Rebalancing in $GDXJ $GDX brought big moves to all the stocks involved! Junior #Gold ETF (GDXJ) –

The share price of many gold companies declined between 25% to 30% – And this during a period gold prices were slightly up.

The VanEck Vectors Gold Miners ETF (GDXJ) tracks a market-cap-weighted index in global gold- and silver mining firms, focusing on small-capitalization companies.


GDXJ became so popular that holdings of some companies were bumping up against 20% ownership. Faced with these problems, GDXJ chose to dramatically alter the composition of the underlying index that GDXJ is supposed to track. In early April 2017, VanEck Vectors Junior Gold ETF announced to modify its rules to include larger companies on or around June 17, 2017.


Attachment 1 shows the potential reductions. One column states the estimated Index weight change and the next column the estimated new Index weight. Attachment 2 shows the additions to the Index.


The massive reshuffling meant that many of the

forecasted index flows represent 10+days of average

volume for some stocks, hence huge! Traders have been beaten the stocks coming out of the index with an ugly stick. One of Toronto-Dominion Bank (TD) Index specialist described the rebalance as “the single greatest wealth destruction event in index history”.


Attachment 3 shows on average stock additions lost 3.3%, reductions -15.7% and GDXJ -16.1%. Attachment 4 shows how investors dumped the GDXJ ETF. The real picture, however, looks even worse. The last column of Table 9 shows the price changes from April 12 (date of the announcement of index changes to May 31st, 2017). As can be seen the share price of many gold companies declined between 25% to 30% (last column – Price Change). And this during a period gold prices were slightly up.




from MasterMetals

2017 Global #Diamonds Prod’n Forecast 142M carats worth $15.6B # Russia #Botswana #Canada

– 11.5% increase in carat volume produced over 2016 and an 9.9% increase in total value

2017 Global natural Diamonds Prod’n Forecast142M carats worth $15.6B
May 3, 2017
By Paul Zimnisky
Mined diamond production in 2017 is estimated to be 142.3 million carats worth $15.6B (see appendix below), which would be an 11.5% increase in carat volume produced over 2016 and an 9.9% increase in total value produced. 
The top 10 largest mines in the world by value produced are estimated to represent 58% of global production. De Beers’ Jwaneng mine in Botswana is ranked number one, and is estimated to independently produce 15% of the world’s diamonds in value. 

The International mine in Russia. Source: ALROSA

Russia is estimated to be the largest producing nation by value at 35%, followed by Botswana at 22%, Canada at 14%, Angola at 8%, South Africa at 7%, Namibia at 5%, and Australia at 3%.
Russian diamond production is dominated by ALROSA (RTS: ALRS) which is 58% owned by Russian national and regional governments. The company’s prized Jubilee mine is estimated to produce 9.2M carats worth $1.4B in 2017, which by itself represents 9% of global diamond output by value. Company-wide, ALROSA’s portfolio includes 11 mines and 5 alluvial operations, producing 27% of global diamond production by volume and 33% by value (see Figure 1 for complete company-wide production figures of major producers).  
Figure 1 – Big 5 diamond miner production and sales data 2015-2017E 
Read the whole report here: 2017 Global Natural Diamond Production Forecasted at 142M Carats Worth $15.6B – Paul Zimnisky | Diamond Industry Analysis: 2017 global natural diamond production estimated at 142 million carats worth $15.6 billion

The MasterMetals Blog


from MasterMetals

#Gold – At what implied gold price are #MiningStocks trading at

The largest gold stocks are trading currently on average at almost no premium (3%) to the gold bullion price. High premiums can still be found in Randgold (31%) and Agnico-Eagle Mines (22%) (see attachment 1+2), the darlings of the gold stocks.


Here is a comment and table from Scotiabank:

The “Implied Gold Price” and resulting calculated premium/discount, is the gold price that would be need for the respective stocks to be trading at 1.0x NAV3%.


The group of companies trading at a discount to bullion continues to grow – with ELD, ACA, YRI, IMG, G, GFI and AU all trading below the current spot price.

