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May 2, 2018

7 @ 7:00

Check out Daniel’s Den later today and visit the BMR comments section throughout the day for updates and helpful information.

1. Markets are quiet ahead of today’s Fed decision…as of 7:00 am Pacific, Gold is unchanged at $1,304 after trading as high as $1,312Silver is up 18 cents at $16.32…Copper has added 2 pennies to $3.07…Nickel has jumped 13 cents to $6.32 while Zinc is a penny higher at $1.40…Cobalt is unchanged at $40.26…Crude Oil is off slightly at $67.18…banks have raised their forecasts for Oil prices for the 7th month in a row on the back of heightened geopolitical risks and OPEC-led production cuts…Iran’s Oil exports hit 2.6 million barrels per day in April, a record since the lifting of sanctions in 2016, with China and India buying more than half of Iran’s Oil…the Dollar Index has pulled back one-fifth of a point to 92.30…a band of strong resistance stretches from 92 to 93…in economic news, private sector U.S. jobs growth was in line with expectations in April as payrolls processor ADP said this morning that 204,000 jobs were created during the month…the Labor Department reports non-farm payrolls on Friday…

2. Exchange-traded-product investors took advantage of the dip in Gold last week to increase their exposure to the metal by 9 tonnes, according to Standard Chartered…however, investors reduced their exposure to other precious metals…Silver outflows reached 343 tonnes over the past week, Platinum net redemptions came to 10,400 ounces and those for Palladium totaled 12,500 ounces…Standard Chartered added that China’s Palladium imports are still down for 2018, though they rose 2% year-on-year in March.  “Despite lingering concerns around auto sales and new energy vehicles, underlying trends in China suggest Palladium demand is likely to be supported, at least this year,” the firm concluded…

3. The Dow has fallen 77 points through the first 30 minutes of trading…most of Wall Street got it wrong – Apple (AAPL, NASDAQ) reported fiscal Q2 earnings above expectations after the close yesterday, despite a slight miss in its iPhone unit sales number versus estimates…investors are also relieved due to the company’s much better than feared June quarter sales guidance range…with a mountain of overseas cash suddenly freed up by the U.S. tax overhaul, Apple bought back $23.5 billion of its own stock in the March quarter, a record amount for any U.S. company, and yesterday it added $100 billion to its target for future repurchases…it also doled out another $3.2 billion in dividends and will boost them by 16% going forward…in Toronto, the TSX has added 40 points…the TSX continues to show increasing technical strength which bodes well for the month of May…the Venture, searching for a catalyst, is 2 points lower in light trading at 774Datametrex (DM, TSX-V) reported this morning that it’s a step closer to publicly listing its subsidiary, Graph Blockchain, on the CSE…a date of record will be set in the near future…

4. The Green Organic Dutchman Holdings Ltd. (TGOD, TSX) has successfully completed an initial public offering of 31.51 million units of the company at a price of $3.65 per unit for total gross proceeds of $115 million…the common shares as well as the common share purchase warrants it issued commenced trading this morning under the symbols “TGOD” and “TGOD.WT” on the TSX…TGOD is trading at $3.79 as of 7:00 am PacificAurora Cannabis took 17.5% of the IPO issue for a total investment of $23 million, increasing its stake in the company to 39.7 million shares…TGOD is currently completing a 14,000 kg per year facility in Ancaster, as well as is constructing an 820,000 sq. ft., 104,000 kg per annum, high-technology cannabis facility in Valleyfield, Quebec…Aurora and TGOD have also entered into a supply contract, providing Aurora with the right to purchase 20% of TGOD’s annual production of organic cannabis from TGOD’s Ancaster and Valleyfield facilities…consequently, Aurora anticipates being able to procure in excess of 23,000 kg per annum of premium organic products once TGOD’s Valleyfield and Ancaster facilities are completed and at full capacity…

