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February 19, 2020

7 @ 7:00

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1. Gold has traded between $1,601 and $1,612 so far today…as of 7:00 am Pacific the yellow metal is up $3 an ounce at $1,604Gold settled above $1,600 yesterday for the first time since April 2013…Silver has added cents to $18.22…both Gold and Silver have broken out technically on short-term charts and can be expected to push higher through month-end…meanwhile, Citi is now calling for $2,000 Gold over the next 12 to 24 months, a pretty safe bet…Gold should perform as a convex macro asset market hedge, resilient during ongoing risk market rallies but a better hedge during sell-offs and volume spikes,” Citi analysts commentedPalladium is up $75 an ounce at $2,591 after hitting significantly higher levels overnight…major breakout above key resistance at $2,350…Platinum has crossed the $1,000 ounce mark, gaining $11 to $1,001, while Rhodium has jumped another $300 an ounce to $10,800…Copper, Nickel and Zinc are off slightly at $2.59, $5.76 and 96 cents…Crude Oil has gained 72 cents to $52.77 while the U.S. Dollar Index is up another one-fifth of a point to 99.63…investors continue to seek safety in the greenback and U.S. equity markets thanks to the strong Trump economy…China’s central bank said today that the impact of the coronavirus on its economy will be limited as the epidemic has not changed the country’s economic fundamentals…The People’s Bank of China (PBOC) said it would help anti-virus efforts by extending credit, including by providing favorable loans or interest rates to companies involved in controlling the epidemic…in its 4th-quarter monetary policy implementation report, the bank added that it would also would keep the yuan stable and maintain its prudent monetary policy to ensure financial stability…China’s Communist Party’s National Health Commission today reported an additional 1,749 cases of the coronavirus nationwide, with 136 deaths…through yesterday, authorities say there had been a total of 74,185 confirmed cases and 2,004 cumulative deaths…British Columbia’s decline has started under the NDP (the province has seen this horror movie before)…yesterday, the government’s budget introduced a major tax increase on so-called “rich” British Columbians earning more than $220,000 a year…B.C. now has one of the highest income tax rates for entrepreneurs, professionals and business owners anywhere in North America – if you are successful and “rich”, B.C.’s socialist government will punish you by taxing the hell out of you…makes so much sense, doesn’t it?…

2. As court orders are burned on rail tracks by aboriginal anarchists and eco-terrorists, CN Rail has announced the layoffs of 450 workers at its operations in Eastern Canada after cancelling more than 400 trains in the past week over the ongoing rail blockades…that’s really just the tip of the iceberg as far as the broader economic impact is concerned across the nation…quite simply, Canada has become a dysfunctional country under “progressive” federal leadership – taxation without representation, in effect, because the feds are not representing taxpayers right now…the Montreal-based railway says the situation is “regrettable” because the impact on the economy and its employees from the protests is unrelated to CN’s activities and beyond its control…Conservative leader Andrew Scheer summed up the national protests accurately yesterday when he stated in the House of Commons, “Standing between our country and prosperity is a small group of radical activists, many of whom have little to no connection to First Nations communities, a bunch of radical activists who won’t rest ’till our Oil and gas industry is entirely shut down.  They are appropriating an Indigenous agenda which they are willfully misrepresenting”…not surprisingly, Scheer’s opinion is in stark contrast to that of Prime Minister Trudeau, who continues to call for “patience” and “dialogue” (how is that possible when you’re dealing with anarchists and eco-terrorists?) and his “progressive” NDP, Green and Bloc allies who are not standing up for the resource sector, Canadian workers, or specifically even the democratically elected First Nation groups who are 100% behind the Coastal GasLink pipeline…President Trump would never allow such a state of affairs in the United States  – all the more reason why capital will increasingly flow from Canada to the United States…Canadians will pay a very heavy price economically if this nonsense continues…

3. Azimut Exploration (AZM, TSX-V) is pushing higher after announcing this morning that it has arranged a non-brokered flow-through private placement in the amount of $6 million at a price of $2.45 per flow-through share…proceeds from the financing, supported by 1 strategic investor”, according to the company, will be used by Azimut to incur eligible Canadian exploration expenses with a focus on its 100%-owned Elmer Gold Property in northern Quebec…shareholders are anxiously waiting for CEO Jean-Marc Lulin and Azimut to publish IP results over the Elmer/Patwon discovery (3.1 g/t Au over 102 m, including 10.1 g/t Au over 20 m)…drill results announced January 14 were a game-changer for the company and tripled the stock price…follow-up drilling begins soon…AZM is up 17 cents at $1.64 as of 7:00 am Pacific…key resistance is $1.50

4. Alamos Gold (AGI, YSX; NYSE), which will release quarterly and yearly financial results following today’s close, has reported a major increase in reserves and mineral resources at its high-grade Island Gold mine in Northern Ontario…Proven and Probable reserves are now 1.22 million ounces (3.6 million tonnes grading 10.37 g/t Au), net of mining depletion, while Inferred resources have jumped 46% to 2.3 million ounces (5.4 million tonnes grading 13.26 g/t), with grades also increasing 13%, reflecting higher grade additions at Island East…combined mineral reserves and resources now total 3.7 million ounces, double the 1.84 million ounces at the time of acquisition in 2017, net of 364,000 ounces of mining depletion…“We had another tremendous year at Island Gold on all fronts, with the asset continuing to evolve into a world-class orebody,” stated John A. McCluskey, President and CEO.  “Over the past 2 years, we have added more than 2 million ounces of mineral reserves and resources, before mining depletion, with the deposit now approaching four million ounces in all categories. We see strong potential for this growth to continue with the deposit open laterally and down plunge across multiple areas of focus.  The majority of this growth is being incorporated into a Phase 3 expansion study of Island Gold, supporting what we expect will be a larger, increasingly profitable, long-life operation in one of the best mining jurisdictions in the world”AGI is off 11 cents at $8.33 in early trading…

