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February 25, 2020

7 @ 7:00 From Smithers

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

1. Gold has traded between $1,658 and $1,633 so far today…as of 7:00 am Pacific the yellow metal has eased off $6 an ounce to $1,653 following yesterday’s new multi-year highs near $1,700 as global stock markets reeled from fresh coronavirus fears…Silver has retreated 25 cents to $18.35…Palladium is up $62 to $2,599 while Rhodium has added another $100 to $11,200…base metals have stabilized with Copper, Nickel and Zinc at $2.57, $5.66 and 93 cents, respectively…Crude Oil has dipped another 33 cents a barrel to $51.10 while the U.S. Dollar Index is down one-tenth of a point at 99.27…the spike in coronavirus cases beyond China sparked concerns yesterday about a prolonged global economic slowdown due to the outbreak…the market losses were widespread around the world, with global stocks losing over $1.7 trillion of value in a single day…South Korea has raised its coronavirus alert to the “highest level” with the latest spike in numbers bringing the total infected to more than 800…meanwhile, Italy has been the worst affected country outside of Asia, with more than 130 reported cases and 7 deaths…Iran also confirmed 12 deaths…the yield on the benchmark 10-year U.S. Treasury note, which moves inversely to price, has fallen to a record low below the 1.325% set on July 6, 2016, in the aftermath of Brexit…

2. The decision by Teck Resources (TECK.B, TSX; TECK, NYSE) to abandon its $20 billion Frontier Oil sands project in Alberta is a massive Canadian political earthquake that will have negative economic repercussions for years…it’s the culmination of Justin Trudeau’s anti-Oil posturing and climate change hysteria to win votes on the left (Trudeau’s approach has been Canada’s version of the thankfully doomed “Green New Deal” being promoted by socialists in the United States)…this also comes at a time when Trudeau, the same Prime Minister who boasted during the SNC-Lavalin scandal how he would “never apologize for standing up, fighting for Canadian jobs”has allowed a small but vocal group of anarchists and eco-terrorists to take the Canadian economy hostage for the past few weeks through rail disruptions and other protests…energy development in this country under the current federal regime is essentially dead…as Rex Murphy so eloquently stated in a National Post column this morning, “There isn’t a single corner in this world – heck, they probably heard it in Senegal – that doesn’t know that Canada is now a place where investments go to die, where projects eagerly embraced become lost in some cavity of madly overzealous regulation, spend years getting revised and receiving additional conditions for approval, are mocked and slandered by busy climate change cowboys and, after billions of dollars spent, simply go away“…former B.C. Premier Christy Clark, a political moderate, commented, “The Teck decision is a terrible turning point.  Like Energy East, they were forced by ludicrously weak and confused fed policy to withdraw.  Who will invest in Canada now??”...Teck brought up that question itself in its news release…“The situation that has faced Frontier will be faced by future projects and it will be very difficult to attract future investment, either domestic or foreign”…meanwhile, in the United States, President Trump is doing the opposite…and compare his visit to India the past couple of days (encouraging investment and trade) to Trudeau’s embarrassing visit…increasingly, capital is going to leave Canada and head to greener pastures in the U.S., and that will translate into a lower standard of living for Canadians…we’ll “save” the planet, though!…well more than $120 billion of energy projects have been cancelled in the past 3 years of Liberal hostility and incompetence…with fossil fuels predicted to represent three-quarters of global energy supply by 2020, what kind of country – especially one that represents only 1.6% of global emissions – would deliberately refuse to develop the full potential of its natural resources?…

3. When was the last time this happened?…no Canadian jurisdiction ranks in the top 10 for “investment attractiveness” according to the latest survey by the Fraser Institute of more than 260 mining executives globally…Saskatchewan maintained its place as the country’s most attractive jurisdiction for investment (ranking 11th on this year’s survey index, down from 3rd last year) followed by Ontario (16th up from 20th), Quebec (18th, down from 4th) and British Columbia (19th down from 18th)…however, B.C. was ranked as the least attractive jurisdiction in Canada for “mining development”…survey respondents pointed to uncertainty concerning disputed land claims and environmental regulations as key factors that made the province unattractive…“The sum of negative responses citing these two areas as deterrents to investment was 78% and 74%, respectively,” the Fraser survey noted…in addition, 67% of respondents for British Columbia were deterred by uncertainty concerning protected areas…

