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Oreninc index falls although brokered action continues

Commentaries & Views

Last Week: 119.12 (Updated)

This week: 76.70

The Oreninc Index fell in the week ending May 29th, 2020 to 76.70 from an updated 119.12 a week ago although brokered action and the number of deals remained strong.

The COVID-19 virus global death toll is nearing 370,000 and more than 6 million cases reported worldwide.

Geopolitics rose up the agenda as stronger words were exchanged between the USA and China focusing on the Asian nation’s imposition of national security laws in Hong Kong. For its part, the House of Representatives is pressing to sanction Chinese officials for human rights abuses against the country's Uighur minority and members of other Muslim groups in the Xinjiang region.

On the economic front, US Federal Reserve chair Jerome Powell underscored the central bank’s commitment to bolster the economy throughout the COVID-19 pandemic, which many interpret as having to issue more debt and buying bonds and other securities.

Another 2.1 million people filed first-time unemployment claims in the US according to the Labor Department, bringing the total to more than 40 million since late March due to the COVID-19 crisis. Meanwhile, the Commerce Department reported that orders for durable goods in the US fell 17.2% in April, meaning orders have fallen in three of the last four months.

The economic picture is no rosier in Europe where European Central Bank president Christine Lagarde predicted that output is likely to contract 8-12% this year." The European Commission is proposing to issue €500 billion in grants to member states hardest hit by the outbreak and some €250 billion in loans. Japan is also opening the purse strings with a stimulus package of more than $1 trillion.

On to the money: brokered action continued thick and fast even though the total raises announced halved to $108.7 million, a one-week low, which included six brokered financings for $54 million, a two-week low, and four bought-deal financings for $39 million, also a two-week low. The average offer size fell to $2.2 million, a two-week low, while the number of financings fell to 49.

Gold had another up-and-down week as the spot price closed down again at $1,730/oz from $1,734/oz a week ago. The yellow metal is up 14.04% so far this year. The US dollar index fell again to 98.34 from 99.86 last week. The VanEck managed GDXJ saw its recent growth trajectory come to an end as it closed down at $46.08 from $46.43 a week ago. The index is now up 9.04% so far in 2020. The US Global Go Gold ETF also closed down at $19.81 from $20.21 a week ago. It is up 12.81% so far in 2020. The HUI Arca Gold BUGS Index closed down at 273.33 from 285.13 last week. The SPDR GLD ETF inventory continued to increase as it closed up at 1,223.14 tonnes from 1,116.71 tonnes last week.

In other commodities, silver continued its surge as the spot price closed up at $17.87/oz from $17.21/oz a week ago. Copper also continued to gain as it closed up at $2.42/lb from $2.38/lb a week ago. Oil continued its recovery as WTI closed up at $35.49 a barrel from $33.25 a barrel a week ago.

The Dow Jones Industrial Average continued its growth as it closed up at 25,383 from 24,465 a week ago. Canada’s S&P/TSX Composite Index closed up at 15,192 from 14,913 the previous week. The S&P/TSX Venture Composite Index closed up at 553.77 from 536.94 last week.

Summary

  • Number of financings decreased to 49.

  • Six brokered financings were announced this week for $54 million, a two-week low.

  • Four bought-deal financings were announced this week for $39m, a two-week low.

  • Total dollars decreased to $108.7 million, a one-week low.

  • Average offer decreased to $2.2 million, a two-week low.

Financing Highlights

O3 Mining (TSXV:OIII) opened a $30 million bought deal.

  • 4.7 million flow-through units @ $4.30 and 6.4 million units @ $2.35.

  • Syndicate led by Cormark Securities, Sprott Capital Partners and Canaccord Genuity

  • Each unit consists of a share and half a warrant exercisable @ $3.25 for two years.

  • Proceeds will be used for exploration at its gold projects in Val d’Or in Quebec, Canada.

Major Financing Openings

  • O3 Mining (TSXV:OIII) opened a $30 million offering underwritten by a syndicate led by Cormark Securities on a bought deal basis. Each unit includes half a warrant that expires in two years. The deal is expected to close on or about June 18th.

  • Condor Gold (TSX:COG) opened a $11.21 million offering on a best efforts basis.   

  • Prime Mining (TSXV:PRYM) opened a $10 million offering underwritten by a syndicate led by Clarus Securities on a best efforts basis. Each unit includes a warrant that expires in five years. The deal is expected to close on or about October 6th.

  • Labrador Gold (TSXV:LAB) opened a $6 million offering on a best efforts basis. Each unit includes a warrant that expires in two years. The deal is expected to close on or about November 30th.

Major Financing Closings

  • Roscan Gold (TSXV:ROS) closed a $7.5 million offering underwritten by a syndicate led by Clarus Securities on a best efforts basis.

  • Fura Gems (TSXV:FURA) closed a $7.19 million offering on a best efforts basis.   

  • Pasofino Gold (TSXV:VEIN) closed a $6 million offering on a best efforts basis.   

  • Summa Silver (CSE:SSVR) closed a $5 million offering on a best efforts basis.
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