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October 11, 2019

7 @ 7:00

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

1. Gold has traded between $1,479 and $1,504 so far todayas of 7:00 am Pacific, bullion is off $13 an ounce at $1,481 as some optimism returns to U.S.-China trade talks…Silver is steady at $17.46 while base metals are all pushing higher…Nickel has jumped 11 cents to $8.15…Copper is up 2 pennies at $2.62 while Zinc, enjoying a good week, has added another 2 cents to $1.11…Cobalt has climbed 34 cents to $15.76…Oil prices are firmer today after an Iranian tanker near the Saudi Arabian coast suffered damage in what the ship’s owner suggested may have been a missile attack…Brent Crude, the global benchmark, and WTI both jumped by as much as about 2% with WTI currently up 65 cents (1.2%) to $54.20…the National Iranian Tanker Co., which owns the Oil tanker Sabiti, said the vessel was 60 miles from the Saudi Arabian port of Jeddah, when it was likely hit by missiles that damaged its main tanks…the incident is the latest flashpoint in the Middle East amid heightened tensions just under a month after Washington and Riyadh accused Tehran of being behind attacks on Saudi Oil-processing facilities at Abqaiq and Khurais that drastically cut the nation’s output…Canada’s private sector keeps bleeding, shedding 21,000 jobs last month…overall, the economy added 54,000 jobs but most of those came from the public sector (health care)…growing the size of government is not the way to grow the economy…on the U.S. data front, the University of Michigan’s consumer sentiment index came in at 96 for October, nicely topping the consensus estimate of 92…the American consumer remains strong and that’s going to keep driving the U.S. economy…

2. The U.S. and China appear close to a limited trade deal, according to media reports this morning, leaving more controversial issues for later negotiations…the trade talks, which President Trump in a news conference yesterday said were “going really well”, extended into the 2nd day this morning…a slew of reports overnight suggest that the world’s 2 largest economies could agree to a partial agreement on issues such as currency and agriculture buying, and it could also include a delay in the tariff hike scheduled for next week…day 2 of the talks now includes a key meeting betwen Trump and Chinese Vice Premier Liu He, which is scheduled to take place at 2:45 pm ET…the additional meeting renewed hopes for positive trade progress as past meetings between the 2 have yielded a delay in tariffs and agriculture buying…

3. How high of a carbon tax do you want to pay to “save the planet”?…even if Canadian federal and provincial governments increase their carbon taxes to $75 (U.S.) a tonne, they will fall far short of reaching greenhouse gas emission targets, according to a new report by the International Monetary Fund…countries that rely more on Coal than Canada will see a greater impact from carbon taxes on their emission levels because the monetary bite will be deeper, the IMF says…some would see a $75 (U.S.) a ton carbon tax balloon Coal prices by 200% by 2030, the report released today showed…“Whereas a $25 (U.S.) a ton price would be more than enough for some countries (for example, China, India, and Russia) to meet their Paris Agreement pledges, in other cases (for example, Australia and Canada) even the $75 (U.S.) a ton carbon tax falls short,” the Washington, D.C.-based lender said…“Emissions are more responsive to pricing in Coal-reliant countries such as China, India, and South Africa than in other countries”

4. Canada Cobalt (CCW, TSX-V), the world’s top-performing Cobalt stock the past 2 years, has inked a transformational deal that will further unlock the power of its proprietary and environmentally friendly Re-2OX process for Cobalt and other metal extraction while also giving the company multiple near-term revenue streams through the acquisition of the Northern Ontario Silver-Cobalt District’s only permitted and fully operating analytical lab and mineral processing facility in the town of Cobalt…the deal, very non-dilutive and strategically timed, unquestionably makes CCW the undisputed vertically integrated leader in Canada’s Silver-Cobalt heartland at a time when Silver is in the early stages of what’s likely going to be a record run…Re-2OX will be integrated into the 23,400 sq. foot facility which currently features 4 main profit centres – 1) Bullion pouring; 2) Bulk sampling; 3) Commercial assaying; 4) E-waste (on the e-waste front, where high-grade Gold and other metals are recovered, investors would be wise to check out how well MWX and ETI have been performing)…the PolyMet operational team, led by majority owner Gino Chitaroni, will be kept in place and incentivized…minor facility upgrades combined with an aggressive sales strategy are expected to help achieve a significant ramp-up in growth and profitability…a  high capacity bullion furnace can pour up to 10 Silver dore bars (90% to 95% fine) of 1,000 ounces each in an 8-hour shift, a feature that’s ideal for a company that has an underground Silver-Cobalt mine just a 1-hour drive down the highway…CCW is up a penny-and-a-half at 33.5 cents as of 7:00 am Pacific…the chart shows a continuation of a strong new uptrend and a breakout above key resistance at 33 cents…

