CANACCORD WEEKLY - AUGUST 28/2012 It’s Alive!
• Over the past two weeks, the junior mining sector has finally shown signs of life.
Over this period, the price of gold has rallied 3.1%, the price of silver has rallied
9.6%, and the TSX Venture Composite Index has rallied 5.1%. While average
daily volumes remain relatively low at 146 million, they are up from less than
120 million at the end of July and continue to trend higher. With a breath of new
life in the junior mining sector, we have seen selective outperformance,
particularly for those companies with strong balance sheets. While the rally is
welcome, the caveat is that much of the new interest in the sector has been
driven by speculation of a renewed program of quantitative easing in the US,
which may or may not come about in early September
IT’S ALIVE!
It has been a challenging year in the junior mining space. From March 1 to August 10,
the TSX Venture Composite Index dropped 29%, and average daily trading volumes for
the TSX Venture dropped from 278 million to less than 120 million. The last two weeks
have been a stark contrast, with the price of gold rallying 3.1%, the price of silver
rallying 9.6%, and the TSX Venture Composite Index up 5.1%. During this time, we have
seen selective share price outperformance, particularly for junior producers with strong
balance sheets