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Three Junior Gold Explorers Worth Exploring

Three Junior Gold Explorers Worth Exploring

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This article was originally published by The Gold Report

Source: Peter Krauth for Streetwise Reports   09/09/2020

Peter Krauth profiles three junior mining companies that he believes hold the potential to produce stellar results.

So far this year, the S&P 500 is up 6%. Considering the massive challenges we’ve faced, that’s not bad.

By comparison, gold has clocked stellar returns. It’s up 26% year-to-date.

But a small subsector of the gold space has far outpaced even gold’s returns.

Imagine making 19 times your investment in just 5 months. Sound impossible? That’s what some junior explorers’ shares have done already this year.

To be fair, these can be some of the most volatile equities on the planet. Of course, the rising tide of a secular gold bull market can go a long way to moderate some of that risk.

Also, allocating capital wisely and across several explorers can help mitigate the hazards these companies might present.

The fact is just one outstanding success, even alongside a few other mediocre performers, can still lead to life-changing returns for investors.

With gold continuing to consolidate, as I’ve been saying to expect in my recent articles, now is a great time to consider where to invest for the next leg up.

Let’s dig in…

Gold Juniors Outperform

The following chart compares the performances of gold, large gold producers, and junior gold miners.

Since March 13, 2020, gold is up 25%, gold producers are up a whopping 89%, and gold juniors are up 111%.

Now if that doesn’t grab your attention, I’m not sure what will.

The fact is, the leverage offered by junior gold companies is downright explosive. Some individual junior gold explorers are up over 1,900% or more in that time frame. That’s testament to the kind of wild upside they can offer.

Needless to say, such high potential reward is commensurate with high risk. Explorers can burn through lots of cash securing land rights, permits and drilling all to turn up nothing.

Other times, big success is followed up with big duds. As well, the commodity cycle can work with or against. That’s why rising gold prices are so important for gold explorers.

Some discoveries that lead to deposits could be uneconomic at $1,400 gold, but highly profitable at $1,800.

Gold’s 4-year bear market from 2012 to 2016 forced miners to dramatically cut costs, sell assets, and put some mines on care and maintenance while expansions were put on ice.

Exploration was one of the first victims, which has led to a dearth of discoveries. But with gold back to marching higher on strongly sustained fundamentals, miners are realizing they need to replace depleting reserves.

As a result, successful explorers become takeover targets as they expand known deposits and discover new ones.

Here are three companies that have the right people and are looking in the right places to potentially produce stellar results.

Nevada Nano Cap

Nevada was ranked as the world’s third most attractive jurisdiction for mining investment by the Fraser Institute this past February. Nevada is exceedingly attractive with its second largest gold reserves in the world and 23 major gold mines, all while producing 5 million ounces of gold annually.

If it were a country of its own, it would be ranked as the 4th largest gold producing nation globally. Considering its stable tax regime, robust legal basis, qualified labor, streamlined permitting and developed infrastructure, there are many reasons to look for gold in Nevada.

Peloton Minerals Corp. (PMC:CSE; PMCCF:OTCQB), at CAD $10M, is a true nano cap junior. Despite no resource so far, its quality properties and outsized potential make up for the higher risk profile.

In 2011 Newmont acquired Fronteer Gold through a $2.3 billion takeover for its Long Canyon project. Also on the Long Canyon Trend is Peloton’s Golden Trail Project, located just 50 km north of Newmont’s Long Canyon mine. Golden Trail is 100% owned by Peloton with no royalties and comprises an 880 acre claim package.

The initial drill program in 2019 delivered 82% of footage mineralized above the detection rate for gold and silver, with a range of 0.005ppm to 0.095ppm Au and 0.5 to 72.0 Ag, and all holes bottomed in mineralization. Golden Trail should see 2,000–3,000 feet of further drilling this fall, going deeper than last year’s efforts, and testing 3,000 feet to the south for Carlin-Style hydrothermal anomalies.

7 kilometers due west is the Texas Canyon project. Armed with good historical data from the previous operator, management is advancing is drilling permits to be able to drill this project by next spring. An NI 43-101 technical report is being compiled to publish data and set out recommendations for further steps. A project summary-abstract was published in the 2020 Geologic Society of Nevada’s virtual symposium. That could help attract a JV partner to participate and advance Texas Canyon.


Source: September 2020 company presentation

Independence Valley is Peloton’s third Nevada project, this one located on the southern extension of the world-renowned Carlin Gold Trend. It’s the largest concentration of gold deposits in North America, with over 40 deposits discovered along the 64 km-long trend.

Located in Elko County, Independence Valley is composed of 1,160 acres and within the historical Spruce Mountain mining district which hosted many historical base and precious metals mines since the 1840s. This project hosts the largest untested Rhyolite Dome int the Spruce Mountain district.

The 2020 drill program will comprise 2,000–3,000 feet, and geophysical modelling of magnetic and CSAMT data have identified three structures within the dome complex that are recommended for testing.

The company’s fourth project is Silver Bell & St. Lawrence (SBSL). It’s a 390-acre claim package with two historical gold mines (Silver Bell & St. Lawrence). Located in Montana, SBSL is under option by Frederick Private Equity to earn a 75% interest through annual option payments and spending $2M within six years of March 2018. Last year’s initial drill program intersected up to 34.4 g/tonne gold. Historical smelter records show gold grades from 0.15 to 0.52 ounces per ton and silver grades from 2.7 to 15.6 ounces per ton.

Catalysts this year and early next will be follow up exploration results on Golden Trail and Independence Valley, plus the technical report on Texas Canyon. As well, potential activity on SBSL could all generate plenty of news flow over the next 6–12 months with exciting potential.

Nevada Elephant Hunter

Also operating in Nevada is NuLegacy Gold Corporation (NUG:TSX.V; NULGF:OTCQB), whose market cap has soared to CAD $103M in recent months. The company holds a 100% interest in the Red Hill project, located on the prolific Cortez Trend, which hosts three of Barrick Gold’s largest and highest-grade Tier 1 Gold deposits: Pipeline with 21 million ounces (Moz) at 2.5 grams/tonne (g/t), Cortez Hills with 15 Moz at 4.1 grams/t, and Goldrush with 10 Moz at 10 g/t.

Red Hill is a highly prospective 108 square kilometer property on the southern end of the Cortez Trend, in close proximity to the cluster of Pipeline, Cortez Hills and Goldrush. Nulegacy boasts a strong technical team and institutional ownership. Oceana Gold owns 10.3%, Barrick owns 6.6%, and Sprott Gold Equity Fund holds 6.4%.


