Resource World Magazine

A P R I L / M A Y 2 0 2 0 www.resourceworld.com 5 Editor's Comments Ellsworth Dickson Ellsworth Dickson, Editor-in-Chief Email: editor@resourceworld.com T: 604 484 3800 | 1 877 484 3800 T he human cost of the COVID-19 (coronavirus) is many thousands of lives lost while many more suffer through the illness and cope with quarantine and social distanc - ing. The oil & gas and minerals sectors that have been hammered by other events pre COVID-19 have also been negatively impacted by the virus. The chain of bad news began with the rail blockades suppos - edly in support of a handful of hereditary First Nations chiefs opposing a natural gas pipeline in northern British Columbia, although the elected chiefs and all 20 First Nations along the route wanted the pipeline to go ahead. However, it later came out that many of the protestors had their own agenda. These rail blockages damaged Canada's econ- omy of which some protestors bragged. This damage included the delayed transport of mineral commodities. Now with the onslaught of COVID-19, Canada's economy is seriously damaged, many thousands have lost their jobs and perhaps a third of the country's small businesses may close for good. This was followed by Teck Resources Ltd. [TECK.A; TECK.B; YECK-NYSE] cancelling its $20 billion Frontier oil sands project (260,000 bbls/day) in Alberta citing Canada's lack of a clear way to develop major resource projects. This wasn't the only resource project cancellation. Others included Saguenay LNG Project ($4 billion), TC Energy's Energy East pipeline ($16 billion), the Petronas Prince Rupert, BC LNG pipeline and export terminal ($36 billion) and several others. Then, the Saudi Arabia-Russian dispute caused the price of oil to collapse at the same time fuel demand decreased due to fewer cars and trucks on the road because of COVID-19. It is expected that Canadian oil wells will probably continue to be shut down with current weak prices despite an agreement to limit output struck by OPEC and other major producers on the April 11 week - end that will curtail production by 9.7 million barrels per day of crude. With less gasoline demand, storage facilities for fuel were almost filled up. This led to oil traders trying to sell their May contracts before the end of April that resulted in the futures mar - ket closing on April 20 for May WTI at -$37.63. In the mining sector, the COVID-19 pandemic has led to many mining operations, smelters and refiners being suspended and head offices being closed. The fallout consequences of the pandemic also include travel restrictions, some companies with- drawing 2020 guidance, volatility of share and metals prices, and difficulties in raising funds. Still, there is good news. People who run both junior and senior mining companies are by nature very entrepreneurial. They are just itching to resume normal business activities – and some are. For example, Endeavour Mining Corp. [EDV-TSX; EDVMF- OTCQX] struck a deal to acquire SEMAFO Inc. in a $1.0 billion all-share transaction that will create the largest gold producer in West Africa. Or how about Alexco Resources Corp. [AXR-TSX; AXU-NYSE] raising $7.5 million in a deal with an underwriting syndicate co- led by Cormark Securities Inc., Cantor Fitzgerald Canada Corp. and including Canaccord Genuity Corp. Proceeds of the offering are slated to advance its flagship Keno Hill silver project in the Yukon. Then there is Equinox Gold Corp. [EQX-TSX; NYSE American] that recently completed a merger with Leagold Mining. Ross Beaty, executive chair of Equinox Gold, commented: "We have created a major gold producer by combining the assets and lead - ership teams of Equinox Gold and Leagold, with a peer-leading growth profile and powerful financial, technical and operational management. Equinox Gold now has six producing mines, two development projects, two expansion projects and the financial capacity to fund its development plans." The gold sector is looking particularly attractive with the yel - low metal trading at US $1,679.20 on April 21. Some gold stocks are seeing significant gains while the TSX Venture Exchange has risen from its low of about 335 to 447 on April 14 showing a nice V-shaped recovery on the chart. My point is that the resource sector will carry on with gold a bright spot in particular. If you can stand the volatility, with shrewd investing there are capital gains opportunities out there. n Resource sector slammed but some light out there

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