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May 21, 2019

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has traded between $1,269 and $1,277 so far todayas of 7:00 am Pacific, the yellow metal is down $an ounce at $1,270 with the Dollar Index pushing past 98…Russia continues its accumulation of Gold, raising its holdings by 15.15 tonnes to 2,183.52 tonnes in April, according to data from the International Monetary Fund (IMF)…Kazakhstan and Turkey also bought Gold in April as bullion’s main source of demand support over the past year, central bank buying, remains strong…Silver is off 5 cents at $14.39…Copper, Nickel and Zinc are all flat at $2.72, $5.42 and $1.23, respectively…analysts expect China’s Zinc production to climb around 5% in May from April to above 560,000 tonnes as new capacity ramps up…a Reuters‘ survey published earlier this month shows analysts on average expect a global Zinc surplus of 20,000 tonnes this year after years of deficits…Cobalt remains steady at $15.76…WTI has retreated 16 cents to $62.94 while the U.S. Dollar Index has climbed more than one-tenth of a point to 98.10…Crude prices remain firm on continued U.S.-Iran tensions and as major producers, including Saudi Arabia, signaled they may maintain production cuts until the end of this year…Iran has recently quadrupled its Uranium production, a spokesperson for the nation’s atomic energy agency admitted yesterday, a provocative step that threatens to further inflame simmering tensions with the United States and deepen regional conflict following a series of dangerous escalations in the Middle East…Helima Craft, global head of commodity strategy at RBC Capital Markets who’s an expert in this region of the world, stated, “We are woefully under-appreciating the seriousness of this crisis”…Singapore, seen as a bellwether for the health of the global economy, has posted its lowest quarterly growth in nearly a decade of 1.2% year-on-year…

2. Worries that the United States and China were digging in for a longer, costlier trade war weighed on financial markets yesterday as Beijing accused Washington of harboring “extravagant expectations” for a deal to end their dispute…last night, however, the U.S. government temporarily eased some trade restrictions imposed on China’s Huawei Technologies last week…the U.S. Commerce Department said it would allow Huawei to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets until August 19…the Chinese company is still prohibited from buying American-made hardware and software to make new products without further, hard-to-obtain licenses…the reprieve is intended to give telecom operators that rely on Huawei equipment time to make other arrangements, U.S. Secretary of Commerce Wilbur Ross said in a statement yesterday…“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross said…Huawei founder Ren Zhengfei today said in a series of interviews with Chinese state media that the reprieve bore little meaning for the telecom gear maker as it had been making preparations for such a scenario…“The U.S. government’s actions at the moment underestimate our capabilities,” Zhengfei  declared…

3. Zambia plans to strip Vedanta-controlled Konkola Copper Mines (KCM) of its mining license and potentially nationalize the operation, in a move likely to stoke international miners’ concerns about rising government intervention in the sector…Zambian President Edgar Lungu announced the plan yesterday, which his spokesman said followed a number of breaches of the terms of the license, without giving details…Zambia, Africa’s 2nd-biggest Copper producer, has also proposed tax changes that Lungu says he will push through, despite opposition from international miners which say they will deter investment that Zambia desperately needs…some miners have already reduced or threatened to cut output, although First Quantum (FM, TSX) said it had abandoned plans to lay off workers…union leaders yesterday called on Glencore (GLNCY, NASDAQ; GLEN, LON) to reverse its decision to close 2 shafts…“We are not shaken in our resolve to divorce (from some companies), starting with KCM, and we have filed that notification,” Lungu said on Zambia National Broadcasting Corporation radio…the plan mirrors moves in other parts of Africa, where countries are trying to secure greater benefits from natural resources being managed by foreign companies…foreign-owned Copper mines account for 95% of Zambia’s export income and half of its government revenues…

4. 48North (NRTH, TSX-V) lost $1.47 million in its fiscal 2019 3rd quarter ending March 31 but remained EBITDA positive for the 3rd consecutive quarter…EBITDA for the 9 months ended March 31, 2019 was $696,000 compared to ($4,429,000) for the comparative period in 2018…Q3 revenues totaled $689,000 (down from Q2) with 9-month revenues totalling $4.3 million…quarterly revenues faced a stark decline on a quarter over quarter basis, falling to just $689,000 for Q3 compared to $2.39 million in revenues that were posted in Q2…the decline is justified by the previous uncertainty associated with the firm’s outdoor cultivation license application, which was granted by Health Canada on Friday (Good Farm will be one of the largest-ever licensed cannabis operations in the world)…co-CEO Alison Gordon stated, 48North successfully achieved all of the milestones it targeted in Q3 and is therefore well on its way accomplishing its goal of delivering next-generation products for fall 2019.  This included receiving its outdoor cultivation licence from Health Canada for its Good Farm”the company’s cash on hand after Q3 jumped to $58 million following the closing of a $28.75 million financing and the addition of $13.6 million from the acceleration of warrants…48North is poised to produce over 40,000 kilograms of outdoor-grown organic cannabis this year, at what is expected to be the lowest-cost per gram in Canada…NRTH is up 22 cents at $1.23 through the first 30 minutes of trading as it threatens to break out of a short-term bullish downsloping channel…