ELD=Eldorado Gold, ACA= Acadian Mining, YRI=Yamana Gold, IMG=IAMGold, G=Goldcorp, GFI=Gold Fields and AU=AngloGold.



Source: Scotiabank GBM Precious Metals Research



from MasterMetals

#Lundin #Gold Announces US$400 – $450 Million Project Financing Package for #FrutaDelNorte

Comment from Paradigm Capital: Lundin Gold Announces US$400 – $450 Million Project Financing Package for Fruta Del Norte



·         Lundin Gold announces a US$400-$450M project financing package for FDN



·         Financing consists of 1) $150M gold prepay credit facility, 2) $150M stream loan credit facility, and 3) $100M-$150M equity commitment from Orion and Blackstone.

·         Project development capex is estimated at $684M, so this takes them to  58%-66% financed.

·         LUG had only a nominal cash of $8.4M as at Q1/17, and a negative ($18.8M) working capital, so really 57%-64% financed.

·         The stream credit facility s repayable in variable monthly principal and interest instalments equivalent to the delivery of 7.75% of gold production and 100% of the silver production starting in December 2020, up to a maximum of 350 Koz of gold and 6.0Moz of silver.

·         Orion and Blackstone Orion and Blackstone have also been granted the right to purchase 50% of Fruta del Norte gold production, up to a maximum of 2.5 Moz, at market prices (a price determined based on monthly delivery dates and a defined quotational period).



·         Generally positive, advancing the project towards development.

·         The stream credit facility might be viewed a bit negatively by the market (losing some of your torque to a rising gold price by having 7.75% of the gold and 100% of silver locked up in this contract), however there are some repayment options (LUG can repurchase 50% for $150M on Jun 30/24, and the remaining 50% on Jun 30/26 for $225M).

·         Positive to see Orion and Blackstone willing to finance projects in Ecuador, and also interesting to see them arrange the offtake agreement whereby they can be guaranteed physical gold deliveries from the project.


Conference Call:

·         Conference call to be held today (Tue May 30) at 10:00am Eastern time

·         Toll-Free North America:              +1-866-238-1645

·         North America: +1-213-660-0928

·         Sweden:              +46-(0) 8-5661-9361         

·         Conference ID: Lundin Gold




Subject: Lundin Gold Announces US$400 – $450 Million Project Financing Package for Fruta Del Norte


Lundin Gold Inc.



May 30, 2017

Lundin Gold Announces US$400 – $450 Million Project Financing Package for Fruta Del Norte

VANCOUVER, BRITISH COLUMBIA–(Marketwired – May 30, 2017) –Lundin Gold Inc. (“Lundin Gold” or the “Company”) (TSX:LUG)(OMX:LUG) is pleased to announce a project finance package of $400 to $450 million (the “Financing”) with the Orion Mine Finance Group (“Orion”) and Blackstone Tactical Opportunities (“Blackstone”). The Financing provides the foundation for the development of the Company’s Fruta del Norte project and shows the growing support for mining investment in Ecuador. The Financing is comprised of a gold prepay credit facility for $150 million, a stream loan credit facility of $150 million and committed participation of $100 to $150 million to future equity financings required to fund the project. All dollar amounts are quoted in U.S. dollars (“$”).

“We are very pleased with the financial commitments that Orion and Blackstone have made towards the development of the Fruta del Norte project and Ecuador” said President and CEO Ron Hochstein. “It confirms the strength of this project and gives us the ability to move full speed ahead with construction.”

Loan Facilities

  • Gold Prepay Credit Agreement:
    • Senior Secured Loan facility of $150 million entered into by the Company’s operating subsidiary, Aurelian Ecuador S.A. (“Aurelian Ecuador”), which holds the Fruta del Norte project;
    • $75 million will be advanced at or shortly after closing. The remaining $75 million is available to be drawn at the option of Lundin Gold, up to the end of June 2018, subject to the perfection of all security and certain other conditions;
    • Repayable in 19 fixed quarterly principal and interest instalments equivalent to the value of 11,500 oz of delivered gold starting in December 2020; and
    • Lundin Gold has an option to defer the quarterly instalments for up to four (4) quarters by increasing the gold equivalent deliveries by 1,000 oz for each deferred quarter.
  • Stream Credit Agreement:
    • Senior Secured Loan facility of $150 million entered into by Aurelian Ecuador;
    • $75 million will be advanced shortly after closing. The remaining $75 million is available to be drawn at the option of Lundin Gold up to the end of June 2018 subject to the perfection of all security and certain other conditions;
    • Repayable in variable monthly principal and interest instalments equivalent to the delivery of 7.75% of gold production and 100% of the silver production starting in December 2020, up to a maximum of 350,000 oz of gold and six million oz of silver; and
    • Option for Lundin Gold to repay (i) 50% of the remaining stream loan on June 30, 2024 for $150 million and / or (ii) the other 50% of the remaining stream loan on June 30, 2026 for $225 million.

Equity Commitment

Orion and Blackstone have committed to participate in future equity financings of Lundin Gold, in an aggregate amount of not less than $100 million and not more than $150 million, as and when initiated by the Company and subject to minimum financing thresholds.

Offtake Agreement

Orion and Blackstone have also been granted the right to purchase 50% of Fruta del Norte gold production, up to a maximum of 2.5 million oz., at a price determined based on monthly delivery dates and a defined quotational period.

Oskar Lewnowski, Chief Investment Officer of the Orion Mine Finance Group, commented, “As one of the largest investors dedicated to the mining industry, we are delighted to be a cornerstone participant of the project financing for the Fruta del Norte project. We look forward to working with the Lundin Gold management team on one of the most exciting development gold assets in the Americas.”

“Blackstone is excited to partner with Lundin Gold to develop Fruta del Norte, a world class gold deposit” said Jasvinder Khaira, Senior Managing Director at Blackstone Tactical Opportunities. “The Lundin Group are talented operators with a strong track record and our partnership is consistent with providing flexible and innovative capital to the natural resource sector.”

Endeavour Financial has provided debt financial advisory services and Norton Rose Fulbright Canada LLP has acted as legal counsel to the Company with the support of the law firm of Lexim Abogados in Ecuador.

The Company also announces the extension of the maturity date from May 31, 2017 to June 30, 2017, of the short-term credit facility with Zebra Holdings and Investments S.à.r.l. (the “Lender”), a company owned by a trust whose settlor was the late Adolf H. Lundin and an insider of Lundin Gold.

Conference Call and Webcast

A conference call and webcast will be held today, Tuesday, May 30, 2017 at 10:00 a.m. Toronto time or 16:00 CET to discuss the Financing Package. Please call in 10 minutes before the conference call starts and stay on the line (an operator will be available to assist you).

Dial-In Numbers:

Toll-Free North America:


North America:



+46-(0) 8-5661-9361



Conference ID: Lundin Gold

To view the live webcast presentation, please log on using this direct link:

The presentation slideshow will also be available in PDF format for download from the Lundin Gold website before the conference call.

A replay of the webcast will be available via the above link approximately two hours after the completion of the conference call until May 30, 2018.

Additional Information

The information in this release is subject to the disclosure requirements of the Company under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was publicly communicated on May 30, 2017 at 8:00 a.m. Eastern Time.

Forward-Looking Statements

Certain of the information and statements in this press release are considered “forward-looking information” or “forward-looking statements” as those terms are defined under Canadian securities laws (collectively referred to as “forward-looking statements”). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “believes”, “anticipates”, “expects”, “is expected”, “scheduled”, “estimates”, “pending”, “intends”, “plans”, “forecasts”, “targets”, or “hopes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “will”, “should” “might”, “will be taken”, or “occur” and similar expressions) are not statements of historical fact and may be forward-looking statements.

By their nature, forward-looking statements and information involve assumptions, inherent risks and uncertainties, many of which are difficult to predict, and are usually beyond the control of management, that could cause actual results to be materially different from those expressed by these forward-looking statements and information. This press release contains forward-looking information in a number of places, such as in statements pertaining to the Financing, future sources of liquidity. Lundin Gold believes that the expectations reflected in this forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking information should not be unduly relied upon. This information speaks only as of the date of this press release, and the Company will not necessarily update this information, unless required to do so by securities laws.