Source: May 2020 company presentation

Its nine-member technical team, most of whom worked at Barrick, have all made significant direct contributions of some kind towards the discovery of over 50 million ounces in Nevada’s Carlin and Cortez trends.

Red Hill could turn out to be an elephant. This summer the company performed a CSAMT survey to help measure the Rift Anticline. Drill intercepts over the last couple of years have produced 9.6 g/t gold over 5.1m, within 20.8m of 2.7 g/t gold at Western Slope, and 16.9 g/t gold over 8.7m within 22.1m of 6.6 g/t gold. That’s high-grade rock which looks a lot like Barrick’s Goldrush deposit of 10M ounces at 10.2 g/t gold.

An initial 16 hole, 11,500-meter drill program on the Rift Anticline this fall, followed by 4–5 holes in the winter and more in the spring should produce some steady news flow.

Nulegacy is aiming to prove up a Tier 1 asset, then look to a merger or JV to develop toward production.

This is elephant country, and that’s what Nulegacy is hunting for.

Canadian Consolidator Explorer

O3 Mining Inc. (OIII:TSX.V) is a larger junior gold explorer with a market cap of CAD $142 million. Their portfolio of assets in the provinces of Quebec and Ontario, Canada, two of the better mining jurisdictions anywhere, span more than 460,000 hectares.

As part of the Osisko Group of companies, O3 is consolidating exploration properties, aiming to become a multi-million ounce high-growth company. In Quebec, the 4th most attractive mining jurisdiction on the planet, O3 controls 61,000 hectares in historically productive Val d’Or and over 50 kilometers of strike length on the Cadillac-Larder Lake fault.

Val d’Or, a district responsible for producing over 30 Moz of gold, holds O3’s flagship Marban project on the Malartic Property, representing 75% of the company’s total resources at 2.5 million gold ounces. That’s up by 40% since the 2016 resource estimate. More than 600,000 meters have already been drilled, with over $60 million invested in the ground. A large 40,000-meter drill program is ongoing to extend the deposit. There is a lot of brownfield upside potential.


Source: September 2020 company presentation

A positive Preliminary Economic Assessment was just delivered on Marban, boasting an after-tax NPV of $423 million, after-tax IRR of 25.2%, a 4-year payback and 15 year mine life. The average cost to produce the gold will be a respectable $822 per ounce, offering nice margins.

With a huge overall 150,000 meter drill program on its Cadillac Break properties, O3 continues to advance this highly prospective district by using AI technology to help identify drill targets.

In Ontario, the Golden Bear Group of properties includes the Garrison project which hosts 2 Moz gold in three main zones. It’s a potential consolidation play as bigger neighbors include Kirkland Lake, Pan American and Moneta Porcupine, some with established deposits of multiple millions of ounces.

As a consolidator/developer/explorer, O3 doesn’t hesitate to joint venture or sell off properties it deems non-core. This allows it to unlock value, while retaining participation in the case of JVs.

Junior gold explorers come in all sizes and varieties. Given their nature of high risk, it makes sense to build a portfolio of at least 5 names. It’s also wise to allocate small amounts and to add to positions over time.

But the moon-shot potential is undeniable, especially in a secular gold bull market that’s starting to heat up.

Peter Krauth

Peter Krauth is a former portfolio adviser and a 20-year veteran of the resource market, with special expertise in energy, metals and mining stocks. He has been editor of a widely circulated resource newsletter, and contributed numerous articles to Kitco.com, BNN Bloomberg and the Financial Post. Krauth holds a Master of Business Administration from McGill University and is headquartered in resource-rich Canada.

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1) Peter Krauth: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
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Probe Metals Intersects 4.7 g/t Au over 26.0 metres (cut), on the Monique Property, Val-d’Or East Project

Highlights: •    New results continue to return impressive gold grades and thickness   •    M…

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Highlights:

•    New results continue to return impressive gold grades and thickness  
•    M zone resource expansion drilling results returned best intercept to date on the Monique property: 4.7 g/t Au over 26.0 metres (7.5 g/t Au over 26.0 metres – uncut), including 182.0 g/t Au over 0.9 metre at 300 metres vertical depth, open along strike and at depth
•    Drilling results continue to confirm expansion and continuity of the A, B, I & M zones with highlights of up to 3.8 g/t Au over 21.7 metres, 3.1 g/t Au over 19.5 metres, 1.4 g/t Au over 19.5 metres, 5.8 g/t Au over 3.3 metres and 5.8 g/t Au over 3.0 metres, between surface and 300 metres vertical depth
•    Three drills active on the Val-d’Or East Project for current 45,000-metre program; 125,000-metre drill program planned for 2022

Probe Metals Inc. (TSX-V: PRB) (OTCQB: PROBF) (“Probe” or the “Company”) is pleased to provide the third set of results from the 2021 drill program on its 100%-owned Val-d’Or East Monique property (the “Property”) located near Val-d’Or, Quebec. Results from seven (7) holes totalling 2,843 metres from the 45,000-metre ongoing drilling program revealed significant, new high-grade mineralized intersections along strike and at depth in the A, B, I and M gold zones southeast of the former Monique open pit mine (see figure 1). This year’s drill program on the Monique property is focussed on resource expansion as well as resource conversion. Results from over 70 drill holes are pending. Selected highlights from the current drill results are presented below.

David Palmer, President and CEO of Probe, states, “Since its discovery in 2019, the M zone has quickly expanded into one of the key mineralized systems on the property. Today’s results demonstrate the incredible exploration potential that exists on the Val-d’Or East Project, with the M Zone returning one of the highest-grade intercepts to date beyond the boundary of the current resource. These kinds of results will definitely help build ounces in the next resource update and advance the project towards development, potentially increasing the production profile, pit sizes, and mine life.  We are currently planning an extensive exploration program for 2022, which will represent the largest program to date for Val-d’Or East.”

Expansion drilling holes MO-21-123 to 127 were designed to test the extension of the A, B, I and M zones laterally and from surface to 350 metres depth. The upper part of hole MO-21-122 tested the continuity of the A and B zones while the lower part explored the extension of the I and M zones, at shallow (open pit) depths. Infill hole MO-21-121 was designed to test the eastern extension of the J and G zones inside the conceptual pits between surface to 100 metres depth. All the expansion drilling holes released today returned significant new gold intercepts, which are all open along strike and at depth. Based on the new results, additional expansion and infill drilling has been planned to test the continuity of these zones. We are currently planning a 125,000-metre drill program at Val-d’Or East for next year. The program will focus on the conversion of inferred resource into indicated category, while still targeting significant expansion. Two drills are now active on infill drilling at the Monique eastern A, B, E, I and M zones area while a third drill is turning on the Courvan trend area.

