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Oreninc Index Crashes Back to Reality

The Oreninc Index crashed back down to reality for the week ending October 23, 2014. Total dollars announced dropped to $36.2m, a ten-week low. Three brokered deals were announced for $24.6m, a two-week low; two bought deals were announced for $24.1m, also a two-week low. Deals announced dropped to 16, a 41-week low.

Deals for the week were lead by Fortress Minerals Corp.’s (TSX-V:FST) purchase of Kinross Gold Corp.’s (TSX:K) Ecuadorian Fruta del Norte gold project for US$240m. Kinross took a $720m writedown on the project last year. 

After a solid performance last week, it is discouraging to see such a harsh week in the financing market. However, in a climate where the only thing holding up the Index’s performance is the large rogue deal, a week without any is bound to have an impact. With each passing week it is becoming clearer that fall 2014 is unlikely to bring any market rebound. 

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Oreninc Index Blasts Off Over Thanksgiving

The Oreninc Index rocketed forward in the Thanksgiving-shortened week ending October 16, 2014. Total dollars announced launched to $249m, the most since March. The main driver of this week’s surprising turnaround was two offerings for over $50m. Including a $100m offering by Elkwater Resources and a $75m rights offering by ShaMaran Petroleum.  This week is most likely a flash in the pan; if the large deals were excluded, it would have been merely a two-week high. However, given that holiday weeks don’t usually include such significant raises, it is a positive sign that offerings are being announced. Expect a comedown next week, but that’s the nature of a volatile Index.

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Oreninc Index Stumbles into Fall

The Oreninc Index stumbled for the week ending October 10, 2014. Total dollars announced dropped to $59.9m, a four-week low. Three brokered deals were announced for $42m, a three-week low. No bought deals were announced for the second time in four weeks. It seems that things are only getting worse in the financing market.

Deal making was active this week, with Lundin Mining (TSX:LUN) buying Freeport McMoRan (NYSE:FCX) 80% ownership interest in the Chilean Candelaria/Ojos del Salado mining operations for $1.8b in cash. Rumours also swirled of Glencore PLC (LON:GLEN) trying to merge with Rio Tinto Group (NYSE:RIO), though it appears Rio has rejected the reported all-stock offer made by Glencore. The deal would create the world’s largest publicly traded mining company.

While fundraising and equity numbers are increasingly getting worse and worse, the crazed deal making from this week is an interesting development. Maybe with companies out trying to make things happen, excitement will be spurred and investors will find value in what has been created. Nonetheless, it would not be wise to hold your breath in a market that has never looked worse during a time of the year that it generally looks its best. 

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Benjamin Cox discusses the dynamics of molybdenum supply and demand, focusing on its link to copper. 

Oreninc Index Remains the Same

The Oreninc Index remained stagnant for the week ending October 2, 2014. Total dollars announced rose to $160.4m, a four-week high. Three brokered deals were announced for $82m, a 14-week high; one bought deal was announced for $75m, a 14-week high.

While companies seem to have more confidence in their ability to raise money the past couple of weeks, deal-making remains light for Canadian juniors. That being said, majors were somewhat active with IAMGOLD Corp’s (TSX:IMG) sale of their Québécois Niobec niobium mine to the former Barrick Gold chief Aaron Regis’s private equity firm, Magris Resources. Newmont Mining Corporation (NYSE:NEM) and the Indonesian government agreed to a deal that allows the gold producer to resume copper exports from the country, ending the nine-month dispute.

Commodity prices had a rough week, with gold dropping to USD$1,200 for the first time in 2014, and platinum hitting a five-year low. Silver also had a rough time, hitting its lowest level in over four years.

While it’s nice to see some movement upwards in the financing market, we are far from out of the water yet. With commodity prices falling and numerous geopolitical issues dominating the headlines, it would not be surprising to see investors and promoters skittish. 

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