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December 20, 2016

#Uranium: Technical Analysis of Uranium Sector: Seeing Signs of Bullish Shift in Trend


Uranium Participation Corp: Signs of a Potential Shift in Trend

 

 

 

Cameco Corp.: Attempting Downtrend Breakout

 

 

 

NexGen Energy Ltd.: Consolidating Breakout

 

 

 

Denison Mines Corp.: Carving Out Basing Pattern  

 



Chart 1 – Uranium Participation Corp is starting to show signs of a potential shift in trend as price action breaks out from a yearlong downtrend. The breakout confirms the bullish divergence in momentum indicators and is backed by a breakout in RSI. It is important to note, however, that price remains below a falling 40-week moving average. We need to see the weekly moving averages start to flatten out and turn higher along with a break above the 40-wma in order to confirm the start of a major shift in trend.

 

Chart 2 – Cameco Corp. is positioning for a major breakout from a ten quarter downtrend as weekly RSI breaks out to 32 month highs on a new MACD buy signal. A weekly close above $10.75 will confirm the major trend reversal and position CCJ for a rally to $14.00.

 

Chart 3 - NexGen Energy Ltd is leading Uranium stocks as price action breaks out from a 6 month downtrend, 200-day moving average and reclaims the neckline of the April to September topping pattern. The breakout confirms the bullish divergence in momentum indicators and positions NXE for a rally to new highs. In the near-term, however, momentum indicators are overbought suggesting a period of consolidation is needed to workoff overbought pressure. We would look to add on weakness and a reset in momentum indicators.

 

Chart 4 – Denison Mines has broken out from a nearly 3 year downtrend as price action continues to carve out a 6 quarter double bottom with the neckline at $0.85.  Weekly momentum indicators continue to show signs of strength suggesting we should see an upside resolution to the current basing pattern. A breakout above $0.85 will confirm a bullish shift in trend that measures to a technical target of $1.30.


December 15, 2016

#Gold - Heavy selling in precious metals futures contracts over the last 24 hours

The attached chart shows the massive seller (s)  used the FED interest rate hike to do further damage in the precious metals market.

 

Through the futures market, in the last 24 hours, the value of US$ 10 Bio. in precious metals futures contracts were dumped into the market.

 


 

 

#Gold & #Silver #ETF holders continue to liquidate holdings - EURO/US$ ratio close to breakout on the downside

Total Global Gold ETFs were DOWN 35kozs Nov 13 to 58.856MozsThey are down 5.4Mozs since the US Election.  They are still up 11.866Mozs so far in 2016 …. Global Silver ETFs were DOWN 1.8Mozs Nov 13 to 654.8Mozs.  They are up 48.6 Mozs YTD.   

 

Source: Bloomberg

December 7, 2016

#Zinc Breaking Out from 7.5 Year Range


 

Zinc Breaking Out from 7.5 Year Range

Ø  Zinc is breaking out from a key inflection level dating back to 2009.

Ø  The breakout is  backed by a momentum thrust with RSI and MACD breaking out to nearly 10 year highs.

Ø  Depth of the 7.5 year range measures conservatively to a technical target of $3,850/t ($1.75/lb).

Ø  Trevali Resources remains our favourite way to play the zinc space. Nevsun Resources also looks poised for further upside.


From Paradigm Capital 

 

Saving #DRC’s #mining law reform

Saving DRC's mining law reform - This is Africa

At current prices, the average effective tax rate of a typical copper mine in DRC would be 58 percent, falling between those in Zambia and Chile. At higher copper prices, the same indicator would be 46 percent, below that of Indonesia, Chile and Western Australia. There is therefore room for DRC to capture a larger share of mining companies' revenue in the event of a new cycle of high prices.

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD/t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD:t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 8,000 USD/t, in net present value terms with a discount rate of 10%.



Saving DRC's mining law reform

National elections in the Democratic Republic of the Congo are slated for  December 19 – at least on paper.

The government's failure to organise them has led to popular outrage, as have the security forces' violent suppression of the resulting protests over the last couple of months. Different political parties have agreed to a new coalition government, headed up by opposition leader Samy Badibanga, to lead the country towards general elections.

But President Joseph Kabila, who has ruled since 2001, will remain in power until then – in effect extending his second and last legal term. This was the goal of the delaying organizing the polls, part of a tactic known as glissement – or slippage – among the Congolese.

In addition to the electoral issue, the new government should address recurring discontent among the Congo's citizens around unsatisfying returns from the country's booming mining sector. Dissatisfaction with the political leadership is closely linked to frustrations with how poorly the central government has managed the mining sector.