All results released today will be included in an updated resource for the Val-d’Or East project, which will form the basis of the prefeasibility study (PFS) expected to be completed in 2023. The PFS is an important step in advancing the project to production and work will run concurrently with environmental studies and permitting.

Selected drill results from holes MO-21-121 to 127 at the Monique Area drilling program are, as follows:

(1) All the new analytical results reported in this release and in this table, are presented in core length. True width is estimated between 65 to 95 % of core length. A capping of 100 g/t is used for the Monique Gold Trend Deposits.

Figure 1: Surface Map – Monique Gold Trend new drilling

About the Monique Property:

The Monique property is located 25 km east of Val-d’Or, in Quebec, and consists of 21 claims and one mining lease covering a total area of 5.5 square kilometres in Louvicourt township. The property hosts a current measured and indicated mineral resource of 13,619,000 tonnes at a grade of 1.54 g/t for 672,800 ounces of gold and inferred mineral resource of 11,733,000 tonnes at a grade of 1.78 g/t for 671,400 ounces of gold (source: Probe Metals NI 43-101 Technical Report Val-d’Or East Project – June 2021). The Property is part of the Company’s Val-d’Or East Project and the consolidated land package stands at 436 square kilometres.

Geology

Gold mineralization on the Monique property is mainly associated with three deformation zones that cross the property with an orientation of 280° and a 75°- 80° dip to the north. Gold mineralization is defined by a network of quartz/tourmaline/carbonate veins and veinlets with disseminated sulphides in the altered wall rocks. A total of 16 gold zones have been discovered on the property, to-date. Some mineralized zones have been defined from surface to a depth of 575 metres and vary in width from 1 metre to up to 60 metres. Mineralized structures extend laterally up to 900 metres.

Past Production

The Monique open pit mine began commercial production in 2013 and ceased production at the end of January 2015. A total of 0.58 Mt of mineralized material was extracted at a grade of 2.53 g/t Au, from the surface to 100 metres depth for a total of 45,694 ounces of gold.

Qualified Person:

The scientific and technical content of this press release has been reviewed, prepared and approved by Mr. Marco Gagnon, P.Geo, who is a “Qualified Person” within the meaning of NI 43-101, and Executive Vice-President and a director of Probe.

Quality Control:

During the last drilling program, assay samples were taken from the NQ core by sawing the drill core in half, with one-half sent to a certified commercial laboratory and the other half retained for future reference. A strict QA/QC program was applied to all samples, which includes insertion of mineralized standards and blank samples for each batch of 20 samples. The gold analyses were completed by fire-assays with an atomic absorption finish on 50 grams of materials. Repeats were carried out by fire-assay followed by gravimetric testing on each sample containing 3.0 g/t gold or more. Total gold analyses (Metallic Sieve) were carried out on the samples which presented a great variation of their gold contents or the presence of visible gold.

About Probe Metals:

Probe Metals Inc. is a leading Canadian gold exploration company focused on the acquisition, exploration and development of highly prospective gold properties. The Company is committed to discovering and developing high-quality gold projects, including its key asset the multimillion-ounce Val-d’Or East Gold Project, Québec. The Company is well-funded and controls a strategic land package of approximately 1,000-square-kilometres of exploration ground within some of the most prolific gold belts in Québec. The Company was formed as a result of the $526M sale of Probe Mines Limited to Goldcorp. Eldorado Gold Corporation currently owns approximately 11.5% of the Company.

On behalf of Probe Metals Inc.,

Dr. David Palmer,

President & Chief Executive Officer

For further information:

Please visit our website at www.probemetals.com or contact:

Seema Sindwani

Director of Investor Relations
[email protected]
+1.416.777.9467

 

Forward-Looking Statements

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This News Release includes certain “forward-looking statements” which are not comprised of historical facts. Forward-looking statements include estimates and statements that describe the Company’s future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan” and include, but are not limited to, statements with respect to: the results of the PEA, including future Project opportunities, future operating and capital costs, closure costs,  AISC, the projected NPV, IRR, timelines, permit timelines, and the ability to obtain the requisite permits, economics and associated returns of the Project, the technical viability of the Project, the market and future price of and demand for gold, the environmental impact of the Project, and the ongoing ability to work cooperatively with stakeholders, including the local levels of government. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management’s expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward looking information in this news release includes, but is not limited to, the Company’s objectives, goals or future plans, statements, exploration results, potential mineralization, the estimation of mineral resources, exploration and mine development plans, timing of the commencement of operations and estimates of market conditions. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to failure to identify mineral resources, failure to convert estimated mineral resources to reserves, the inability to complete a feasibility study which recommends a production decision, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, inability to fulfill the duty to accommodate First Nations and other indigenous peoples, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, capital and operating costs varying significantly from estimates and the other risks involved in the mineral exploration and development industry, and those risks set out in the Company’s public documents filed on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.








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Explorers and developers targeting cobalt projects

By Ellsworth Dickson Historically, the metal cobalt was a by-product of mines that were mainly…

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By Ellsworth Dickson

Historically, the metal cobalt was a by-product of mines that were mainly concerned with other metals, for example, silver. That was the case for the1903 silver rush around the Town of Cobalt in northeastern Ontario. The hundreds of veins in the camp featured high-grade silver values accompanied by several cobalt minerals.

The silver rush was slow to get started but by 1906 there were 263 mining companies in the Cobalt district. Many famous mines were built such as the Coniagas, Nipissing 407, Agaunico, Silverfields, O’Brien, Glen Lake Mines, Deer Horn Mines, Agnico, Temiskaming, Trethaway, Hi-Ho, Cart Lake and more.

Silver mining continued into the 1980s with cobalt still of secondary interest. The Cobalt area mines lay dormant until about 2017 when the rising price of cobalt resulted in a staking rush with both cobalt and silver of interest. Since 2017, there have been a number of activities in the Cobalt camp – exploration and drill programs, staking, new discoveries, consolidations, changes of plans, and so on. The initial fever has naturally given way to people in it for the long haul. (more later on)

Cobalt is used to make superalloys, high-temperature alloys, cutting tools, magnetic materials, petrochemical catalysts, pharmaceuticals, steels and glaze materials. Back in the 1990s, only 1% of cobalt demand was from its use in rechargeable batteries.

Today, the cobalt market is largely being driven by “new economy” drivers, including lithium-ion batteries, consumer electronics, Electric Vehicles (EVs) and Energy Storage Systems (ESS) that are the dominant uses for lithium-ion batteries, representing 64% of cobalt demand in 2020.

