Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Global equity markets continued to rally due to a decline in new cases of COVID-19 in almost all of the hardest hit nations, and continued vaccine rollout. All the seven indices we track reported gains (orange bars).

Current Vs Pre COVID-19 ( as of Feb 15, 2021 )

Source: FRC / Various

For the first time, almost all of the hardest hit nations experienced a decline in daily new cases of COVID-19.

Daily New Cases in the US, India, UK, Spain, Argentina, Canada

Source: https://www.worldometers.info/coronavirus/

11.5% of the U.S. population has received vaccinations vs 9.4% at the same time last week. This compares to 22.5% in the U.K. (up from 17.7%). Israel is at 46%, up from 40%. The U.S. is currently administering over 1.8M doses per day, up from 1.4M in the prior week. We estimate that 50% of the population will be vaccinated by August 2021 vs our previous estimate of October.

share of people who received at least one dose of COVID-19 vaccine, Feb 1, 2021 -

Source:Official data collated by Our World in Data – Last updated February 16, 2021

Base metals continued to gain strength based on the above-mentioned factors. Gold prices were down 1.4% and is the weakest performer (on a YoY basis) among the mainstream metals. Gold prices typically fall when there is a decline in global economic uncertainties. We expect prices to strengthen in H2-2021, as inflation kicks in from a global economic recovery.

Week-over-Week (Feb 15, 2021) and Year-over-Year (Feb 15, 2021)

Source: FRC / Various

Inventory levels of base metals remained flat on the LME, but increased on the SHFE (Shanghai), providing us mixed signals.

Not surprisingly, valuations of gold producers were down 6%, while that of base metals producers were up 2% last week.

Gold Producers Feb 15, 2021

Source: S&P Capital IQ & FRC

Base Metal Producers Feb 15, 2021

Source: S&P Capital IQ & FRC

Gold Producers and Base metal producers in Feburary

Source: S&P Capital IQ & FRC

We are not making any changes to our price forecasts, but are reviewing our 2021 projections for base metals based on their continued strength.

FRC Forecasts for metals ( Gold, silver , copper , zinc , nickel )

Source: FRC

 

In the following section, we review companies that announced key developments in the past week. The table below summarizes the changes we made in ratings/fair value estimates/EPS projections of companies under coverage in this report:

Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Source:https://www.researchfrc.com/weekly-mining-commentary-54/