Dovish Fed / SoftBank Bets on AI / Gold Junior Commences Production

Updates on Financials, Technology, Energy, and Special Situations Companies Under Coverage

Pixie Dust Technologies, Inc/ NASDAQ-PSDT

PR Title: Announces FY2024 (ended April 2024) results

Analyst Opinion: Mixed - Revenue was up 41% YoY, beating our estimate by 10%. However, due to higher G&A expenses, net losses were up 14% YoY, and 3% higher than our estimate. We will publish a detailed update shortly. Pixie is a Japanese technology company focused on applying its proprietary wave control technology across a wide range of applications for consumer personal care/healthcare, and businesses. One of its flagship products promotes hair growth and mitigates hair loss. The company also offers products for individuals who are deaf or hard of hearing, and those interested in improving their cognitive abilities.

FRC Top Picks

The following table shows last week’s top five performers among our Top Picks, including four junior resource companies, and a biotech company. The top performer, E3 Lithium, was up 52%. Last month, E3 completed a highly promising pre-feasibility study on its lithium project in Alberta.

Top Five Weekly Performers	WoW Returns
E3 Lithium Limited (ETL.V)	51.6%
Hemostemix Inc. (HEM.V)	22.2%
Contango Ore Inc. (CTGO)	12.2%
Giga Metals Corporation (GIGA.V)	10.7%
Southern Silver Exploration Corp. (SSV.V)	7.4%
* Past performance is not indicative of future performance (as of July 15, 2024)

Source: FRC

Our top picks have outperformed the benchmark (TSXV) in four out of seven time periods listed below.

Performance by Sector

Total Return	1 Week	1 mo	3 mo	6 mo	1 yr	3 yr	Since launch
Mining	-0.9%	-5.9%	-3.2%	13.8%	-12.6%	-35.1%	8.1%
Cannabis	N/A	N/A	N/A	N/A	N/A	-44.6%	-23.6%
Tech	0.0%	0.0%	-6.0%	0.0%	-40.7%	-31.0%	-4.5%
Special Situations (MIC)	4.5%	1.5%	1.4%	8.6%	29.4%	-14.5%	-12.0%
Private Companies	N/A	N/A	N/A	N/A	6.7%	20.5%	30.5%
Portfolio (Total)	0.0%	-4.5%	-3.6%	9.2%	-4.4%	-17.9%	5.0%
Benchmark (Total)	2.9%	3.9%	3.1%	5.4%	-4.9%	-34.5%	-32.8%
Portfolio (Annualized)	-	-	-	-	-4.4%	-6.4%	0.5%
Benchmark (Annualized)	-	-	-	-	-4.9%	-13.2%	-3.7%

1. Since the earliest initiating date of companies in the list of Top Picks  (as of July 15, 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

Market Updates and Insights: Mining

Last week, global equity markets were up 1.2% on average (up 0.7% in the previous week). The US$ is down 0.7% WoW, while the S&P 500 is up 1.1% WoW, reaching record highs, driven by dovish statements from the Fed, soft inflation data, and a cooling labor market. We continue to believe that the Fed will cut rates in Q4-2024.

Source: FRC / Various

Last week, metal prices were down 1.1% on average (up 2.3% in the previous week).

Gold producer valuations were up 5.0% last week (up 5.6% in the prior week); base metal producers were up 3.0% last week (up 2.8% in the prior week). On average, gold producer valuations are 12% lower (previously 17%) than the past three instances when gold surpassed US$2k/oz.

		08-Jul-24		15-Jul-24
	Gold Producers	EV / R (forward)	EV / EBITDA (forward)	EV / R (forward)	EV / EBITDA (forward)
1	Barrick	3.09	6.45	3.20	6.54
2	Newmont	3.30	7.51	3.45	7.81
3	Agnico Eagle	4.66	8.54	4.93	9.04
4	AngloGold	2.51	5.82	2.53	5.84
5	Kinross Gold	2.61	5.78	2.77	5.92
6	Gold Fields	2.78	5.14	2.91	5.54
7	Sibanye	0.70	3.86	0.70	3.82
8	Hecla Mining	4.54	13.94	5.10	14.79
9	B2Gold	1.67	3.27	1.80	3.49
10	Alamos	4.91	9.17	5.53	10.00
11	Harmony	1.76	5.27	1.78	5.42
12	Eldorado Gold	2.50	5.12	2.63	5.31
	Average (excl outliers)	2.77	5.99	2.93	6.25
	Min	0.70	3.27	0.70	3.49
	Max	4.91	13.94	5.53	14.79
	Base Metal Producers	EV / R (forward)	EV / EBITDA (forward)	EV / R (forward)	EV / EBITDA (forward)
1	BHP Group	2.99	5.75	3.02	5.76
2	Rio Tinto	2.22	4.73	2.24	4.78
3	South32	1.63	7.38	1.59	7.17
4	Glencore	0.46	6.02	0.46	5.96
5	Anglo American	1.92	5.65	1.90	5.56
6	Teck Resources	2.97	7.00	3.56	8.18
7	First Quantum	3.93	12.80	3.96	13.05
	Average (excl outliers)	2.30	7.05	2.39	7.21
	Min	0.46	4.73	0.46	4.78
	Max	3.93	12.80	3.96	13.05