Lundin Gold’s actual results could differ materially from those anticipated. Management has identified the following risk factors which could have a material impact on the Company or the trading price of its shares: the ability to arrange financing and the risk to shareholders of dilution from future equity financings; risks related to carrying on business in an emerging market such as possible government instability and civil turmoil and economic instability; volatility in the price of gold; the timely receipt of regulatory approvals, permits and licenses; risks associated with the performance of the Company’s contractors; risks inherent in the development of an underground mine; deficient or vulnerable title to mining concessions and surface rights; shortages of resources, such as input commodities, equipment and skilled labour, and the dependence on key personnel; risks associated with the Company’s community relationships; unreliable infrastructure and local opposition to mining; volatility in the market price of the Company’s shares; uncertainty with the tax regime in Ecuador; measures required to protect endangered species; difficulty complying with changing government regulations and policies, including without limitation, compliance with environment, health and safety regulations, and the cost of compliance or failure to comply with applicable laws; exploration and development risks; the accuracy of the Mineral Reserve and Resource estimates for the Fruta del Norte Project and the Company’s reliance on one project; the Company’s lack of operating history; illegal mining; uncertainty as to reclamation and decommissioning; adverse global economic conditions; risks associated with the Company’s information systems; the ability to obtain adequate insurance; risks of bribery or corruption; the potential for litigation; limits of disclosure and internal controls; and the potential influence of the Company’s largest shareholders. 

There can be no assurance that such statements will prove to be accurate, as Lundin Gold’s actual results and future events could differ materially from those anticipated in this forward-looking information as a result of the factors discussed under the heading “Risk Factors” in the Company’s current annual information form available at



Lundin Gold Inc.
Ron F. Hochstein
President and CEO


Lundin Gold Inc.
Sophia Shane
Corporate Development


Marketwired, 25 York Street, Suite 900, P.O. Box 403, Toronto, Ontario, M5J 2V5

from MasterMetals

#Gold – The Penalty Box chart

Below is a comment and graphic on gold stocks from Scotiabank. It shows the darling stocks and the ones sitting in the penalty box. It doesn’t mean that gold stocks in the penalty box will do well in the future. As a matter of fact these companies have to do something to get out of the penalty box in order that investors start buying them.


– Gold Equities Penalty Box Update…: Below Scotia Mining Sales showing a scattered diagram showing where each company trades between their 52 Week Low and 52 Week High (0% for 52 WL and 100% for 52 WH) plotted against Scotiabank’s P/NAV5% at Spot Everything – see attached pdf for full comps.  Value shoppers may like to see companies in the bottom left quadrant because they are “washed out” by the market and have a very low valuation. 


Source: P/NAV data provided by Scotiabank GBM Precious Metals Research; Pricing Data provided by Bloomberg; Chart created by Scotia Mining Sales

* All THO estimates provided by Scotia Mining Sales


The Penalty Box  stocks are: PG=Premier Gold, DPM=Dundee Preciuos Metals, RIC=Richmont Mines, TMR=, THO=, DGC=Detour Gold, GUY=Guyana Goldfields,

G=Goldcorp, AGI=Alamos Gold, NGD=NewGold, MND=, AU=, YRI=Yamana Gold, TGZ=Teranga Gold, ACA=, SMF=SEMAFO, AKG=Asanko Gold.

from MasterMetals

#Gold & #Silver Commitments of Futures Traders

Commitments of Futures Gold Traders show that large speculators (hedge funds and money managers) have further reduced their long positions. Net commercial gold dealers reduced their short positions. Neither side wants to be currently exposed heavily to gold (attachment 1).


The KITCO Gold Survey reveals that both, Wall Street and Retail investors (Main Street) are bullish for this week (attachment 2).


Gold Barometers indicate that the overbought situation in gold stocks has diminished. Physical gold and silver have been in neutral territory for weeks (attachment 3).


Commitments of Futures Silver Traders show that large speculators have further reduced their long exposure. The current position is the lowest of the last 12 months. Also net commercial silver dealers reduced their short positions and also here we witness the smallest positions of the last 12 months (attachment 4).


