The Weekly Dig - Nov 24, 2017
by Mick Carew, PhD, firstname.lastname@example.org, Emma Boggio, MSC, CPA and CA, and The Haywood Mining Team
The Weekly Dig - Base Metal Investors Give Thanks as Copper and Nickel Rally
Precious Metals: Precious metals struggled this week as gold, silver, and platinum all recorded losses. Gold, although nearly recovering from early week losses, finished the week down 0.31% at US$1,288. Silver, however, didn’t have quite as strong of a comeback as it finished down 1.58% at US$17.04. Platinum, also exceeding a 1% weekly decline, finished at US$942. Meanwhile, palladium gained some ground as it finished Friday afternoon at US$999, and recorded a 0.24% increase week over week.
Base Metals: The base metals were all up week over week. LME nickel had the strongest week, up 4.0% WoW, with copper and zinc up 3.5% and 1.5% WoW, respectively. The price improvement in copper was driven by increased demand from China, as physical premia in the spot market continue to rise. In addition, Codelco announced that it has raised its offer for contractual supply in 2018. These events led to a run on inventories this week, as Asian stockpiles were down 20% WoW. LME copper stockpiles were down 14% WoW, marking the greatest WoW decline since 2005. Global refined zinc stocks are now below the critical 10-day pinch point, at 9 days of consumption (-51% YTD), with few signs of new supply, as Chinese domestic mined supply tightens as a result of continued environmental inspections. Unionized workers at BHP’s Escondida copper mine held a 24-hour strike on Thursday to protest recent layoffs which impacted ~3% of the mine’s workforce. Earlier this year, the Escondida mine, which produces ~5% of the world’s total copper output, was impacted by a 43-day strike. Southern Copper’s Peruvian operations (Cuajone and Toquepala) were also impacted by their third labour dispute this year, as one of the operations’ five unions began an indefinite strike on November 21 over profit-sharing. Among the base metals equities this week, the top performers were Atalaya Mining (up 9.5% WoW), First Quantum Minerals (up 7.1% WoW), Teck Resources (up 6.2% WoW) and Hudbay Minerals (up 5.7% WoW), primarily driven by the improvement in base metals prices. Imperial Metals lagged the pack, down 8.4% WoW, after being down 6.8% last week following the release of Q3/17 financials which missed consensus estimates.
Important Information and Legal Disclaimers
All prices are in C$ unless noted
This report is neither a solicitation for the purchase of securities nor an offer of securities. Our ratings are intended only for clients of Haywood Securities Inc., and those of its wholly owned subsidiary, Haywood Securities (USA) Inc., and such clients are cautioned to consult the respective firm prior to purchasing or selling any security recommended or views contained in this report.
Estimates and projections contained herein, whether or not our own, are based on assumptions that we believe to be reasonable. The information presented, while obtained from sources we believe reliable, is checked but not guaranteed against errors or omissions. Changes in the rates of exchange between currencies may cause the value of your investment to fluctuate. Past performance should not be seen as an indication of future performance. The investments to which this report relates can fluctuate in value and accordingly you are not certain to make a profit on any investment: you could make a loss.
Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income.
Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage. In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts.
Dissemination of Research
Research reports are disseminated either through electronic medium or in printed copy. Clients may access reports on our website, or receive publications directly via email. Haywood strives to ensure all clients receive research in a timely manner and at the same time. It is against our policy for analysts to discuss or circulate their recommendations internally prior to public distribution. This policy applies equally to recommendation changes, target changes and/or forecast revisions.
For Canadian residents: Haywood Securities Inc. is a Canadian registered broker-dealer and a member of the Investment Industry Regulatory Organization of Canada, the Toronto Stock Exchange, the Toronto Venture Exchange and the Canadian Investor Protection Fund and accepts responsibility for the dissemination of this report. Any Canadian client that wishes further information on any securities discussed in this report should contact a qualified salesperson of Haywood Securities Inc.
For U.S. residents: This investment research is distributed in the United States, as third party research by Haywood Securities (USA) Inc. Haywood Securities (USA) Inc. is a wholly owned subsidiary of Haywood Securities Inc., registered with the U.S. Securities and Exchange Commission, and is a member of FINRA and the Securities Investor Protection Corporation (SIPC). Haywood Securities (USA) Inc. as a U.S. registered broker-dealer accepts responsibility for this Research Report and its dissemination in the United States. Any U.S. client that wishes further information on any securities discussed in this report or wish to effect a transaction in these securities should contact a qualified salesperson of Haywood Securities (USA) Inc. Haywood Securities Inc. Research Analysts are considered Foreign Research Analysts to the USA and are not registered/qualified as Research Analysts with FINRA. As these analysts are considered Foreign Research Analysts they may not be specifically subject to FINRA (formerly NASD) Rule 2711 and FINRA (formerly NYSE) Rule 472 restrictions on communications with a Subject Company, Public Appearances and trading securities held by a Research Analyst Account.
This report may be distributed in the following states: nil. Otherwise, this report may only be distributed into those states with an institutional buyer state securities registration exemption.
We, Mick Carew, Geordie Mark, Colin Healey, Pierre Vaillancourt, and Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Of the companies included in the report the following Important Disclosures apply:
Other material conflict of interest of the research analyst of which the research analyst or member knows or has reason to know at the time of publication or at the time of public appearance: