Favorable Outlook for Uranium and Bitcoin / Gold Holds Firmly Above $2,500/oz
Published: 8/26/2024
Author: FRC Analysts
Key Highlights
- Last week, metals prices and the S&P 500 continued their rally, driven by cooling inflation and dovish comments from the Fed, which also contributed to a weaker US$ and lower yields.
- Shares of a copper junior under coverage were up 15% last week
- Good news for uranium juniors
- Gold prices are holding firm above US$2,500/oz, but producer valuations are 9% lower than the past three instances when gold surpassed US$2,000/oz.
- With all five key statistical indicators pointing to potential strength, our near-term outlook for Bitcoin
South Star Battery Metals Corp. (STSBF, STS.V)
PR Title: Successful purification of BamaStar graphite concentrates to battery grade purity (Alabama)
Analyst Opinion: Positive – Trials indicate that the BamaStar natural flake graphite project in Alabama could potentially produce high-purity graphite suitable for lithium-ion batteries. These results will be added to an ongoing PEA, set for release next month. Additionally, the company is just days away from starting commercial production at its graphite project in Brazil.
Argentina Lithium & Energy Corp. (LIT.V, PNXLF)
PR Title: A geophysical survey adds 600 hectares of potential brine aquifer at the Rincon West project (Argentina)
Analyst Opinion: Positive – A recently completed geophysical survey at the Don Fermin property, part of LIT's flagship Rincon West project, has generated new drill targets. A prior drill program targeting two other areas encountered lithium over long intervals. LIT plans to drill the Don Fermin property (the third target) before completing a maiden resource estimate.
Churchill Resources Inc. (CRI.V, CRICF)
PR Title: Stakes new licenses contiguous to its flagship Taylor Brook nickel project property in Newfoundland
Analyst Opinion: Positive – Similar to Taylor Brook, the new land package shows potential for hosting nickel sulphide deposits, a key source of nickel used in lithium-ion batteries. Prospecting and soil sampling are currently underway. CRI is submitting permit applications for an airborne survey, and follow-up surface work.
Updates on Financials, Technology, Energy, and Special Situations Companies Under Coverage
Sekur Private Data Ltd. /CSE:SKUR
Analyst Opinion: Positive - Funds will be used for working capital. Sekur offers cybersecurity and privacy solutions to consumers and businesses. We believe businesses operating with sensitive and confidential information (such as a medical, financial, and real estate) are ideal targets for Sekur. In the coming weeks, the company plans to roll out services designed for large enterprises, while aggressively targeting SMBs. Management is targeting profitability by 2025.
FRC Top Picks
The following table shows last week’s top five performers among our Top Picks. The top performer, Panoro Minerals, was up 15%. Panoro is advancing multiple copper projects in Peru, including a large copper-gold deposit. We anticipate an updated Preliminary Economic Assessment (PEA) this year.
| Top Five Weekly Performers | WoW Returns |
| Panoro Minerals (PML.V) | 15.4% |
| Western Exploration Inc. (WEX.V) | 13.2% |
| Kidoz Inc. (KIDZ.V) | 12.5% |
| Hemostemix Inc. (HEM.V) | 10.0% |
| Lake Resources NL (LKE.AX) | 8.8% |
| * Past performance is not indicative of future performance (as of Aug 26, 2024) |
Source: FRC
Our top picks have outperformed the benchmark (TSXV) in five 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 | -2.3% | -4.0% | -21.1% | 10.6% | -7.8% | -37.4% | -6.8% |
| Cannabis | N/A | N/A | N/A | N/A | N/A | -40.8% | -23.6% |
| Tech | 12.5% | 12.5% | 6.0% | 28.6% | -25.0% | -33.4% | -4.4% |
| Special Situations (MIC) | 3.2% | 10.6% | 17.1% | 8.5% | 42.3% | -26.8% | -4.7% |
| Private Companies | N/A | N/A | N/A | N/A | 6.7% | 20.5% | 30.5% |
| Portfolio (Total) | -1.1% | 0.2% | -12.8% | 7.9% | 1.3% | -20.8% | 0.7% |
| Benchmark (Total) | 1.0% | 0.1% | -4.3% | 5.4% | -0.5% | -34.9% | -34.6% |
| Portfolio (Annualized) | - | - | - | - | 1.3% | -7.5% | 0.1% |
| Benchmark (Annualized) | - | - | - | - | -0.5% | -13.3% | -3.9% |
1. Since the earliest initiating date of companies in the list of Top Picks (as of August 26, 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 0.6% on average (up 3.2% in the previous week). The S&P 500 gained 0.7% amid cooling inflation, and dovish comments from the Fed, which also contributed to a weaker US$ and lower yields. With the Fed almost certain to initiate rate cuts in Q4, the key question now is the number of cuts and the time frame over which they will unfold. We believe key economic metrics, including employment, GDP growth, and manufacturing activity, will significantly influence the timing and scale of these cuts.
