Management clearly has a plan and has timed things quite well with the SF Revitalization plan disseminated prior to the AGM and the PFS on "Investors Day", where Alio Gold opens the TSX and the new company starts in earnest.
Depending on expectation, the PFS was a non-event or solidified a core asset - but not because of any "new finding". My view was this: Alio Gold now has a strong foundation with SF, a cash cow of a project with AP and has legitimized its property and cash flow prospects for the next 7-8 years. This is a 180 from Backens. McCunn has savvy and moxy. I like that.
With the significant rebalancing going on in the NYSE funds and GDX, I tend to think the spring/summer will be quite positive....
https://www.nyse.com/indices/rebalance-schedule
GDX rebalaning in June
Dramatic transformation for GDXJ
According to a press release from the firm, starting on June 17, "companies ranking between 60 percent and 98 percent (currently between 80 percent and 98 percent) of the full market capitalization [of the investable gold miner universe] qualify for inclusion in the MVIS Global Junior Gold Miners Index."
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Translated into market-capitalization terms, that means the market-cap range for new index components may expand from $75 million–$1.6 billion to $75 million–$2.9 billion, according to a Scotiabank report published April 13.
The changes to the index will result in a dramatic transformation of GDXJ's portfolio. Scotiabank estimates that, after the changes, there could be 23 new additions to the index (four of which are already in the ETF). Those 23 new additions could represent 60.8 percent of the new index portfolio.
To fund the buying of the new index additions, the existing index components will likely face steep selling. The Scotiabank report says that GDXJ "could have to sell $2.6B across existing index constituents," which represents "2.5 percent to 8 percent of the total shares outstanding of each existing index constituent."
Given the large amount of selling anticipated in its current holdings, GDXJ dropped notably April 13 even as gold prices climbed to a five-month high. The ETF fell by 3.5 percent, compared to a 1 percent gain for spot gold and a 0.1 percent loss for the larger, VanEck Vectors Gold Miners ETF (GDX). After the Friday market holiday, the ETF fell by another 2.3 percent on Monday.
Growing market cap
The changes to GDXJ and its underlying index are a reflection of the constraints faced by a large, rapidly growing ETF that invests in a relatively small niche area of the market. For the time being, the broadening of the index will help the ETF remain sufficiently diversified, even if new money continues to pour into the fund.
However, the downside of the changes is that GDXJ has moved up the scale in terms of market cap, reducing the exposure it offers to the smallest junior gold miners. If the fund continues to grow and again faces issues with concentrated positions, it may have to broaden the index once more.
As Scotiabank points out, the GDXJ universe was first expanded in December 2014, when the ETF faced similar problems. The broadening of the index at the time increased the ETF's market-cap range from $95 million–$448 million to $95 million–$995 million.