The Weekly Dig - April 20, 2018
Mick Carew, PhD, mcarew@haywood.com and The Haywood Mining Team
Nickel Surges on Sanctions Fears
Highlights:
Base Metals: Base metals were all up week over week. LME nickel was the most positively impacted metal, up 6.3% WoW, following last week’s gain of 5.1%. Zinc was up 3.8% WoW followed by copper, which was up 2.3% WoW. The LMEX Index finished the week up 425 bps at 3,457. The S&P Metals & Mining Select Industry Index finished the week at 1,862, which was up 1.7% WoW. YoY, metals have had a respectable performance: copper, zinc, and nickel are up 24.2%, 23.2% and 56.6%, respectively. LME inventories were mixed WoW, with zinc down -5.0%, copper down -1% and nickel flat WoW. Excluding bonded warehouse inventories, we calculate the current days of consumption at 13.1 for copper and 8.2 for zinc. The US Dollar Index was up 54.6 bps last week finishing at 90.29, which had a slight negative impact on base metals prices. Recent U.S. sanctions against United Co. Rusal contributed to the surge in LME nickel as commodities traders speculated that other Russian companies could face similar sanctions. Nickel prices were additionally supported by the recent increase in forecast demand for electric vehicles by BHP Billiton Ltd., and an 18% YoY decrease in Q1 nickel production by Vale SA.
Precious Metals: Following mid-week gains, it ended up as a mixed week for precious metals as silver and palladium registered gains while both gold and platinum finished the week down. Gold, down US$10.11 (0.8%), finished at US$1,336 and platinum, down US$4.13 (0.4%), finished at US$927. Silver and palladium, on the other hand, maintained Wednesday’s advances (each up ~3% on Wednesday) to finish the week at US$17.13 and US$1,031 per ounce Friday afternoon. Positive performers this week included Tahoe Resources (THO-T, SELL, $5.50 target) up 6.9%, Eldorado Gold (ELD-T, BUY, $2.50 target) up 3.3%, and Detour Gold (DGC-T, BUY, $26.00 target) up 2.8%. On the junior mining/exploration front, Goldquest Mining (GQC-V, HOLD, $0.20 target) finished the week up 27.5%, while Troilus Gold (TLG-V, BUY, $3.25 target), Osisko Mining (OSK-T, BUY rating, $6.00 target) and Nighthawk Gold (NHK-T, BUY, $1.30 target) also had positive weeks, finishing up 14.3%, 7.1% and 3.0% respectively.
The Week Ahead: Mountain Province Diamonds (MPVD-T; BUY rating, $6.30) will provide Q1/18 operations data on April 24th, and OceanaGold (OGC-T; HOLD rating, $4.20 target) will release Q1/18 operations data and financials on April 26th.