5Strong Q1 results for Kirkland Lake Gold (KL, TSX)…net earnings increased year-over-year to $53.8 million U.S. ($0.25/share) compared to $13.1 million ($0.06/share) in Q1 2017 and $41.0 million ($0.20/share) in Q4 2017…the company also posted record quarterly EBITDA of $105.9 million versus $66.9 million in Q1 2017 and $103.9 million in Q4 2017…solid cash flow from operating activities totaled $89.6 million vs. $67.9 million in Q1 2017 and a quarterly record of $103.4 million in Q4 2017…cash increased $43.7 million or 19% to $275.3 million at March 31, 2018 from $231.6 million at the end of 2017….production jumped to 147,644 ounces from 130,425 ounces in Q1 2017 and compared to record quarterly production of 165,579 ounces in Q4 2017All-In-Sustaining-Costs (AISC) averaged $833 versus $873 in Q1 2017 and $816 in Q4 2017…Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented:  “Our Q1 2018 results surpassed target levels for the quarter in most key areas and, as a result, we entered the second quarter tracking very well against our consolidated 2018 guidance.  Looking ahead, we expect higher levels of production as the year progresses, which will contribute to further improvements in unit costs.  Our capital expenditures will increase from Q1 2018 levels over the balance of the year as we ramp up the Macassa shaft project and key growth projects at Fosterville.  At Macassa, work on the shaft project in Q1 2018 was focused on permitting and engineering, with surface construction commencing in the second quarter.  At Fosterville, a number of permits were received in April, which will lead to an acceleration of work going forward.”

6. Alamos Gold (AGI, TSX), up in early trading, has recorded its 4th consecutive quarter of record production, though net earnings for Q1 came in at just $600,000…the Island Gold mine, acquired through last year’s buyout of Richmont Mines, achieved record quarterly Gold production of 28,100 ounces in its first full quarter as part of Alamos…mine-site AISC of $633 per ounce was well below guidance…production guidance at Island Gold has been increased to between 95,000 and 105,000 ounces for 2018…notably, there has been a 400% increase in Reserves and a 60% increase in the Reserve grade at Island Gold since 2014…this operation should help drive profitably for AGI in the years ahead…reflecting the strong start to the year, Alamos has increased company-wide 2018 production guidance to a range of 490,000 to 530,000 ounces, representing a 19% increase over 2017 with AISC expected to average $950 per ounce…

7. A new poll conducted by IPSOS Reid shows that a strong majority of Canadians support the Kinder Morgan Trans Mountain pipeline expansion, so why are politicians so afraid of the vocal minority?…56% of respondents say they support the expansion of the pipeline from Alberta to B.C.’s coast, while 24% respondents oppose it…20% of Canadians aren’t sure whether or not they should support it…while most of the opposition to the pipeline expansion has come from B.C., the poll found that 55% of British Columbian respondents support it, while only 37% are against it…opposition is concentrated mostly in Metro Vancouver and in densely populated areas of Vancouver Island, where the NDP and Greens draw most of their support.  Darrell Bricker, CEO of Ipsos Pubic Affairs, told Global News, “The people who are opposed, it doesn’t have to be a big group to flood a town hall.  I think the volume of sound is much louder than the level of public opinion they represent.”

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May 1, 2018

BMR Evening Alert!

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7 @ 7:00

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

1. Gold, often under pressure going into a Fed meeting, has traded between $1,303 and $1,313 so far today…as of 7:00 am Pacific, bullion is down $9 an ounce at $1,306…April sales of U.S. Mint Eagle Gold coins were the weakest since 2007Silver has slipped 10 cents to $16.20…Copper, Nickel and Zinc are off slightly at $3.04, $6.20 and $1.40, respectively…Cobalt is unchanged at $40.26…Crude Oil is 84 cents lower at $67.73…U.S. Crude production jumped 260,000 barrels per day (bpd) to a record high of 10.26 million bpd in February, according to fresh data yesterday from the Energy Information Administration…meanwhile, OPEC output has fallen to a 1-year low due to declining production in Venezuela and lower shipments from African producers…the U.S. Dollar Index has jumped nearly two-thirds of a point to 92.41…short-term, the greenback is becoming technically overbought at the same time as Gold is approaching very strong support around $1,300, setting the stage for a reversal in these markets this week as the Fed begins its 2-day meeting today…the Dollar Index has moved above its 200-day moving average (SMA), currently 91.85, for the first time in more than a year, hitting a 3-and-a-half month high versus the euro and moving into positive territory for the year against a basket of major currencies…however, the Dollar Index faces strong resistance near 93 and that’s where it can be expected to react…

2. The Dow has dipped 142 points through the first 30 minutes of trading…Apple is scheduled to report fiscal Q2 earnings and revenue after the close…of the S&P 500 companies that have reported thus far, 79.4% have posted better-than-expected earnings, according to FactSet…in Toronto, the TSX is off 22 points while the Venture has slipped 5 points to 778 as oversold RSI(2) conditions emerge…Pascal Biosciences (PAS, TSX-V) has raised an additional $400,000 through the exercise of 40-cent warrants last week, as disclosed in the company’s latest financial statements…this follows the completion of a $5.1 million financing by Pascal in March, shortly after the company announced it’s the first to identify a mechanism in which cannabinoids may provide a direct benefit in immunotherapy…

