Rate Cuts / Uranium Financing / Silver PEA / Bitcoin Trends
Published: 6/10/2024
Author: FRC Analysts
Key Highlights
- Last week, the Bank of Canada and the European Central Bank became the first major central banks to cut rates
- Robust jobs data boosted treasury yields, strengthening the US$, which prompted a pullback in metal prices
- A uranium junior under coverage has attracted US$190M in project financing
- Robust PEA results from a silver junior under coverage
- The global hash rate of Bitcoin (BTC) and the Realized HODL ratio (RHODL) increased last week, suggesting potential for an uptick in near-term BTC prices
In This Issue
- Commentary on Companies Under Coverage: Gain insights into companies under coverage that experienced significant developments last week, along with our analysts' commentary and actionable takeaways.
- FRC Top Picks: Explore the top five weekly performers among our list of top picks.
- Weekly Mining Commentary: Gain a broader perspective on global equity and metal markets, major developments, trends affecting the mining sector, along with our analysts' predictions, and metal price forecasts.
- Weekly Crypto Commentary: Stay updated with the latest developments in the crypto markets, including detailed analysis of key parameters such as crypto prices, global market capitalization, hash rates, and valuations of publicly traded crypto companies.
Blue Sky Uranium Corp. (BSK.V, BKUCF)
PR Title: Announces a transaction to advance the Ivana uranium deposit through feasibility, and to commercial production
Analyst Opinion: Positive – BSK has signed a deal with an Argentine company to potentially earn up to an 80% interest in the Ivana project by spending US$30M towards a feasibility study, and funding 100% of the project’s CAPEX through production, estimated at US$160M. A recent PEA had reported an AT-NPV8% of US$228M, using US$75/lb U3O8. Based on our report in March 2024, an 80% interest in the project should be valued at US$223M. With the deal bringing in US$190M, we believe BSK has captured 85% of the project's fair value. Overall, we are pleased with the deal as it will mitigate project risks, and ensure full funding towards production, without any substantial share dilution for BSK. We will publish a detailed update shortly.
Southern Silver Exploration Corp. (SSVFF, SSV.V)
PR Title: Announces an updated PEA on Cerro Las Minitas (Mexico)
Analyst Opinion: Positive – An updated PEA returned an AT-NPV5% of US$501M, and an AT-IRR of 21%, using US$23/oz silver (base-case), and an AT-NPV5% of US$876M, and an AT-IRR of 30%, using US$27.6/oz silver vs the spot price of US$29.5/oz. Compared to the 2022 PEA, the base-case NPV increased by 44%, driven by higher metal prices, increased annual production, and an extended mine life, partially offset by the impact of higher CAPEX/OPEX. SSV is trading at just 11% of the base-case AT-NPV5%. We will publish a detailed update shortly.
Eskay Mining Corp. (ESKYF, ESK.V)
PR Title: Enters into a LOI to acquire P2 Gold Inc. (TSXV: PGLD) for $11M
Analyst Opinion: Positive – This acquisition is highly accretive for Eskay, offering geographical diversification and access to an advanced-stage project at a deeply discounted price. P2 is advancing a copper-gold project in Nevada. A recently completed PEA had reported an AT-NPV10% of US$257M, and a high AT-IRR of 21%, using US$1,950/oz gold, implying that Eskay is paying just 5% of the AT-NPV10%. The project hosts 3.45 Moz in AuEq resources. Eskay is paying just US$5/oz vs the sector average of US$34/oz.
Transition Metals Corp. (TNTMF, XTM.V)
PR Title: Validates copper porphyry potential at the Pike Warden project (Yukon)
Analyst Opinion: Positive – Recent exploration has confirmed porphyry mineralization (large tonnage/low grade) at its Pike Warden project. The property is also prospective for epithermal gold-silver (high grade/shallow).
Grid Battery Metals Inc. (CELL.V)
PR Title: Completes phase one of its 2024 exploration program on the Clayton Valley lithium project (Nevada)
Analyst Opinion: Positive – A recent geophysical survey has identified a significant fault structure, which could potentially serve as a conduit for lithium accumulation. Management intends to use these results, and the impending results of an infill soil sampling survey, to identify drill targets. The Clayton Valley property is located adjacent to Albemarle’s (NYSE: ALB) lithium mine, and Century Lithium’s (TSXV: LCE) advanced-stage lithium project.
Updates on Financials, Technology, Energy, and Special Situations Companies Under Coverage
Ocean Biomedical Inc./NASDAQ:OCEA
PR Title: Joint venture partner, Virion Therapeutics, reports positive results from their immunotherapy, VRON-0200, for HBV (hepatitis)
Analyst Opinion: Early results from Virion's phase one human trials for Hepatitis B are promising: safe, well-tolerated, and potentially activating patients' immune systems. OCEA is an incubator partnering with inventors, universities, and research institutions to potentially commercialize their discoveries for medical treatments. OCEA is advancing multiple drug candidates for oncology (cancer prevention), fibrosis (lung tissue damage treatment), and infectious diseases (malaria).
