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July 30, 2020

7 @ 7:00

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1. Spot Gold has traded between $1,943 and $1,968 so far todayas of 7:00 am Pacific, Gold has retreated $17 an ounce to $1,954…Silver has corrected 86 cents to $23.43…as expected, Federal Reserve officials left their benchmark interest rate unchanged near zero yesterday and again vowed to use all their tools to support the U.S. economy amid a shaky recovery from the Wuhan COVID-19 pandemic…Jerome Powell said the Fed does not see inflation on the horizon yet, as some in the markets are predicting…“Fundamentally, this is a disinflationary shock. There’s a lot of discussion over how this might lead to inflation over time,” he added…“We see core inflation dropping to 1%. I do think for some time we’re going to be struggling against disinflationary pressures rather than inflationary pressures”on the base metal front, Copper and Nickel are off slightly at $2.91 and $6.20, respectively, while Zinc is steady at $1.02…Crude Oil has slipped to $40.22 while the U.S. Dollar Index has fallen another one-fifth of a point to 93.27…a surge in virus infections since mid-June appears to be slowing the recovery in some American states, according to private sector real-time data…JPMorgan’s tracker of credit and debit card transactions, for instance, shows that spending rose in May and early June before stalling and remained flat through last week…data by Facteus, which tracks transactions by 15 million debit and credit card holders, also suggest restaurant spending was increasing in June and has largely flattened since…the U.S. Census Bureau also said in its latest weekly Household Pulse Survey that 51.1% of households experienced a loss of employment income in the week ended July 21, up from 48.3% 4 weeks ago…meanwhile, the number of Americans who filed for unemployment benefits last week was roughly in line with expectations…weekly jobless claims for the week ending July 25 came in at 1.434 million…this marks the 2nd consecutive week in which initial claims have climbed after declining for 15 straight weeks…it’s also the 19th straight week in which initial claims have exceeded 1 million…this might be a good sign – beer sales are bouncing back, according to the world’s largest brewer…Anheuser-Busch InBev (BUD, NYSE) reported this morning that its global sales volume picked up in June after 3 months of declines…on a sad note this morning, Herman Cain, the former Republican Presidential candidate and affable business magnate, died today after being hospitalized for COVID-19…Cain, who was 74, first went to an Atlanta hospital for treatment on July 1

2. The U.S. economy saw the biggest plunge in activity it has ever known in the 2nd quarter, though it wasn’t quite as bad as most had feared…GDP from April to June plunged 32.9% on an annualized basis, according to the Commerce Department’s first reading on the data released this morning…economists surveyed by Dow Jones had been looking for an annualized drop of 34.7%…sharp contractions in personal consumption, exports, inventories, investment and spending by state and local governments all converged to bring down GDP…however, personal income soared, thanks in large part to government transfer payments associated with the pandemic…this has certainly helped with the stock market recovery…current-dollar personal income rose more than 6-fold to $1.39 trillion, while disposable personal income shot up 42.1% to $1.53 trillion…despite the rise, personal outlays tumbled by $1.57 trillion, due in large part to a drop in services spending…

3. Kirkland Lake Gold (KL, TSX; NYSE) has posted Q2 net earnings of $150.2 million or 54 cents per share (all figures in U.S. dollars)…adjusted net earnings were $219.3 million (79 cents per share), double the Q2 2019 level of $109.8 million and 22% higher than $179.2 million the previous quarter…revenue more than doubled in Q2 vs. the same period last year ($581 million vs. $281.3 million) on Gold sales of 341,390 ounces, a 61% increase from 212,091 ounces in Q1 2019 and similar to 344,586 ounces in Q1 this year…excluding the impact of $132.6 million tax payment made in Australia in Q2 2020 as final tax instalment for 2019 tax year, net cash provided by operating activities in Q2 totalled $354.8 million, with free cash flow of $226.7 million…Detour Lake generated $89 million of free cash flow in Q2 2020 (excluding transaction and restructuring costs related to acquisition)…as of June 30, KL had $537.4 million in the bank with no debt…Tony Makuch, President and CEO, commented: “We achieved solid results in Q2 2020 despite significant disruptions related to COVID-19. Compared to last year’s 2nd quarter, production increased 54%, our adjusted net earnings doubled and we generated strong free cash flow. Once again, Fosterville was a key driver of our results, increasing production by 10% year over year and generating AISC of $273 per ounce. With year-to-date production of 314,970 ounces, Fosterville entered the second half of the year well positioned to achieve its full-year 2020 guidance of 590,000610,000 ounces. Detour Lake is already making a significant contribution to our performance and to value creation. The mine generated $89 million of free cash flow in Q2 2020, and $167 million from January 31, 2020 to June 30, 2020. We are expecting even better results from Detour Lake in the 2nd half of the year, with the workforce back to pre-COVID levels and mining rates ramping up, which should lead to improved grades. Detour Lake’s performance has already exceeded our expectations and with the current Gold price environment, the timing of the Detour Gold transaction could not have been better. At Macassa, there was a significant impact in YTD 2020 from the move to reduced operations and our COVID-19 protocols. Having said that, as with Detour Lake, workforce levels at Macassa are now back to normal levels and we are positioned for stronger results in the 2nd half of 2020, from both higher tonnes processed and improved average grades”KL is bucking the weakness in the Gold space this morning, up 61 cents at $67.75 as of 7:00 am Pacific

