Oreninc Index rebounds as cash pours into juniors

The Oreninc Index rebounded in the week ending February 10, 2017 to 90.26 from 76.28 the previous week. Gold had another strong week consolidating over the $1,200 USD mark and continuing to rise to close the week at $1,233 USD after hitting a three-month high at $1,240 USD on Thursday.

Total fund raising dollars announced grew to C$166.1m from C$148.3m, a two-week high, which included 14 brokered financings for a total of $127.3m within which were ten bought-deal financings for $90.1m. The average offer size nudged up from $3.5m to $3.7m, and the total number of financings announced increased to 45.

Several financings have been increased from the initial raise amount due to demand, a trend that Mercenary Geologist Micky Fulp discusses in the latest Oreninc podcast, which he says is evidence that, “the market is moving into a bull cycle that looks similar to the one seen in early 2009.”

Reflecting the continued strengthening of gold, the industry’s leading benchmark index, the van Eck managed GDXJ continued its upward trend and is now up 32.52% so far in 2017. The SPDR GLD ETF gold inventory closed the week at 836.7 tonnes, its highest volume since December 16, 2016.

Copper continues to rise hitting a twelve-month high of $2.76 per pound, and showing signs of further growth as a strike began Thursday 9 February at Escondida, the world’s largest copper mine that produces about 1.1 million tonnes a year of copper, some 5% of the world’s copper production.

The Dow Jones Industrial Average remaining over 20,000 and closing the week at 20,269 whilst the S&P/TSX Composite Index reached another record high and closed at 15,729.

Financial news highlights

Lithium again pulled in the cash with Advantage Lithium Corp. (TSX-V:AAL) closing a $20 million offering underwritten by a syndicate led by Dundee Securities and Liberty One Lithium Corp. (TSX-V:LBY.H) announcing a $3.5m financing. Advantage Lithium struck a deal in November 2016 with Australia’s Orocobre–the world’s newest lithium producer–to joint venture the Cauchari project in Argentina.

Also of note, Osisko Mining Inc. (TSX:OSK) opened a $30 million bought deal offering underwritten by a syndicate led by BMO Capital Markets and Canaccord Genuity to fund exploration in Canada where it is planning a massive 250,000m 2017 drill program focusing on Windfall deposit and Black Dog discovery in Quebec. Only three hours later the company increased its bough deal offering to a staggering $52 million. Concurrently Osisko has announced a $30 million bought deal flow through financing.

Columbian gold producer 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 strong demand. 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:

  • Number of financings increased to 45.
  • 14 brokered financings were announced for $127.3m, a two-week high.
  • Ten bought-deal financings were announced for $90.1m, a two-week high.
  • Total dollars grew to $166.1m, a two-week high.
  • Average offer size up slightly to $3.7m, a two-week high

 

Major Financing Openings:

  • Osisko Mining Inc. (TSX:OSK) opened a $11 million offering underwritten by a syndicate led by BMO Capital Markets on a bought deal basis. The deal is expected to close on or about February 28, 2017.
  • Questerre Energy Corporation (TSX:QEC) opened a $33 million offering underwritten by a syndicate led by Pareto Securities AS on a best efforts basis.
  • Probe Metals Inc. (TSX-V:PRB) opened a $03 million offering underwritten by a syndicate led by Cormark Securities Inc. on a bought deal basis. The deal is expected to close on or about February 28, 2017.
  • Nighthawk Gold Corp. (TSX-V:NHK) opened a $10 million offering – later increased to $20 million – underwritten by a syndicate led by PI Financial Corp. on a bought deal Each unit includes a 1/2 warrant that expires in 18 months. The deal is expected to close on or about March 2, 2017.

Major Financing Closings:

  • Fortuna Silver Mines Inc. (TSX:FVI) closed a $99 million offering underwritten by a syndicate led by Raymond James Ltd. on a bought deal basis.
  • Golden Star Resources Ltd. (TSX:GSC) closed a $5 million offering underwritten by a syndicate led by Clarus Securities Inc. on a bought deal basis.
  • Questerre Energy Corporation (TSX:QEC) closed a $33 million offering underwritten by a syndicate led by Pareto Securities AS on a best efforts basis.
  • Advantage Lithium Corp. (TSX-V:AAL) closed a $20 million offering underwritten by a syndicate led by Dundee Securities Ltd. on a best efforts

Company news

NuLegacy Gold (TSXV: NUG) C$0.28, Mkt Cap C$80.5 million

  • Reported an assay of 42.5m @ 0.56 g/t Au from core hole AV-4C at its Avocado gold orebody in Nevada that twinned the September 2016 reverse circulation (RC) discovery hole AV-2.
  • AV/4C included an interval of 5.1m @ 2.57 g/t Au proving Avocado's Carlin-type gold system's ability to produce high grades.
  • Stratigraphic analysis of AV-4C indicates the next drill holes should be drilled to the north and north-west of AV-2 and AV-4C in pursuit of the higher-grade source of gold encountered in AV-2 via an initial 10,000 ft. (five RC holes) drilling program.
  • Conclusions AV-4C was AV-2 which indicates that the gradient direction to drill is to west, north-west, which the company will target with its spring drilling campaign.

Conclusion: The promising Avocado discovery adds to the potential of Red Hill/Iceberg project in Nevada that are on trend from Barrick Gold’s Pipeline, Cortez and Goldrush gold deposits. NuLegacy’s chief geoscience officer Dr. Roger Steininger is credited with discovering Pipeline in 1989 and Iceberg in 2012.

 

Prospero Silver Corp. (TSXV: PSL) C$0.28, Mkt Cap C$2.5 million

  • Generative exploration program leads to five projects with plans to add two more soon.
  • Permitting work has been completed to bring the projects to drill-ready status.
  • The Santa Maria del Oro project in Durango and Pachuca SE project in Hildalgo are now drill-ready and drill permit and environmental approvals are imminent.
  • The El Petate project in Hidalgo now has 27 drill sites permitting and the company is in negotiations with the aim of securing a minimum drilling commitment for it.
  • Field work at the Bermudez project means it is drill-ready or ready to JV.
  • On the corporate side, 2.4 million warrants were exercised in the last quarter of 2016 and into early 2017, bringing C$275,657 into the company’s coffers.
  • Prospero has 30.57-million shares issued (46.5 million fully diluted) and cash is about C$1.47 million.

Conclusion: Prospect generator Prospero continues to generate new prospects in Mexico and advancing them to drill ready status but the key for the company will be finding funding partners to take them forward.