The DRC is now the largest global producer of cobalt and the fifth-largest producer of copper. Lower metal prices since 2014 have slowed growth. International and local mining entrepreneurs have made fortunes off of the country's minerals. However allegations of political corruption around mining deals are all over the news.For all this wealth, the general population has little to show for it.

After several years of high mineral prices, in 2012 the government initiated a mining code review in response to citizen pressure. Though participatory in nature, the process was a dead end.

The version submitted to parliament in March 2015 did not represent a compromise between industry and civil society organisation positions. Active lobbying from the country's chamber of mines focused on the draft law's fiscal provisions. These pressures led the government to abandon the reform project.

The drop in copper prices, as well as the growing economic and political crisis in Congo, have chilled attempts by other actors to resume the process. For almost two years, the status of the reform has been unclear.

This is bad for business and frustrates the population, the majority of whom live on less than a dollar a day.

Benchmarking reform

The Natural Resource Governance Institute (NRGI) recently identified potential solutions to the deadlock. We analysed the current mining code (dating from 2002) along with the proposed revisions submitted to parliament.

We benchmarked the results against other mining jurisdictions, from Peru to Australia. We found that the existing fiscal regime for mining companies in the DRC is relatively generous to companies, but not out of line with international practice given the country's strengths and weaknesses.

At current prices, the average effective tax rate of a typical copper mine in DRC would be 58 percent, falling between those in Zambia and Chile. At higher copper prices, the same indicator would be 46 percent, below that of Indonesia, Chile and Western Australia. There is therefore room for DRC to capture a larger share of mining companies' revenue in the event of a new cycle of high prices.

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD/t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD:t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 8,000 USD/t, in net present value terms with a discount rate of 10%.

Average effective tax rate for a copper mine, with copper prices set at 8,000 USD:t, in net present value terms with a discount rate of 10%

However  a balance must be struck. The DRC has rich geology but a difficult political and regulatory environment. Companies' operating costs are relatively high. Some allowances must be made to make operating in this environment palatable to investors.

Read the rest of the article here: 

http://www.thisisafricaonline.com/News/Saving-DRC-s-mining-law-reform?ct=true?utm_campaign=enews+nov+3rd+issue+standard+version&utm_source=emailCampaign&utm_medium=email&utm_content=



December 3, 2016

Dominion #Diamond (DDC) Production and cash flow on the rise - Dividend 4.2%

With US$ 180 Mio. in cash, no significant debt and an annual dividend is US$ 0.40 for a yield of 4.2%, DDC is a great way to diversify away from precious metals producers 

#GOLD ETF's - Continued liquidation

 

Source: Bloomberg

 

Gold ETF holders continue to liquidate their holdings.

 

As of Monday gold holdings in the world's largest ETF totaled 885.04 tonnes, the lowest level since June. November has been one of the worst months in terms of outflows in the last 3 years as GLD gold reserves have dropped by 57.55 tonnes. The outflows total more than US$ 2.3 Bio.

 

Total Global Gold ETFs were DOWN 202kozs Nov 28 to 60.670MozsThey are down 3.2Mozs in November.  They are up 13.680Mozs so far in 2016 …. Global Silver ETFs were UP 162kozs Nov 28 to 660.4Mozs.  They are up 54.2Mozs YTD.   


December 1, 2016

#Gold companies: Where is the breakeven point to create Free #CashFlow

"In 2017e the average Mid-Tier/Intermediate and Junior gold producers will need US$1,124/oz and US$1,199/oz (Alacer outlier removed) respectively to cover all of their costs, including development capex."

 

Source: Scotiabank GBM Precious Metals Research

 

After a euphoric few months, analysts are back where the market has been a year ago, figuring  out free cash flow (FCF) breakeven points for gold companies. As the Table for Scotiabank outlines, intermediate gold companies need on average US$ 1,124 per ounce and junior gold companies (excluding Alacer Gold) US$ 1,199 per ounce to break even in 2017.

 

In 2017e the average Mid-Tier/Intermediate and Junior gold producers will need US$1,124/oz and US$1,199/oz (Alacer outlier removed) respectively to cover all of their costs, including development capex.  

 

A key item that will be carefully watched by Scotiabank's entire precious metals research team will be looking for with companies' 2017 guidance is the potential of a rising sustaining capex outlook.  The key question is how many companies cut sustaining capital over the past few years and will now have to "catch-up" on this front?