Bright Prospects for the US$ / Bitcoin Optimism / Our Top Picks Continue to Outperform
Published: 5/27/2024
Author: FRC Analysts
Key Highlights
- The S&P 500, gold, and copper have retreated from their historic highs in the prior week.
- Fresh inflation data from Canada showed signs of cooling, increasing the probability of a rate cut in June/July.
- 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.
- Shares of a copper junior, and a cobalt-gold junior, on our list of top picks have more than doubled in the past month.
- Last month, companies on our Top Picks list were up 12.7% on average vs 2.8% 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.
East Africa Metals Inc. (EAM.V, EFRMF)
PR Title: Receives extension of mine development periods for Mato Bula, Da Tambuk, and Terakimti projects from Ethiopia’s Ministry of Mines
Analyst Opinion: Positive – The company now has until 2028 to begin construction work on its gold projects in Ethiopia, which we believe is a reasonable timeline. Partner Tibet Huayu Mining (SHSE: 601020) has already initiated development work aimed at advancing the Mato Bula and Da Tambuk gold projects, located 4 km apart, toward production; construction activities will commence shortly. Tibet Huaya is funding the project to production. EAM owns a 30% carried interest.
StrategX Elements Corp. (STGX.CN)
PR Title: Announces a $1.5M private placement
Analyst Opinion: Positive – Proceeds will be used to fund drilling at its flagship Nagvaak project (pre-resource stage) in Nunavut. This property features seven targets, within a 6 km long and 0.4 km wide mineralized zone, with potential for hosting nickel, vanadium, cobalt, silver, PGE, and graphite.
HydroGraph Clean Power Inc. (HG.CN, HGCPF)
PR Title: Announces a $1.6M private placement
Analyst Opinion: Positive – HG is concurrently advancing initiatives with numerous graphene consumers and distributors worldwide to potentially commercialize its technology. Graphene is the thinnest/lightest/strongest material known.
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 down 0.1% on average (up 0.9% in the previous week). The S&P 500, gold, and copper have retreated from their historic highs in the prior week. Fresh inflation data from Canada showed signs of cooling, increasing the probability of a rate cut in June/July. We anticipate the US$ will remain strong, given indications that global central banks, particularly the Bank of Canada, the European Central Bank, and the Bank of England, will likely cut rates sooner than the Fed. A robust US$ could exert downward pressure on both equity and metal prices.
Source: FRC / Various
Last week, metal prices were down 3.5% on average (up 7.9% in the previous week). 
Gold producer valuations were down 4.3% last week (up 4.2% in the prior week); base metal producers were down 2.6% last week (up 4.8% in the prior week). On average, gold producer valuations are 17% lower (previously 13%) compared to the past three instances when gold surpassed US$2k/oz.
| 13-May-24 | 21-May-24 | 27-May-24 | |||||
| Gold Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | Barrick | 3.10 | 6.59 | 3.22 | 6.86 | 3.10 | 6.60 |
| 2 | Newmont | 3.29 | 7.61 | 3.42 | 7.90 | 3.18 | 7.37 |
| 3 | Agnico Eagle | 4.67 | 8.89 | 4.82 | 9.19 | 4.53 | 8.55 |
| 4 | AngloGold | 2.18 | 4.96 | 2.30 | 5.26 | 2.18 | 4.98 |