4. The Dow has lost 533 points through the first 30 minutes of trading…Apple, Amazon, Alphabet and Facebook, representing nearly $5 trillion in market capitalization, are all set to report quarterly earnings after the bell today…Facebook and Alphabet are both up more than 13% in 2020Amazon has surged 64% in that time and Apple is up 29.5% this year…Newmont (NGT, TSX; NEM, NYSE), the world’s biggest Gold miner, says higher Gold prices helped generate significant fresh cash flow in the 2nd quarter…net earnings for Q2 were $412 million (U.S.) or 51 cents per diluted share, an increase of $411 million from the 2nd quarter of 2019Newmont produced 1.4 million attributable ounces of Gold at an all-in-sustaning cost of $1,097 per ounce in Q2, generating $388 million (U.S.) of free cash flow…results were in line with expectations…in Toronto, the TSX has shed 230 points while the Venture has slipped 7 points to 704Sona Nanotech (SONA, CSE) has jumped $1.25 a share to $14.10 as the company closes in on potential FDA approval within days for its COVID-19 Rapid Response Test…a strong 3rd party endorsement of the test came yesterday in disclosure from authorities in Saudi Arabia, a key G-20 country that’s expected to be a major buyer of what may quickly become just the 3rd antigen-based COVID-19 test approved by the FDA…operational challenges at the mine level are knocking back Superior Gold (SGI, TSX-V), despite recent positive exploration results…SGI is taking a hit in early trading after the company lowered production guidance for 2020 and essentially put itself on the block…Superior announced that founder Christopher Bradbrook is stepping step down as President and CEO…he will tender his resignation as a director…Tamara Brown, an independent director of the company since 2017 with more than 2 decades of mining industry and capital markets experience, will assume the role of Interim CEO, effective at the close of business tomorrow…the company has established a Special Committee to launch a strategic review process to explore and evaluate a broad range of potential alternatives focused on maximizing shareholder value, including but not limited to a potential sale or merger of the company…

5. Benchmark Metals (BNCH, TSX-X) reported this morning that it has received support from the Tsay Keh Dene Nation, Kwadacha Nation and Takla Nation to advance its flagship Lawyers Gold-Silver project in north-central British Columbia…CEO John Williamson commented: Benchmark has completed agreements with all first nations in the region, we are very pleased to be working co-operatively, clearly demonstrating the capability and strength of support from our partner nations. It shows what can be done when companies and indigenous groups build relationships and work together. These supportive relationships bode well for continued success to advance the Lawyers Gold-Silver Project along the permitting path for a mining decision. Benchmark is rapidly advancing the project with near-term drill results and milestone events in the context of a surging Gold sector”…Johnny Pierre, Tsay Kev Dene Nation Chief, stated: Benchmark has shown itself to be a company we can work with. This partnership can provide real opportunities and benefits for our communities while still ensuring our aboriginal rights and environmental concerns are respected”…BNCH is off a penny at 96 cents in early trading…

6. Strong 2nd quarter for Copper Mountain Mining (CMMC, TSX) as the company exceeded its revised operating plan announced in mid-March with quarterly production of 23.9 million pounds of Copper equivalent comprising 18.1 million pounds of Copper, 7,499 ounces of Gold and 86,126 ounces of Silver…CMMC reduced cash cost per pound significantly in Q2 to $1.48 (U.S.) from $1.74 in the same period a year ago…all-in-costs in the most recent quarter were $1.67 (U.S.) a pound compared to $2.35 a pound in Q2 2019…revenue jumped to $91 million (CDN) while earnings per share were 12 cents (CDN) vs. just a penny a year ago…“We are pleased to have achieved such a strong quarter despite the global impact of the COVID-19 virus and the associated lower Copper price environment,” commented Gil Clausen, Copper Mountain’s President and CEO…“The positive outcome was a direct result of our quick response in implementing a revised mine plan in early March, demonstrating the flexibility of the Copper Mountain mine plan and our team’s ability to adapt quickly to changing market conditions. More importantly, we prioritized the health and safety of our employees and we have had no confirmed or presumptive cases of COVID-19 at any of our operations”CMMC is down 3 cents at 71 cents…key resistance is in the mid-70’s, the top of a long-term downtrend line…

7. European airline and airport executives urged the Trudeau government this week to allow a safe “restoration of travel” between Canada and Europe, adding industry pressure on Ottawa to remove coronavirus-related restrictions that have discouraged international air travel…in a letter dated July 27, a copy of which was obtained by Reuters, top executives of nearly a dozen European airlines and airports warned that “since many EU countries and Switzerland require reciprocity to re-establish access, Canada’s continued entry restriction and quarantine requirements are becoming problematic”…airline trade group International Air Transport Association (IATA) has also asked Ottawa to replace quarantine restrictions with multi-pronged measures, including testing, to reduce transmission from travel…

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  1. Lion One

    Quinton Hennigh on the Kerr Report

    “Although I’d expect to see the vein areas to stay about the same widths, 2 to 3 meters, as we go deeper I would expect the grades would probably go up,,,, just the geology, the way the system formed..” for “this high grade phenomena, for this style of mineralization to persist to depth.”

    Great interview on the Kerr report: it is definitely worth a second listen, and even a pause here and there to really understand what he’s saying, the implications of it, and why Quinton is so pumped about LION.


    Comment by Carl N — July 30, 2020 @ 9:46 am

  2. Hi Jon. Any thoughts on if SONA will receive/announce field test results by “end of July” as mentioned in their July 2, 2020 PR?

    Comment by John — July 30, 2020 @ 11:24 am

  3. While the economy is terrible due to Covid-19 lock downs, Great Depression levels and worse, i might note Q2 GDP was down a guesstimated 9.5%.

    This 32.9% down being widely advertised would be on a guesstimated “annualized” basis.

    Comment by Daniel — July 30, 2020 @ 11:28 am

  4. A month ago, John, the day after a holiday (July 1) was a major turning point, and we’re coming up to another holiday Monday. I’m sure we’ll hear from SONA imminently and my guess is the news will be very good given what we heard from the Saudis yesterday.

    Comment by Jon - BMR — July 30, 2020 @ 1:38 pm

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