Report

Mining Monthly: May Edition

What you need to know:
• The metals and mining market continued its strong run in May, driven by inflationary concerns due to the trade war and geopolitical tensions.
• In May, gold was up 1.8%, silver was up 1.7%, and copper was also up 1.7%. The equities outperformed the commodities, with the GDX up 3.3%, GDXJ up 6.4%, SIL up 5.9%, and COPX up 8.7%.
• Financings remained elevated during May, with multiple juniors raising over $10M as generalist capital returns to the sector.
• M&A activity continued to be strong in May as the major firms look to utilize their boosted cash flow to purchase juniors at discounted prices.

Sentiment Update
The mining sector extended its strong performance into May, posting its fifth consecutive month of gains. Markets were driven by continued strength in gold prices, improved macro sentiment, and increased financing activity. The strong performance was led by persistent inflation concerns on the back of the trade wars, geopolitical tensions, and central bank buying.

Gold was up 1.8% in the month, reaching further all-time highs despite the 10-year yield increasing. Silver was up 1.7%, ending the diverging trend between the two metals. Equities outperformed the commodity prices with the GDX up 3.3%, GDXJ up 6.4%, and SILJ up 5.9%. We were highly encouraged by the performance of the juniors as they play catch up to the larger firms and capital trickles down the sector. The mining equities underperformed broader markets with the S&P 500 and TSX up 6.5% and 5.4%, respectively. Copper also performed in line with the other metals, being up 1.7% while the COPX was up a sizeable 8.7%. The other metals and commodities fairly flat, with the best performer being platinum (+8%) and the worst performer being lithium (-10%).

Financings remained highly elevated in May, including several bought deals and strategic placements exceeding C$50M. M&A also continued to be strong, with key transactions such as Pan American’s acquisition of MAG Silver and ongoing consolidation in the silver and uranium sectors.
Underlyings
ALLEGIANT GOLD

Amerigo Resources Ltd.

Amerigo Resources is engaged in the production of copper and molybdenum concentrates with operations in Chile. Through its subsidiary, Minera Valle Central S.A., Co. has a contract with Chile's state-owned copper producer National Copper Corporation to process the tailings from El Teniente underground copper mine.

ANDEAN PRECIOUS METALS CORP

CAPITAN SILVER CORP

DYNACOR GROUP INC.

Endurance Gold

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.

Giga Metals

GIGA Metals is an exploration stage mineral resources company engaged in the acquisition and exploration of mineral properties, primarily in northern British Columbia. Co. has not yet identified any mineral resource on any of its properties that is of a commercially exploitable quantity.

MOON RIVER MOLY LTD

OMAI GOLD MINES CORP

Rio Tinto plc

Rio Tinto is engaged in finding, mining and processing mineral resources. Co. has four product groups: iron ore, which supplies the global seaborne iron ore trade; aluminium, which includes bauxite mines, alumina refineries, and aluminium smelters; Copper and Diamonds, which has managed operations in Australia, Canada, Mongolia and the U.S., and non-managed operations in Chile and Indonesia, with by-product including gold, silver, molybdenum and others such as sulphuric acid, rhenium, and lead carbonate; and Energy and Minerals, which comprises mining, refining and marketing operations across borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium sectors.

Sailfish Royalty Corp.

Santacruz Silver Mining

Santacruz Silver Mining is engaged in the operation, acquisition, exploration and development of mineral properties in Mexico, with a primary focus on silver, but also including gold, zinc and lead. Co. is focused on meeting and maintaining its primary production objective of producing approximately 1.5 million silver equivalent ounces on a yearly basis at its producing property, the Rosario Mine. In addition, Co. is exploring three other mineral properties, being the San Felipe Project (an advanced stage project), the Gavilanes Project (an exploration project), and the El Gachi Property (an early stage exploration project).

Tembo Gold Corp

Tempo Gold is in the exploration stage and is engaged in the acquisition, exploration and development of gold resource properties in Tanzania, East Africa.

Tocvan Ventures

TRIGON METALS INC.

Provider
Atrium Research Corporation
Atrium Research Corporation

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. 

Analysts
Ben Pirie

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