The hourly gold chart (attachment 5) shows gold had a good week. As per close on Friday, New York time 4:00 p.m., gold closed at US$ 1,255 per ounce for a gain on the week of US$ 27. The ARCA Gold Bugs Index (HUI) (attachment 6) made no headway last week and closed at 197.11 (almost unchanged on the week).


The chart of gold futures continuous contracts (attachment 7) indicates that the 50-day moving average is trying to break through the 200-day moving average.


Attachment 8 is the HUI (Arca Gold Bugs Index) chart. It fell lately out of a triangle formation and is currently fighting its way back into it. It looks we are in a shake-out period. The components of HUI are visible in attachment 9.



from MasterMetals

Upheaval in junior #gold mining co’s as leading #ETF $GDXJ rebalances its portfolio in June

@media print { body { margin: 2mm 9mm; } .original-url { display: none; } #article .float.left { float: left !important; } #article .float.right { float: right !important; } #article .float { margin-top: 0 !important; margin-bottom: 0 !important; } } Upheaval in junior mining as leading ETF GDXJ set to rebalance portfolio in June

The rebalancing in the GDXJ has meant increased volatility in the junior and not so junior miners 

Upheaval in junior mining as leading ETF GDXJ set to rebalance portfolio in June

It says something about the proposed expansion of North America’s leading junior gold mining fund that it could now include Gold Fields (NYSE:GFI), one of the national champions of one of the world’s biggest gold mining countries, in its portfolio. 

But larger companies are coming in to the GDXJ and holdings in smaller ones are being cut in a rebalancing that’s scheduled for June.

How much of a junior gold mining specialist the GDXJ will then truthfully be is open to question. But those definitions are being stretched by the fund’s own stellar success, and it’s hard to get too pernickety when investors are making money.

Or at least think they will.

Between the start of the year and the middle of February the GDXJ soared by around 33%, and at one point its value hit over US$5.5bn.

At the time, it was a clear sign that the junior mining markets were roaring back after years in the wilderness. The new positivity towards junior miners remains intact, just about, as most commodities have held on to gains posted in the last year or so and the market boost that Donald Trump’s election stimulated hasn’t completely worn off yet.

But the unexpected side-effect was that so much capital flowed into the GDXJ from eager investors that it has been unable to place it all within the mandated sphere of companies that it’s allowed to invest in. For regulatory reasons that are standard practice the world over, the fund is unable to go over a certain threshold in how much of a percentage it holds in any one company.

In many cases it has now reached the maximum threshold it’s allowed. The only solution: find more companies, or to put it another way, expand the investment universe to bigger and more arresting propositions.

Thus, according to analysis by BMO Capital Markets, in June the GDXJ is likely take major positions in Eldorado Gold (TSE:ELD), Yamana Gold (TSE:YRI), and Centamin Egypt (LON:CEY) (TSE:CEE), among others.

Eldorado has a market capitalisation of just over C$3bn, Yamana a market capitalisation of over C$3.5bn, and Centamin a market capitalisation of £1.9bn. Small companies these are not.

And then there’s the matter of Gold Fields (NYSE:GFI), which alongside Anglo Gold (LON:AGD), ranks as the foremost of South Africa’s gold miners, and has a market capitalisation of nearly US$3bn. Lest we forget South Africa was for many years the number one producer of gold in the world bar none. GDXJ’s probable move onto the Gold Fields register really does take it into the big leagues.

Other companies that will likely be added in June include First Majestic (TSE:FR), Coeur Mining (TSE:CDM) and New Gold (TSE:NGD).

But there is a downside to all this.

First, not everyone in the market has taken a shine to the GDXJ’s decision effectively to re-brand the “J” part of its name as an apparent optional extra. After all, there’s already a GDX without the “J”, and for what it’s worth it does what it says on the tin: invest in gold companies the world over. AngloGold, that other South African champion, comprises 2.73% of the GDX’s portfolio, but at US$4.5bn its market capitalisation isn’t a particular order of magnitude different from its smaller peer Gold Fields.

Investors in the GDXJ might be forgiven for thinking that the difference between the two funds is about to become very blurred.

