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Oreninc Index Down As Brokered Dollars Shrink

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Last week index score: 51.00 (updated)

This week: 39.79

The Oreninc Index fell in the week ending April 5th, 2019 to 39.79 from an updated 51.00 as the dollars announced in brokered deals shrank.

Gold continued to suffer this week, falling to four-week lows as the US dollar and stock markets surged. The US Labor Department said applications for unemployment benefits fell to 49-year low to 202,000 for the week ended March 30st, the lowest level since December 1969, against market expectations of 216,000. The unemployment rate remains unchanged at 3.8%.

On the political front, the US and China are still engaged in trade talks although an outcome still seems uncertain in terms of both timing and content.

Uncertainty continues in the ongoing saga about whether or how the UK will leave the European Union (EU). UK Prime Minister Teresa May is unwilling or unable to meaningfully change the deal she negotiated with the EU and saw it rejected again by Parliament. Her lack of flexibility means that two-days of negotiations with the opposition Labour Party failed to progress towards a solution, with the result that she had to return to Brussels to request more time. France, Spain and Belgium have now turned up the pressure by stating they will oppose allowing the UK any extensions unless there is evidence that she get agreement in Parliament. The consequence is that the prospect of the more extreme solutions has increased. These are the UK dropping out of the EU with no deal or the UK government moving to revoke its exercise of Article 50 of the EU constitution to withdraw.

On to the money: total fund raises announced decreased to C$54.1 million, a four-week low, that included two brokered financings for C$4,2 million, a four-week low and one bought-deal financing for C$3,5 million, also a four-week low. The average offer size increased to C$1.7 million, a one-week high, whilst the number of financings increased to 31, a two-week high.

Gold has found support around the US$1,290/oz level closing down a smidge at US$1,291/oz from US$1,292/oz a week ago. The yellow metal is up 0.72% so far this year. The US dollar index continued to strengthen as it closed up at 97.39 from 97.28 last week. The van Eck managed GDXJ closed up at US$31.79 from US$31.73 a week ago. The index is up 5.20% so far in 2019. The US Global Go Gold ETF pulled back again as it closed down at US$12.82 from US$12.88 last week. It is up 12.36% so far in 2019. The HUI Arca Gold BUGS Index closed up at 171.18 from 169.95 last week. The SPDR GLD ETF saw a sharp sell off as its inventory closed down at 761.87 tonnes from 784.26 tonnes a week ago. It was last at these inventory levels in December 2018.

In other commodities, silver spot closed down a cent at US$15.11/oz from US$15.12/oz a week ago. Copper lost ground as it closed down at US$2.89/lb from US$2.93/lb a week ago. Oil continued to see strong growth as WTI closed up at US$63.08 a barrel from US$60.14 a barrel a week ago.

The Dow Jones Industrial Average saw strong growth as it closed up at 26,424 from 25,928 last week. Canada’s S&P/TSX Composite Index also closed up at 16,396 from 16,102 the previous week. The S&P/TSX Venture Composite Index closed up at 629.82 from 626.89 last week.

Summary

  • Number of financings increased to 32, a two-week high.

  • Two brokered financings were announced this week for C$4.2m, a four-week low.

  • One bought-deal financing was announced this week for C$3.5m, a four-week low.

  • Total dollars declined to C$54.1m, a four-week low.

  • Average offer increased to C$1.7m, a two-week low.

Financing Highlights

Nouveau Monde Graphite (TSXV:NOU) entered into definitive agreements in connection with a non-brokered private placement with Pallinghurst Graphite for C$10.3 million.

  • 43.8 million shares @ C$0.235

  • Pallinghurst to own about 19.99% of the shares and have anti-dilution rights to maintain its 19.99% ownership for up to two years.

  • Closing is expected to occur before April 30th.

  • A second private placement to selected existing institutional shareholders is expected to close in May.

  • The combined proceeds will be about C$22.0 million.

  • Proceeds will fund the next stage of development of the Matawinie graphite development project in the Saint-Michel-des-Saints area of Quebec, Canada, specifically the continued operation of the existing graphite flake plant, the construction of a demonstration plant, ongoing permitting and for working capital.

Major Financing Openings

  • Nouveau Monde Graphite (TSXV:NOU) opened a C$11.7 million offering on an insiders only basis with selected existing institutional shareholders.

  • Nouveau Monde Graphite (TSXV:NOU) opened a C$10.3 million offering on a strategic deal basis with The Pallinghurst Group.

  • BeMetals (TSXV:BMET) opened a C$5.0 million offering on a best efforts basis. Each unit includes half a warrant that expires in two years.

  • International Frontier Resources (TSXV:IFR) opened a C$4.66 million offering on a best efforts basis. The deal is expected to close on or about April 19th.

 Major Financing Closings

  • Victoria Gold (TSXV:VIT) closed a C$19.41 million offering underwritten by a syndicate led by BMO Capital Markets on a bought deal basis.

  • Victoria Gold (TSXV:VIT) closed a C$15.0 million offering on a strategic deal basis with Osisko Gold Royalties.

  • Cantex Mine Development (TSXV:CD) closed a C$6.01 million offering on a best efforts basis.    

  • Sabina Gold & Silver (TSX:SBB) closed a C$5.21 million offering on a best efforts basis.
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