Various world governments have actually mandated the manufacture of EVs and the tapering off of internal combustion engines, resulting in an EV sales growth forecast of 30%. Consequences of the COVID virus have sometimes affected the cobalt marker but that will eventually end. Cobalt is currently trading at US$24.03 per pound, up about 57% from a year ago. Consequently, cobalt explorers and developers have targeted projects in various locales around the world.

Cobalt, being a fairly rare metal, means that there are not that many cobalt projects or mines – either as a primary commodity or as a secondary product, usually with copper, nickel or silver Cobalt is not like, say, the gold or copper sector that generates many projects and mines.

Commodity trader and miner Glencore Plc [GLEN-LSE] recently said it will restart operations at the world’s largest cobalt mine, Mutanda in southeast Democratic Republic of Congo (DRC), towards the end of this year and return to production in 2022.

The DRC (Kinshasa) continues to be the world’s leading source of mined cobalt, supplying approximately 70% of global mine production. The use of child labour at artisanal mines is a big problem.

According to the United States Geological Survey, 2020 mine production was DRC: 95,000 tonnes; Russia: 6,300 tonnes; Philippines: 4,700 tonnes; Canada: 3,200 tonnes; China: 2,300 tonnes; U.S.: 600 tonnes; and Australia: 5,700 tonnes. In 2020, total global production in 2020 was 140,000 tonnes with world reserves pegged at 7.1 million tonnes.

The 2021 diamond drilling program at the Fortune Minerals NICO Project, NWT.

Thanks to the burgeoning EV industry, cobalt demand is expected to steadily increase as manufacturing ramps up which bodes well for the cobalt sector.

Besides northeastern Ontario, there are not a great number of other cobalt projects in North America. One company that stands out is Fortune Minerals Limited [FT-TSX] that has attracted investor interest because its flagship NICO project in Canada’s Northwest Territories that is one of the most advanced cobalt development assets outside the Democratic Republic of Congo (DRC).

Fortune is one of only a handful of global companies that could emerge as a possible supplier of “ethical cobalt” to consumers seeking an alternative to the DRC, currently the source of over 60% of the world’s production.

Amnesty International has warned electric car companies to seek out alternatives to the DRC, which is well known for its mineral wealth, but also civil wars and corruption.

However, Fortune is more than just a play on cobalt. The unique metal assemblage of the NICO deposit includes open pit and underground proven and probable reserves of 33 million tonnes, containing 1.1 million ounces of gold, 82 million pounds of cobalt, 102 million pounds of bismuth, and 27 million pounds of copper.

According to a 2014 feasibility study and recent optimizations, that material could support average annual production for the first 14 years of a 20-year mine life (2020 mine plan), including 1,800 tonnes per year of cobalt in battery grade cobalt sulphate, 47,000 ounces per year of gold in doré bars, 1,700 tonnes per year of bismuth in ingots and oxide and 300 tonnes per year of copper in cement precipitate.

The study suggest that ore can be extracted from a proposed open pit and underground mine and mill that will produce a bulk concentrate for shipment to a refinery that the company plans to construct in southern Canada.

The products that would be produced at the proposed refinery include cobalt chemicals used to make high performance rechargeable batteries, bismuth metals and chemicals, as well as gold.

It is worth noting that the company has received environmental assessment approval and key permits to construct and operate the NICO mine and concentrator in the Northwest Territories.

Fortune also owns the satellite Sue-Dianne copper-silver-gold deposit, located 25 kilometres north of the NICO mine site and other exploration projects in the Northwest Territories, and maintains the right to repurchase the Arctos anthracite coal deposits in northwest British Columbia that were previously bought by a British Columbia Crown corporation.

A helicopter prepares a diamond drill pad at the Fortune Minerals NICO Project, NWT.

Fortune sees Sue-Dianne as a potential future source of incremental mill feed that could extend the life of a NICO mill and concentrator

Sue-Dianne hosts an indicated resource of 8.4 million tonnes grading 0.80% copper, 3.2 g/t silver and 0.07 g/t gold. On top of that is an inferred resource of 1.62 million tonnes of grade 0.79% coper, 2.4 g/t silver and 0.07 g/t gold.

“Cobalt has a critical role in the accelerating transition to e-mobility, and advanced assets like our NICO Project are needed to help satisfy the growing demand and diversify the supply chain,” said Fortune President and CEO Robin Goad.

The NICO project is located 160 kilometres northwest of Yellowknife and 50 kilometres north of Whati, a First Nations community in the North Slave region

Due to the remote location, the Tlicho Highway, under construction for the NWT government, is a key enabler for the NICO development and is nearing completion and expected to open to the public later this year. The $213 million, 97-kilometre all-season road to the community of Whati, together with the spur road that Fortune plans to construct, will allow metal concentrates to be trucked from the mine to the rail head at Hay River or Enterprise, NWT for railway delivery to the company’s planned hydrometallurgical refinery.

Fortune has talked about a total project cost of around $775 million. But the focus now is on various optimizations and refinery sites aimed at delivering a more financially robust project compared to the one envisaged in the 2014 feasibility study.

In keeping with that effort, Fortune recently launched a 3,000-metre drill program to test for a potential expansion of the NICO deposit at the east end of the deposit. It said exploration crews will also test up to four additional targets defined by previous geology and geophysics programs.

Fortune recently raised almost $542,000 from a private placement offering of 3.9 million issued that were issued at 14 cents per unit. It also received a grant of $144,000 from the Government of the NWT.

On October 22, 2021, Fortune shares were trading at $0.13 in a 52-week range of 27 cents and $0.06, leaving the company with a market cap of $47.58 million based on 366 million shares outstanding.

Other companies within the cobalt mining space worth mentioning include:

Canada Silver Cobalt Works Inc. [CCW-TSXV; CCWOF-OTC] recently reported high-grade cobalt assays from its Castle East discovery located 1.5 km from its 100%-owned, past-producing Castle Mine near Gowganda in the silver-cobalt district northeast of the Town of Cobalt where the company has completed 42,000 metres of a 60,000-metre drill program aimed at significantly increasing its 43-101 resource estimate. Canada Silver Cobalt Works recently discovered a major high-grade silver vein system at Castle East. The company also has a pilot plant and processing facility.

Kuya Silver Corp. [KUYA-CSE] has given notice of intention to exercise an option to earn a 70% interest in all of First Cobalt Corp.’s [FCC-TSXV; FTSSF-OTCQX] remaining mineral rights in the Cobalt camp. Kuya previously acquired a 100% interest in a property package surrounding the Kerr Lake area for $4-million.

First Cobalt owns a hydrometallurgical cobalt refinery in the Town of Cobalt. The refinery has the potential to produce either a cobalt sulfate for the lithium-ion battery market or cobalt metal for the North American aerospace industry or other industrial and military applications.

