Our Analysts Predicted This Epic Climb!
Published: 5/21/2024
Author: FRC Analysts
Key Highlights
- Last week, equity markets and metal prices surged as the US$ retreated amidst signs of a slowing U.S. economy.
- For the first time, gold surpassed US$2,400/oz, copper US$5/lb, and the S&P 500 hit 5300
- Our forecasts proved accurate. Earlier this year, we anticipated gold and silver surpassing US$2,300/oz and US$30/oz, respectively, when they were trading at US$2,000/oz and US$23/oz
- Shares of a cobalt-gold junior under coverage were up 50% WoW, following the announcement of securing $16M in funding from the U.S. and Canadian governments
- Last month, companies on our Top Picks list were up 9.6% on average vs 3.9% for the benchmark (TSXV)
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.
Fortune Minerals Limited (FT.TO, FTMDF)
PR Title: Receives funding from the U.S. Department of Defense, and the Government of Canada, for advancing the NICO critical minerals project (the NWT and Alberta)
Analyst Opinion: Positive - This is a major milestone for FT; the company has secured $16M in funding from the U.S. and Canadian governments. These funds will primarily be used towards an updated feasibility study for the NICO cobalt-gold-bismuth-copper project. NICO hosts North America's largest primary cobalt deposit, and the world’s largest bismuth deposit. FT is partnering with Rio Tinto (NYSE: RIO) to evaluate various processing methods for recovering bismuth and cobalt from Rio’s Kennecott operations in Utah, which will then be processed at FT’s planned refinery in Alberta. We will publish a detailed update report shortly.
Verde AgriTech Ltd (NPK.TO, VNPKF)
PR Title: Announces Q1 results
Analyst Opinion: Negative - Revenue was down 54% YoY, and 58% lower than our estimate, due to lower product sales (down 21% YoY), and prices (down 42% YoY). Sales were impacted by adverse climate conditions, negatively impacting fertilizer demand in Brazil. EPS declined YoY from -$0.002 to -$0.09, missing our forecast of -$0.001. At the end of Q1, Verde had a $9M working capital deficit, and $20M in long-term debt. Approximately $25M in debt is due for repayment in the next 12 months; we believe management has to either refinance this debt, or raise equity. The company has commenced a debt restructuring plan, and is in the process of renegotiating terms with lenders. Management is optimistic about securing improved debt terms, such as extending the payment period, and reducing interest rates. However, due to the uncertainty surrounding this outcome, we are temporarily suspending our rating, and fair value estimate on Verde.
Tartisan Nickel Corp. (TN.CN, TTSRF)
PR Title: Acquires additional claims for the Kenbridge nickel project; advances baseline studies (Ontario)
Analyst Opinion: Positive -TN has expanded the Kenbridge nickel project area by acquiring additional contiguous claims. In addition, baseline studies required for permitting advanced exploration/mine development have commenced. Kenbridge hosts high-grade open-pittable/underground class 1 nickel resources, essential for lithium-ion batteries in electric vehicles (EVs).
Equity Metals Corporation (EQMEF, EQTY.V)
PR Title: Announces a $3M private placement
Analyst Opinion: Positive - Proceeds will be used to drill-test two new targets at the company’s flagship Silver Queen gold-silver project in B.C. Four of the 20 known veins host resources totaling 1.04 Moz AuEq (85 Moz AgEq) at 6.2 g/t AuEq (512 g/t AgEq).
Updates from Financials, Technology, Energy, and Special Situations Companies Under Coverage
Enterprise Group Inc./ TSX
PR Title: Adds a new tier one petroleum producer client
FRC Opinion: Positive – E has secured an undisclosed tier-one client, bolstering its roster. The company generates revenue from renting equipment to oil and gas companies, including majors such as Suncor (TSX: SU), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), Tourmaline Oil (TSX:TOU), and Cenovus Energy (TSX:CVE). In response to increased demand from clients, the company recently closed a $7M bought deal financing to expand its rental equipment fleet.
FRC Top Picks
The following table shows last week’s top five performers among our Top Picks, including five junior resource companies. The top performer, World Copper (TSXV: WCU), was up 58%. WCU is advancing multiple copper projects in the Americas.
| Top 5 Weekly Performers | WoW Returns |
| World Copper Ltd. (WCU.V) | 57.5% |
| Fortune Minerals Limited (FT.TO) | 50.0% |
| Transition Metals Corp.(XTM.V) | 45.5% |
| Verde Agritech Plc. (NPK.TO) | 38.2% |
| Southern Silver Exploration Corp. (SSV.V) | 34.8% |
| * Past performance is not indicative of future performance (as of May 21, 2024) |
Source: FRC
Last week, companies on our Top Picks list were up 9.6% on average vs 3.9% 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 Week | 1 mo | 3 mo | 6 mo | 3 yr | Since launch |
| Mining | 13.6% | 20.7% | 53.4% | 50.0% | -41.9% | 16.0% |
| Cannabis | N/A | N/A | N/A | N/A | -41.7% | -23.6% |
| Tech | -4.7% | -31.7% | 25.0% | 2.5% | -34.6% | -4.2% |
| Special Situations (MIC) | -0.9% | -3.4% | -2.0% | 8.9% | -17.4% | -11.4% |
| Private Companies | N/A | N/A | N/A | N/A | 20.5% | 30.5% |
| Portfolio (Total) | 9.6% | 13.6% | 38.7% | 39.9% | -21.5% | 9.2% |
| Benchmark (Total) | 3.9% | 9.9% | 12.5% | 17.5% | -35.0% | -29.7% |
| Portfolio (Annualized) | - | - | - | - | -7.8% | 0.9% |
| Benchmark (Annualized) | - | - | - | - | -13.4% | -3.3% |
1. Since the earliest initiating date of companies in the list of Top Picks (as of May 13, 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 0.9% on average (up 0.8% in the previous week). Equity markets and metal prices surged as the US$ retreated amidst signs of a slowing U.S. economy. New data indicated stagnating retail sales, weak industrial production, high jobless claims, and a weaker than expected core CPI. Consequently, the S&P 500 surged past 5,300 for the first time.
Gold broke the US$2,400/oz barrier, while copper breached US$5/lb, both reaching unprecedented levels. Additionally, silver climbed above US$30/oz for the first time since 2012. Our forecasts proved accurate. Earlier this year, we anticipated gold and silver surpassing US$2,300/oz and US$30/oz, respectively, when they were trading at US$2,000/oz and US$23/oz.
Source: FRC / Various
Last week, metal prices were up 7.9% on average (up 2.1% in the previous week).
Gold producer valuations were up 4.2% last week (down 3.8% in the prior week); base metal producers were up 4.8% last week (up 0.8% in the prior week). On average, gold producer valuations are 13% lower (previously 17%) compared to the past three instances when gold surpassed US$2k/oz.
| 13-May-24 | 21-May-24 | ||||
| Gold Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | Barrick | 3.10 | 6.59 | 3.22 | 6.86 |
| 2 | Newmont | 3.29 | 7.61 | 3.42 | 7.90 |
| 3 | Agnico Eagle | 4.67 | 8.89 | 4.82 | 9.19 |
| 4 | AngloGold | 2.18 | 4.96 | 2.30 | 5.26 |
| 5 | Kinross Gold | 2.43 | 5.50 | 2.55 | 5.71 |
| 6 | Gold Fields | 2.93 | 5.45 | 2.89 | 5.38 |
| 7 | Sibanye | 0.75 | 3.96 | 0.81 | 4.33 |
| 8 | Hecla Mining | 4.64 | 14.85 | 5.34 | 17.31 |
