Check back later today for Daniel’s Den and Visit the BMR comments section throughout the day for updates and helpful information!
1. Gold has traded between $1,237 and $1,246 so far today…as of 7:00 am Pacific, bullion is up $5 an ounce at $1,242 after U.S. non-farm payrolls for November rose less than expected…Silver is 6 cents higher at $14.50…Copper has rebounded 3 pennies to $2.80 while Nickel and Zinc are up slightly at $4.94 and $1.24, respectively…Cobalt remains steady at $25.06…Oil prices are pushing higher on reports that OPEC has just reached a tentative agreement to cut output…the meeting is still continuing…OPEC producers have apparently agreed to cut production by 800,000 barrels per day (bpd) beginning in January…non-OPEC producers are expected to cut 400,000 bpd…the combined reduction of 1.2 million bpd is roughly in line with expectations entering the meeting in Vienna…WTI is up $2.29 a barrel at $53.78 while the U.S. Dollar Index is flat at 96.81…U.S. job growth slowed in November with non-farm payrolls increasing by a much less than expected 155,000 for the month while the unemployment rate held steady at 3.7%, the lowest since 1969…a separate gauge that includes discouraged workers and those holding part-time jobs for economic reasons, sometimes called the real unemployment rate, rose from 7.4% to 7.6%….average hourly earnings, a closely watched sign of whether inflation pressures are building (which they’re not), again rose at a 3.1% pace from the same period a year ago…
2. Canadian cannabis producer Cronos Group (CRON, TSX, NASDAQ) will receive a $2.4 billion equity investment from Altria Group (MO, NYSE), one of the biggest tobacco companies in the world, under a friendly agreement announced this morning…Virginia-based Altria, parent of tobacco company Philip Morris USA which makes Marlboro cigarettes, will acquire a 45% ownership stake in Toronto-based Cronos at $16.25 per share (CDN) under the initial investment…Altria can also invest up to a further $1.4 billion within 4 years, increasing its ownership stake in Cronos to 55%, under the arrangement…“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” stated Howard Willard, Altria’s Chairman and CEO…“We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential”…Altria, which will have 4 out of 7 seats on an expanded Cronos board, said the cannabis industry “is poised for rapid growth over the next decade” and called cannabis “an adjacent category” for its tobacco operations…Cronos of course has responded well to the news with the stock up $3.22 a share at $17.20 through the first 30 minutes of trading…
3. Pan Pacific Copper (PPC), Japan’s top Copper smelter, expects the price of the metal to jump to about $3.30 a pound next year due to firm global demand and tighter supply…China’s new smelting capacity will help bolster global output, but troubles or maintenance at existing smelters to meet stricter environmental rules worldwide are expected to weigh on production…meanwhile, the closure earlier this of Vedanta Resources‘ 400,000-tonne per year Tuticorin plant in the Indian state of Tamil Nadu has flipped India from being a net exporter of refined Copper to a net importer, drastically reshaping physical copper flows…in May, an Indian state ordered the permanent closure of a Copper smelter controlled by London-listed Vedanta Resources after 13 people were killed during violent protests against the smelter on environmental concerns…the smelter had operated for 22 years…
4. Miners from across the globe view the possibility of losing their “license to operate” as the biggest risk for 2019-2020, according to the Ernst & Young (EY) annual survey of Top 10 business risks facing miners and metals…this should come as little surprise given events around the world in 2018 and how the mining sector has come under attack in so many jurisdictions, even in so-called “safe” jurisdictions like Canada…this year’s survey, which polled 250 mining executives, showed that “digital effectiveness” was moved into 2nd place and “maximizing portfolio returns” to 3rd place…EY explained that miners will need to work harder to keep their “license to operate” which naturally expands their responsibilities…“We have seen ‘license to operate’ rocket to first position, with over half of our respondents nominating it as the No. 1 risk [for 2019–2020],” EY said in its report…“License to operate has evolved beyond the narrow focus on social and environmental issues. There are now increasing expectations…any misstep can impact the ability to access capital or even result in a total loss of license…license to operate needs to quickly become part of a mining company’s DNA in the same way as safety is”…
5. Shares of Aphria (APHA, TSX) roared back yesterday, jumping 50% to snap a 5-day sell-off – and they’re up again in early trading today – after the company appointed a special committee to review a recent deal criticized by short sellers…investors had endured a beating – the stock tumbled from a high of $11.36 November 28 to an intra-day low of $4.76 Wednesday after a widely circulated report raised questions about one of the company’s recent deals…Aphria said its board had appointed a special committee of 3 independent directors to review the company’s acquisition of assets in Jamaica, Argentina and Colombia…the committee was struck to “confirm the company’s belief that it conformed with all company policies and generally accepted corporate governance practices”…the short sellers said that Aphria paid nearly $300 million in stock to buy assets in Jamaica, Argentina and Colombia that are practically worthless…the report also pointed out the assets had been bought just a few weeks earlier by another company for $202 million less, and before that were owned by firms with apparent ties to an early investor in Aphria…meanwhile short seller Nate Anderson of Hindenburg Research made it clear yesterday that he’s not about to let up on his pressure on Aphria…
6. The Dow, on a roller coaster ride lately, is up 53 points as of 7:00 am Pacific…“You’ve gone from a period of zero sensitivity to headlines to a period of hypersensitivity,” stated James Athey, senior investment manager at Aberdeen Standard Investments, in a CNBC interview this morning…“We’re now in a world where no one knows which way is up and which way is down”…the marijuana and Gold sectors have given Canadian stocks a lift…the TSX is up 101 points through the first 30 minutes of trading…Kirkland Lake Gold (KL, TSX) is enjoying its 8th straight winning session thanks to higher Gold prices and fresh upward guidance from the company regarding 2018 production…KL this month should easily conquer measured Fib. resistance at $30.52 on its long-term weekly chart which clears the way for significantly higher prices in 2019…the Venture has climbed 5 points to 571 after testing support yesterday at 560…the Venture’s bottoming pattern has been consistent with previous Decembers, setting the stage for a potentially very significant move beginning later this month and extending into Q1…December, January and February are by far the Venture’s best 3 months on the calendar which makes this a highly favorable time to be accumulating high quality plays on any weakness…
7. Tesla (TSLA, NASDAQ) is up for the 6th straight session this morning following an upgrade by a Jefferies analyst who cited the company’s strengthening balance sheet, strong growth relative to the rest of the auto industry and improving productivity witnessed at a recent visit to the car maker’s Fremont factory…“Tesla should continue to stand out with broader price points, battery security of supply, product edge and a brand that transcends the volume/premium divide,” wrote Philippe Houchois in a note to clients this morning…“In short, in the year ahead we think only Tesla will avoid a volume zero-sum-game or negative margin trade-off in EVs”…Jefferies upgraded Tesla to buy from hold and raised its price target all the way to $450 from $360…Tesla shares have jumped 37% this quarter, frustrating short sellers, while the S&P 500 has lost 7%…GM shares are up 6% over the same period and Ford is down 2%…
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Hi Jon
There appears to be a consensus that 2019 will be the rebound year for both base metals and precious metals bolstered by the expected U S dollar rollover. The comments in item 3 about copper prices should give explorers in the golden triangle finding copper and nickel a nice boost along with producers of course.
Donald
Comment by Donald — December 8, 2018 @ 4:28 am