The Weekly Dig
HIGHLIGHTS
Precious Metals: After a muted performance despite a higher gold price, Junior gold equities were higher overall this week as the price of gold continued to rise. Since last Thursday, gold continued to perform stronger, reaching a high of US$1,250 per ounce briefly on Monday, only to fall to US$1,241 per ounce on Thursday following better-than-expected initial jobless claims figures from last week. A decision by the U.S. Federal Reserve on whether to raise the key interest rate in its meeting next week may also have stalled gold’s run given the general consensus that another raise is likely. The VanEck Vectors Junior Gold Miners ETF reflected the better performance in the junior gold space, rising almost one point, while the S&P Global Gold Index registered a six point gain. Despite the S&P/TSX Venture Composite Index falling another 6 points this week, several junior explorers performed well, including Midas Gold Corp. (MAX-T, BUY rating, $1.90 target; up 16%), Harte Gold Corp. (HRT-T, BUY rating, $0.80 target; up 10%) and Nighthawk Gold Corp. (NHK-T, BUY rating, $0.90 target; up 8%). Meanwhile, Detour Gold Corp. (DGC-T, BUY rating, $15.50 target) rose 14% after shareholders voted to remove most of the Company’s board of directors and interim CEO. Osisko Gold Royalties (OR-T, BUY rating, $16.50 target; up 7%) and SEMAFO Inc. (SMF-T, BUY rating, $6.00 target; up 8%) were also among the better performing gold producers this week. Finally, platinum, silver and palladium were all higher, finishing 1%, 2% and 4% higher.
Base Metals: The base metals were mixed week over week (WoW) as of Thursday’s close. LME copper was the most positively impacted metal up +1.3% to $2.79/lb while LME zinc was down -2.7% WoW at $1.19/lb. Nickel was unchanged WoW. The LMEX Index was up 0.32% WoW at 2,883.7 at Thursday’s close. The S&P Composite Diversified Metals & Mining Industry Index closed Thursday at 5,211.91, which was up 2.97% WoW. Metals are all down YoY with copper, zinc and nickel down -8.0%, -16.5% and -2.3% respectively. LME inventories were mostly down WoW with copper and nickel inventories down -4.0% and -0.3% WoW respectively. Zinc was up 2.3%. Excluding bonded warehouse inventories, we calculate the current days of consumption at 5.5 for copper and 3.9 for zinc. The US Dollar Index was up 28bps this week, closing on Thursday at 97.08, having little impact on base metals prices. The base metals equities in our coverage were mixed WoW. The most negatively impacted weekly performer in our coverage universe was Capstone Mining (CS: TSX, BUY, $0.85/sh target), down -16.4% WoW. The most positively impacted weekly performer in our coverage universe was Copper Mountain (CMMC: TSX, BUY, C$2.00/sh target), which was up +1.4% WoW on Thursday.
