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Oreninc Index Update: November 6th, 2017

ORENINC INDEX increases as financings increase

 

ORENINC INDEX - Monday, November 6th, 2017
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Last week index score: 64.50 (Updated)

This week: 75.58

 

Prospero Silver (TSXV:PSL) received permits to drill its Bermudez project in northwest Chihuahua, Mexico.

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

Castle Silver Resources (TSXV:CSR) signed a provisional milling agreement with Granada Gold Mine.

LiCo Energy Metals (TSXV:LIC) provided a drilling update on its Teledyne and Glencore Bucke cobalt properties near Cobalt, Ontario, Canada.

 

The Oreninc Index grew in the week ending November 3rd, 2017 to 75.58 from last week’s updated 64.50 as the number of brokered financings and bought deals increased even though the total raises announced fell.

The gold price was negatively impacted by the US unemployment rate falling to 4.1%, which is a 17-year low. With the Federal Reserve FOMC due to meet in early December, the market has priced-in the near certainty that it will increase interest rates to 1.25-1.50%. In the UK, the Bank of England raised interest rates for the first time in a decade to 0.5%. News flow, meanwhile has been low on geopolitics and dominated by Hollywood sex scandals. That could change abruptly as US president Donald Trump embarks of a tour of Asia. The US is a key ally of both Japan and South Korea—where it has based significant military forces—countries that feel increasingly threatened by North Korea’s push to develop ballistic nuclear missiles. The region is also of great interest to China and Russia, which oppose any increase in US presence. Let’s hope any explosions are restricted to the president’s Tweets.

Total fund raises announced decreased slightly to C$104.2 million, a two-week low, which included five brokered financings for C$68.5 million, a nine-week high, and two bought-deal financings for C$22.6 million, a three-week high. The average offer size fell however, to C$2.4 million, a two-week low, whilst the total number of financings announced increased to 43, a 21-week high.

Gold tread water for much of the week and closed down slightly at US$1,269/oz from US$1,273/oz a week ago. Gold is now up 10.7% since the start of the year. The van Eck managed GDXJ had a marginally positive week, rising to US$32.12 from US$32.10 a week ago. It is now up 1.81% so far in 2017. The US Global Go Gold ETF fared slightly better to close at US$12.24 from US$12.15 last week. The SPDR GLD ETF saw inventories continue to sell down to close the week at 846 tonnes from 851 tonnes a week ago.

In other commodities, silver fell also barely moved despite some earlier volatility, closing the week at US$16.84/oz from US$16.87/oz a week ago. Copper too had a flat week to close at US$3.11/lb from US$3.10/lb a week. Oil continued its upwards climb and hitting its highest level since July 2015, closing the week at US$55.64 a barrel from US$53.90 a barrel a week ago.

The Dow Jones Industrial Average continued to move deeper into record territory as it closed at 23,539 from 23,328 last week. Canada’s S&P/TSX Composite Index posted a similar growth chart to the Dow’s and broke through the 16,000-level to close up at 16,020 from 15,953 the previous week. The S&P/TSX Venture Composite Index saw slight growth to close at 791.98 from 787.38 the previous week.

 

Summary:

  • Number of financings increased to 43, a 21-week high.
  • Five brokered financings were announced this week for C$68.5m, a nine-week high.
  • Two bought-deal financings were announced this week for C$22.6, a three-week high.
  • Total dollars decreased to C$104.2m, a two-week low.
  • Average offer size also decreased to C$2.4m, a two-week low.

 

Financing Highlights

 

Avesoro Resources (TSX:ASO) opened a C$25.88 million offering underwritten by a syndicate led by Hannam & Partners and Numis Securities out of the UK and Sprott Capital Partners out of Toronto on a best efforts basis. Funds will be used for the proposed acquisition of the Youga and Balogo gold mines in Burkina Faso.

  • Purchase price of US$69.5 million via US$51.0 million in stock and US$18.5 million cash.
  • Avesoro conditionally raised £15.2 million (about US$20.0 million) through a placement at 1.9 pence.
  • The transaction will simplify the management structure by bringing two mines into the company from the wider Avesoro Jersey group.
  • Forecast proforma 2017 gold production of 180-190koz. Forecast 2018 production of 230koz.