5. After a period of very weak growth, Canada’s GDP is expected to rebound to about 2% in the 2nd half of 2019, according to a report released this morning by the Organization For Economic Cooperation And Development (OECD)…however, that’s still well below Canada’s potential and the growth rate in the United States…“Exports will strengthen in response to an easing in Alberta’s mandatory Oil production cuts and higher export market growth,” said the OECD“Business investment will rise as firms move to increase capacity and productivity and in response to new tax incentives.  Employment growth is on course to slow, but the unemployment rate should remain near record lows”…the OECD, which had downgraded its economic projections in March, also lowered its 2019 global GDP forecast to 3.2% from 3.3%…

6. The Dow is up 118 points as of 7:00 am Pacific…for all its drama since early last year and the high perceived stakes, the U.S.-China trade battle has not been able to hold the equity markets hostage for long stretches of time…the onrushing recession feared in December is not in evidence; the Fed has backed away from rate hike plans; corporate earnings arrived better than forecast; and U.S. consumer sentiment is at a 15-year high…in Toronto, the TSX is down 26 points in early trading…Collision Conference, the high-profile tech conference, kicks off in earnest today in Toronto…the Venture is up another 3 points at 612…the Index has pushed above its 10 and 20-day moving averages for the first time in more than a month, while the 50-day is flattening out after a brief decline – it all points toward a more robust market to finish off Q2 and moving into the summer when key exploration programs heat up on multiple fronts…nearest Fib. resistance is 613Organigram Holdings (OGI, TSX-V) hit a new high of $11.30 in early trading, a penny above measured Fib. resistance on our OGI chart…expect a pullback from this new high…latest drill results released this morning by Amex Exploration (AMX, TSX-V) from its Perron Project near Rouyn-Noranda are highlighted by 8.5 m @ 31 g/t Au, including 0.70 m @ 317.5 g/t and 0.60 m @ 65.4 g/t (PE-1945), in the High Grade Zone (HGZ) at a vertical depth of 125 m…drill hole PE-1943 intercepted 9.1 m of 2.3 g/t Au including 0.80 m of 23.7 g/t at a vertical depth of 350 m (core lengths)…First Cobalt (FCC, TSX-V) was halted pre-market, pending news…the best acquisition First Cobalt could have made in the last couple of years (too late now) was Canada Cobalt (CCW, TSX-V) with underground access at the Castle mine and a game-changing technology that has made it the first junior in the Cobalt space to generate revenue…

7. Rob McEwen told Kitco News on the sidelines of the Hard Assets Conference that, historically, timing points to a bull market in Gold stocks that we have yet to see fully play out…“In the last 77 years there’s been 8 bear markets in Gold equities and the last one we were in was the deepest and longest of all the bear markets in the last 77 years.  In the same period there’s been 6 bull markets and the average gain is 540%;  we’re in the 7th bull market right now, we’re only up 170% from the beginning of 2016, so there’s probably a double, if not a triple from here,” he said…for contrarian investors, McEwen added that now would be a good time to enter the market that he sees as having “low downside and much greater upside than the broad market”…on Copper, McEwen said that the electric vehicle revolution is already here, meaning higher demand for the base metal will surely follow…Tesla pioneered the game, now all the car manufacturers in the world are building electric vehicles.  China sold last year twice as many vehicles that were electric than Tesla sold worldwide, so we’re going to see big demand,” he pointed out, adding that a typical electric car contains 180 pounds of Copper…

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  1. Sell berg at $0.085 on GEMC

    Comment by flyinthruu — May 21, 2019 @ 10:38 am

  2. If Battery wants to produce fast and Glencore is willing to work with First Cobalt, they better get a move on it and make a deal with CCW.

    Comment by flyinthruu — May 21, 2019 @ 12:05 pm

  3. That’s good, actually, flyinthru…and I suspect it’s a non-North American investor with no clue what’s unfolding in Nevada…

    Comment by Jon - BMR — May 21, 2019 @ 12:55 pm

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