5. The Dow is on track to snap a 3-week losing skid, up 363 points as of 7:00 am Pacific while the TSX has gained 58 points…the U.S. stock market continues to outperform the Canadian market handily…notably, over the past 10 years, the S&P 500 has delivered a total return (with dividends) of 238%, or more than 2.5 x times the 92% return for the S&P/TSX Composite Index over the same period…the Venture, hurt yesterday by plunging cannabis stocks, is off slightly at 542 as it trades at a 2019 low…high-grade Gold play MacDonald Mines (BMK, TSX-V) has been ignoring the Venture weakness, hitting its best levels in more than 2 years in recent sessions, while Giga Metals (GIGA, TSX-V), a Northern B.C. low-grade but high tonnage Nickel play, is trading in the mid-40’s near a 2-year high…

6. Discovery Metals (DSV, TSX-V) is raising $17 million through the issuance of common shares and subscription receipts at a price of 45 cents…Eric Sprott has agreed to invest $5 million in the private placement, maintaining his 19.9% interest in Discovery following the issuance of common shares…the balance of Sprott’s investment will be completed with the purchase of subscription receipts, which, if converted, will increase his interest in the company to approximately 22%, assuming the private placement is fully subscribed…Taj Singh, President and CEO, commented, “We are excited to have substantially expanded our European investor base as we transition into our next phase of growth.  We are also very appreciative of the continued support of Mr. Sprott and are pleased that he has significantly increased his ownership in Discovery. These investments ensure we are well funded to pursue exploration plans for our Cordero silver project and also for our Coahuila Silver-Zinc-Lead projects.  For Discovery shareholders, this private placement is a strong endorsement of our future business plans”

7. More pain for the cannabis sector:  Hexo (HEXO, TSX) reported yesterday that it expects 4th quarter sales to be much lower than previously estimated…the stock plunged $1.12 to close at $3.76 and is off slightly in early trading today…Hexo expects to sell about $15.5 million worth of product in the quarter ending July 31, 40% less than previously forecast…as recently as June, it predicted $26 million in sales…Hexo also withdrew its previously predicted $400 million sales forecast for next year and did not provide a new estimate…CEO Sebastien St-Louis blamed the bleak sales forecast on a number of macro headwinds, including “slower than expected store rollouts, a delay in government approval for cannabis derivative products and early signs of pricing pressure”…Hexo’s warning had a negative impact across the entire sector…Canopy Growth, Aurora Cannabis and Aphria shares were all down sharply…Hexo is the latest Canadian cannabis company to blindside investors in the past few months…in August, Canopy posted a significantly bigger loss than expected in its latest quarter and pushed out the timeline to achieve profitability…

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  1. Partial deal with China….pressure on the metals for awhile?

    Comment by Jean — October 11, 2019 @ 12:13 pm

  2. Jon…just curious if shipping the high grade gravity concentrate from GGM (as discussed in April) to the
    Polymet facility to pour gold would be a possibility, or am I thinking too far ahead? This is in follow-up
    to Marc’s question and your reply…thanks

    Comment by bob — October 12, 2019 @ 9:01 am

  3. Jon…just curious if shipping the high grade gravity concentrate from GGM (as discussed in April) to the
    Polymet facility to pour gold would be a possibility, or am I thinking too far ahead? This is in follow-up
    to Marc’s question and your reply…thanks

    Comment by bob — October 12, 2019 @ 9:07 am

  4. Yes, Bob, possible to pour some Gold bars from that at PolyMet.

    Comment by Jon - BMR — October 13, 2019 @ 6:15 am

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