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November 7, 2019

7 @ 7:00

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

1. Gold has traded between $1,493 and $1,480 so far today…as of 7:00 am Pacific, the yellow metal is off $6 an ounce to $1,484…Silver is 6 cents lower at $17.53…Copper has added 3 pennies to 2.69…Copper prices have gained more than 4% in the past month, thanks to a better tone in U.S.-China trade relations…hedge funds and other speculative investors are the least bearish they have been on Copper since April, according to data from the U.S. Commodity Futures Trading Commission…Nickel is off slightly at $7.41…Indonesia will decide on Monday whether to resume Nickel ore exports after halting shipments to investigate reports of export rule violations, Indonesia Investment Board chief Bahlil Lahadalia said today…the government ordered a temporary halt to exports of Nickel ore on October 28 following reports that exports had surged after Indonesia confirmed that an export ban will be implemented from January 2020, bringing it forward from 2022…the recent export surge reportedly included large sales of high-grade Nickel ore from Indonesia, which only allows exports of ore with less than 1.7% Nickel content…Zinc and Cobalt are both flat at $1.16 and $16.10, respectively…Crude Oil has jumped 98 cents to $57.33 while the U.S. Dollar Index is unchanged at 98.00…the Bank of England held interest rates steady today, opting not to adjust borrowing costs in the world’s 5th-largest economy ahead of a snap election…the EU slashed its growth forecasts for the euro zone today, blaming global trade tensions for limiting economic expansion…the warning from the EU’s executive arm, the European Commission, comes at time when the ECB has started a new round of stimulus to prop up fragile growth…“The fact that growth is no longer expected to rebound meaningfully in the next 2 years is a major shift compared to previous forecasts and is based on the assessment that many features of the global slowdown will be persistent,” the European Commission said this morning in its Autumn Economic Forecasts report…“Most importantly, the surge in trade tensions and record-high uncertainty about trade policies is likely to have inflicted lasting damage to world trade,” the Commission added…what they’re not willing to admit is the need for much more sensible and growth-oriented fiscal policies in the euro zone, but that would mean abandoning anti-growth socialist models..

2. U.S. stock futures turned higher overnight after China said the world’s 2 largest economies had agreed to remove existing trade tariffs…Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster…the ministry spokesperson said that both sides were closer to a so-called “Phase 1” trade agreement following constructive negotiations over the past 2 weeks…one important condition for a limited trade agreement, Feng insisted, was that the U.S. and China must remove the same amount of charges at the same time…it comes after reports that a meeting between President Trump and Chinese President Xi Jinping could be postponed until December – delaying a chance for the 2 leaders to sign an interim trade deal…market participants had expected the 2 economic giants to sign a deal later this month, after both Washington and Beijing spoke of progress in talks late last week…

3. Jurisdictional risk – that’s one of the biggest concerns of investors right now, and this horrific incident underscores that point: An attack on employees of Quebec Gold producer Semafo (SMF, TSX) in Burkina Faso has left at least 37 people dead and dozens injured…the attack occurred about 40 km from the Boungou mine – one of the 2 sites operated by the company in the West African country – when a convoy of 5 buses carrying mine employees and accompanied by a military escort was ambushed by Islamic extremists…the military vehicle ahead was reported to have struck an explosive device…the rest of the convoy was then shot in what is believed to be the deadliest attack since Islamic extremists became active in the country in 2015Semafo said in a statement that the Boungou mine site “remains safe and our operations have not been affected…We are working actively with all concerned authorities to ensure the health and safety of our employees, contractors and suppliers”

4. One of the best places in the world to be for an exploration or mining company is the Eskay CampSkeena Resources (SKE, TSX-V) has released a robust Preliminary Economic Assessment this morning for its Eskay Creek Gold-Silver Project, taking advantage of existing infrastructure from the past producing mine…the PEA envisions a high-grade open-pit averaging 3.23 g/t Au, 78 g/t Ag (4.17 g/t AuEq, diluted)…after-tax NPV(5%) is $491 million (U.S.) with a 51% IRR and 1.2-year payback period…life-of-mine average annual production is estimated at 236,000 oz Au and 5.8 million oz Ag at a CAPEX of $233 million (U.S.)…the open-pit operation would feature a 6,850-tonne per day mill and flotation plant producing saleable concentrate…Skeena CEO Walter Coles commented, “Eskay Creek was a remarkable discovery that became an extraordinary underground mine in 1994 and produced until 2008.  This PEA demonstrates that Eskay Creek still has a bright future ahead, revitalized as an open-pit Gold and Silver mine, with the additional possibility for underground mining.  The project has the potential to produce an average of 306,000 Gold-equivalent ounces per year with a diluted mill feed grade of 4.17 g/t Gold-equivalent.  Also, as a brownfield site, Eskay Creek benefits from tremendous infrastructure installed by the previous operators.  Finally, by creating a Gold concentrate rather than doré, we are able to keep initial capital costs very low, at $233 million (U.S.), relative to the amount of precious metals produced; this also simplifies and reduces technical risks for the project”SKE is up 4 cents at 60 cents through the first 30 minutes of trading…