 

Major Financing Openings:

  • Avesoro Resources (TSX:ASO) opened a C$25.88 million offering underwritten by a syndicate led by TBA on a best efforts basis.
  • Neo Lithium (TSXV:NLC) opened a C$20.09 million offering underwritten by a syndicate led by Cormark Securities on a bought deal basis. The deal is expected to close on or about November 21st.
  • Desert Star Resources (TSXV:DSR) opened a C$17 million offering underwritten by a syndicate led by BMO Capital Markets on a best efforts basis. Each unit includes half a warrant that expires in 36 months.
  • LSC Lithium (TSXV:LSC) opened a C$6 million offering underwritten by a syndicate led by GMP Securities on a best efforts basis. Each unit includes half a warrant that expires in 36 months. The deal is expected to close on or about November 9th.

Major Financing Closings:

  • Integra Resources (CSE:ITR) closed a C$27.26 million offering underwritten by a syndicate led by GMP Securities on a best efforts basis.
  • LSC Lithium (TSXV:LSC) closed a C$20 million offering underwritten by a syndicate led by GMP Securities on a best efforts basis.
  • Pure Gold Mining (TSXV:PGM) closed a C$19.19 million offering underwritten by a syndicate led by Macquarie Capital Markets Canada on a bought deal basis.
  • Lithium X Energy (TSXV:LIX) closed a C$14.97 million offering underwritten by a syndicate led by Cormark Securities on a bought deal basis.

 

Company news

 

Prospero Silver (TSXV:PSL) received permits to drill its Bermudez project in northwest Chihuahua, Mexico.

  • Drill testing at Bermudez is part of its on-going 6,950m reconnaissance drill campaign funded by strategic partner Fortuna Silver Mines.
  • Prospero is planning 2-4 holes in the first quarter of 2018.
  • Bermudez hosts a low sulphidation epithermal vein system that is exposed over a 2.5km by 50-100m area, suggesting potential to host an epithermal Au-Ag deposit.

Analysis

The drill permit will see Prospero continue on its programme to rapidly test a number of targets under its strategic deal with Fortuna Silver.

 

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

  • Highlights included surface channel sample (#38) with 8.1m @ 47.73% Zn.
  • Sampling commenced at the northern end of a 1.4km trend of known high-grade, non-sulphide zinc mineralization at or near the surface.
  • These sampling results are in areas from the Bongarita and Mina Chica areas which were never drilled, but rather had numerous historic exploration pits, some of which were resampled.
  • Zinc One has applied for permits for 130 drill platforms.

Analysis

High-grade sampling results are an encouraging indication that Bongarita and Mina Chica hold significant potential. Their potential will be more rigorously tested in the near-future by the upcoming drill program, which will better delineate and expand the known mineralization at Bongará.

 

Castle Silver Resources (TSXV:CSR) signed a provisional milling agreement with Granada Gold Mine.

  • It allows the development of a mill flowsheet that can equally process the gold-bearing ore from Granada Gold Mine near Rouyn-Noranda in Quebec, Canada as well cobalt-silver-bearing mineralization from Castle’s property in Gowganda, Ontario.
  • The terms include batch processing a minimum of 600,000 tonnes of 4.0g/t Au ore from the Granada Gold Mine open pit over three years with an option to treat a further 1.4Mt of pre-concentrated waste rock.
  • The mill will be installed at the Castle Silver Mine
  • The US$20M for mill construction will be financed by debt and facilitated by a family office in the UK.
  • Castle CEO Frank Basa is also president & CEO of Granada. Dianne Tookenay and Jacques Monette are directors of both companies.

Analysis

If the agreement comes to fruition, it will provide Castle with a revenue stream as it advances the exploration and development of its Gowganda property and will therefore subsidise the cost of building the mill it will need.

 

LiCo Energy Metals (TSXV:LIC) provided a drilling update on its Teledyne and Glencore Bucke cobalt properties near Cobalt, Ontario, Canada.

  • LiCo completed 19 diamond drill holes for about 2,000m on its two cobalt mineral exploration properties: 16 on Glencore Bucke for about 1,400m and three at Teledyne for 600m.
  • Glencore Bucke drilling tested the Main and Northwest zones with visual cobalt camp style mineralization noted in every hole.
  • A second rig was added at Teledyne that also visually intersected Cobalt camp style mineralization.

Analysis

Initial indications appear positive from the drilling programme with cobalt camp style mineralization seen in each hole. However, the proof of the pudding will be the drill assay results.

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