Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Global equity markets stayed relatively flat in the past week. Markets rallied today as treasury yields retreated. Rising yields typically result in lower equity valuations (from higher discount rates), and higher borrowing costs. The U.S. Fed indicated last week that it has no intent to raise rates until 2023. As we expect inflation to kick in with an economic recovery in H2-2021, we expect rate hikes to commence in late 2021 or early 2022.

Current Vs Pre COVID-19 ( as of Mar 1, 2021 )

Source: FRC / Various

After two consecutive weeks of decline, most of the hardest hit nations reported a marginal increase in daily new cases of COVID-19.

Daily New Cases in the U.S., India, Canada, Italy, U.K, Argentina

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

14.9% of the U.S. population has received vaccinations vs 13.1% at the same time last week. This compares to 29.6% in the U.K. (up from 25.9%). Israel is at 54.6%, up from 50.5%. We are maintaining our estimate that 50% of the U.S. population will be vaccinated by August 2021.

Gold prices declined again in the past week due to rising bond yields.

Week-over-Week (Mar 1, 2021) and Year-over-Year (Mar 1, 2021)

Source: FRC / Various

Zinc and nickel prices declined due to increases in inventory levels. Copper prices remained strong despite higher inventory levels on both the LME, and the SHFE (Shanghai). We expect copper prices to experience downward pressure.

LME Inventory (Mar 1, 2021)

Source: FRC/Various

SHFE Inventory ( Feb 26 , 2021)

Source: FRC/SHFE

Valuations of gold and base metals producers were down 8% and 13% WoW, respectively.

Gold Producers and Base metal producers in Feburary

Source: S&P Capital IQ & FRC

Base Metal Producers Feb 21, 2021

Source: S&P Capital IQ & FRC

Gold Producers and Base metal producers in February and March

Source: S&P Capital IQ & FRC

We are not making any changes to our price forecasts. We believe gold has the highest upside this year.

FRC Forecasts

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-56/