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April 16, 2019

7 @ 7:00

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1. Gold has traded between $1,273 and $1,288 so far today, touching a new 3-month low as equity markets continue to push higher…as of 7:00 am Pacific, bullion is off $12 an ounce at $1,275 with strong support in the $1,260’s…holdings of SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, dropped to their lowest yesterday since early November of last year…Silver is off 4 cents at $14.90…Copper and Nickel are steady at $2.93 and $5.88, respectively, while Zinc has slipped 4 pennies to $1.32…Cobalt prices remain above $16, near 3-month highs, another indication that China is turning the corner…Crude Oil has eased off 20 cents to $63.43 while the Dollar Index is up slightly at 96.99…the rally in global equities has further to go as more money jumps back into the market, BlackRock CEO Larry Fink said this morning on CNBC’s “Squawk Box”“We have a risk of a melt-up, not a meltdown here,” said Fink, the head of the largest asset manager in the world…“We have record amounts of money in cash. We still see outflows in retail in equities and in institutions”…China reports Q1 GDP tomorrow…the larger than expected rise in new loans and aggregate financing suggests that previous stimulus is now working its way through the system which should lead to improvement in real economic data over the coming months, giving the metals mark another boost…Albertans have a chance to take their province back today as they head to the polls in a critical election that’s expected to end 4 years of NDP rule that has led to higher taxes, deficits and debt, a landlocked Oil industry and empty offices in Calgary, with help of course from the likes of Trudeau and Horgan…

2. The Bank of Canada’s gauge of business sentiment, released yesterday, has turned negative for the first time in nearly 3 years…virtually all measures were weaker in the 1st quarter, including sales growth, spending plans and hiring intentions, with many key readings slipping below historical averages…the BOC said, “The main headwinds are a more uncertain outlook in the Western Canadian energy sector, continued weakness in housing-related activity in some regions and tangible impacts from global trade tensions”…the last time the survey was in negative territory was in the 3rd quarter of 2016…the findings strongly suggest the BOC will leave its key rate unchanged next week, and perhaps do nothing through the rest of the year…meanwhile, the Bank of Nova Scotia says the probability of a recession in Canada by next year is “small but rising”

3. The Dow is up 59 points through the first 30 minutes of trading…investors cheered strong earnings from UnitedHealth Group (UNH, NYSE) and Johnson & Johnson (JNJ, NYSE) while Bank of America (BAC, NYSE) beat analysts’ estimates for profit as it cut expenses more than expected and posted a 25% surge in earnings at its consumer banking division…in Toronto, the TSX has gained 21 points as of 7:00 am Pacific while the Venture is flat at 618…the Canadian Marijuana Index has rebounded 11 points to 611 after landing at support yesterday…Aurora Cannabis (ACB, TSX) is acquiring the balance of Hempco (HEMP, TSX-V) that it does not already own…Aurora will pay $1.04 per Hempco share, payable in shares of Aurora, reflecting a valuation of approximately $63.4 million on a fully diluted basis…Hempco provides Aurora with low-cost, high-volume access to raw material (hemp) for the extraction of CBD…Max Resource (MXR, TSX-V) is pushing higher after just announcing high-grade Gold and Platinum in surface sampling at its Choco Project in Colombia…PyroGenesis Canada (PYR, TSX-V) was halted pre-market, pending news…Niocorp (NB, TSX) is up modestly in early trading after releasing details of a new design for its Elk Creek superalloy materials project in southeastern Nebraska, plus an updated NI-43101 Feasibility Study…the results help to further de-risk Elk Creek for project financing…pre-tax NPV of $2.57 billion is 12% higher than in the previous FS while after-tax IRR goes from 21.7% to 25.8%…total upfront CAPEX for the project, however, has climbed to $1.14 billion, a 5.1% increase over the 2017 FS…exploration drilling by Osisko Mining (OSK, TSX) has discovered a strongly mineralized extension of the Lynx deposit at approximately 1,000 m vertical depth…DDH OSK-W-191857 has extended Lynx 100 m down plunge in an area outside the prior Windfall mineral resource estimate area…the new exploration hole intersected a wide zone of strong silica and sericite alteration (39 m width)…it contained sulphides with local Gold mineralization from 1,278 m to 1,317 m downhole featuring 3 separate intervals – 4.3 m @ 322 g/t Au, 2.8 m @ 13.6 g/t and 2.4 m @ 16 g/t…further step out drilling is in progress to pursue this depth extension which has seen no previous drilling…