3. Marathon Gold (MOZ, TSX) is up in early trading after releasing an updated resource estimate for its Marathon deposit in the Valentine Lake Gold Camp…it’s now officially a multi-million ounce deposit with 2,137,000 ounces in the Measured and Indicated categories (33.4 million tonnes grading 1.93 g/t Au) and 1.1 million ounces in the Inferred category (17.3 million tonnes grading 1.99 g/t Au).  “The Marathon deposit still continues to deliver promising results as it is now double the size of the Leprechaun deposit and remains open to further expansion. The increase in grade and size of the underground material at Marathon is very important for future resource development as is the Sprite drilling in the bog area.  There is an opportunity for resource expansion in both open pit and underground available for Marathon to test before the next economic study,” commented Phillip Walford, President and CEO…

4. Ongoing drilling at Orca Gold’s (ORG, TSX-V) Galat Sufar South (GSS) target at Block 14 in Sudan has further expanded the newly identified Hanging Wall zone in the East pit with 39 m grading 2.52 g/t Au and 20 m grading 2.72 g/t Au in drill holes GSRC740 and GSRC741, respectively…two multi-purpose rigs are currently on site and a third will be added this month…the current program is focused on further developing the East zone pit where a new geological interpretation is being applied…CEO Richard Clark stated, “The ongoing expansion of mineral resources at GSS continues to justify an aggressive drill program.  The discovery of the Hanging Wall  zone supports our new understanding of geological controls at GSS and strongly suggests that other, previously unidentified, targets will be discovered.  We are very excited about this development and look forward to further reporting on the success of our resource expansion program.” 

5. Cypress Development (CYP, TSX-V) resumes trading at 8:30 am Pacific after releasing a maiden resource estimate for its 100%-owned Clayton Valley Lithium Project in Nevada…the total Indicated mineral resource comprises 597 million tonnes at an average grade of 899 ppm (0.09%) Li, which equates to a contained 2.86 million tonnes of Lithium carbonate equivalent (LCE)…the total Inferred resource is 779 million tonnes at an average grade of 888 ppm (0.089%) Li, which = 3.68 million tonnes of LCE…the deposit, which remains open at depth, is outlined by 23 core holes drilled by Cypress during 2017 and 201821 of the 23 holes ended in Lithium mineralization…this is being interpreted as a fossil Lithium brine deposit which was uplifted by the faulting above the eastern margin of the current salt playa…the Lithium occurs within a large volume of mudstones, composed of volcanic ash with finer grained clay, carbonate and salt minerals…geologists love resource estimates but investors tend to prefer mystery, which is why there could be a “sell on news” with CYP

6. As Vancouverities, just 750 miles from the Oil sands, pay more for gas than in any other major Oil-producing nation except Norway, some excellent points by Kate Sims, B.C. director of the Canadian Taxpayers’ Association, in a piece today in the Financial PostWhen the forced federal carbon tax is set at $50 per tonne in 2022, that means that gasoline will have a carbon tax of 11.63 cents per litre. Will that be enough?  Not according to the Environment Canada bureaucrats who told Environment Minister Catherine McKenna that the country needs a carbon tax of $100 per tonne by 2020 and a tax of $300 per tonne by 2050 to meet the government’s promises under the Paris climate agreement. That would be 23 cents per litre on gas in 2020 and then 70 cents per litre by 2050 – about $50 extra in today’s money to fill up the family sedan.  People need to use Oil and gas. The carbon tax doesn’t make people ‘reduce their use’ of this modern lifeblood, it just costs them a lot of money while not stopping the emissions.  Our economy and our modern way of life depend on Oil and gas.  We use them to run our power stations, till our soil, plant our food, mine our minerals, mill our wood, heat our greenhouses, manufacture all of our goods and haul those goods and food to market.”

7. Ethereum prices took a hit today after a report that regulators are exploring whether it and other cryptocurrencies should be treated like securities…both U.S. commodities and securities watchdogs are questioning whether the same rules for stocks should apply to these digital currencies, according to a Wall Street Journal report this morning…until now, cryptocurrencies have not been drawn into wider crackdowns by the Securities and Exchange Commission this year…the cryptocurrency’s creation in 2014 was “probably an illegal securities sale” in the eyes of some regulators, according to the WSJ piece…Ether, which has a current market cap of about $65 billion market cap, is down 5% at $650 as of 7:00 am Pacific according to data from CoinMarketCap.com

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