5. More high-grade drill results from Wesdome Gold Mines (WDO, TSX), including 114.8 g/t over 10 m, as underground definition and exploration drilling continue at its 100%-owned Kiena mine complex in Val d’Or…7 underground drills are now in operation completing the infill and up and down plunge extension drilling of the Kiena Deep A Zone…this drilling continues to confirm the overall continuity of the geometry and the high-grade Gold mineralization of the A Zone and identify additional mineralization outside of the most recent resource estimate…recent drilling, including hole 6580 and its associated wedge holes, have extended mineralization in the A Zone an additional 100 m down plunge…it now extends for more than 830 m…a total of 40,850 m in 136 new drill holes have now been drilled since the latest resource estimate, which is expected to be updated later this year…hole 6580 returned 114.8 g/t Au over a 10-m core length (32.8 g/t cut over true width of 5.6 m)…other highlights from the Kiena Deep A Zone include 25.3 g/t over 17.2 m in hole 6580W1 (21 g/t cut over 11.6 m true width) and 86.5 g/t over 9.7 m in hole 6580W2 (31.7 g/t cut over 4.2 m true width)…meanwhile, the 79 level drift, consisting of 576 m of down ramp development and drill platforms, has now been completed and 2 drills have been mobilized to commence drilling of the potential up plunge extension of the A Zone…previous limited drilling into the up plunge area from 67 level returned a number of good intersections that require follow up…Duncan Middlemiss, President and CEO, commented, “We are extremely pleased with the recent infill drilling results from the Kiena Deep A Zone that continues to confirm the grade continuity and will be used to convert Inferred resources to Indicated resources in the updated resource estimate later this year.  The PEA study is ongoing and expected to be completed in Q2 2020; which will be based on the latest Kiena Mineral Resource Estimate from September 2019. Ongoing drilling of the A Zone continues to expand the size of this zone and is expected to grow the resource base”WDO is up 15 cents at $9.88 as of 7:00 am Pacific

6. The Dow has climbed 47 points through the first 30 minutes of trading…the S&P 500 and NASDAQ have hit new record highs…in Toronto, the TSX is up 30 points with the Gold Index steady at 270 after a big jump yesterday…the Venture is up 3 points at 580…key resistance is 585DynaCERT (DYA, TSX-V) is up 7 cents at $1.02 as it threatens to hit a new multi-year high…Canadian Palladium (BULL, CSE) is steady at 22 cents after a 4-cent jump yesterday…drilling at the company’s Palladium project near Sudbury could generate some buzz at PDAC…high-grade drill results last April from the Sunday Lake Project, including 9.1 g/t PGM over 15.8 m, more than doubled the share price of Transition Metals (XTM, TSX-V)…Palladium prices are now much higher and fresh results are due soon from drilling that started last month…the thickest and highest-grade intercepts yet from this property are possible given the significant new anomalies that were targeted…XTM, with only about 45 million shares outstanding, holds a 25% free-carried interest in the project, in addition to a 100% interest in multiple other PGE properties…XTM closed up half a penny at 18 cents yesterday with the rising 50-day SMA preparing to cross above the 200-day SMA at 17 cents in a classic “Golden Cross”…

7. First Majestic (FR, TSX; AG, NYSE) has reported record revenues of $363.9 million (U.S.) in 2019, a 21% increase from 2018, with adjusted net earnings coming in at $7.3 million (4 cents per share)…total production reached 25.6 million Silver equivalent ounces, a 15% increase over 2018, reaching the top end of the company’s 2019 guidance range of 24.4 million to 26.0 million ounces…Silver production reached 13.2 million ounces, a 13% increase over 2018, and inline with the company’s guidance range of 12.8 to 13.5 million ounces…FR generated a record $140 million (U.S.) of cash from operating activities, and mine operating earnings were $66.2 million (U.S.) compared to $11.9 million (U.S.) in 2018 primarily due to higher revenues, metal prices and lower cash costs…all-in sustaining costs of $12.64 (U.S.) per payable Silver ounce represented a 15% decrease compared to 2018, beating the 2019 guidance range of $12.98 to $13.94 per ounce…cash costs of $5.16 (U.S.) per payable Silver ounce was a 26% decrease compared to 2018, also beating guidance…the company achieved annual consolidated Silver recoveries of 86%, a new record, due to ongoing investments in metallurgical processing and innovation…First Majestic successfully commissioned the new 3,000 tpd high-intensity grinding (“HIG”) mill at Santa Elena, making it the only whole-ore, hard rock mining application of this technology in Latin America…the company also commenced earthwork and ramp development activities at Santa Elena’s Ermitano Project in advance of initial production scheduled for early 2021First Majestic ended 2019 with the highest cash balance in the company’s 18-year history (cash and cash equivalents of $169 million (U.S.), up from $57 million (U.S.) at the end of 2018) as the Silver bull market intensifies…FR is down 14 cents at $13.32 as of 7:00 am Pacific

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