With permits and building infrastructure already in place, the First Cobalt Refinery will be operational as early as 2022. Once operational, the Refinery will produce 25,000 tonnes of battery-grade cobalt sulfate per annum, representing more than 5 per cent of all cobalt produced around the world.

Cruz Battery Metals Corp. [CRUZ-CSE; BKTPF-OTC; A2DMG8], formerly Cruz Cobalt Corp., completed a three-hole, 837-metre diamond drill campaign at the Hector Silver-Cobalt property. The company is a large mineral land holder in the Cobalt area and also includes the Bucke, Coleman, Johnson and Lorraine prospects.

Fuse Cobalt Inc. [FUSE-TSXV; FUSEF-OTC; 43W3-FSE], formerly Lico Energy Metals, recently reported that the government of Ontario announced a joint $10-million investment in the First Cobalt refinery in Cobalt Ontario. Significantly, this refinery is located approximately 1,500 metres west of the company’s cobalt exploration property. Fuse holds the Teledyne Cobalt property in Bucke and Lorrain Townships as well as the Glencore Bucke property located on the west boundary of the Teledyne property.

Brixton Metals Corp. [BBB-TSXV; BBBXF-OTCQB] has 100% interests in the Langis-Hudbay silver-cobalt project near the Town of Cobalt. The Langis Mine produced 10.4 Moz silver at 25 oz/ton and 358,340 lbs of cobalt between 1908 and 1989. Between 1903 and 1953 the Hudson Mine produced 4 million ounces of silver and 185,570 lbs cobalt.

iMetal Resources Inc. [IMR-TSXV; ADTFF-OTC] reported grab sample values of 67.9, 29.6 and 11.3 g/t gold from its flagship Gowganda West property.

The Eagle mine of Lundin Mining Corp. [LUN-TSX; LUNMF-OTC; LUMI-Sweden] in Michigan produces a cobalt-bearing nickel concentrate.

Jervois Global Ltd. [JRV-TSXV, ASX; JRVMF-OTC] is constructing the Idaho cobalt project (ICP) about 40 km from Salmon, east-central Idaho. It is a primary cobalt deposit with production estimates of 1,200 tons per day of super-alloy grade high-purity cobalt metal over a 7-year mine life.

The company has committed more than US$30-million toward equipment, materials and labour costs, both on-site and for detailed engineering. Construction, procurement and engineering schedule is on time with plan and commissioning of the mine expected from mid-2022. Currently, underground construction has commenced.

The company said that this historic step marks the first time in decades that the United States will have a primary cobalt mine within its borders.

Bryce Croker, CEO of Jervois, said, “Cobalt is a crucially important material for both defense and civilian applications. The electrification of the United States and global transportation sectors are currently and expected to continue driving exceptional cobalt demand growth.”

Some analysts are predicting a 17% increase in cobalt demand this year over 2020 and even more demand in the future due to the electrification of the world’s vehicle fleet. For example, the Ford Motor Company [F-NYSE] recently announced a US$11 billion investment to build electric vehicles in Tennessee and Kentucky, creating 11,000 new jobs. News doesn’t get much better than that.

 




















fortune minerals limited

Author: Resource World

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Futures Surge To All Time High As Earnings Supercharge Market Meltup

Futures Surge To All Time High As Earnings Supercharge Market Meltup

The wall of worry that preoccupied traders just weeks ago has melted…

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Futures Surge To All Time High As Earnings Supercharge Market Meltup

The wall of worry that preoccupied traders just weeks ago has melted away, and has been replaced with a global market melt up (just as Goldman predicted again this weekend), which pushed US index futures to a new all time high this morning when spoos hit 4,580.75, while propelling European and Asian stocks higher as corporate earnings helped boost sentiment amid lingering concerns about inflation and growth. As of 715am ET, US equity futures were up 0.42% or 19.25 points, Dow Jones futures were up 126 points or 0.35% and Nasdaq futures jumped 0.61%, extending cash market gains boosted by Tesla’s rally to a $1 trillion market value on a big order and Facebook’s results announcement revealing strong user growth and a $50 billion stock buyback. 10-year Treasury yields dropped by 1 basis point while the dollar slid to session lows. Bitcoin traded around $63,000.

The barrage of earnings reports continued on Tuesday morning, with United Parcel Service, General Electric and 3M all gaining in pre-market trading after strong results. Eli Lilly advanced after raising full-year forecasts. Bakkt shares jumped 36% in the U.S. premarket session after more than tripling Monday when Mastercard said it has inked a deal with the firm to help banks offer cryptocurrency rewards on their debit and credit cards.  Facebook also rose after pledging to buy back as much as $50 billion more in stock, with tech heavyweights Twitter, Alphabet and Microsoft reporting after the market close on Tuesday. Here are all the notable premarket movers:

  • Facebook (FB US) rises as much as 2.5% in premarket as analysts stay bullish despite a third-quarter revenue miss and an outlook that was below consensus. Advertising growth is seen improving in 2022.
  • Tesla (TSLA US) gains 1% after stock closed at a record high, boosted by several factors on Monday including a large car order from rental firm Hertz and Morgan Stanley lifting its price target.
  • Creatd (CRTD US) was up 27% adding to a 50% gain over the past two trading sessions amid a rally in a growing number of retail-trader favorite stocks linked to former U.S. President Donald Trump.
  • Redbox (RDBX US) rises as much as 130% after the firm completed a business combination with Seaport Global Acquisition, a special purpose acquisition company.
  • Cryptocurrency-exposed stocks rise, with Eqonex (EQOS US), previously known as Diginex, more than doubling in value after listing Polkadot on its platform and Bakkt (BKKT US) extending Monday’s gains.

Earnings season is helping to counter concerns that elevated inflation and tightening monetary policy will slow the recovery from the pandemic. Some 81% of S&P 500 members have reported better-than-expected results so far, though CitiGroup Inc. warned that profit growth may be close to peaking.

Equity markets are “continuing their recovery and we expect this process to continue past big-tech earnings” and this week’s European Central Bank meeting, where policy makers may flag the end to their pandemic bond-buying program, Sebastien Galy, senior macro strategist at Nordea Investment Funds, wrote in a note.

Still, some analysts voiced caution over the impact of the COVID-19 pandemic on supply chains: “Even though this has been a good earnings season in aggregate we are starting to see more companies with supply backlogs, hiring difficulties, and rising input prices that are eating into profits,” Deutsche Bank analysts wrote.

The debate over price pressures continued when former Treasury Secretary Lawrence Summers said officials are unlikely to deal with “inflation reality” successfully until it’s fully recognized.