4First Majestic Silver (FR, TSX), which has been in an uptrend since November, announced this morning that total production in Q1 2019 reached 6.3 million Silver equivalent ounces…this consisted of 3.3 million ounces of Silver, 32,037 ounces of Gold, 2.7 million pounds of lead and 1.3 million pounds of Zinc…Keith Neumeyer, President and CEO, commented, “We had a solid start to 2019.  Pure Silver production increased 2% to 3.3 million ounces as a result of higher grades at the San Dimas and La Encantada mines.  The commissioning progress of the new La Encantada roaster improved in the month of March but remained below throughput guidance for the full quarter.  Nevertheless, La Encantada recorded a significant 60% increase in Silver production in the quarter due to higher grades and tonnes processed.  Finally, we continue to expect our investments in new innovations such as high-intensity grinding and microbubbles to begin to bear fruit in the second half of 2019 with higher recoveries and production at the Santa Elena, La Encantada and La Parrilla operations”

5. Cannabis prices in Canada have soared since legalization with prices on the black market in some areas of the country now reportedly less than half that of licensed dispensaries…the average cost of a dried gram has rocketed since legalization last October, according to users who voluntarily entered what they paid into a Statistics Canada app., with the difference between legal and illegal prices even more dramatic…marijuana in regulated stores averages $9.99 per gram compared to less than $6.40 per gram on the black market, some 36% cheaper…“Seventy per cent of total cannabis that’s being consumed was purchased illegally, 30% was from legal sources,” said James Tebrake from Statistics Canada

6. National Access Cannabis (META, TSX-V) reported a net loss of $5.6 million in Q2 with its retail cannabis stores generating $15.9 million in revenue and adjusted EBITDA of $1.8 million…the stock is off 7 cents at 85 cents after 30 minutes of trading…the news follows Q2 losses announced yesterday by Aphria (APH, TSX) and Organigram (OGI, TSX-V)…“With 23 stores operating in 2 provinces, 7 applications underway in B.C. and a focused strategy for Ontario, we are poised to continue growing our leading footprint at a national level, while driving solid financial performance for our shareholders,” stated CEO Mark Goliger…“I am very proud of our team’s operational execution, which has resulted in our retail cannabis operating business unit generating consistently strong revenue growth and positive Adjusted EBITDA.  Our team is focused on accretively building our national retail footprint to 40 stores by the end of calendar 2019, while maximizing the same-store sales growth and contribution of individual store locations.  As the Canadian cannabis market finds its footing, we also expect supply issues to begin to abate, which will enable us to continue offering our customers the wide selection they are used to, while optimizing our working capital and adjusted EBITDA for the benefit of shareholders”

7. Gold play turned hemp play adds another chapter:  California Gold Mining (CGM, CSE) announced this morning that it has received a Letter of Intent (LOI) from Chicago-based industrial hemp cultivation consulting firm Delta Valley Logistics (DVL) for the purchase of the company’s entire production of feminized, high-CBD (cannabidiol) industrial hemp seeds in 2019 and 2020 from the first greenhouse projected to be built on the company’s 100%-owned Fremont Property in Mariposa County, California…specifically, the non-binding LOI makes clear DVL’s intention to purchase up to 5,000 pounds of seeds from California Gold during this period…the seeds shall be purchased at the prevailing wholesale market price at the time of harvest, less 5%…current wholesale seed value is estimated to range from $15,000 to $30,000 per pound…California Gold also says it has signed a comprehensive consulting agreement with DVL whereby DVL will conduct all operations related to the company’s industrial hemp seed cultivation project at Fremont…as part of the agreement, DVL and California Gold have mutually agreed to work with each other on an exclusive basis for the cultivation of industrial hemp seed, oil and fibre within the states of California, Oregon, Washington, Nevada and Arizona for the duration of the business relationship…

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1 Comment

  1. Ndp just got kicked big time in ab,not surprised, HORGAN your next!!

    Comment by Laddy — April 16, 2019 @ 8:31 pm

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