FRC Top Picks
The following table shows last month’s top five performers among our Top Picks, including five junior resource companies. The top performer, World Copper (TSXV: WCU), was up 196%. WCU is advancing multiple copper projects in the Americas.
| Top Five Monthly Performers | MoM Returns |
| World Copper Ltd. (WCU.V) | 195.7% |
| Fortune Minerals Limited (FT.TO) | 140.0% |
| Southern Silver Exploration Corp. (SSV.V) | 55.0% |
| Starcore International Mines Ltd. (SAM.TO) | 45.5% |
| South Star Battery Metals Corp. (STS.V) | 25.0% |
| * Past performance is not indicative of future performance (as of May 27, 2024) |
Source: FRC
Last month, companies on our Top Picks list were up 12.7% on average vs 2.8% for the benchmark (TSXV). Our top picks have outperformed the benchmark in all of the six time periods listed below.
Performance by Sector
| Total Return | 1 mo | 3 mo | 6 mo | 1 yr | 3 yr | Since launch |
| Mining | 19.7% | 54.8% | 45.0% | 17.6% | -41.9% | 2.6% |
| Cannabis | N/A | N/A | N/A | N/A | -41.6% | -23.6% |
| Tech | -27.3% | 42.9% | 33.3% | -27.3% | -35.5% | -4.2% |
| Special Situations (MIC) | -4.1% | -3.8% | 10.8% | 19.3% | -17.1% | -10.5% |
| Private Companies | N/A | N/A | N/A | 6.7% | 20.5% | 30.5% |
| Portfolio (Total) | 12.7% | 39.9% | 34.9% | 15.0% | -21.9% | 2.8% |
| Benchmark (Total) | 2.8% | 8.3% | 12.3% | -0.1% | -37.2% | -31.6% |
| Portfolio (Annualized) | - | - | - | 15.0% | -7.9% | 0.3% |
| Benchmark (Annualized) | - | - | - | -0.1% | -14.4% | -3.6% |
1. Since the earliest initiating date of companies in the list of Top Picks (as of May 27, 2024) 2. Green (blue) indicates FRC's picks outperformed (underperformed) the benchmark. 3. Past performance is not indicative of future performance. 4. Our complete list of top picks (updated weekly) can be viewed here: Top Picks List
Weekly Mining Commentary
Last week, global equity markets were up 0.1% on average (down 0.6% in the previous week). The Bank of Canada and the European Central Bank became the first major central banks to cut rates, with both institutions reducing rates by 25 bp last week. Last week, robust jobs data boosted treasury yields, strengthening the US$, which prompted a pullback in metal prices. Gold and copper have extended their retreat from the historic peaks observed three weeks ago. We maintain our belief that the Fed will cut rates in Q4-2024.
Source: FRC / Various
Last week, metal prices were down 3.7% on average (down 2.0% in the previous week).
Gold producer valuations were down 5.2% last week (down 0.3% in the prior week); base metal producers were down 3.4% last week (down 1.7% in the prior week). On average, gold producer valuations are 22% lower (unchanged) than the past three instances when gold surpassed US$2k/oz.
Source: S&P Capital IQ & FRC
We are maintaining our metal price forecasts.
Weekly Crypto Commentary
Prices of mainstream/popular cryptos were down 5% on average last week (down 1% in the previous week).
Source: FRC/Yahoo Finance
The global MCAP of cryptos is US$2.67T, up 13% MoM, and 143%YoY.
Total Crypto Market Cap Chart
Source: CoinGecko
Last week, BTC was down 1.7%, while the S&P 500 was up 2.1%. The U.S. 10-year treasury yield was up 1.5%.
Source: FRC/ Yahoo Finance
The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 598 exahashes per second (EH/s), up 2% WoW, and 3% MoM. The increase in hash rates is negative for miners as their efficiency rates (BTC production per EH/s) are inversely linked to global hash rates.
Total Hash Rate (BTC)
The Realized HODL ratio (RHODL), which gauges the activity of short-term holders relative to long-term holders, is up 5% WoW, and 617% YoY. We interpret the increase in RHODL as a sign of strengthening demand, suggesting potential for an uptick in near-term prices. Historically, BTC prices have moved in tandem with this ratio. By tracking RHODL, we believe we can identify potential turning points in BTC prices.
Source: FRC/ Various
Companies operating in the crypto space are trading at an average EV/R of 6.1x (unchanged).
Source: S&P Capital IQ/FRC
Source: S&P Capital IQ/FRC