| 5 | Kinross Gold | 2.43 | 5.50 | 2.55 | 5.71 | 2.55 | 5.71 |
| 6 | Gold Fields | 2.93 | 5.45 | 2.89 | 5.38 | 2.85 | 5.29 |
| 7 | Sibanye | 0.75 | 3.96 | 0.81 | 4.33 | 0.78 | 4.17 |
| 8 | Hecla Mining | 4.64 | 14.85 | 5.34 | 17.31 | 4.89 | 15.87 |
| 9 | B2Gold | 1.71 | 3.52 | 1.78 | 3.59 | 1.65 | 3.29 |
| 10 | Alamos | 5.02 | 9.46 | 5.20 | 9.79 | 5.03 | 9.52 |
| 11 | Harmony | 1.70 | 4.95 | 1.87 | 5.45 | 1.76 | 5.13 |
| 12 | Eldorado Gold | 2.47 | 5.07 | 2.61 | 5.35 | 2.54 | 5.18 |
| Average (excl outliers) | 2.75 | 6.00 | 2.86 | 6.26 | 2.74 | 5.98 | |
| Min | 0.75 | 3.52 | 0.81 | 3.59 | 0.78 | 3.29 | |
| Max | 5.02 | 14.85 | 5.34 | 17.31 | 5.03 | 15.87 | |
| Industry (three year average) | 110.70 | 116.70 | 110.70 | 116.70 | 110.70 | 116.70 | |
| Base Metal Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | BHP Group | 2.93 | 5.65 | 3.14 | 6.04 | 3.07 | 5.92 |
| 2 | Rio Tinto | 2.34 | 4.98 | 2.47 | 5.23 | 2.41 | 5.14 |
| 3 | South32 | 1.58 | 7.36 | 1.71 | 7.97 | 1.69 | 7.95 |
| 4 | Glencore | 0.45 | 6.04 | 0.47 | 6.31 | 0.46 | 6.19 |
| 5 | Anglo American | 2.01 | 5.96 | 2.04 | 6.02 | 2.00 | 5.93 |
| 6 | Teck Resources | 3.12 | 7.21 | 3.20 | 7.39 | 3.11 | 7.17 |
| 7 | First Quantum | 3.92 | 13.30 | 4.11 | 13.99 | 3.92 | 13.38 |
| Average (excl outliers) | 2.34 | 7.21 | 2.45 | 7.56 | 2.38 | 7.38 | |
| Min | 0.45 | 4.98 | 0.47 | 5.23 | 0.46 | 5.14 | |
| Max | 3.92 | 13.30 | 4.11 | 13.99 | 3.92 | 13.38 | |
Source: S&P Capital IQ & FRC
We are maintaining our metal price forecasts.
Weekly Crypto Commentary
Prices of mainstream/popular cryptos were up 2% on average last week (up 13% in the previous week).
| May 27, 2024 | ||
| Cryptocurrencies | 1-Week | 1-Year |
| Bitcoin | 1% | 160% |
| Binance Coin | -1% | 98% |
| Cardano | -3% | 28% |
| Ethereum | 5% | 114% |
| Polkadot | 6% | 44% |
| XRP | 2% | 14% |
| Polygon | 7% | -19% |
| Solana | -5% | 767% |
| AVERAGE | 2% | 151% |
| MIN | -5% | -19% |
| MAX | 7% | 767% |
| Indices | ||
| Canadian | 1-Week | 1-Year |
| BTCC | -2% | 145% |
| BTCX | -1% | 152% |
| EBIT | -2% | 149% |
| FBTC | 3% | 48% |
| U.S. | 1-Week | 1-Year |
| BITO | 3% | 74% |
| BTF | 12% | 96% |
| IBLC | 7% | 58% |
Source: FRC/Yahoo Finance
The global MCAP of cryptos is US$2.71T, up 9% MoM, and 132%YoY.
Total Crypto Market Cap Chart
Source: CoinGecko
Last week, BTC was up 1.2%, while the S&P 500 was down 0.1%.
Source: FRC/ Yahoo Finance
The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 648 exahashes per second (EH/s), up 8% 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 15% WoW, and 602% YoY. We interpret the increase in the 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 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 6.8x (previously 6.7x).
Source: S&P Capital IQ/FRC
| May 27, 2024 | ||
| Crypto Companies | Ticker | TEV/Revenue |
| Argo Blockchain | LSE: ARB | 2.2 |
| BIGG Digital | CSE: BIGG | 9.7 |
| Bitcoin Well | TSXV: BTCW | 0.9 |
| Canaan Inc. | NASDAQ: CAN | 1.0 |
| CleanSpark Inc. | NasdaqCM:CLSK | 13.1 |
| Coinbase Global | NASDAQ: COIN | 14.9 |
| Galaxy Digital Holdings | TSX: GLXY | N/A |
| HIVE Digital | TSXV:HIVE | 3.1 |
| Hut 8 Mining Corp. | TSX: HUT | 8.2 |
| Marathon Digital Holdings | NASDAQ: MARA | 11.6 |
| Riot Platforms | NASDAQ: RIOT | 8.1 |
| SATO Technologies | TSXV: SATO | 1.5 |
| AVERAGE | 6.8 | |
| MEDIAN | 8.1 | |
| MINIMUM | 0.9 | |
| MAXIMUM | 14.9 |
Source: S&P Capital IQ/FRC
