Oreninc Index pulls back as gold grows

oreninc canadian resource financing index graph

The Oreninc Index fell in the week ending February 2, 2017 to 76.28 from 92.95 the previous week. Gold had another strong week rising back over the $1,200 USD mark and closing the week at $1,219 USD.

Total fund raising dollars announced fell to C$148.3m from C$233.5m, which included eight brokered financings for a total of $68.9m within which were five bought-deal financings for $57.1m. The average offer size fell from $6.5m to $3.5m.

Whilst the average dollar value per raise decreased, the total number of financings announced increased to 43. Reflecting the uptick in gold, the industry’s leading benchmark index, the van Eck managed GDXJ continued its upward trend and is now up 24.44% so far in 2017.

Whilst people around the world are protesting against some of the policies and executive orders that President Donald Trump is making, the markets continue to like what they see with the Dow Jones Industrial Average remaining over 20,000 and closing the week at 20,071 whilst the S&P/TSX Composite Index pulled back a smidge from last week’s record and closed at 15,467.

However, people power is beginning to produce effects amongst some big businesses:

Uber Technologies chief executive Travis Kalanick stepped down from a position on President Donald Trump’s economic advisory council after 200,000 Uber users deleted the app, whilst various fashion retailers dropped Ivanka Trump's brand.

Financial news highlights

Lithium continues to be a sector that pulls in investors and this week saw Neo Lithium (TSXV: NLC) announce a C$25.0 million bought deal financing with Sprott Capital. Neo has the Tres Quebrades project in Argentina, which has one of the highest grades and lowest impurity contents of any lithium brine salar in the world.

Also of note, Red Eagle Mining (TSX: R) announced a bought deal financing of C$10 million by a syndicate led by BMO Capital Markets that was quickly increased to C$15 million due to the strong demand for it. This financing is the first time for several years that the company has turned to the Canadian market for funding as previous recent raises to finance the construction of its San Ramon gold mine in Colombia that began production in late 2016 have been undertaken in Peru, with private equity groups and with its mine building contractor. One of the results of this raise could be that Red Eagle starts receiving analyst coverage on Bay St.

Summary:

  1. Number of financings increased to 43.
  2. Eight brokered financings were announced for $68.9m, a two-week low.
  3. Five bought-deal financings were announced for $57.1m, a two-week low.
  4. Total dollars fell to $148.3m, a four-week low.
  5. Average offer size lowered to $3.5m, a four-week low

Major Financing Openings:

  1. JDL Gold Corp. (TSX-V:JDL) opened a $27 million offering on a best efforts Each unit includes 1 warrant that expires in 57 months
  2. Neo Lithium Corp. (TSX-V:NLC) opened a $01 million offering underwritten by a syndicate led by Sprott Capital Partners on a bought deal basis. Each unit includes a 1/2 warrant that expires in 18 months. The deal is expected to close on or about February 22, 2017.
  3. Red Eagle Mining Corporation (TSX:R.TO) opened a $15 million offering underwritten by a syndicate led by BMO Capital Markets on a bought deal The deal is expected to close on or about February 21, 2017.
  4. Pure Gold Mining Inc. (TSX-V:PGM) opened a $12 million offering underwritten by a syndicate led by Macquarie Capital Markets Canada Ltd. on a bought deal The deal is expected to close on or about February 22, 2017.

Major Financing Closings:

  1. Platinum Group Metals (TSX:PTM) closed a $38 million offering underwritten by a syndicate led by BMO Capital Markets on a bought deal basis. The deal was expected to close on or about January 31, 2017.
  2. ShaMaran Petroleum Corp. (TSX-V:SNM) closed a $36 million offering on a best efforts The deal was expected to close on or about January 30, 2017.
  3. Hudson Resources Inc. (TSX-V:HUD) closed a $33 million offering on a best efforts basis. Each unit includes a 1/2 warrant that expires in 36 months.
  4. Strategic Oil & Gas Ltd. (TSX-V:SOG) closed a $75 million offering underwritten by a syndicate led by Paradigm Capital Inc on a best efforts basis.