4. BMR is reporting the rest of this week from Smithers, the hub of British Columbia’s exploration sector, where BMR is a lead sponsor of the Vancouver Canuck Alumni Association “Indoor-Outdoor Challenge” this coming weekend to celebrate the 50th anniversary season of the Vancouver Canucks in the NHL…proceeds are going toward local minor hockey…what could be more “Canadian” than hockey, our national pastime, and our resource sector?…this weekend’s event, which has drawn tremendous support from the local community, will kick off with an investor presentation/news conference Friday afternoon in Smithers, followed by a banquet Friday night, an indoor game Saturday and an outdoor game “rematch” the following day on Tyhee Lake…both games will feature former Canuck stars, including the likes of Kirk McLean, Cliff Ronning, Jyrki Lumme, Geoff Courtnall, Thomas Gradin, Dave Babych and others, against a local oldtimers’ team known as the Smithers Flyers…country music star Aaron Pritchett and Global News B.C. anchor Paul Haysom will also be playing for the Alumni team…FIN, the Canucks’ popular mascot, will be whipping fans into a frenzy at Saturday’s game in the Smithers arena…Canada has proven to be the best in the world at producing hockey players…and when it comes to this country’s unmatched natural resource endowment, a true blessing, and our ability to extract metals and Oil (commodities the world desperately needs) using the highest labor and environmental standards, we are also world leaders…this is something to celebrate and fight for, especially at a time when the resource sector in Canada – particularly Oil and gas – is under attack from within…the resource sector made Canada great but we have to fight for it now because there is an energized group on the left that’s determined to take this country down a very different path…

5. The Dow has rebounded 87 points following yesterday’s big drop, the worst since February 2018…with yesterday’s declines, the S&P 500 and the Dow both wiped out all of their 2020 gains…in Toronto, the TSX is 32 points lower while the Venture is off a point at 567…a stock that has bucked the trend in recent sessions is Sona Nanotech (SONA, CSE)…there isn’t a more advanced situation in terms of the development of a rapid screening test for COVID-19…interest in the stock picked up dramatically on news last week but this story definitely hasn’t yet hit the radar screens of the masses…SONA, which closed at 36.5 cents yesterday, has only about 50 million shares outstanding…the company is deploying its proprietary nanotechnology to produce a quick-response lateral flow test to screen patients for COVID-19…when completed (and this is moving along at a rapid pace), the test is expected to produce results in 5 to 15 minutes…this could be rolled out within just weeks…there is currently no lateral flow test specific to COVID-19, which was first detected in Wuhan, Hubei province, China, and continues to spread across the globe…QMX Gold (QMX, TSX-V) is getting a strong boost this morning following more high-grade Gold drill results yesterday and news of a $6 million flow-through financing at 18 cents involving Eric Sprott and O3 Mining (OIII, TSX)…results yesterday from QMX from the River target west of the Lac Herbin mine included 36.7 g/t over 3.5 m, and 34.9 g/t over 3 m…QMX is up 2.5 pennies at 14 cents on high volume…Amex Exploration (AMX, TSX-V) has added a 4th drill rig to its Perron Gold Property near Rouyn-Noranda…this rig will be dedicated to exploration drilling on the eastern Gold zone (EGZ) given the company’s recent successful extension of the high-grade zone at the EGZ…using its predictive modelling techniques, the Amex geological team has been able to successfully target the projected eastward and depth extension of the HGZ with thick and high-grade vein intercepts…initial results from Palladium One’s (PDM, TSX-V) first IP survey at Kaukua East in Finland have revealed a large chargeability anomaly, representing the eastern extension of the Palladium dominant Kaukua South zone…this zone now extends over a 2-km strike length…the Kaukua East IP survey identified a much stronger and wider chargeability anomaly than the previous 2008 IP survey which was instrumental in identifying the 1.2-million ounce Palladium equivalent Kaukua deposit…PDM is up a penny at 17 cents as of 7:00 am Pacific

6. Galway Metals (GWM, TSX-V) has drilled one of its best holes ever at its Clarence Stream Project in New Brunswick – 10.6 g/t Au over 47 m, plus 1.2 g/t Au over 32 m, in hole 87…the 2 intervals in this hole line up well, between previously released step-out holes 72 and 78 located 22 m northeast and 116 m southwest, respectively…meanwhile, hole 93 extended the Richard zone 97 m to the southwest with an intersection that ran 4.5 g/t over 10.8 m…Robert Hinchcliffe, President and CEO, stated: “Hole 87‘s location between 2 other wide and high-grade intercepts bodes very well for the Clarence Stream resource update scheduled for the 3rd quarter of 2020, both from the perspective of any pit-constrained or underground resource.  Hole 93 is significant because it continues the process of closing the gap between the Richard and Jubilee Zones, just as the previous press release of 2 weeks ago closed the gap between the GMZ and Richard Zones.  Of note is that NONE of the 36,377 m of drilling that Galway has completed in the 2.5-km-long mineralized system that hosts the George Murphy, Richard and Jubilee Zones are in the existing Clarence Stream resource, which was last updated 2.5 years ago on September 26, 2017.  That resource includes the South and North Zones only.  All 5 deposits remain open for expansion in all directions.  Galway’s strong drill results demonstrate that Clarence Stream is an emerging new Gold district in North America”GWM has added cents to 37.5 cents through the first 30 minutes of trading…

