Oreninc Natural Resource Financing Index Falls as Action Dries Up (again)


Last week index score: 45.85 (updated)

This week: 25.90

Prospero Silver (TSX-V: PSL) and Fortuna Silver Mines (TSX:FVI) amended their strategic financing agreement and amended the 2018 work program in Mexico.

NuLegacy Gold (TSX-V: NUG) began drilling on its Red Hill in the Cortez gold trend of Nevada.

Zinc One Resources (TSX-V: Z) announced additional drill results from the Mina Grande Sur zone at its Bongará zinc mine project in north-central Peru.

The Oreninc Index halved in the week ending May 11th, 2018 to 22.90 from an updated 45.85 a week ago as funding again dried up.

Another quiet and less volatile week that saw gold steadily build momentum throughout the week only to lose it at the end. The US and North Korea agreed to meet at a landmark presidential summit in Singapore. Meanwhile, US president Donald Trump pulled the US out of the 2015 Iran nuclear framework deal and said that the US will continue to impose sanctions on the country and any company that continues to do business with it to the ire of European countries.

On to the money...total fund raises announced fell to C$56.5 million, a seven-week low, which included no brokered financings, a five-week low, and no bought deal financings, also a five-week low. The average offer size grew to C$2.9 million, a two-week high although the number of financings fell to 19, a nine-week low. Whilst the dollars announced did not fall much from last week, the absence of broker action saw the Oreninc Index take a proportionally bigger hit.

A flat week for gold as it closed up slightly at US$1,319/oz from US$1,314/oz a week ago. Gold is now up 1.27% this year. The US dollar index, on a tear since mid-April, finally took a hit and closed down at 92.5 from 92.56 a week ago after hitting a high of 93.12. The Van Eck managed GDXJ posted growth through the week and then weakened at the close to end up at US$33.85 from US$33.55 last week. The index is down 0.82% so far in 2018. The US Global Go Gold ETF also saw growth to close up at UA$13.35 from US$13.11 a week ago. It is up 2.61% so far in 2018. The HUI Arca Gold BUGS Index closed up at 182.24 from 181.39 last week. The SPDR GLD ETF again saw sales to close its inventory at 857.64 tonnes from 864.13 tonnes a week ago.

In other commodities, silver made a gain to close up at US$16.66/oz from US$16.53/oz a week ago. Likewise, copper made gains to close up at US$3.11/lb from US$3.08/lb last week. Oil continued to post gains to close up at US$70.51 a barrel from US$69.72 a barrel a week ago, returning to levels last seen in late 2014.

The Dow Jones Industrial Average rebounded from its losses last week to close up at 24,831 from 24,262 last week. Canada’s S&P/TSX Composite Index also saw growth to close up at 15,983 from 15,729 the previous week. The S&P/TSX Venture Composite Index closed up at 782.92 from 772.24 last week.

Summary:

  • Number of financings declined to 19, a nine-week low.
  • No brokered financings were announced this week, a five-week low.
  • No bought-deal financings were announced this week, a five-week low.
  • Total dollars fell to $56.5m, a seven-week low.
  • Average offer size grew to $2.9m, a two-week high.

Financing Highlights

West African Resources (TSX-V: WAF) is to raise A$35 million to fund pre-development activities at its Sanbrado gold project in Burkina Faso.

  • West African will issue 109.4 million shares @ A$0.32.
  • The company anticipates completing a revised feasibility study by the end of the second quarter.

Major Financing Openings:

  • West African Resources (TSX-V:WAF) opened a $34.3 million offering on a best efforts basis.
  • Wealth Minerals (TSX-V: WML) opened a $5 million offering on a best efforts basis. Each unit includes half a warrant that expires in 24 months.
  • Aton Resources (TSX-V: AAN) opened a $3 million offering on a best efforts basis. Each unit includes half a warrant that expires in 60 months. The deal is expected to close on or about May 15th.
  • ATAC Resources (TSX-V: ATC) opened a $3 million offering on a best efforts basis.    

Major Financing Closings:

  • Africa Energy (TSX-V: AFE) closed a $57.98 million offering underwritten by a syndicate led by Pareto Securities on a best efforts basis.
  • Seabridge Gold (TSX: SEA) closed a $19.73 million offering on a best efforts basis.
  • Garibaldi Resources (TSX-V: GGI) closed a $13.05 million offering on a best efforts basis.    
  • Pacton Gold (TSX-V: PAC) closed a $5.55 million offering underwritten by a syndicate led by Sprott Capital Partners on a best efforts basis.

Company News

Prospero Silver (TSX-V: PSL) and Fortuna Silver Mines (TSX: FVI) amended their strategic financing agreement and amended the 2018 work program in Mexico.

  • Repricing and exercise of Fortuna’s 5.4 million warrants to provide C$803,571 additional funding for drilling.
  • 6,000m drill program to test three additional targets: Buenavista, Bermudez and Trias.
  • November 30th deadline agreed for Fortuna to exercise its option rights to select up to two Prospero projects for option to joint venture agreements.

Analysis

The renewed commitment by Fortuna to test new targets is encouraging. The repricing and exercising of Fortuna’s warrants is a non-dilutive way for Prospero to secure more funding at a premium to market price for the planned work and removes warrant overhang from the stock.

NuLegacy Gold (TSX-V: NUG) began drilling on its Red Hill in the Cortez gold trend of Nevada.

  • An initial 15,000 feet of drilling or 12 holes. Results will determine the second stage of drilling.
  • 2018 drilling and field exploration budget of C$5.0 million with emphasis on discovery of new, additional gold zones.

Analysis

With a new season of drilling commencing following an extended winter break, the company is looking to step out from and grow the size of its existing discoveries as well as continuing to find new mineralized areas to increase the overall size and scope of Red Hill. The next couple of months should see regular news flow from the company.

Zinc One Resources (TSX-V:Z) announced additional drill results from the Mina Grande Sur zone at its Bongará zinc mine project in north-central Peru.

  • Highlights included 8.2m @ 42.7% Zn.
  • 81 drill holes for 1,811m drilled to date.

Analysis

This portion of the Mina Grande Sur drill program was designed to determine the extent of the mineralization so obtaining additional high-grade intersections is a bonus and attest to the robustness of Mina Grande Sur, which should be reflected in the upcoming resource calculation.

About Oreinc.com:

Oreninc.com is North America’s leading provider of relevant financing information in the junior commodities space. Since 2011, the company has been keeping track of financings in the junior mining as well as oil and gas space. Logging all relevant deal and company information into its proprietary database, called the Oreninc Deal Log, Oreninc quickly became the go-to website in the mining financing space for investors, analysts, fund managers and company executives alike.

The Oreninc Deal Log keeps track of over 1,400 companies, bringing transparency to an otherwise impenetrable jungle of information. The goal is to increase the visibility of transactions and to show financings activity in a digestible format. Through its daily logging activities, Oreninc is in a position to pinpoint momentum changes in the markets, identify which commodities are trending and which projects are currently receiving funding.

Website:  www.oreninc.com

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