The MSCI world equity index, which tracks shares in 50 countries, added 0.1%

European shares hit the highest level in seven weeks: the Stoxx Europe 600 index rose more than 0.5% led by gains in travel stocks and insurers, and edging close to a the record high reached in September while German stocks gained 0.9%. Reckitt Benckiser gained more than 5% after the maker of Strepsils throat lozenges raised its sales forecast. Swiss lender UBS Group AG climbed after posting a surprise jump in profit, while Novartis AG advanced on news it may spin off its generic-drug unit. After a stellar quarter for U.S. and British banks, Switzerland’s UBS rose over 2% on its highest quarterly profit since 2015, helping the financial services sector climb about 1%.

Earlier in the session, the MSCI Asia Pacific Index traded 0.3% higher in afternoon trading, paring an earlier gain of as much as 0.7% which pushed it to its highest level in six weeks.  Asian stocks rose as investors focused on encouraging earnings reports from some of the world’s biggest technology companies. The advance was driven by a subgauge of IT names including South Korean memory chipmaker SK Hynix, which climbed after reporting record sales and forecasting further demand growth. Japanese electronics giants Nidec Corp. and Canon Inc. reported results after Tuesday’s close. “The earnings season so far continues to meet investor expectations and assuage inflationary concerns,” said Justin Tang, head of Asianresearch at United First Partners. Tesla’s order from Hertz, good prospects for the $550 billion U.S. infrastructure bill and the latest talks between U.S. and China officials also helped “inject some risk appetite,” Tang said. Japan led gains among national benchmarks, with the Topix rising more than 1%. The market was helped by a local media report that the ruling Liberal Democratic Party may be able to win a majority of seats on its own in the general elections scheduled for next week. Key gauges in tech-heavy South Korea and Taiwan also jumped more than 0.5%, while benchmarks fell in Hong Kong and China.

In China, Modern Land China Co. became the latest builder to miss a payment on a dollar bond, in a further sign of stress in the nation’s real estate sector. Defaults from Chinese borrowers on offshore bonds have jumped to a record.

Japanese stocks advanced as investors looked toward earnings reports from major companies and political stability after the upcoming election. Electronics makers and telecommunications providers were the biggest boosts to the Topix, which gained 1.2%. Fast Retailing and Tokyo Electron were the largest contributors to a 1.8% rise in the Nikkei 225. Asian stocks and U.S. futures also rose, following the S&P 500’s climb to a record high, amid positive news from Tesla and Facebook. Japanese companies reporting results today include Canon, Nidec and Hitachi Construction Machinery.  Meanwhile, the ruling Liberal Democratic Party may be able to exceed a majority of 233 seats on its own in the general elections scheduled for Oct. 31, a poll conducted by Asahi showed. “There’s a lot of noise out there but for stocks, it’s about fundamentals, which are corporate earnings,” said Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management. “We’re starting to see some pretty good earnings figures, so I’m thinking we’ll see the Nikkei 225 consolidate around the 29,000 level this week.”

In rates, Treasuries were cheaper across front-end of the curve, fading a portion of Monday’s gains even as corporate earnings propel stock futures to new highs. The 10-year TSY yield is lower by less than 1bp at 1.622%; 2-year yields are cheaper by ~1bp on the day while long-end of the curve is richer by ~1.5bp, flattening 2s10s, 5s30s spreads by ~2bp. The TSY curve is flatter with long-end yields richer on the day, unwinding Monday’s steepening move. Treasury auction cycle begins with sale of 2-year notes, followed by 5- and 7-year offerings over next two days. 

In FX, the Bloomberg Dollar Spot Index was mixed but slumped to session lows as US traders walked in. The pound led gains followed by other risk-sensitive currencies such as the Australian and New Zealand dollars. Sterling gained even as overnight index swaps show traders trimmed back bets for BOE tightening, pricing in 14 basis points of hikes in November, down from 15 points previously. The yen was the worst performer as demand for haven assets receded following talks between U.S. and Chinese officials on the economy and cooperation in which some incremental progress was made. The euro inched up after gyrating toward the $1.16 handle; the euro’s volatility skew flattened in the past two weeks, suggesting a rebound in the spot market. Given the latter has stalled at a key resistance area, risk reversals could show downside risks once again. The Turkish lira rallied the most in more than four months after President Recep Tayyip Erdogan dropped his demand for 10 Western ambassadors to be expelled from the country.

China’s offshore yuan gained for a fourth straight day, lifted by a phone call between the U.S. and China on trade and economic issues. Overnight borrowing costs sunk to one-month lows after the central bank boosted cash injections into the financial system. 

In commodities, WTI crude oil was steady around $84 a barrel and Brent traded above $86 as investors weighed the outlook for U.S. stockpiles and prospects for talks that may eventually help to revive an Iranian nuclear accord, allowing a pickup in crude exports.
Gold held above $1,800 an ounce and Bitcoin hovered around $62,500.

Looking at today’s calendar, we get the August FHFA house price index, September new home sales, October Conference Board consumer confidence and Richmond Fed manufacturing index. In central banks, ECB’s Villeroy and de Cos will speak. In corporate earnings, we will get results from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter

Market Snapshot

  • S&P 500 futures up 0.4% to 4,576.25
  • STOXX Europe 600 up 0.6% to 474.91
  • MXAP up 0.4% to 200.93
  • MXAPJ up 0.2% to 662.77
  • Nikkei up 1.8% to 29,106.01
  • Topix up 1.2% to 2,018.40
  • Hang Seng Index down 0.4% to 26,038.27
  • Shanghai Composite down 0.3% to 3,597.64
  • Sensex up 0.4% to 61,232.14
  • Australia S&P/ASX 200 little changed at 7,443.42
  • Kospi up 0.9% to 3,049.08
  • German 10Y yield little changed at -0.12%
  • Euro little changed at $1.1609
  • Brent Futures down 0.3% to $85.76/bbl
  • Gold spot down 0.3% to $1,802.76
  • U.S. Dollar Index little changed at 93.86

Top Overnight News from Bloomberg

  • Traders are wagering on rate hikes of as much as 158 basis points over the next year in countries including the U.K., New Zealand and South Korea amid soaring costs of living and commodity prices. Yet a flattening in yield curves — historically seen as the market’s assessment of economic health — indicates rising concern that such a rapid withdrawal of support will hurt the nascent recovery
  • Financial markets have stubbornly ignored recent warnings from ECB policy makers including Chief Economist Philip Lane that they’re wrong to anticipate a rate hike at the end of next year. The task of persuading people otherwise will fall to President Christine Lagarde as she presents the Governing Council’s latest decision on Thursday