 Source: S&P Capital IQ & FRC

We are maintaining our metal price forecasts.

Market Updates and Insights: Cryptos

Prices of mainstream/popular cryptos were up 12% on average last week (down 9% in the previous week).

July 15, 2024
Crypto Stocks	EV/Revenue
Argo Blockchain	1.8
BIGG Digital	5.6
Bitcoin Well	0.8
Canaan Inc.	1.3
CleanSpark Inc.	11.9
Coinbase Global	13.6
Galaxy Digital Holdings	N/A
HIVE Digital	3.7
Hut 8 Mining Corp.	8.2
Marathon Digital Holdings	11.3
Riot Platforms	7.6
SATO Technologies	1.7
Average	6.1
Median	5.6
Min	0.8
Max	13.6

 Source: FRC/Yahoo Finance

The global MCAP of cryptos is US$2.31T, down 9% MoM, but up 83%YoY.

Total Crypto Market Cap Chart

Source: CoinGecko

Last week, BTC was up 10.2%, while the S&P 500 was up 1.1%. The U.S. 10-year treasury yield was down 0.04 pp.

Source: FRC/ Yahoo Finance

The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 584 exahashes per second (EH/s), up 2% WoW, and 2% 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, was down 29% WoW, but up 292% YoY. We interpret the decrease in RHODL as a sign of weakening demand, suggesting potential for a downtick 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

July 15, 2024
Cryptos	WoW	YoY
Bitcoin	10%	110%
Binance Coin	10%	130%
Cardano	13%	34%
Ethereum	10%	76%
Polkadot	7%	16%
XRP	21%	25%
Polygon	8%	-34%
Solana	13%	459%
Average	12%	102%
Min	7%	-34%
Max	21%	459%
Indices
Canadian	WoW	YoY
BTCC	11%	107%
BTCX	11%	119%
EBIT	12%	117%
FBTC	11%	36%
U.S.	WoW	YoY
BITO	11%	40%
BTF	12%	69%
IBLC	9%	55%

  Source: S&P Capital IQ/FRC

Market Updates and Insights: Artificial Intelligence/AI 

Major AI indices are up 1% WoW on average (up 2% in the previous week), and 11% YoY.

July 15, 2024
AI Indices	WoW	YoY
First Trust Nasdaq AI and Robotics ETF	3%	-6%
Global X Robotics & AI ETF	2%	8%
Global X AI & Technology ETF	-0.2%	26%
iShares Robotics and AI Multisector ETF	1%	-1%
Roundhill Generative AI & Technology ETF	-2%	27%
Average	1%	11%
Min	-2%	-6%
Max	3%	27%

Source: FRC/Various

The following table highlights some of the most popular large-cap AI stocks. Shares of these companies are down 1% WoW on average (up 5% in the previous week), and 108% YoY. Their average P/E is 43.2x (previously 43.3x) vs the NASDAQ-100 Index’s average of 32.7x (previously 32.4x).

AI Stocks	WoW	YoY	P/E
Arista Networks	-3%	112%	50
Dell Technologies	-6%	150%	29
Microsoft Corporation	-2%	31%	39
NVIDIA Corp	-2%	176%	76
Micron Technology	-1%	101%	n/a
Palantir Technologies	3%	66%	n/a
Qualcomm	1%	68%	27
Super Micro Computer (SMCI)	-1%	197%	50
Taiwan Semiconductor Manufacturing	1%	76%	32
Average	-1%	108%	43
Median	-1%	101%	39
Min	-6%	31%	27
Max	3%	197%	76

Source: FRC/Various 

Key Developments:

• Japanese investment bank SoftBank Group has acquired U.K.-based AI chip designer Graphcore for US$600M. Despite Graphcore's revenue being under US$5M, we believe the high price reflects intense interest in the growing AI chip sector. We anticipate this sector to witness a surge in M&A activity in the coming year.