Source: FRC / Various
Last week, metal prices were up 1.4% on average (up 2.3% in the previous week).
Gold producer valuations were up 1.4% last week (up 9.4% in the prior week); base metal producers were up 4.8% last week (up 2.5% in the prior week). On average, gold producer valuations are 9% lower (previously 11%) than the past three instances when gold surpassed US$2k/oz.
Source: S&P Capital IQ & FRC
| 19-Aug-24 | 26-Aug-24 | ||||
| Gold Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | Barrick | 3.34 | 6.84 | 3.43 | 7.03 |
| 2 | Newmont | 3.57 | 8.04 | 3.68 | 8.28 |
| 3 | Agnico Eagle | 5.10 | 9.14 | 5.25 | 9.45 |
| 4 | AngloGold | 2.58 | 5.72 | 2.55 | 5.67 |
| 5 | Kinross Gold | 2.71 | 5.69 | 2.69 | 5.66 |
| 6 | Gold Fields | 2.98 | 5.63 | 2.81 | 5.13 |
| 7 | Sibanye | 0.64 | 3.89 | 0.64 | 3.91 |
| 8 | Hecla Mining | 4.49 | 13.04 | 4.88 | 14.16 |
| 9 | B2Gold | 1.69 | 3.45 | 1.80 | 3.69 |
| 10 | Alamos | 5.86 | 10.97 | 5.99 | 11.25 |
| 11 | Harmony | 1.92 | 6.25 | 1.84 | 6.01 |
| 12 | Eldorado Gold | 2.81 | 5.41 | 2.81 | 5.45 |
| Average (excl outliers) | 2.95 | 6.46 | 2.99 | 6.55 | |
| Min | 0.64 | 3.45 | 0.64 | 3.69 | |
| Max | 5.86 | 13.04 | 5.99 | 14.16 | |
| Base Metal Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | BHP Group | 2.73 | 5.24 | 2.82 | 5.41 |
| 2 | Rio Tinto | 2.08 | 4.57 | 2.09 | 4.62 |
| 3 | South32 | 1.30 | 6.09 | 1.37 | 6.38 |
| 4 | Glencore | 0.39 | 5.54 | 0.39 | 5.62 |
| 5 | Anglo American | 1.83 | 5.49 | 1.87 | 5.62 |
| 6 | Teck Resources | 3.62 | 8.79 | 3.60 | 8.76 |
| 7 | First Quantum | 3.58 | 12.07 | 4.04 | 13.95 |
| Average (excl outliers) | 2.22 | 6.83 | 2.31 | 7.19 | |
| Min | 0.39 | 4.57 | 0.39 | 4.62 | |
| Max | 3.62 | 12.07 | 4.04 | 13.95 | |
We are maintaining our metal price forecasts.
Key Developments:
- Uranium stocks spiked last week after Kazatomprom, the world’s largest producer, reduced its 2025 production target, further tightening the supply chain. The Sprott Junior Uranium Miners Index (NASDAQ: URNJ) jumped 8%. We maintain our outlook that the uranium supply chain remains highly vulnerable, especially with Russia accounting for 35% of global enriched uranium production. This supply risk will likely accelerate M&A activity as majors look to secure long-term resources. Paladin Energy’s (MCAP: $3.3B) recent $1.1B bid for Fission Uranium (TSX: FCU) highlights this trend.
