ORENINC INDEX – Monday, December 17^th 2018

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Last week index score: 45.44 (updated)

This week: 60.25

Fortuna Silver Mines (TSX:FVI) moved forward with a strategic cooperation agreement with Prospero Silver (TSX-V:PSL) exercising its right to be granted an option to acquire up to a 70% interest in the Pachuca SE project near Pachuca in Hidalgo, Mexico.

The Oreninc Index grew in the week ending December 14^th, 2018 to 60.25 from an updated 45.44 a week ago as gold starts to shine.

Investors may finally be starting to see gold as a safe haven investment with the yellow metal generally holding onto recent gains despite the US dollar index hitting record levels. Eyes are now on the US Federal reserve meeting this coming week with many observers expecting that it will indicate that it will slow the pace of interest rate increases in 2019.

With about three months to go until the UK is due to leave the European Union, the world is no closer to knowing what will happen on that fateful day in March. British Prime Minister Theresa May pulled postponed taking the deal she hammered out with the EU to the House of Commons (the UK Lower House) due to overwhelming opposition to it from all political sides. Sterling fell to its lowest level in two years against the US dollar and May promptly faced and defeated a vote of no confidence from her own party, the Conservative Party. May has to present the deal to the Commons in January and appears to be content to let the clock run down to force the hand of deal opponents to accept it rather than a no-deal exit from the EU. Meanwhile, an increasing number of voices in the Labour Party, the main opposition party, and putting pressure on party leader Jeremy Corbin to push for a second referendum vote that includes a remain in the EU option.

The two-week climate summit in Katowice, Poland agreed a range of measures to make the Paris climate pact operational in 2020 including rules to ensure that countries keep their promises to cut carbon. The agreement aims to deliver the Paris goals of limiting global temperature rises to well below 2C.

On to the money: total fund raises announced increased again to C$120.9 million, a twelve-week high, although there were no brokered financings, and one bought-deal financing for C$20.0 million, a one-week low. The average offer size fell to C$2.6 million, a one-week low, whilst the number of financings increased to 46, a 51-week high.

Gold pulled back to close down at US$1,239/oz from US$1,249/oz a week ago. It is down 4.90% this year. The US dollar index showed strength, gaining to close up at 97.44 from 96.71 last week. The van Eck managed GDXJ fell as it closed down at US$27.77 from US$28.04 a week ago. The index is down 18.63% so far in 2018. The US Global Go Gold ETF however closed up at US$10.92 from US$10.71 a week ago. It is now down 16.06% so far in 2018. The HUI Arca Gold BUGS Index closed down at 152.66 from 153.93 last week. The SPDR GLD ETF added ounces to inventory to close up at 763.56 tonnes from 759.73 tonnes a week ago.

In other commodities, silver shed a few cents to close down at US$14.58/oz from US$14.63/oz a week ago. Copper gained a cent to close up at US$2.76/lb from US$2.75/lb a week ago. Oil saw losses again as WTI closed down at US$51.20 a barrel from US$52.61 a barrel a week ago.

The Dow Jones Industrial Average continued to see selling as it closed down at 24,100 from 24,388 last week. Canada’s S&P/TSX Composite Index also closed down at 14,595 from 14,795 the previous week. The S&P/TSX Venture Composite Index also closed down again at 555.38 from 572.38 last week.

Summary

• Number of financings increased to 46, a 51-week high.
• No brokered financings were announced this week, a three-week low.
• One bought-deal financing was announced this week for C$20.0m, a one-week low.
• Total dollars increased to C$120.9m, a 12-week high.
• Average offer size decreased to C$2.6m, a one-week low.

Financing Highlights

Gabriel Resources (TSX-V:GBU) entered into definitive subscription agreements for a non-brokered private placement of up to 106.4 million units @ US$0.2475 for gross proceeds of up to US$20.0 million (C$26.3 million).

• Each unit consists of one share and a warrant exercisable @ US$0.49 for five years.
• The purchase price represents a 25% discount to the closing price immediately preceding the announcement.
• It is anticipated that insiders will subscribe for up to 55.2 million units for gross proceeds of US$10.37 million
• Gabriel is progressing with its arbitration case against Romania before the World Bank’s International Centre for Settlement of Investment Disputes and intends to use the proceeds to finance the costs of the ongoing ICSID arbitration.

Sabina Gold & Silver (TSX:SBB) announced a bought deal financing with a syndicate of underwriters co-led by BMO Nesbitt Burns and RBC Dominion Securities to buy 16.7 million shares @ C$1.20 for gross proceeds of C$20.0 million. Due to strong demand, this was increased to 18.3 million shares for gross proceeds of C$22.0 million.

• Zhaojin International Mining elected to exercise its participation right to purchase 1.8 million shares for C$2.2 million.
• Net proceeds will be used to advance development of the Back River gold project in Nunavut, Canada.

Major Financing Openings

• Gabriel Resources (TSX-V:GBU) opened a C$3 million offering on a best efforts basis. Each unit includes a warrant that expires in five years.
• Sabina Gold & Silver (TSX:SSB.T) opened a C$20.0 million offering on a bought deal
• Reunion Gold (TSX-V:RGD) opened a C$15.0 million offering on a best efforts
• Northern Dynasty Minerals (TSX:NDM) opened a C$4 million offering on a insiders only basis.

Major Financing Closings

• Silvercrest Metals (TSX-V:SIL) closed a C$66 million offering on a strategic deal basis.
• Stornoway Diamond (TSX:SWY) closed a C$30.0 million offering on a best efforts Each unit included half a warrant that expires in five years.
• Northern Vertex Mining (TSX-V:NEE) closed a C$72 million offering on a best efforts basis. Each unit includes a warrant that expires in two years.

Company news

Fortuna Silver Mines (TSX:FVI) decided to move forward with a strategic cooperation agreement with Prospero Silver (TSX-V: PSL) and exercised its right to be granted an option to acquire up to a 70% interest in the Pachuca SE project near Pachuca in Hidalgo, Mexico.

• Fortuna to spend C$8.0 million in qualifying expenditures and complete a preliminary economic assessment, with a minimum spend of C$1.0 million in the first year.
• In 1Q18, Prospero, with funding by Fortuna, completed a 1,800m drill program testing three targets at Pachuca SE. Holes 1 and 3 cut the possible tops of new vein systems. Hole 2 intersected three argillic caps in the shallow portion of the hole, and three mineralized veins at depth.
• A new drilling campaign is planned for 2019.

Analysis

Fortuna activating the strategic cooperation agreement with the Pachuca SE asset is a positive that will result in considerably more exploration spend on the project in the coming years. Exploration will follow-up on previous drill results in addition to testing other targets on the property.