7. Interesting move by New Gold (NGD, TSX, NYSE) today, though this never would have occurred if the company hadn’t struggled with its Rainy River Project…New Gold is selling a free cash flow interest in its New Afton mine in British Columbia to the Ontario Teachers’ Pension PlanOntario Teachers has agreed to acquire a 46% free cash flow interest in New Afton with an option to convert this interest into a 46% JV interest in 4 years for upfront cash proceeds of $300 million (an overriding buyback option provides NGD with the flexibility to potentially require 100% of New Afton in the future)…“We are pleased to be partnering with Ontario Teachers, one of the world’s preeminent and most well-respected investors, in this transformational transaction that provides us with upfront cash allowing us to restructure our balance sheet and lower our level of net indebtedness via a true shared risk and upside partnership focused on free cash flow,” stated New Gold President and CEO Renaud Adams…“This transaction provides New Gold with an attractive cost of capital, further strengthens our financial position, allows us to benefit from the full exploration potential elsewhere on the New Afton land package and provides the opportunity to reacquire 100% of New Afton.  Ontario Teachers is known to conduct in-depth due diligence and partner with high-quality management teams that share its values of integrity and operational excellence.  We look forward to our partnership with Ontario Teachers as we continue our mission to turn New Gold into Canada’s leading intermediate diversified Gold producer”NGD is up on the news in early trading, 16 cents higher at $1.35

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  1. My thought, I keep hearing that the police are trying their best to keep safety as their top priority, but the stuff I’m hearing and seeing , it won’t be much longer and the police just might be keeping the protesters safe from the general public, they are now burning the tracks,, vigilante will start…. people are getting pissed.

    Comment by Laddy — February 25, 2020 @ 12:19 pm

  2. Indeed, Laddy…just north of here (Smithers), several people, including at least two hereditary chiefs, were arrested at a railway blockade near New Hazelton…members of the Gitxsan Nation set up the blockade mid-afternoon yesterday, less than 2 weeks after a similar blockade at that site was dismantled on the promise of dialogue from federal and provincial politicians…Gitx’san Nation Hereditary Chief Spookw said the protesters were out in support of Wet’suwet’en hereditary chiefs who oppose the Coastal GasLink pipeline project…they were also opposing the arrests of demonstrators at the Tyendinaga Mohawk Territory camp next to a railway crossing in Ontario earlier yesterday…at the blockade near New Hazelton, witnesses described a chaotic scene of arrests in the dark, involving about 40 protesters and 20 police officers…the anarchists and eco-terrorists aren’t going to stop – they are in fact encouraged by the weakness of the federal government and others…that, in turn, will encourage vigilantism as you are saying…

    Comment by Jon - BMR — February 25, 2020 @ 12:28 pm

  3. Ohh I have no doubt tempers are about to boil over, i feel for the commuter and the people that are about to get laid off and so forth, but if this is what it takes to get rid of this do nothing , weak pm of Canada, then so be it!! Trump was right in saying Trudeau is weak and two faced. But we already knew that….

    Comment by Laddy — February 25, 2020 @ 12:47 pm

  4. Real fear in the markets past few days…

    Comment by Jean — February 25, 2020 @ 1:24 pm

  5. Yes, Jean…Dow down nearly 2,000 points in 2 days…but nothing that 1 Trump tweet can’t fix in an instant…

    Comment by Jon - BMR — February 25, 2020 @ 2:07 pm

  6. I’m surprised copper isn’t down more…

    Comment by Matt — February 25, 2020 @ 2:25 pm

  7. Rex Murphy is the best, a man of common sense. These protests get tiresome. I believe in looking after the environment as much as anybody but Canada is not going to save the planet (1.6% of world emmissions!), not a hard figure to look up. If you don’t have jobs then we have real big problems.

    On another note, it’s about time to hear from CCW!!

    Comment by Danny — February 25, 2020 @ 3:49 pm

  8. Jon. Looks like CCW chart is broken. Can news start the SP in the right direction?

    Comment by Don — February 25, 2020 @ 4:50 pm

  9. Not at all, Don…primary uptrend is completely intact and what you saw today, on not high volume, was some nervous nellies giving up paper as part of the broader market pullback – nearly 2,000 points on the Dow and nearly 40 points on the Venture the last 2 days…unrelated totally to developments at CCW…management and High Grade Halliday are on their way to Smithers and then PDAC with one of the best success stories on the Venture, with news to further back that up at the perfect time, I’m sure…

    Comment by Jon - BMR — February 25, 2020 @ 5:55 pm

  10. BMR, would you vote for Bernie Sanders?

    Comment by Jackson — February 25, 2020 @ 5:58 pm

  11. Why would u even ask such a silly question, Jackson? Crazy Bernie is a lunatic and a socialist – hoping, though, that he’s the Democratic nominee (looks increasingly likely) as he’ll get slaughtered by Trump in November.

    Comment by Jon - BMR — February 25, 2020 @ 6:05 pm

  12. Jackson: I think anyone reading Jon’s daily commentary can answer that question for you. As for me, I’m fighting socialism until hell freezes over–then I’m fighting it on the ice!

    Comment by Jon (not BMR Jon) — February 25, 2020 @ 6:13 pm

  13. Whoo, silver equities sure got hit hard….bloodbath in the markets…

    Comment by Michelle — February 27, 2020 @ 1:40 pm

  14. What all of this is going to do, Michelle, is drive Gold and Silver prices much higher as central banks ramp up liquidity like you’ve never seen – we’re witnessing the genesis of that event, and it’s going to make Gold and Silver stocks ultimately go thru the roof…

    Comment by Jon - BMR — February 27, 2020 @ 6:25 pm

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