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were lifted by the tailwinds seen stateside, whereby the SPX and DJIA both notched fresh all-time-highs, although the NDX outperformed as Tesla shot past the USD 1000/shr mark and USD 1trl market cap milestone. US equity futures overnight drifted higher with the NQ narrowly outperforming its peers. European equity futures also posted mild gains. Back to APAC, the ASX 200 (+0.1%) was kept afloat by tech names as the sector saw tailwinds from the stateside performance. The Nikkei 225 (+1.8%) outperformed following the prior session’s underperformance, and as the JPY drifted lower during the session. The KOSPI (+0.9%) was also firmer with SK Hynix rising some 3% at the open as chip demand supported earnings. The Hang Seng (-0.4%) and Shanghai Comp (-0.3%) opened flat but the latter was initially underpinned following another chunky CNY 190bln net liquidity injection by the PBoC. The Hang Seng Mainland Properties Index fell almost 5% in early trade, whilst Modern Land noted that it will not be able to meet payments and shares were halted until future notice. Finally, 10yr JGBs were lower amid spillover selling from T-notes and Bund futures.

Top Asian News

  • MediaTek Sees 2021 Revenue Growing by 52%; 3Q Profit Beats
  • UBS Going ‘Full Bull’ on China Despite Outflows, Growth Worry
  • China’s IPO Flops Raise Red Flag Over Shares Pricing: ECM Watch
  • Asian Stocks Rise as Investors Focus on Major Tech Earnings

European equities (Stoxx 600 +0.6%) trade on a firmer footing after extending on the tentative gains seen at the cash open with the Stoxx 600 at its best level in around seven weeks. The APAC session saw some support via the tailwinds seen in the US after the SPX and DJIA both notched fresh all-time highs and the NDX outperformed and Tesla shot past the USD 1000/shr mark and USD 1trl market cap milestone. The Nikkei 225 (+1.7%) led gains in the region alongside a firmer JPY whilst the Shanghai Comp (-0.3%) was unable to benefit from another chunky liquidity injection by the PBoC. Stateside, futures are indicative of a firmer cash open with the NQ (+0.6%) continuing to outpace peers with Facebook +2.4% in pre-market trade post-results which saw the Co. announce a USD 50bln boost to its share buyback authorisation. From a macro perspective, with the Fed in its blackout period and events on Capitol Hill not providing much impetus for price action, the equity landscape will likely be dominated by earnings with the likes of Alphabet, Microsoft, General Electric, 3M, Visa, AMD and Twitter all due to report today. Earnings are also playing a pivotal role in Europe today with Reckitt (+6.4%) top of the FTSE 100 and supporting the Personal and Household Goods sector after Q3 results prompted the Co. to raise its sales outlook. UBS (+0.6%) is off best levels but still firmer on the session after reporting its highest quarterly profits in six years. Countering the upside from UBS in the Banking sector is Nordea (-4.0%) with shares weighed on by Sampo selling 162mlnn shares in the Co. to institutional investors. Novartis (+1.6%) shares are trading broadly inline with the market after opening gains were scaled back post-Q3 earnings which saw the Co. report a 10% increase in operating profits and announce a strategic review of its generic drug unit Sandoz. Telecoms are near the unchanged mark and unable to benefit from the broader gains seen across the region as Orange (-2.7%) acts as a drag on the sector after announcing a decline in Q3 earnings.

Top European News

  • UBS Going ‘Full Bull’ on China Despite Outflows, Growth Worry
  • Adler Sells Real Estate Portfolio Valued at More Than EU1B
  • Europe Gas Extends Gains With Weak Russian Flows, Norway Outages
  • Latest Impact of Europe’s Energy Crisis is a Plunge in Trading

In FX, the 94.000 level remains tantalisingly or agonisingly close, but elusive for the Dollar index, and it could simply be a psychological barrier as a breach would clear the way for a complete comeback from trough to 94.174 peak set last week. However, the Greenback has lost some yield attraction and the broad risk tone is bullish to dampen demand on safe-haven grounds, while chart resistance and option expiries are also preventing the Buck from staging a more pronounced rebound ahead of a busier US agenda including housing data, consumer confidence, several regional Fed surveys and the first slug of issuance in the form of Usd 60 bn 2 year notes. Back to the DXY, 93.965-795 encapsulates trade thus far, and the 21 DMA stands at 93.966 today, just 3 ticks shy of Monday’s high.

  • AUD – In similar vein to its US counterpart, the Aussie is finding 0.7500 a tough round number to crack, convincingly, but Aud/Usd is deriving support from the ongoing recovery in industrial metals awaiting independent impetus via Q3 inflation data tomorrow.
  • JPY/CHF – The Yen and Franc continue to lag their major peers and retreat further vs the Dollar, with the former now struggling to keep sight of the 114.00 handle even though hefty option expiries reside from 113.85 to the big figure (1 bn), and Usd/Jpy faces more at the 114.50 strike (1.1 bn), while the latter is sub-0.9200 and unwinding more gains relative to the Euro as the cross probes 1.0700.
  • GBP/NZD – Conversely, Sterling remains primed for further attempts to extend gains beyond Fib resistance and breach 1.3800, while eyeing 0.8400 against the Euro irrespective of some UK bank research suggesting that BoE Governor Bailey may not back up recent hawkish words with a vote to hike rates at the November MPC. Elsewhere, the Kiwi is still hovering above 0.7150 and defending 1.0500 vs its Antipodean rival with a degree of traction via RBNZ Governor Orr warning that climate change could culminate in a lengthy phase of stronger inflation that needs a policy response.
  • EUR/CAD – Both rather flat, as the Euro continues to pivot 1.1600 and rely on option expiry interest for underlying support (1.5 bn rolling off from the round number to 1.1610 today), but also anchored by the 21 DMA that aligns with the big figure, while the Loonie has lost its crude prop on the eve of the BoC, though should also receive protection from expiries at 1.2400 (1 bn) within a 1.2394-68 range.
  • EM – The Try has reclaimed more lost ground to trade above 9.5000 vs the Usd on a mix of corrective price action and short covering rather than any real relief about Turkey’s latest rift with international partners given another blast from President Erdogan who said statements issued by ambassadors on Kavala target his country’s judiciary and sovereignty, adding that the Turkish judiciary does not take orders from anyone. On the flip-side, the Zar is softer alongside Gold and ongoing issues with SA power supply provided by Eskom.