5. A fabulous 3rd quarter for the Apple of Gold stocks, Kirkland Lake Gold (KL, TSX; KL, NYSE)…KL reported net earnings of $176.6 million (U.S.) or 84 cents per basic share…net earnings tripled from $55.9 million, or 27 cents per share, in the 3rd quarter of 2018 and were 69% higher than this year’s previous quarter…Tony Makuch, President and CEO, commented:  “Q3 2019 was our best quarter to date driven by exceptional results at Fosterville and a solid quarter of performance at Macassa.  At Fosterville, production increased by almost 70,000 ounces from Q3 2018 largely reflecting a 75% improvement in the average grade, to 41.8 g/t.  Grades of this level are rarely seen in our industry and resulted from the ramp up in production of the high-grade Swan Zone.  We mined our first Swan stope during last year’s 3rd quarter, which contributed about 7,500 ounces of production.  We have ramped up production since then and, in Q3 2019, mined 11 Swan Zone stopes, which contributed about 94% of the 158,327 ounces produced for the quarter. Substantially higher grades resulted in further improvement in unit costs which, combined with rising Gold prices, led to significant margin expansion at Fosterville during the quarter.  Turning to Macassa, the mine had a strong quarter in Q3 2019 with tonnes processed increasing 18% and the average grade improving to 23.3 g/t from 21.5 g/t in Q2 2019.  We expect Fosterville and Macassa to finish 2019 with strong 4th quarters, which will position both mines to easily achieve their full-year 2019 production guidance.  At the Holt Complex, we have lowered our production guidance for full-year 2019 based on results to date and are now assessing a future strategy for this operation”

6. The Dow, continuing to make new record highs, is up 214 points as of 7:00 am Pacific…in Toronto, the TSX has added 77 points…Canadian Tire (CTC, TSX) is off marginally after an earnings miss, though $227.7 million for Q3 and an increase in the dividend is not too shabby…Barrick Gold (ABX, TSX; GOLD, NYSE) reported strong Q3 results yesterday, beating quarterly profit estimates and raising its dividend payout on higher production and improved Gold prices…B2Gold (BTO, TSX; BTG, NYSE) reported record quarterly consolidated Gold production of 258,200 ounces…Q3 net earnings were $65.6 million (U.S.)…the company has also declared its first dividend of 1 cent per share beginning in Q4 (4 cents per share on an annualized basis)…Silver producer First Majestic (FR, TSX; AG, NYSE) posted net earnings of $8.6 million (U.S.) in Q3, up 46% compared to the same period last year…AISC were reduced by 29% to $10.76 per payable Silver ounce compared to $15.12 per ounce in Q3 2018…the Venture is off 1 point at 538 in early trading…Canada Cobalt (CCW, TSX-V), the pacesetter in the Northern Ontario Silver-Cobalt Camp, has added another 2 cents to 39 cents as of 7:00 am Pacific as it closes in on a fresh 8-month high…yesterday it set a new all-time single session volume record with 3.8 million shares changing hands…Wallbridge Mining (WM, TSX) has retreated 2 cents to 69 cents while neighbor Balmoral Resources (BAR, TSX) remains unchanged at the key 24-cent level…Bee Vectoring Technologies (BEE, TSX-V), after a strong session on news yesterday, has eased off a couple of pennies to 49 cents…BEE has signed 2 new grower deals in the blueberry market as it progresses in the commercial phase of operations…

7. China has officially launched research and development work for 6G mobile networks, having only just rolled out 5G…the Ministry of Science and Technology said in a statement posted today that it will set up 2 working groups to carry out the task…1 group will consist of relevant government departments responsible for promoting how 6G research and development will be carried out…the other team will be made up of 37 universities, research institutes and enterprises, which will lay out the technical side of 6G and offer advice…5G refers to next-generation mobile networks that offer super-fast data speeds that promise to support technologies like driverless cars and virtual reality…China turned on its 5G networks earlier this month ahead of an initial 2020 schedule…5G is still in its infancy as most people around the world are still on 4G networks…

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  1. I thought a really good consolidation day today for CCW, volume really good again as there was 851K on all exchanges. What’s interesting is that only 361K of that traded on the venture, not sure if that’s good or bad (probably neither) just interesting that the alternative exchanges are becoming a lot more popular. I think we move higher once the PP is closed, hopefully that’s soon.

    Comment by Danny — November 7, 2019 @ 2:52 pm

  2. Silver getting slaughtered…certainly didn’t expect the chart to turn this way…

    Comment by Jean — November 8, 2019 @ 5:21 am

  3. Changes nothing about the primary Silver trend, Jean, just a screaming buy more than ever…what’s key is the breakout above the long-term downtrend line, so this noise the last 2 days means squat in the big scheme of things…strong support around the $17 level and also just below it…the action we’ve seen this week is also the kind of action that can precede (by days or weeks) a massive new move to the upside…

    Comment by Jon - BMR — November 8, 2019 @ 5:56 am

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