Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Most of the global equity indices we track remained relatively flat last week. The S&P 500 was the best performer (up 1.8%) amid a stronger than expected jobs report from the U.S.

Source: FRC / Various

 

Prices of mainstream metals (except nickel) remained flat as well. Nickel prices, which have been very volatile in the past few weeks, dropped 2.5% last week, after reporting a 7% gain in the prior week. Nickel demand is driven by batteries, but the recent price volatility is primarily due to drastic changes in inventory levels, primarily on the SHFE (Shanghai).

Week-over-Week(July 5, 2021) Year-over-Year (July 5, 2021)

Source: FRC / Various

Valuations of gold producers were up 2% WoW; base metal producers were up 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

Six out of the top 15 hardest hit nations (including the U.K., Spain, Russia, Colombia, Iran, and Mexico) are experiencing a spike in new COVID-19 cases. 68.6% of Canadians have received at lease one dose vs 67.6% at the same time last week. 35% of Canadians are fully vaccinated (previously 26%) vs 50% in the U.K. (48%), and 47% in the U.S. (46%). As noted last week, due to vaccine hesitancy, vaccination rates decline significantly once a country reaches the 60% mark. We believe governments worldwide have to come up with initiatives to encourage more vaccinations.

Share of people who received at least one dose of COVID-19 vaccine, Jul 4, 2021

Source: Official data collated by Our World in Data

Share of people vaccinated against COVID-19, Jul 4, 2021

Source: Official data collated by Our World in Data

We are maintaining our price forecasts. Gold and silver remain well positioned for H2-2021. Central banks have started increasing their gold purchases, and the trend is expected to continue (see chart below) amid the global economic recovery.

FRC Forecasts

Source: FRC

Central Bank demand seen recovering in 2021 and 2022

Source: Bloomberg

In the following section, we review companies that announced key developments in the past week. We are making the following key changes to our ratings/fair value estimates:

Source: FRC

Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Source: https://www.researchfrc.com/weekly-mining-commentary-74