Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Five of the seven global equity indices we track returned positive returns in the past week (orange bars).

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

Source: FRC / Various

Prices of mainstream metals increased last week due to weakness in the US$.

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

Source: FRC / Various

Except Brazil, Italy, and Poland, most of the hardest hit nations continue to report declines in new cases of COVID-19.

Daily new cases in the U.S., U.K., Mexico, India, Italy, Brazil

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

20.9% of the U.S. population has received vaccinations vs 17.6% at the same time last week. This compares to 35.6% in the U.K. (up from 32.7%). Israel is at 59.7%, up from 57.3%. We continue to estimate that 50% of the U.S. population will be vaccinated by July. Four of the five highest vaccinated countries (based on percentage of population vaccinated), Israel, the U.A.E, the U.S., and the U.K., are experiencing declines in cases. However, Chile, which is in the top five, is experiencing a surge in cases, as shown below.

Share of people who received at least one dose of COVID-19 vaccine, Mar 14, 2021

Source: Official data collated by our World in Data – Last updated 15 March, 12:20 (London Time)

Daily New Cases in Israel and Chile

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

In the past few days, several countries in Europe (Germany, France, Italy, Ireland, Netherlands, etc.) temporarily suspended the use of AstraZeneca’s (LSE: AZN) vaccinations over blood clot concerns. The U.S. has yet to approve AZN. Mr. Trudeau stated today that Canada considers AZN’s vaccine to be safe. We are concerned that this development might delay the rollout of vaccines in Europe. We believe that such a scenario will strengthen the US$, and negatively impact metal prices.

Inventory levels of base metals increased two weeks in a row on both the LME, and the SHFE (Shanghai), indicating potential for near-term weakness in prices.

LME Inventory (Mar 15, 2021)

Source: FRC / Various

SHFE Inventory (Mar 12, 2021)

Source: FRC / SHFE

Valuations of gold producers were up 2% WoW, while that of base metals producers were down 1%.

Gold Producers

Source: S&P Capital IQ & FRC

Base Metal Producers

Source: S&P Capital IQ & FRC

Gold Producers and Base Metal Producers

Source: S&P Capital IQ & FRC

Although we expect gold to be under pressure in the near-term (due to rising yields, and a stronger US$), we expect a recovery in the second half as real inflation kicks in from an economic recovery driven by pent-up demand, and savings set aside by consumers. We are maintaining our forecasts, but expect prices to remain volatile in the coming months.

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:

company that announced key developments last week

Source: FRC

Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Source: https://www.researchfrc.com/weekly-mining-commentary-58/