearth of financings announced. Indeed, Oreninc data shows that this is a worst run up for financings to the PDAC conference in March than seen throughout the bear market years with a five-week index average of 46.5 compared to 130.22 in 2011 and 42.45 in 2016.

The stock market correction saw the VIX fear index spike to a record high as the spectre of inflation now stalks the US with January inflation coming in higher than expected at 2.1%. Consequently, yields on the US ten-year treasury have started climbing as the US dollar fell to a three-year low. The recent stock market sell-off saw gold take a big hit but then rapidly reclaim its losses, rebounding back to the US$1,350/oz level.

On to the money: total fund raises announced fell to a miserly C$41.6 million, a three-week low, which included one brokered financing for C$5.0m, a six-week low, and no bought-deal financings, a three-week low. The average offer size was cut in half to C$2.4 million, a three-week low, whilst the total number of financings fell to just 17, a four-week low.

 

Gold powered back up to the US$1,350/oz level to close at US$1,346/oz after hitting a high of US$1,353/oz, up from US$1,316/oz a week ago. The van Eck managed GDXJ responded and closed up at US$32.51 from US$30.63 last week. The index is down 4.75% so far in 2018. In similar fashion, the US Global Go Gold ETF also rebounded to close at US$12.44 from US$11.57 a week ago. It is down 4.4% so far in 2018. The SPDR GLD ETF saw inflows to close at 824.54 tonnes from 820.71 tonnes a week ago.

 

In other commodities, silver partially recovered to close up at US$16.64/oz from US$16.36/oz a week ago. Copper rebounded strongly to close up at US$3.26/lb from US$3.03/lb last week. Oil improved to close at US$61.68 a barrel from US$59.20 a barrel a week ago.

The Dow Jones Industrial Average recovered from some of its recent losses to close up at 25,219 from 24,190 last week. Likewise with Canada’s S&P/TSX Composite Index that closed up at 15,452 from 15,034 the previous week. The S&P/TSX Venture Composite Index continued to grow and closed up at 830.17 from 813.39 last week.

 

Summary:

·      Number of financings dropped to 17, a four-week low.

·      Three brokered financings were announced this week for C$26.5m, a three-week low.

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

·      Total dollars sunk to C$41.6m, a three-week low.

·      Average offer size also fell to C$2.4m, a three-week low.

 

 

Financing Highlights

Bonterra Resources (TSXV:BTR) opened a private placement with Sprott Capital Partners as lead agent to raise C$21.5 million.

·      The offering includes 13.3 million flow-through shares @ C$0.75 and 19.2 million flow-through shares @ C$0.60.

·      The agents will be entitled to a 6% cash fee of the gross proceeds and broker warrants for 4% of the aggregate number of securities placed.

·      Gross proceeds will be used for Canadian exploration.

 

Major Financing Openings:

·      Bonterra Resources (TSXV:BTR) opened a C$21.5 million offering on a best efforts basis. The deal is expected to close on or about March 15th.

·      Nxgold (TSXV:NXN) opened a C$5 million offering underwritten by a syndicate led by Red Cloud Klondike Strike on a best efforts basis. Each unit includes a warrant that expires in 24 months. The deal is expected to close on or about March 13th.

·      Resource Capital Gold (TSXV:RCG) opened a C$5 million offering on a best efforts basis.  Each unit includes half a warrant that expires in 24 months. The deal is expected to close on or about March 9th.

·      Chimata Gold (TSXV:CAT) opened a C$2 million offering on a best efforts basis.  Each unit includes half a warrant that expires in 12 months.

 

Major Financing Closings:

·      Orla Mining (TSXV:OLA) closed a C$30.76 million offering underwritten by a syndicate led by GMP Securities on a bought deal basis. Each unit included half a warrant that expires in 36 months.

·      International Cobalt (CSE:CO) closed a C$10 million offering on a best efforts basis. Each unit included half a warrant that expires in 24 months.

·      Majestic Gold (TSXV:MJS) closed a C$9.71 million offering on a best efforts basis.

·      Golden Predator Mining (TSXV:GPY) closed a C$8.38 million offering underwritten by a syndicate led by Clarus Securities on a best efforts basis.

 

Company News

NuLegacy Gold (TSXV:NUG) plans to begin a ~12,000m drilling and field exploration program in March with a budget of C$5.0 million.

Continued emphasis on the discovery of new, additional gold zones on its Red Hill property.

2017 exploration resulted in the discovery and significant expansion of Carlin-style gold mineralization in the new Serena zone, discovered a new epithermal-type gold mineralized zone (the VIO zone) on the western end of the Red Hill property,

Analysis

Having completed a successful and productive exploration program in 2017, the company plans to continue where it left off in its pursuit of discovering new gold mineralisation. At the same time, it will continue advancing metallurgical and other studies to move towards assessing the economic viability of the project. The near term will see NuLegacy publish a maiden NI 43-101 compliant resource estimate that will cover about 35% of the 3km strike length of the Iceberg deposits.

 

 

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