Mining Monthly: August Edition
What you need to know:• The precious metals markets held flat in August, following the solid performance in July; mining equities fell modestly.
• M&A continued to be light in August, we believe this is primarily due to the lack of clarity regarding the direction of interest rates.
• Safe-haven assets like gold and silver continue to look highly attractive with mining equities trading close to trough multiples, creating buying opportunities for when investment dollars flow back into the sector.
Sentiment Update
Commodity prices remained relatively flat through August, following a strong month in July. Mining equities fell along with a down month for broader indices. Gold fell 0.2% to $1940.0/oz and silver was up 0.4% to $24.4/oz. Copper decreased 3.1% to $3.8/lb, following a gain of 5.5% in July. We note that there still remains a strong uptrend in gold, silver, and copper with the three being up 14.4%, 36.9%, and 11.1% YTD, respectively. Mining equities slightly underperformed broader markets with the GDX down 6.8% and COPX down 9.3% compared to the TSX and S&P500 which were down 1.6% and 1.4%, respectively. The battery metals space continues to be mixed with lithium down another 23% in August while cobalt, nickel, and tin were up 7%, 8%, and 10%, respectively.
We are remaining patient as mining equities trade at close to trough multiples but we don’t expect this to last with the backdrop of persistent elevated metals prices, a poor supply outlook, and increasing demand across almost all metals.
M&A activity was again light in August, similar to June and July, which we believe was due to the lack of clarity on the direction of interest rates. We believe M&A will accelerate once there is a more definitive pivot from both the Fed and BoC.
This could also contribute to an increase in investment flows into the mining and metals equities.
On August 10th, U.S. inflation came in at 3.2% YoY and 0.2% MoM, compared to consensus of 3.3% YoY and 0.2% MoM. This compares to U.S. Core inflation data which came in as 4.7% YoY and 0.2% MoM, compared to consensus expectations of 4.8% YoY and 0.2% MoM. Canadian core inflation was in line with expectations, posting 3.2% YoY and 0.5% MoM vs. consensus of 3.2% YoY and 0.4% MoM.
On August 30th, the U.S. GDP Growth Rate came in at +2.1% QoQ below consensus of +2.4%, with the market beginning to show the effects of the elevated interest rates. Canadian MoM GDP Growth came in at -0.2%, in line with consensus but down from 0.2% last month. The deteriorating economic data leads us to believe that both the Canadian and the U.S. economies are finally starting to show the effects of the interest rate hikes and this could lead to a long-awaited pivot.
Friday Night is a development stage company engaged in the business of acquiring and exploring mineral properties with a view to developing mineable deposits of precious and base metals.
1Life Healthcare operates a membership-based primary care platform. The company develops a healthcare membership model based on direct consumer enrollment, as well as employer sponsorship. The company also provides medical services in-office and virtually. As of September 30, 2019, the company had approximately 397,000 members in 9 markets in the United States; 6,000 enterprise clients; and health network partnerships. The company serves consumers, employers, providers, and health networks under the One Medical brand name.
Alamos Gold is engaged in the exploration, mine development, and the mining and extraction of precious metals, primarily gold. Co.'s s primary asset is the Mulatos Mine and holds the mineral rights to the Salamandra group of concessions in the State of Sonora, Mexico, which includes several known satellite gold occurrences.
Artemis Gold Inc is a Canada-based gold development company. The Company is engaged in identification, acquisition and development of gold properties. The Company is working under GK Project that is approximately 17 kilometer west of the community of Telegraph Creek, northwestern British Columbia.
Dundee Precious Metals is a Canadian based international mining company engaged in the acquisition, exploration, development and mining of precious metals properties.
Endurance Gold is engaged in the exploration and development of mineral properties in North America and has not yet determined whether its properties contain ore reserves that are economically recoverable. The recoverability of the amounts expended on mineral interests by Co. is dependent upon the existence of economically recoverable reserves, the ability of Co. to obtain necessary financing to complete exploration and development of its mineral properties and upon future profitable production or proceeds from disposition of its mineral interests.
Euro Sun Mining is an exploration and development company focused on gold and copper exploration and development on its property in Romania as well as gold exploration and development on the Riacho dos Machados gold project in Brazil.
Fortuna Silver Mines is engaged in the mining, exploration, extraction and processing of silver, gold and zinc mine properties in southern Peru and Mexico.
Lundin Gold is engaged in the acquisition, exploration and development of gold and base metal properties.
Lundin Mining is a holding company. Through its subsidiaries, Co. is engaged in the exploration for minerals and the production of base metals, with a focus on zinc.
Marathon Gold is engaged in the acquisition, exploration and development of precious and base metal prospects.
New Gold is a gold producer engaged in gold mining and related activities including acquisition, exploration, extraction, processing and reclamation.
NGEx Minerals Ltd. NGEx Minerals Ltd is a Canada-based copper and gold exploration company. The Company has projects in Chile and Argentina. It is initially focused on the development of its copper-gold porphyry discovery, Los Helados. Los Helados is located in the Andes Mountains of the Atacama Region, Chile. It also has other early-stage projects located in Argentina.
NGEX Resources is engaged in the acquisition, exploration and development of mineral properties located in Africa, North and South America. The recoverability of the cost of mineral properties expenditures is dependent upon the discovery of economically recoverable reserves, preservation of Co.'s interest in the underlying mineral claims, the ability of Co. to obtain necessary financing to complete the project, and future profitable production or alternatively, upon Co.'s ability to dispose of its interests on an advantageous basis.
Atrium Research provides institutional quality issuer paid research on North American public equities using deep fundamental analysis. Our research reports are disseminated through Bloomberg, FactSet, Capital IQ, Reuters and many more, as well as through our social media and email distribution lists.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.