In commodities, WTI and Brent have been softer throughout the European morning dipping from the initially steady start to the APAC session after yesterday’s pressured; nonetheless, prices haven’t dipped too far from recent peaks. Newsflow for the complex and broadly has been sparse thus far as focus remains very much on earnings and events due later in the week. Specifically for energy, we had commentary from Russian Deputy PM Novak that he wants OPEC+ to stick to the agreement to increase production by 400k BPD at the November gathering, commentary which had little impact on crude at the time. Elsewhere, the weekly Private Inventory report is due later in the session and expectations are for a build of 1.7mln for the headline crude figure; for reference, both distillates and gasoline stocks are expected to post a draw. Moving to metals, spot gold and silver are pressured this morning with initial downside perhaps stemming from a short-lived resurgence in the USD; however, while the metals do have a negative bias, the magnitude of this – particularly in spot gold – is fairly minimal. Separately, base metals are softer with LME copper hindered and still shy of the 10k figure. Again, newsflow this morning has been limited but we did see a production update from Hochschild who confirmed FY21 production guidance of 360-370k gold-equivalent ounces after reporting that Q3 was the strongest period of the year, thus far.

US Event Calendar

  • 9am: Aug. S&P Case Shiller Composite-20 YoY, est. 20.00%, prior 19.95%; 9am: MoM SA, est. 1.50%, prior 1.55%
  • 9am: Aug. FHFA House Price Index MoM, est. 1.5%, prior 1.4%
  • 10am: Oct. Conf. Board Consumer Confidenc, est. 108.2, prior 109.3
    • Present Situation, prior 143.4
    • Expectations, prior 86.6
  • 10am: Oct. Richmond Fed Index, est. 5, prior -3
  • 10am: Sept. New Home Sales, est. 758,000, prior 740,000; MoM, est. 2.5%, prior 1.5%; 

DB’s Jim Reid concludes the overnight wrap

If you’ve never seen Lord of the Flies feel free to come round to our house where you’ll get a live performance that gets more authentic the longer this two week half-term holiday we’re in goes on. Yet again working is the safest option. We have the option to “purchase” extra holiday each year but I’m thinking of seeing if I can give some back and take the money instead. They are hard work when put into a room together for any period of time.

It was not only the fighting that was the same as last week, markets were pretty similar yesterday too as we saw fresh equity highs alongside renewed multi-year highs in breakevens. There are a few subtle changes in company reporting trends though. Even though this has been a good earnings season in aggregate we are starting to see more companies with supply backlogs, hiring difficulties, and rising input prices that are eating into profits. Indeed yesterday saw a few consumer staples companies lower full year profit outlooks in their earnings releases.

Nevertheless, major equity indices marched higher, with the small cap Russell 2000 (+0.93%) and Nasdaq composite (+0.90%) outperforming the S&P 500 (+0.47%). Consumer discretionary stocks were the clear outperformer, driven by news of Tesla (+12.66%) receiving a 100k car order from Hertz. Tesla’s big day saw it become the first automaker to cross 1 trillion dollar market cap and also drove the outperformance of the FANG index ahead of Facebook’s after hours earnings release.

Speaking of which, Facebook missed revenue estimates but beat on earnings. Shares were slightly higher in after-hours trading, where they are betting big on virtual reality technology.

Overnight in Asia, the Nikkei 225 (+1.75%) and the KOSPI (+0.61%) are outperforming the Hang Seng (-0.42%) and Shanghai Composite (+0.01%). The sentiment in China is being clouded by the news of another developer, Modern Land China Co., missing a payment on a $250 million dollar bond. This news came as Bloomberg reported that Chinese firms set a yearly record on offshore bond defaults. Another development in the region is that Hong Kong has pushed back against yesterday’s calls for an easing in its virus rules which the banks in particular were calling for. In geopolitics, China’s Vice Premier Liu He and U.S. Treasury Secretary Janet Yellen held a call about trade and economic concerns, boosting sentiment in Asian markets, while the S&P 500 mini futures (+0.24%) is trading higher. The yield on 10y Treasury (+0.7bps) is also up. In data releases, South Korean preliminary GDP for Q3 came in at +4.0% versus +4.3% expected, while Japan’s services PPI for September declined to +0.9%, missing estimates of +1.1%.

Back to yesterday and in fixed income, as mentioned at the top inflation breakevens continued their march higher. In the US, 10-year Treasury breakevens (+2.7 bps) closed at 2.67%, just shy of their widest levels since 10-year TIPS began trading in 1997. 10yr nominal yields were -0.2 bps lower as real yields slipped -2.3bps to their lowest levels since mid-September. European breakevens kept pace, with 10-year German breakevens increasing +1.9bps to 1.93% and UK breakevens increasing +1.2 bps to 4.20%. As was the case with the US, real yields fell as nominal 10-year yields decreased across Europe. Bunds (-0.9bps), Gilts (-0.5bps), OATs (-1.1bps) and BTP (-3.4bps) yields all fell.

Crude oil futures put in a mixed performance. Multiple OPEC+ members signaled they won’t increase supply at their upcoming meeting leading to gains in crude, yet the gains were short lived, as headlines noted that Iran and the EU will stage talks to restore the 2015 nuclear deal, paving a way for Iranian oil supply to return to the market. Brent futures finished +0.54% higher while WTI futures were unchanged. Natural gas prices were on a one-way track higher, however. US natural gas prices had their biggest one-day gain in a year, increasing +11.70%, on the back of a colder forecast for the upcoming winter as supply issues still abound. European and UK natural gas prices were only modestly higher by comparison, increasing +1.27% and +1.86%, respectively. European leaders are gathering in Luxembourg today for an emergency meeting on the energy crisis.

European equities were almost unchanged, with the STOXX 600 (+0.07%) finishing with marginal gains with energy (+1.27%) leading. The German DAX (+0.36%) gained with the help of stronger IT (+1.76%) performance despite Ifo expectations (95.4) coming in below consensus (96.6).

In other data releases, the Chicago Fed National Activity Index came at -0.13 versus 0.20 expected. The Dallas Fed Manufacturing Activity Index (14.6), however, surprised on the upside by coming above expectations (6.0). Delivery times remained elevated in the survey, and a special question showed that labour supply issues got slightly worse.

In virus news, Moderna reported that its vaccine showed a strong immune response for children from 6 to under 12 years old. Meanwhile, China announced in its initial guidelines that unvaccinated athletes at the 2022 Winter Olympics in Beijing would have to quarantine for 21 days, while Hong Kong was pressured by banks to relax its zero-COVID policy.

In today’s data releases, August FHFA house price index, September new home sales, October Conference Board consumer confidence and Richmond Fed manufacturing index are due from the US. In central banks, ECB’s Villeroy and de Cos will speak. In corporate earnings, we will get results from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter

 

Tyler Durden
Tue, 10/26/2021 – 07:47



Author: Tyler Durden

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