Especially because the rebalancing that the GDXJ is about to undertake is also likely to involve some heavy selling of existing holdings at the more junior end to make sure the scales stay level.

Thus of the overseas holdings shares in Hochschild (LON:HOC), Highland Gold (LON:HGM), Regis Resources (ASX:RRL), St Barbara (ASX:SBM), Resolute (ASX:RSG), Saracen (ASX:SAR), Westgold (ASX:WGR), Beadell (ASX:BDR), Perseus (ASX:PRU), Silver Lake (ASX:SLR), Ramelius (ASX:RMS) and Munsun Capital (HKG:1194) all fell on news of the rebalancing.

There has been similar downward pressure on companies listed in Canada, with the strange twist that the likelihood of major selling from the GDXJ portfolio has driven down valuations, in turn driving down the valuation of the GDXJ itself.

And article in April on asked “Is GDXJ killing the market?” and although the larger GDX has also dropped since news of the GDXJ rebalancing was announced, there is a significant and unexpected dose of short-term bearishness suddenly at large in the junior market.

The Canadian companies most affected by the rebalancing include Kirkland Lake Gold (TSE:KL), Silver Standard Resources (TSE:SSO), Torex Gold (TSE:TXG), Endeavour Mining Corp (TSE:EDV), Osisko Gold Royalties (TSE:OR), Centerra (TSE:CG) and Novagold Resources (TSE:NG).

Shares in Centerra are up by around 33% since the beginning of the year, but did dip significantly following the GDXJ announcement. Novagold’s shares are heavily down. Osisko Gold Royalties shares dipped and then recovered. Kirkland’s dipped and then stabilised. Silver Standard’s crashed then bounced. Torex’s weakened significantly, as did Endeavour’s.

Sure, the euphoria about Trump’s election is wearing off and the market is weaker. There are mixed signals on gold now, with the US dollar strength easing, and hawkishness from the Fed waxing and waning. But knowing that what BMO calls “a massive rebalance trade” is coming in June is having an undeniably detrimental effect right across the market.

Bradford Cooke, the chief executive of Endeavour Silver, encapsulated the effects very well in recent remarks he made to shareholders.

“Our stock has been particularly volatile in recent weeks and we believe the GDXJ ETF index fund rebalancing is the main reason,” he said.

“At the date of their most recent filing, the GDXJ held 15% of Endeavour’s issued and outstanding shares – making them by far our largest shareholder. Their holdings had been steadily creeping up as the size of the fund grew, and they were rapidly approaching the 20% threshold in many of their holdings (not just Endeavour Silver).”

So far so good. But the new need to buy into bigger companies has created selling pressure on the existing holdings.

“As a result, they have been reducing their positions in all of their current GDXJ holdings and buying the larger cap mining shares to be added to the index,” continued Cooke.

“We believe this rebalancing of the GDXJ holdings is primarily what caused the recent volatility, and price decline, in our stock. There is no other fundamental reason for the sell-off, as our operations remain on track to meet 2017 guidance, and we are cash flow positive at current metal prices.”

Other Canadian companies that are vulnerable to suffer similar effects include Novagold (TSE:NG), MAG Silver (TSE:MAG), McEwen Mining (TSE:MUX), Silvercorp (TSE:SVM), Sandstorm Gold (TSE:SSL), Klondex (TSE:KDX), Alacer (TSE:ASR), Asanko (TSE:AKG), Seabridge (TSE:SEA), China Gold International (TSE:CGG), Richmont Mines (TSE:RIC), Continental Gold (TSE:CNL), Wesdome Gold Mines (TSE:WDO), First Mining Finance (CVE:FF), Golden Star Resources (TSE:GSC), Argonaut Gold (TSE:AR), Gold Standard Ventures (CVE:GSV), Teranga Gold (TSE:TGZ), Great Panther (TSE:GPR), Primero Mining (TSE:P) and Dundee Precious Metals (TSE:DPM).

Paradoxically though, the short-term weakness created by the GDXJ rebalance may actually represent a buying opportunity for canny investors, since all this downward pressure has very little to do with fundamentals.

Pick your company, and watch for a bounce. Especially now that gold is moving upwards once more. 



from MasterMetals