Market Updates and Insights: Cryptos
Prices of mainstream/popular cryptos were up 4% on average last week (up 2% in the previous week).
| August 26, 2024 | ||
| Cryptos | WoW | YoY |
| Bitcoin | 3% | 141% |
| Binance Coin | -3% | 154% |
| Cardano | -1% | 40% |
| Ethereum | 2% | 62% |
| Polkadot | 3% | 2% |
| XRP | -4% | 10% |
| Polygon | 19% | -7% |
| Solana | 11% | 682% |
| Average | 4% | 136% |
| Min | -4% | -7% |
| Max | 19% | 682% |
| Indices | ||
| Canadian | WoW | YoY |
| BTCC | 5% | 138% |
| BTCX | 4% | 141% |
| EBIT | 4% | 139% |
| FBTC | 5% | 36% |
| U.S. | WoW | YoY |
| BITO | 5% | 54% |
| BTF | 3% | 73% |
| IBLC | 2% | 74% |
Source: FRC/Yahoo Finance
The global MCAP of cryptos is US$2.35T, down 7% MoM, but up 93%YoY.
Total Crypto Market Cap Chart
Source: CoinGecko
Last week, BTC was up 3.1%, while the S&P 500 was up 0.7%. The U.S. 10-year treasury yield was down slightly by 0.06 pp.
Source: FRC/ Yahoo Finance
The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 654 exahashes per second (EH/s), up 1% WoW, but down 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 up 12% WoW, and 348% 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
The table below highlights key statistically significant factors influencing BTC prices. With five positive signals and nil negative (compared to four positive and one negative in the previous week), the near-term outlook for BTC prices has strengthened. Our model accurately predicted last week’s uptick in prices.
* “↑” and “↓” indicate whether a parameter has increased or decreased
* Red (green) denotes a negative (positive) signal for BTC prices; black implies neutral.
Source: FRC
Companies operating in the crypto space are trading at an average EV/R of 5.3x (previously 5.0x).
Source: S&P Capital IQ/FRC
| August 26, 2024 | |
| Crypto Stocks | EV/Revenue |
| Argo Blockchain | 2.2 |
| BIGG Digital | 4.8 |
| Bitcoin Well | 0.7 |
| Canaan Inc. | 1.2 |
| CleanSpark Inc. | 8.8 |
| Coinbase Global | 11.1 |
| Galaxy Digital Holdings | N/A |
| HIVE Digital | 3.3 |
| Hut 8 Mining Corp. | 8.2 |
| Marathon Digital Holdings | 9.9 |
| Riot Platforms | 7.0 |
| SATO Technologies | 1.6 |
| Average | 5.3 |
| Median | 4.8 |
| Min | 0.7 |
| Max | 11.1 |
Source: S&P Capital IQ/FRC
Market Updates and Insights: Artificial Intelligence/AI
Major AI indices are up 0.1% WoW on average (up 5% in the previous week), and 15% YoY.
| August 26, 2024 | ||
| AI Indices | WoW | YoY |
| First Trust Nasdaq AI and Robotics ETF | 1% | 2% |
| Global X Robotics & AI ETF | 1% | 21% |
| Global X AI & Technology ETF | -1% | 28% |
| iShares Robotics and AI Multisector ETF | 1% | -3% |
| Roundhill Generative AI & Technology ETF | -2% | 27% |
| Average | 0% | 15% |
| Min | -2% | -3% |
| Max | 1% | 28% |
Source: FRC/Various
The following table highlights some of the most popular large-cap AI stocks. Shares of these companies are down 4% WoW on average (up 8% in the previous week), but up 87% YoY. Their average P/E is 36x (previously 33x) vs the NASDAQ-100 Index’s average of 32x (previously 31x).
| AI Stocks | WoW | YoY | P/E |
| Arista Networks | -2% | 89% | n/a |
| Dell Technologies | 0% | 95% | 22.9 |
| Microsoft Corporation | -2% | 28% | 35.3 |
| NVIDIA Corp | -1% | 170% | 75.6 |
| Micron Technology | -9% | 51% | n/a |
| Palantir Technologies | -5% | 111% | n/a |
| Qualcomm | -2% | 52% | 22.2 |
| Super Micro Computer (SMCI) | -9% | 120% | 30.5 |
| Taiwan Semiconductor Manufacturing | -3% | 73% | 26.7 |
| Average | -4% | 87% | 35.5 |
| Median | -2% | 89% | 28.6 |
| Min | -9% | 28% | 22.2 |
| Max | 0% | 170% | 75.6 |
Source: FRC/Various