| 9 | B2Gold | 1.71 | 3.52 | 1.78 | 3.59 |
| 10 | Alamos | 5.02 | 9.46 | 5.20 | 9.79 |
| 11 | Harmony | 1.70 | 4.95 | 1.87 | 5.45 |
| 12 | Eldorado Gold | 2.47 | 5.07 | 2.61 | 5.35 |
| Average (excl outliers) | 2.75 | 6.00 | 2.86 | 6.26 | |
| Min | 0.75 | 3.52 | 0.81 | 3.59 | |
| Max | 5.02 | 14.85 | 5.34 | 17.31 | |
| Industry (three year average) | 110.70 | 116.70 | 110.70 | 116.70 | |
| Base Metal Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | BHP Group | 2.93 | 5.65 | 3.14 | 6.04 |
| 2 | Rio Tinto | 2.34 | 4.98 | 2.47 | 5.23 |
| 3 | South32 | 1.58 | 7.36 | 1.71 | 7.97 |
| 4 | Glencore | 0.45 | 6.04 | 0.47 | 6.31 |
| 5 | Anglo American | 2.01 | 5.96 | 2.04 | 6.02 |
| 6 | Teck Resources | 3.12 | 7.21 | 3.20 | 7.39 |
| 7 | First Quantum | 3.92 | 13.30 | 4.11 | 13.99 |
| Average (excl outliers) | 2.34 | 7.21 | 2.45 | 7.56 | |
| Min | 0.45 | 4.98 | 0.47 | 5.23 | |
| Max | 3.92 | 13.30 | 4.11 | 13.99 | |
Source: S&P Capital IQ & FRC
Despite the recent surge in metal prices, we are maintaining our metal price forecasts. We will make changes if prices remain at their current levels for an extended period.
Weekly Crypto Commentary
Prices of mainstream/popular cryptos were up 13% on average last week (down 5% in the previous week).
| May 21, 2024 | ||
| Cryptocurrencies | 1-Week | 1-Year |
| Bitcoin | 7% | 161% |
| Binance Coin | 8% | 101% |
| Cardano | 9% | 39% |
| Ethereum | 27% | 107% |
| Polkadot | 16% | 43% |
| XRP | 5% | 18% |
| Polygon | 11% | -16% |
| Solana | 22% | 781% |
| AVERAGE | 13% | 154% |
| MIN | 5% | -16% |
| MAX | 27% | 781% |
| Indices | ||
| Canadian | 1-Week | 1-Year |
| BTCC | 13% | 149% |
| BTCX | 13% | 158% |
| EBIT | 13% | 155% |
| FBTC | 9% | 50% |
| U.S. | 1-Week | 1-Year |
| BITO | 8% | 81% |
| BTF | 16% | 102% |
| IBLC | 8% | 60% |
Source: FRC/Yahoo Finance
The global MCAP of cryptos is US$2.77T, up 10% MoM, and 137%YoY.
Total Crypto Market Cap Chart
Source: CoinGecko
Last week, BTC was up 7%, while the S&P 500 was up 2%.
Source: FRC/ Yahoo Finance
The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 592 exahashes per second (EH/s), up 1% WoW, but down 9% 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 19% WoW, and 505% YoY. We interpret the increase in RHODL ratio 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 the 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 6.7x (previously 5.9x).
Source: S&P Capital IQ/FRC
| May 21, 2024 | ||
| Crypto Companies | Ticker | TEV/Revenue |
| Argo Blockchain | LSE: ARB | 2.8 |
| BIGG Digital | CSE: BIGG | 8.4 |
| Bitcoin Well | TSXV: BTCW | 0.8 |
| Canaan Inc. | NASDAQ: CAN | 1.0 |
| CleanSpark Inc. | NasdaqCM:CLSK | 13.6 |
| Coinbase Global | NASDAQ: COIN | 14.1 |
| Galaxy Digital Holdings | TSX: GLXY | N/A |
| HIVE Digital | TSXV:HIVE | 2.8 |
| Hut 8 Mining Corp. | TSX: HUT | 8.2 |
| Marathon Digital Holdings | NASDAQ: MARA | 12.2 |
| Riot Platforms | NASDAQ: RIOT | 8.7 |
| SATO Technologies | TSXV: SATO | 1.5 |
| AVERAGE | 6.7 | |
| MEDIAN | 8.2 | |
| MINIMUM | 0.8 | |
| MAXIMUM | 14.1 |
Source: S&P Capital IQ/FRC
