By Remy Blaire
GOLD ILLUMINATES MATERIALS SECTOR
Gold recovered the $1,300 level and came off lows of the month as the dollar weakened and as Brexit jitters permeated investor sentiment. After regaining its highest level in two weeks the precious metal tested a resistance level of $1,307 an ounce. Spot gold for April delivery managed to settle above $1,309 an ounce in midweek trade but retreated below the $1,300 level as the U.S. currency strengthened on Thursday.
Concerns about the slowdown in global growth and the outcome over the U.S.-China tariff dispute are ongoing. Yet the broader market has come off recent lows and recovered from the Christmas Eve bear market of 2018. The Federal Reserve’s “patient” approach to interest rate hikes and the possibility of an “adjustment” to the unwinding of is balance sheet have supported the market turnaround.
It’s been a wild ride for gold and now the yellow metal may be past the inversion phase of the recent rollercoaster ride. U.S. economic data is lukewarm but supportive of the Fed’s current position on rate hikes.
On Wednesday, the U.K. Parliament rejected a no-deal Brexit. In a close decision, MPs voted to reject leaving the EU without a withdrawal agreement. On Thursday, MPs will vote on delaying Brexit and request an extension to Article 50. If the vote passes and the EU agrees – the U.K. will not leave on March 29.
On this side of the Atlantic, U.S. equities continued to recover with the DJIA eyeing the so-called “golden cross” chart pattern. The benchmark equity average could see its 50-day moving average (DMA) cross above the 200-DMA. While the technical indicator could point to a long-term bull market, the breakout pattern is a lagging one and never a guarantee of future performance.
SURVIVAL OF THE FITTEST IN GOLD MINING
Gold mining stocks can be an indicator of how the gold market is faring. The stocks are oftentimes seen as a way to get leveraged exposure to gold prices.
The biggest players in the sector are making headlines for mergers and venture announcements. Barrick Gold Corp and Newmont Mining Corp formed a joint venture in Nevada. Earlier this year, Newmont Mining acquired Goldcorp, creating the largest gold miner in the world. Several months ago Barrick Gold scooped up Randgold Resources.
In the aftermath of the 2011 commodity crash there were expectations of more mergers for the junior mining companies. The deals that took place among the gold miners in 2018 totaled over $59 billion but amounted to less than half the sum seen during the peak in 2011.
At the same time, there have been other notable deals recently including Newcrest Mining’s move into Canada. Newcrest and Imperial Metals agreed to a joint venture for a majority stake in a B.C. mine. Meanwhile, Newcrest also entered into a deal with Greatland Gold for a gold-copper project.
SEABRIDGE GOLD – IRON CAP GOLD AND COPPER RESOURCES AMPLIFIED
Seabridge Gold (TSX: SEA) (NYSE: SA) is a development stage company based in Toronto, ON. The company’s main projects include the Kerr-Sulphurets-Mitchell (KSM) property in British Columbia, the Courageous Lake property in the Northwest Territories, the Iksut Property located in NW B.C.
Seabridge evaluates, acquires and is involved in the exploration and development of gold properties in North America and has other resource projects on the continent. The Snowstorm Project is located in Nevada at the intersection of the main gold trends in the northern region on the U.S. state.
The KSM project is one of the world’s largest undeveloped gold projects in the world. Seabridge Gold recently announced an updated independent mineral resource estimate for its Iron Cap deposit. This deposit is one of four gold and copper porphyry deposits within the KSM project. Worthy of note is that the project is 100% owned by Seabridge.
The company updated its resource estimate for its Iron Cap project that boosts the project’s indicated resource by 460,000 ounces gold and 177 million pounds copper. In turn the project’s inferred resource is expanded by 7.45 million ounces gold and 4 billion pounds copper.
Rick Rule, president and CEO of Sprott U.S. Holdings spoke with Seabridge Gold’s CEO, Rudi Fronk for a brief interview segment. After the latest Iron Cap update, Fronk remarked that the new estimate could lead to the company prioritizing the deposit ahead of others in the overall project plan:
The “exploration success at Iron Cap … gives us greater flexibility to optimize project economics. Iron Cap is closer to infrastructure than Kerr and Sulphurets and its development could be faster and less costly … Iron Cap clearly has the size and grade to justify early inclusion in the mining sequence.”
Fronk says the Iron Cap “resource additions … have met our annual corporate objective of increasing gold ownership on a per share basis. In 2018, our shares outstanding increased by approximately 3.6 million shares resulting from new financings to fund our programs plus other share issuances.”
Seabridge Gold has a market capitalization of nearly $1 billion.
Listen to Rick Rule’s interview with Seabridge Gold’s Chairman and CEO, Rudi Fronk. To hear Fronk’s thesis on gold and learn about Seabridge’s track record and global resources: