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Encounter Technologies, Inc. is in the process of undertaking the management of four major-flag hotels in Central Kansas and Northern Oklahoma. Moreover, a one-year escrow will operate contemporaneously with the management contracts for each property; whereby, the company will be purchasing those properties. The company will commence a secondary offering during the second quarter of calendar year 2019 (following the effect of a notification of corporate actions to FINRA) to satisfy the purchase prices-in-full for those properties. The company's management has been engaged in confidential discussions to acquire two "Strip" properties in Las Vegas, Nevada, which will give the company a significant presence in the hospitality industry. The company's board of directors anticipate the hotel/casino transactions will close in eight months to one and one-half years after to company obtains the required Nevada State regulatory approvals.
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https://www.otcmarkets.com/stock/ENTI/profile
So sorry to hear this Cash.
I just placed an ENTI order with TDAmeritrade with no problem.
Good luck with your sister Cash. Glad you can spend time with her.
Pretium Resources Inc.: Pretivm Reports Third Quarter 2018 Results
Brucejack Mine delivers profitability; significant cash build VANCOUVER, British Columbia, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Pretium Resources Inc. (TSX/NYSE:PVG) ('Pretivm' or the 'Company') is pleased to report financial and operating results for the third quarter and first nine months of 2018. All amounts are in US dollars unless otherwise noted. This release should be read in conjunction with the Company's Financial Statements and Management's Discussion and Analysis ('MD&A') available on the Company's website and on SEDAR and EDGAR. 'Brucejack delivered another profitable quarter in a declining gold price environment, which speaks to the robust economics of the mine,' said Joseph Ovsenek, President & CEO of Pretivm. 'We have generated significant earnings from mine operations every quarter since achieving commercial production, and have built a cash balance of over $190 million. We remain on track to refinance our construction debt facility and repurchase the precious metals stream by year-end without issuing equity.’
Third Quarter 2018 Summary
Production of 92,641 ounces of gold at a mill feed grade of 12.4 grams per tonne gold.
Revenue of $110.1 million on 94,458 ounces of gold sold.
Total cost of sales $72.5 million or $767 per ounce of gold sold1.
All-in Sustaining Cost ('AISC')1 of $709 per ounce of gold sold.
Net earnings of $10.7 million ($0.06 per share).
Adjusted earnings1 of $26.3 million ($0.14 per share).
Generated $52.4 million cash from operating activities.
Cash and cash equivalents balance of $190.3 million as at September 30, 2018.
Notice was delivered to repurchase 100% of the gold and silver stream that was sold as part of the construction financing package.
Subsequent to the end of the quarter, a commitment letter for a fully underwritten $480.0 million debt facility to refinance the existing construction credit facility was executed. 1Refer to the 'Non-IFRS Financial Performance Measures' section at the end of this news release.
Third Quarter Production Overview
Production totaled 92,641 ounces of gold and 95,741 ounces of silver compared to 82,203 ounces of gold and 83,233 ounces of silver in the third quarter 2017. Year to date 2018 production totaled 279,670 ounces of gold and 308,676 ounces of silver.
Mill feed grade averaged 12.4 grams per tonne gold compared to 10.5 grams per tonne gold in the third quarter 2017. Year to date 2018 mill feed grade averaged 12.0 grams per tonne gold.
Gold recoveries averaged 97.4% compared to 96.5% in the third quarter 2017. Year to date 2018 recoveries averaged 97.4%.
Process plant throughput averaged 2,610 tonnes per day for a total of 240,122 tonnes of ore compared to 2,840 tonnes per day for a total of 261,262 tonnes of ore in the third quarter 2017. Year to date 2018 process plant throughput averaged 2,705 tonnes per day for a total of 738,555 tonnes of ore.
Mine development remained at a rate of approximately 700 meters per month during the quarter.
The sequence of the mine plan and the availability of stopes for optimal blending are the main drivers of our gold production. We anticipate narrowing the range of grade variability as development advances.
Operating Results
Three months ended September 30, Nine months ended September 30,
2018 2017 2018 2017(1)
Ore mined t 255,227 271,534 772,072 271,534
Mining rate tpd 2,774 2,951 2,828 2,951
Ore milled t 240,122 261,262 738,555 261,262
Head grade g/t Au 12.4 10.5 12.0 10.5
Recovery % 97.4 96.5 97.4 96.5
Mill throughput tpd 2,610 2,840 2,705 2,840
Gold ounces produced oz 92,641 82,203 279,670 82,203
Silver ounces produced oz 95,741 83,233 308,676 83,233
Gold ounces sold oz 94,458 55,413 278,417 55,413
Silver ounces sold oz 87,110 19,846 289,710 19,846
The following abbreviations were used above: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).
(1) Data for the nine months ended September 30, 2017 covers the period commencing from July 1, 2017, the date the Brucejack Mine achieved commercial production, to September 30, 2017. Third Quarter Financial Overview
Revenue of $110.1 million compared to revenue of $70.9 million in the third quarter 2017. Revenue includes a loss on trade receivables at fair value related to provisional pricing adjustments of $1.6 million. The comparable period is the third quarter 2017 which was the Company's first quarter of production after commercial production was achieved on July 1, 2017. Year to date 2018, the Company generated revenue of $346.0 million.
The Company sold 94,458 ounces of gold at an average realized price of $1,169 per ounce generating $110.4 million in revenue. Treatment costs and refining charges associated with concentrate sales, in the amount of $4.3 million, were included within concentrate revenue. The average London Bullion Market Association AM and PM market price over the quarter ended September 30, 2018 was $1,213 per ounce. In the comparable period, the sale of 55,413 ounces of gold contributed $71.0 million at an average realized price of $1,281 per ounce. Year to date 2018, the Company sold 278,417 ounces of gold generating $345.1 million in revenue.
Total cost of sales was $72.5 million or $767 per ounce of gold sold. In the third quarter 2017, total cost of sales was $44.9 million or $810 per ounce of gold sold. Total cost of sales includes production costs, depreciation and depletion, royalties and selling costs. Year to date 2018 total cost of sales was $231.4 million or $831 per ounce.
Total cash cost1 was $568 per ounce of gold sold and AISC was $709 per ounce of gold sold. In the third quarter 2017, total cash cost was $656 per ounce of gold sold and AISC was $788 per ounce of gold sold. Year to date total cash cost was $627 per ounce of gold sold and AISC was $758 per ounce of gold sold.
Sustaining capital expenditures amounted to $5.2 million compared to $3.5 million in the third quarter 2017. Year to date 2018 sustaining capital incurred was $12.8 million.
Earnings from mine operations1 were $37.6 million compared to $26.0 million in the third quarter 2017. Year to date 2018 earnings from mine operations were $114.5 million.
Net earnings were $10.7 million compared to a net loss of $7.0 million in the third quarter 2017. Year to date 2018 net earnings were $33.8 million.
Adjusted earnings were $26.3 million compared to $14.0 million in the third quarter 2017. Year to date 2018 adjusted earnings were $79.2 million.
Cash generated from operating activities was $52.4 million compared to $47.5 million in the third quarter 2017. Year to date 2018 cash generated from operations was $154.4 million.
Cash and cash equivalents were $190.3 million as at September 30, 2018 increasing $134.0 million from $56.3 million at December 31, 2017.
On September 24, 2018, the Company provided notice of its intention to repurchase 100% of the callable 8% precious metals stream for $237.0 million. The stream was sold by Pretivm as part of the construction financing package for the Brucejack Mine.
Subsequent to September 30, 2018, the Company signed a commitment letter for a fully underwritten $480.0 million debt facility to be drawn to refinance the existing construction credit facility of approximately $423.8 million due on December 31, 2018, for the construction of the Brucejack Mine. The debt facility will be available by way of a $250.0 million secured amortizing non-revolving credit facility and a $230.0 million senior secured revolving credit facility. Funds from the revolving facility will also be available for general corporate purposes including, if necessary, to support the repurchase of 100% of the precious metals stream. (See news release dated October 4, 2018.)
Upon completion of the debt settlement and refinancing transactions in the fourth quarter of 2018, the Company expects that future operating and debt settlement requirements will be satisfied from operating cash flow.
Financial Results
In thousands of USD, Three months ended September 30, Nine months ended September 30,
except for per ounce data 2018 2017 2018 2017(1)
Revenue $ 110,060 70,875 345,960 70,875
Earnings from mine operations (2) $ 37,608 25,963 114,512 25,963
Net earnings (loss) for the period $ 10,734 (6,975 ) 33,773 (13,733 )
Per share - basic $/share 0.06 (0.04 ) 0.19 (0.08 )
Per share - diluted $/share 0.06 (0.04 ) 0.19 (0.08 )
Adjusted earnings (2) $ 26,327 13,951 79,172 4,684
Per share - basic (2) $/share 0.14 0.08 0.43 0.03
Total cash and cash equivalents $ 190,318 53,774 190,318 53,774
Cash generated from operating activities 52,364 47,470 154,358 39,913
Total assets $ 1,771,543 1,673,601 1,771,543 1,673,601
Long-term debt (3) $ 59,610 639,975 59,610 639,975
Total cash costs (2) $/oz 568 656 627 656
All-in sustaining costs (2) $/oz 709 788 758 -
Average realized price (2) $/oz 1,169 1,281 1,239 1,281
Average realized cash margin (2) $/oz 601 625 612 625
(1) Data for the nine months ended September 30, 2017 covers the period commencing from July 1, 2017, the date the Brucejack Mine achieved commercial production, to September 30, 2017.
(2) Refer to the 'Non-IFRS Financial Performance Measures' section for a reconciliation of these amounts.
(3) Long-term debt does not include the current portion of the Company's senior secured Credit Facility and the Stream Obligation in the amount of $641,468 as at September 30, 2018. Second Half 2018 Outlook
H2 2018 production guidance Gold production at the Brucejack Mine for the second half of 2018 is expected in the range of 200,000 to 220,000 ounces, for total 2018 gold production of 387,000 to 407,000 ounces. With our production of 92,641 ounces of gold in the third quarter, we are on track to meet the lower end of our H2 2018 production guidance. H2 2018 financial guidance All-in sustaining costs for the second half of 2018 are expected to range from $710 to $770 per ounce gold sold. With our AISC of $709 per ounce gold sold in the third quarter, we are on track to meet our H2 2018 AISC guidance. As production has reached steady state at the Brucejack Mine, an increased focus has been placed on operational efficiency to reduce costs. Stream Repurchase and Debt Refinancing We remain on track to repurchase 100% of the precious metals stream and refinance the existing construction credit facility during the fourth quarter without issuing equity. Organic Growth Opportunities Application to increase production rate On December 20, 2017, the Company submitted an application to the BC Ministry of Energy, Mines and Petroleum Resources and the BC Ministry of Environment and Climate Change Strategy to increase the Brucejack Mine production rate to 3,800 tonnes per day. The increase would result in an annual average production rate of 1.387 million tonnes, up from 0.99 million tonnes (a daily average of 3,800 tonnes from 2,700 tonnes). Based on preliminary engineering, the capital cost to increase the mill capacity is estimated to be less than $25 million which is expected to be incurred in 2019. The approval process is expected to be completed by year end.
Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine Engineer, Pretium Resources Inc. is the Qualified Person ('QP') responsible for Brucejack Mine development. Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Vice President, Geology and Chief Geologist, Pretium Resources Inc. is the QP responsible for the Brucejack Mine grade control program and the Brucejack Mine exploration drilling. Regional grass-roots exploration The 2018 regional grass-roots exploration program, which includes geophysical studies, continued regional prospecting and mapping and diamond drilling on several high priority gold targets with respect to the Bowser Claims, is substantially complete. The 2018 program follows up on the comprehensive regional exploration that has previously been completed on the 1,250-square-kilometer, wholly-owned property. To date, the program has resulted in the identification of several distinct areas that have the potential to host mineralized zones similar to the Valley of the Kings and Eskay Creek deposits. An 8,240 meter regional exploration drill program which comprised 24 drill holes on five high-priority targets was completed through this year's field season. The drilling was completed on October 10, 2018. Assays and results from the program are anticipated later this year.
A private placement of 227,273 flow-through common shares of the Company at a price of C$13.20 per flow-through share was completed on July 25, 2018 for total gross proceeds of approximately C$3.0 million. The proceeds of the private placement of flow-through common shares were used to fund a portion of the 2018 grass-roots exploration program.
Kenneth C. McNaughton, M.A.Sc., P.Eng., Chief Exploration Officer, Pretium Resources Inc. is the QP responsible for the regional grass-roots exploration program.
Our unaudited condensed consolidated interim Financial Statements and Management's Discussion and Analysis for the three and nine months ended September 30, 2018 are filed on SEDAR and EDGAR and are available on our website at www.pretivm.com. Webcast and Conference Call The webcast and conference call to discuss the third quarter 2018 operational and financial results will take place Friday, November 9th, 2018 at 8:00 am PT (11:00 am ET).
Webcast and conference call details:
Friday, November 9, 2018 at 8:00 am PT (11:00 am ET)
Webcast www.pretivm.com
Toll Free (North America) 1-800-319-4610
International and Vancouver 604-638-5340
A recorded playback will be available until November 24, 2018:
Toll Free (North America) 1-800-319-6413
Access Code 2560
About Pretivm Pretivm is emerging as the premier low-cost intermediate gold producer with production at the high-grade underground Brucejack Mine in northern British Columbia now at steady state.
For further information contact:
Joseph Ovsenek
President & CEO
Troy Shultz
Manager, Investor Relations &
Corporate Communications
Pretium Resources Inc.
Suite 2300, Four Bentall Centre, 1055 Dunsmuir Street
PO Box 49334 Vancouver, BC V7X 1L4
(604) 558-1784
invest@pretivm.com
(SEDAR filings: Pretium Resources Inc.) Non-IFRS Financial Performance Measures The Company has included certain non-IFRS measures in this new release. Refer to the Company's MD&A for an explanation and discussion of non-IFRS measures. The Company believes that these measures, in addition to measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company and to compare it to information reported by other companies. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with International Financial Reporting IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other issuers. Total cost of sales and cash costs Total cash costs is a common financial performance measure in the gold mining industry but has no standard meaning. The Company reports total cash costs on a gold ounce sold basis. The Company believes that, in addition to measures prepared in accordance with IFRS, such as revenue, certain investors can use this information to evaluate the Company's performance and ability to generate operating earnings and cash flow from its mining operations. Management uses this metric as an important tool to monitor operating cost performance.
Total cash costs include cost of sales such as mining, processing, maintenance and site administration, royalties and selling costs and changes in inventories less non-cash depreciation and depletion, site share-based compensation and silver revenue divided by gold ounces sold to arrive at total cash costs per ounce of gold sold. Other companies may calculate this measure differently.
The following table reconciles these non-IFRS measures to the most directly comparable IFRS measure disclosed in the financial statements.
For the three months ended For the nine months ended
In thousands of USD,
except for per ounce data September 30,
2018 September 30,
2017 September 30,
2018 September 30,
2017(1)
Gold ounces sold 94,458 55,413 278,417 55,413
Cost of sales per ounce sold reconciliation
Cost of sales $ 72,452 $ 44,912 $ 231,448 $ 44,912
Cost of sales per ounce of gold sold $ 767 $ 810 $ 831 $ 810
Total cash costs reconciliation
Cost of sales $ 72,452 $ 44,912 $ 231,448 $ 44,912
Less: Depreciation and depletion (16,949 ) (8,106 ) (50,816 ) (8,106 )
Less: Site share-based compensation (569 ) (124 ) (1,809 ) (124 )
Less: Silver revenue (1,251 ) (324 ) (4,212 ) (324 )
Total cash costs $ 53,683 $ 36,358 $ 174,611 $ 36,358
Total cash costs per ounce of gold sold $ 568 $ 656 $ 627 $ 656
(1) Data for the nine months ended September 30, 2017 covers the period commencing from July 1, 2017, the date the Brucejack Mine achieved commercial production, to September 30, 2017.
All-in sustaining costs
The Company believes that AISC more fully defines the total costs associated with producing gold. The Company calculates AISC as the sum of total cash costs (as described above), sustaining capital expenditures (excluding expansion capital related to the 3,800 tonne per day expansion project), accretion on decommissioning and restoration provision, treatment and refinery charges netted against concentrate revenue, site share-based compensation, and corporate administrative costs, all divided by the gold ounces sold to arrive at a per ounce amount.
Other companies may calculate this measure differently as a result of differences in underlying principles and policies applied. Differences may also arise due to a different definition of sustaining versus non-sustaining capital.
The following table reconciles these non-IFRS measures to the most directly comparable IFRS measures disclosed in the financial statements.
For the three months ended For the nine months ended
In thousands of USD,
except for per ounce data September 30,
2018 September 30,
2017 September 30,
2018 September 30,
2017(1)
Gold ounces sold 94,458 55,413 278,417 -
All-in sustaining costs reconciliation
Total cash costs $ 53,683 $ 36,358 $ 174,611 $ -
Sustaining capital expenditures(2) 5,189 3,526 12,813 -
Accretion on decommissioning and restoration provision 136 146 432 -
Treatment and refinery charges 4,267 1,044 12,387 -
Site share-based compensation 569 124 1,809 -
Corporate administrative costs(3) 3,110 2,484 8,934 -
Total all-in sustaining costs $ 66,954 $ 43,682 $ 210,986 $ -
All-in sustaining costs per ounce of gold sold $ 709 $ 788 $ 758 $ -
(1) AISC for the nine-months ended September 30, 2017 was not disclosed as commercial production results only commenced on July 1, 2017.
(2) Sustaining capital expenditures includes deferred development costs.
(3) Includes the sum of corporate administrative costs per the statement of earnings (loss) and comprehensive earnings (loss), excluding depreciation within those figures. Total cash costs and AISC reconciliation
Total cash costs and AISC are calculated based on the definitions published by the World Gold Council ('WGC') (a market development organization for the gold industry comprised of and funded by 18 gold mining companies from around the world). The WGC is not a regulatory organization. Average realized price and average realized cash margin Average realized price and average realized cash margin per ounce sold are used by management and investors to better understand the gold price and cash margin realized throughout a period.
Average realized price is calculated as revenue from contracts with customers less silver revenue divided by gold ounces sold. Average realized cash margin represents average realized price per gold ounce sold less total cash costs per ounce sold.
The following table reconciles these non-IFRS measures to the most directly comparable IFRS measures disclosed in the financial statements.
For the three months ended For the nine months ended
In thousands of USD,
except for per ounce data September 30,
2018 September 30,
2017 September 30,
2018 September 30,
2017(1)
Revenue from contracts with customers(2) $ 111,658 $ 71,323 $ 349,304 $ 71,323
Less: Silver revenue (1,251 ) (324 ) (4,212 ) (324 )
Gold revenue(3) $ 110,407 $ 70,999 $ 345,092 $ 70,999
Gold ounces sold 94,458 55,413 278,417 55,413
Average realized price $ 1,169 $ 1,281 $ 1,239 $ 1,281
Less: Total cash costs per ounce of sold (568 ) (656 ) (627 ) (656 )
Average realized cash margin per ounce of gold sold $ 601 $ 625 $ 612 $ 625
(1) Data for the nine months ended September 30, 2017 covers the period commencing from July 1, 2017, the date the Brucejack Mine achieved commercial production, to September 30, 2017.
(2) Revenue from contracts with customers is recognized net of treatment costs and refinery charges on revenue generated from concentrate sales in the amount of $4,327 (2017 - $1,044) and $12,600 (2017 - $1,044) for the three and nine months ended September 30, 2018, respectively. The portion of these treatment costs and refinery charges related to gold concentrate sales were $4,267 (2017 - $1,026) and $12,387 (2017 - $1,026) for the three and nine months ended September 30, 2018, respectively.
(3) Gold revenue excludes the loss on trade receivables at fair value related to provisional pricing adjustments in the amount of $1,598 (2017 - $448) and $3,344 (2017 - $448) for the three and nine months ended September 30, 2018, respectively. Adjusted earnings and adjusted basic earnings per share Adjusted earnings and adjusted basic earnings per share are used by management and investors to measure the underlying operating performance of the Company. Presenting these measures helps management and investors evaluate earning trends more readily in comparison with results from prior periods.
Adjusted earnings is defined as net earnings adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: (gain) loss on financial instruments at fair value, amortization of discount on senior secured term credit facility, accretion on convertible notes, impairment provisions and reversals and deferred income tax expense (recovery). Adjusted basic earnings per share is calculated using the weighted average number of shares outstanding under the basic method of earnings per share as determined under IFRS.
The following table reconciles these non-IFRS measures to the most directly comparable IFRS measures disclosed in the financial statements.
For the three months ended For the nine months ended
In thousands of USD,
except for per ounce data September 30,
2018 September 30,
2017 September 30,
2018 September 30,
2017
Basic weighted average shares outstanding 183,069,568 181,317,140 182,634,260 180,943,434
Adjusted earnings and adjusted basic earnings per share reconciliation
Net earnings (loss) for the period $ 10,734 $ (6,975 ) $ 33,773 $ (13,733 )
Adjusted for:
Loss on financial instruments at fair value 7,321 14,210 6,377 17,970
Amortization of discount on senior secured term credit facility 7,143 5,657 20,051 5,657
Accretion on convertible notes 1,404 1,404 4,165 1,404
Deferred income tax expense (recovery) (275 ) (345 ) 14,806 (6,614 )
Adjusted earnings $ 26,327 $ 13,951 $ 79,172 $ 4,684
Adjusted basic earnings per share $ 0.14 $ 0.08 $ 0.43 $ 0.03
Earnings from mine operations Earnings from mine operations provides useful information to management and investors as an indication of the Company's principal business activities before consideration of how those activities are financed, sustaining capital expenditures, corporate administrative costs, foreign exchange gains (losses), gains (losses) on financial instruments at fair value, interest and finance income and expense and taxation.
The following table reconciles this non-IFRS measure to the most directly comparable IFRS measures disclosed in the financial statements.
For the three months ended For the nine months ended
In thousands of USD September 30,
2018 September 30,
2017 September 30,
2018 September 30,
2017(1)
Revenue $ 110,160 70,875 345,960 70,875
Cost of sales 72,452 $ 44,912 $ 231,448 $ 44,912
Earnings from mine operations $ 37,608 $ 25,963 $ 114,512 $ 25,963
(1) Data for the nine months ended September 30, 2017 covers the period commencing from July 1, 2017, the date the Brucejack Mine achieved commercial production, to September 30, 2017. Forward-Looking Statements This news release contains 'forward-looking information', 'forward looking statements', 'future oriented financial information' and/or 'financial outlooks' within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as 'forward-looking statements' or 'forward-looking information'). The purpose of disclosing future oriented financial information and financial outlooks is to provide a general overview of management's expectations regarding the anticipated results of operations and costs thereof and readers are cautioned that future oriented financial information and financial outlook may not be appropriate for other purposes. Wherever possible, words such as 'plans', 'expects', 'guidance', 'projects', 'assumes', 'budget', 'strategy', 'scheduled', 'estimates', 'forecasts', 'anticipates', 'believes', 'intends', 'modeled', 'targets' and similar expressions or statements that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved, or the negative forms of any of these terms and similar expressions, have been used to identify forward-looking statements and information. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking statements. Forward-looking information may include, but is not limited to, information with respect to: production and cost guidance; the refinancing of the Company's construction debt facility, including the terms of such refinancing, the intended use of proceeds and the timing thereof; the repurchase of the Company's precious metals stream, including the timing thereof and the source of funds; anticipated results of our operations; source of funds for future operating and debt settlement requirements; our planned mining, exploration and development activities; our operational grade control program, including plans with respect to our infill drill program and our local grade control model; capital and operating cost estimates; production and processing estimates; the future price of gold and silver; our liquidity and the adequacy of our financial resources; our intentions with respect to our capital resources; our financing activities, including plans for the use of proceeds thereof; the estimation of mineral reserves and resources including the 2016 Valley of the Kings Mineral Resource estimate and the Brucejack Mineral Reserve estimate; realization of mineral reserve and resource estimates; timing of further development of our Brucejack Mine; costs and timing of future exploration and development; results of future exploration and drilling; timelines and similar statements relating to the economic viability of the Brucejack Mine, including mine life, total tonnes mined and processed and mining operations; timing, receipt, and anticipated effects of, and anticipated capital costs in connection with approvals, consents and permits under applicable legislation; our executive compensation approach and practice; our relationship with community stakeholders; litigation matters; environmental matters; our effective tax rate and the recognition of our previously unrecognized income tax attributes; new accounting standards applicable to the Company, including the effects of adoption of such standards; and statements regarding USD cash flows, currency fluctuations and the recurrence of foreign currency translation adjustments. Statements concerning mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to materially differ from those expressed or implied by the forward-looking statements, including, without limitation, those related to: the accuracy of our mineral resource and reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which they are based; uncertainties relating to inferred mineral resources being converted into measured or indicated mineral resources; commodity price fluctuations, including gold price volatility; general economic conditions; the inherent risk in the mining industry; significant governmental regulations; currency fluctuations, and such other risks as are identified in Pretivm's Annual Information Form dated March 28, 2018, Form 40-F dated March 28, 2018, MD&A and other disclosure documents as filed in Canada on SEDAR at www.sedar.com and in the United States through EDGAR at the SEC's website at www.sec.gov (collectively, the 'Pretivm Disclosure Documents'). Our forward-looking statements are based on the assumptions, beliefs, expectations and opinions of management on the date the statements are made, many of which may be difficult to predict and beyond our control. In connection with the forward-looking statements contained in this news release, we have made certain assumptions about our business, including about our exploration, development and production activities, and the results, costs and timing thereof; timing and receipt of approvals, consents and permits under applicable legislation; the geopolitical, economic, permitting and legal climate that we operate in; the price of gold and other commodities; exchange rates; market competition; the adequacy of our financial resources, and such other material assumptions as are identified in the other Pretivm Disclosure Documents. We have also assumed that no significant events will occur outside of our normal course of business. Although we believe that the assumptions inherent in the forward-looking statements are reasonable as of the date of this news release, forward-looking statements are not guarantees of future performance and, accordingly, undue reliance should not be put on such statements due to the inherent uncertainty therein. We do not assume any obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law. For the reasons set forth above, prospective investors should not place undue reliance on forward-looking statements. Neither the TSX nor the NYSE has approved or disapproved of the information contained herein.
Source: Pretium Resources Inc
https://www.twst.com/update/pretium-resources-inc-pretivm-reports-third-quarter-2018-results/
Exclusive interview: Pretium’s Ovsenek responds to Brucejack ramp-up criticisms
Posted By: Matthew Keevil January 29, 2018
Pretium Resources’ Brucejack gold mine in northwestern British Columbia. Credit: Pretium Resources.
On Jan. 23, Pretium Resources (TSX: PVG; NYSE: PVG) provided an update on the ramp-up at its flagship Brucejack underground gold mine in northwestern B.C.’s Golden Triangle district.
The company was criticized by BMO Capital Markets for providing “more questions than answers” following a release that included lower-than-expected mine grades and higher all-in sustaining costs (AISC).
Pretium’s stock had dropped over 30% to a 52-week low of $9.18 per share on the Toronto Stock Exchange (TSX), on 13.3 million shares traded at the time of writing on Jan. 29.
The company attributes the results to a delay in commissioning its “grade control system” at the mine, as well as flaws in its development plan related to areas lacking sufficient in-fill drilling.
Pretium president and CEO Joseph Ovsenek agreed to an exclusive interview with The Northern Miner to set the record straight on the Brucejack ramp-up. He explains that the company remains committed to producing roughly 500,000 oz. gold annually for the first eight years of the mine’s 18-year mine life, at an AISC of US$446 per oz. gold.
Flotation cells in the mill building at Pretium Resources’ Brucejack gold mine in British Columbia. Credit: Pretium Resources.
The Northern Miner: What is your take on the negative market reaction to Pretium’s Jan. 23 press release on Brucejack’s ramp-up and 2018 guidance?
Joseph Ovsenek: I think the market is not understanding that we’ve got a highly-variable, high-grade gold mine that’s just ramping up. The fourth quarter was our second quarter of actual production. We certainly started out very well, but it’s still a ramp up. You don’t just start-up a mine and turn on the factory. It’s much more complicated.
Pretium Resources' president Joseph Ovsenek underground at the Brucejack gold project in British Columbia. Source: Pretium Resources
The market didn’t give us any leeway, and they’re entitled to do that, but this is all part of the process. We’ve got work to do.
TNM: The grade reconciliation of 75% to 80% was a talking point following the release. Was that a range Pretium expected during pre-production?
JO: We’ve been pushing [grade reconciliation] from our first week of mining. We told everyone that it was very early days and we’d do the best we could at year end. But we’re looking at reconciliation over just five months, and we’ve been mining a very small portion of the deposit where we didn’t have the drill density we do in other areas. We also don’t have our grade control system working.
So, we think the results are actually quite good for our first six months of operation, all things considered.
But the market is clearly saying they want us to be better than that. It’s early days on grade reconciliation along with everything else. We believe as we get into other better-defined areas, and open up the deposit, we’ll be able to approach parity with our grade model. But right now we’re five months into mining on an operation that has a twenty-year life.
It’s the harsh reality of the market and obviously we have to do better. We’re working hard on that. In the end we’re in a ramp-up and we believe things are going to meet our expectations. It’s just a question of time.
TNM: Could you provide more detail on mining at the 1,200 level sill and the lower grades?
JO: The feasibility study (FS) called for developing a sill on the 1,200 level, and we went ahead and did that to establish the long-term infrastructure for the mine. We’re taking a longer-term look at an operation with an extended life here and not just at numbers for the quarter.
But our drill density down there was not where it should have been. We should have had higher density before we were mining at the 1,200, but that’s hindsight.
We actually had the density we needed at the top-end of those stopes, which are around 30 metres high, but not at the bottom. We ran into big variability and since we didn’t have the grade control system working we couldn’t refine our stopes as well as we should have.
We have a bulk underground model for mining the deposit. It is designed to block off our gold in effectively ten-by-ten metre blocks. We then put stopes around it that run 15 metres wide, by 30 metres high, by 30 metres long.
We need our grade control system to allow us to actually define the dimensions of our stopes. Unfortunately, we’d thought it would be operational in the fourth quarter, and we needed to execute better on that. The plan is to get it fully operational by mid-February, and that will help us with the dilution. When you combine it with opening up other areas of the mine plan, well, it should improve our grade reconciliation rate toward parity.
TNM: What does the grade control system look like and what were the issues that caused the delays?
JO: It’s effectively a big tank with an agitator. So you’re looking at something resembling an industrial size washing machine that blends material. That part of the system works fine. You put drill cuttings from our long-hole drill in there and mix it up with a bunch of water for a nice, homogeneous sample.
The problem we had was the feed into the system, as well as the outflow from the system where we actually gather our samples. Those parts were not robust enough to work on a day-to-day basis and give us reliable, steady samples. We tried to put it together through November, but realized it wasn’t going to work. So we re-engineered the in-flow and out-flow areas, and it’s now being re-commissioned. We’re putting it through more rigorous testing before declaring it operational, but we’re expecting it’ll be ready in a couple weeks.
The first gold doré bar produced at Pretium Resources’ Brucejack mine. Credit: Pretium Resources.
TNM: You mentioned “hindsight” pursuant to the feasibility plan and the 1,200 level. Are there any other elements that might make the company re-consider the current mine plan or scheduling?
No. The problem was that our plan has always been to mine areas where we have the necessary drill density. We’re running a trial program on reverse-circulation (RC) drilling this week to see if we can speed things up in that regard. We’d originally planned on using core drilling, so it could also make things cheaper.
We’re following the model being used at AngloGold Ashanti‘s (NYSE: AU) Sunrise Dam mine in Australia. We understand they’ve had good success with it there.
But we need to be mining where we have that drill density, and we shouldn’t have been mining down on that 1,200 level. Unfortunately, we opened it up following the FS and it was going ahead. We realized we weren’t getting the grade we wanted in places, but once it’s opened up and you’re mining it you have to finish up and back-fill so you can start on the area above. We’re working through that now.
TNM: Brucejack’s AISC guidance for the first half of 2018 is higher than expected at between US$700 to US$900 per oz. due to “accelerated underground development” and “winter-related costs.” Could you provide some detail on the cost estimates?
JO: The “accelerated development” part actually ties a little bit into the fourth quarter.
We went into the fourth quarter and felt the Street had gotten out a little bit ahead of us. We saw those production estimates coming from the analysts, but internally we’d expected marginal improvement on our third-quarter results. We were moving along on that course and doing fine, but in December both our long-hole drills went down and we had trouble blasting a stope right when we were getting into higher grade material. We couldn’t get the high-grade ore into the mill and didn’t have any alternatives.
So we’ve done a few things to make sure that doesn’t happen in the future. We brought in another drill to build stope inventory and give us a back-up. That’s extra development costs.
If you look at the FS, we’re supposed to be running at around 2,700-tonnes-per-day, which means the expectation tends to be: development at a rate of around 420 metres per month.
Well, we are going to be developing through this year at a rate of 700 metres per month because we want to build-up that stope inventory. The FS says we should hit full production rate running between five and six stopes, but we want to have another five or six stopes in inventory. That gives us a range of grades so if we get hung-up somewhere we have a back-up.
In terms of the weather, we found that when we were in construction that we were always behind the curve in terms of how much it cost us to keep everything going with the snowfall. I expect we’re being a little conservative in that regard, but it’s our first winter of purely mining at Brucejack. We get five to six metres of snow, and we have to be prudent with that.
TNM: Could you give us context on the new guidance range over the firsthalf of 2018, which calls for between 150,000 oz. and 200,000 oz. gold production?
JO: The range for the ramp-up is 150,000 oz. if we keep doing what we’re doing now. The upper end assumes we get the grade control working in February and start getting that data into the short-term mine plan. By mid-March we’d start to define our stopes better, narrowing it down, and focus on getting the grade up. So heading into the second quarter we’re running a fully-operational grade control system. That puts us closer to the top end.
We’ve only put out six months guidance because we want to signal to people that: ‘Look, we’re still in ramp-up mode.’ People don’t seem to care and just want us to deliver, which we understand, but we expect to get things sorted out over the next six months.
We have the tonnes right now and the mill is running great with no issues at current capacity. It’s just a question of getting that data we need to smooth out the grade profile.
TNM: There had been some controversy in years past with the Brucejack resource modeling triggered by the departure of Strathcona Mineral Services as a consultant on the project. Has anything in the current ramp-up caused Pretium to re-consider how you’re going to model, or approach, the deposit?
JO: No. It’s a highly-variable deposit we’ve been estimating from surface. We’re now underground and opening it up. Like I said, it’s now all about the data. We need more of it and we need the grade control system going so we can really define our stopes well. We need to continue with the in-fill drilling because it’s not a deposit where you can mine on 10-or 20-metre drill spacing. You have to be down in the five-to-ten metre drill centres. So it’s more about refinement of the resource model than starting from scratch. We have that ability now that we’re underground. We need to keep refining our knowledge, and our model, and we’ll get there.
TNM: Finally, how is Pretium’s capital position looking in terms of the ramp-up and guidance?
JO: We’re making money; we’re generating cash. We’re on the positive side of that situation, so we don’t have any overhang to worry about in terms of where the next buck might come from. It takes the pressure off and we can now focus on execution and improving grades.
We’re quite pleased with a lot of elements at the mine. We’re clearly not pleased with the share price, but this is a long-term mine and we’re going to be successful.
http://www.northernminer.com/news/exclusive-interview-pretiums-ovsenek-brucejack-ramp-criticisms/1003793482/
The Unsustainable $60 Oil Spike In 2017
By Rakesh Upadhyay - Dec 23, 2016, 4:10 PM CST
An eventful year for oil is coming to an end. During the year, crude oil sank to depths unseen since 2003, but recovered nicely to above $52 per barrel by December. We saw OPEC hammer out a deal to cut production, another first in eight years, and non-OPEC nations like Russia also pitched in with their contribution to a production cut.
Will 2017 also be another year of ups and downs, or does the picture for next year look much better for the oil bulls? Let’s analyze.
EIA projections
The latest Short-Term Energy Outlook released on December 6, forecasts Brent to average $52 a barrel and WTI to average $51 a barrel in 2017. While the EIA expects both Brent and WTI to average $50 a barrel during the first half of 2017, the second half is likely to see higher oil prices of $55 a barrel.
Global inventory builds are likely to average 0.4 million bpd for 2017, with the first half showing higher builds at 0.8 million bpd.
As far as total world production and consumption is concerned, the EIA forecasts 97.42 million barrels per day in production, whereas demand is forecast to be 96.99 million barrels per day.
OPEC crude oil production is likely to be 33.2 million bpd in 2017. Nigeria continues to struggle due to militant attacks, and similarly, Libya is also held back by tribal militia infighting. Related: Oil Traders See Market Balance By Mid-2017
Global oil demand is expected to increase by 1.6 million bpd in 2017, and the real oil-weighted world GDP growth is expected to be 2.7 percent in 2017. An increase in demand has been factored in considering the strong PMI numbers in India, China, Europe and the U.S., which indicates increased oil demand.
What are the risks to higher oil prices?
There are a few risks, which we believe will limit the rally in crude oil prices.
1. Though the OPEC nations will follow up on their promise to cut production in the first two or three months of 2017, they are unlikely to continue any further. The fiscal situation in the oil producing nations cannot sustain any decrease in revenues, as most are reeling under the pressure of low oil prices.
2. Higher oil prices will revive the shale oil industry in the U.S., which will attempt to increase its exports into new markets, thereby threatening to enter markets previously dominated by the middle east nations. As this is a real threat, OPEC members will start pumping frantically so as to not lose their hard-earned market share.
3. Demand growth from China and India might not be as supportive as 2016. While India is dealing with the demons of demonetization, China has tightened the regulations on its teapot refiners and its storage facilities are filling up. Both these events are likely to reduce demand growth from the two major nations guzzling crude oil.
4. A stronger dollar, as expected by most analysts, will also curb demand. If the U.S. resorts to trade protectionism, it is likely to start trade wars, thereby threatening the global recovery, leading to lower oil demand.
However, in the first quarter, we expect crude oil prices to trade higher to $60 a barrel, as news of the OPEC nations maintaining their quotas will provide a temporary boost. These higher levels are unlikely to be sustained, though.
What do the charts suggest?
The crude oil chart shows an ascending triangle pattern, which is bullish in nature. Though crude oil prices broke out to the upside, there has been little follow-up buying. However, at times, breakouts are unsuccessful during the first attempt. After some consolidation, another attempt is made, which can lead to higher oil prices, which we believe will happen in the first quarter of 2017.
However, $61 is a strong resistance, which is unlikely to be scaled. Higher oil prices will accelerate the shale oil recovery and entice nations like Libya, Iran and Nigeria to ramp up production. Following this, we expect prices to correct in the second quarter onward.
On the downside, the floor for crude oil prices is $52, $44 and $36 per barrel levels. After the initial jump, crude is likely to trade below $52 a barrel for most of the second half of 2017.
By Rakesh Upadhyay for Oilprice.com
http://oilprice.com/Energy/Energy-General/The-Unsustainable-60-Oil-Spike-In-2017.html
WTI 50.77 -2.21 -4.17%
OPEC: Has The Cheating Already Begun?
By Osama Rizvi - Dec 13, 2016, 11:24 AM CST
With the deal now done, we seem to be witnessing history in the making. But remember: history always repeats itself. When two agreements were signed in the early 2000s, both collapsed due to the inability of OPEC members to adhere to their commitments. Hence, the chance of the deal dying an early death is all too real. One of the factors that will bridle prices in the near future is the rate at which global stockpiles will deplete. My previous article explored the different factors that may spur U.S. Shale production. On the 10th of December, OPEC successfully convinced the NOPEC producers to curb oil production next year. But another factor, the most sensitive and uncertain one, is the adherence to the deal. If producers do not see any significant change in prices, the situation will inevitably deteriorate. That is why the first 6 months, after which there will be another meeting to check the results, are going to be very significant.
As per the agreement, NOPEC producers have agreed to cut 558,000 barrels a day and OPEC producers will cut 1.2mbpd. Saudi Arabia will take the biggest share of this, cutting 486,000 barrels per day. Russia will contribute 300,000 barrels per day to the total NOPEC production cut. All this amounts to 2 percent of global supply. Azerbaijan, Oman and Mexico will also contribute, reducing production by 35,000, 40,000 and 100,000 barrels per day respectively. In reality however, producers like Mexico, which is set to experience “natural declines”, are going to sell these declines as a cut. A natural decline is the drop in yield as a field age with time.
“The use of natural decline as part of the non-OPEC deal is likely to dampen its impact.” An article in Bloomberg reports.
The contributions from a majority of producers are not particularly significant, which means the burden of success will likely fall on the two main players, OPEC’s de facto leader Saudi Arabia and Russia. Both have touched a record high production level in the past month. The figures were released soon after the countries agreed for a deal on November 30th.
(Click to enlarge)
Many analysts believe that, excluding the deal, the rate at which the stockpiles will deplete throughout next year will not be enough to bring equilibrium to the global market given the continuing production of U.S. Shale oil.
“That scenario would leave largely unchanged the 300 million-barrel global stockpile surplus..,” reports Bloomberg.
Additionally, the perceived fickleness of the de-facto leader of OPEC is always hovering over the deal. As I mentioned, if either Russia or Saudi Arabia do not see any significant change in prices, the deal may fall apart. It is important to note that Saudi Arabia, desperate for a deal to halt the falling oil prices that continue to add to its $98 billion of deficit, may not be able to reach its fiscal break-even point of $79.90 in order to balance its budget. As production falls, the breakeven point will creep upward threatening the Kingdom’s commitment.
As noted by one industry observer, U.S.-based energy consultant Rex Preston Stoner of HUB International, former Saudi Oil Minister Ali al-Naimi had dryly commented at a Washington DC symposium last week that OPEC members “tend to cheat” and therefore any tangible results from today’s agreement “remain to be seen.”
But, for now at least, circumstances are promising. Global stock and commodity markets are up and investors are reaping the rewards with this weekend’s assurance by OPEC and NOPEC producers that they will cut production. But leaving assurances, promises and a formal deal to the side, each country’s need to maximize its income from crude oil production is one thing, but rebalancing the global market for crude is something altogether different.
By Osama Rizvi for Oilprice.com
WTI Tumbles To $51 Handle After OPEC Warns Glut May Continue Longer Than Expected
Dec 14, 2016 8:20 AM
On the heels of last night's big crude build, OPEC's overnight report stating that supply cuts won’t re-balance the market until the second half of 2017 has sparked further losses in oil prices, almost erasing the entire OPEC/NOPEC/Saudi cut ramp.
As Bloomberg reports, OPEC said its agreement to cut production, while speeding up the re-balancing of the global oil market, won’t result in demand exceeding supply until the second half of next year.
The Dec. 10 agreement between the Organization of Petroleum Exporting Countries and non-members such as Russia and Kazakhstan “will accelerate the reduction of global inventories and bring forward the re-balancing of the oil market to the second half of 2017,” OPEC said in its monthly report Wednesday.
It’s a more pessimistic outlook than that published Tuesday by the International Energy Agency, which indicated a supply deficit in the first half.
Despite a commitment from those countries to lower their output in the first half by 600,000 barrels a day, the organization slightly increased forecasts for supplies from outside OPEC in 2017. It estimates that production in Russia, which pledged half of the non-OPEC cut, and in Kazakhstan, which also agreed to cut, will remain steady for the six months covered by the deal.
And the result is further downside on oil - almost erasing the entire OPEC/NOPEC rally...
This was also not helped by some bearish notes from analysts:
SGH says Saudi Arabia “will lead efforts to put more supply in the market” if prices rise too quickly or too far above $60/bbl. Manaar Group sees Iraq cutting output less than it pledged.
SGH analysts Sassan Ghahramani and Kevin Muehring
OPEC/non-OPEC agreement in Vienna on quotas and output cuts intends to stabilize prices, not drive them higher
Producers plan to steer prices within a $50/bbl-$60bbl range through 1H 2017, when they expect supply and demand to rebalance
Iraq won’t cut output by 180k-220k b/d as it committed to do under Nov. 30 agreement
Nation will probably cut only ~100k b/d, as it seeks to defend sales in Asia and avoid reducing output at fields it operates with international oil cos
Heating oil deliveries in France rose by almost 50% y/y in October as nuclear plant closures curbed nation’s atomic-power production by 15% y/y
French distillate inventories in October fell by 9m bbl m/m. If confirmed, it would mean that the November middle distillate inventories in EU15 & Norway were below last year’s level for 1st time this year.
http://www.zerohedge.com/news/2016-12-14/wti-tumbles-51-handle-after-opec-warns-glut-may-continue-longer-expected
WTI 52.05 -0.93 -1.76%
Oil Falls As API Reports A Significant Build To Crude, Gasoline Inventories
By Zainab Calcuttawala - Dec 13, 2016, 4:30 PM CST
Oil prices fell on Tuesday after the American Petroleum Institute’s (API) weekly report showed a large build of 4.68 million barrels in the United States’ crude inventory levels, instead of the expected 1.5 million-barrel draw.
The build comes after last week’s report from the Energy Information Administration (EIA) that showed a 2.4 million barrel drop in commercial inventories the week prior.
Gasoline inventories have seen builds over the past five weeks, just as winter takes over and demand for the product declines. This time around, gasoline saw the biggest jump – 3.905 barrels - since January.
Crude levels at the Cushing, Oklahoma storage facility increased by 632,000 barrels – far lower than the 3.2 million barrel jump experts anticipated, according to Zero Hedge. Still, crude levels at the site have been on the up-and-up since October, and this week’s report continues the trend, with a monumental build of 4.01 million barrels as of last week’s report—the biggest weekly build since 2008, according to the agency.
This edition of API projections will either be confirmed or denied in tomorrow’s official EIA data. Since the last report, suspicions regarding the effectiveness of the OPEC deal have been dampened as Saudi Arabia, Iran and other partners affirmed their adherence to the quotas outlined in the agreement.
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“There’s obvious optimism from the bulls on OPEC’s ability to come to an agreement with non-OPEC,” Paul Crovo, Philadelphia-based oil, equities analyst at PNC Capital, told ZH over the phone. “At the same time, there’s a reasonable level of trepidation” regarding supply response from U.S. shale
The price of WTI was down 0.83% to $52.39 a half hour after data release, while Brent traded down 0.88% at $55.20. Gasoline prices were down 0.85% to $1.5299.
By Zainab Calcuttawala for Oilprice.com
http://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Fall-As-API-Reports-A-Significant-Build-To-Crude-Gasoline-Inventorie.html
Trump to name Exxon Mobil CEO Tillerson as U.S. secretary of state: Fox News
Mon Dec 12, 2016 | 7:20pm EST
ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer
U.S. President-elect Donald Trump will name Exxon Mobil Corp Chief Executive Officer Rex Tillerson as his choice for secretary of state, Fox News reported on Monday, citing unnamed sources.
(Writing by Eric Beech in Washington; Editing by Mohammad Zargham)
http://www.reuters.com/article/us-usa-trump-tillerson-idUSKBN14200X?il=0
Credit Suisse Gives Delisted ETN Investors An Out
Some investors may not have seen the post-market close announcement from Credit Suisse and therefore had an unnecessarily uneasy weekend, contemplating the fact that they were possibly stuck holding shares of the VelocityShares 3x Long Crude Oil ETN (UWTI) and the VelocityShares 3x Inverse Crude Oil ETN (DWTI).
The unprecedented closure of the immensely successful exchange-traded notes caught many investors by surprise, and others did not understand the implications of a product delisting to trade over-the-counter. The ETNs had nearly $600 million in assets still at the close of trading on Friday, Dec. 9, after seeing their last day of trading on Thursday, Dec. 8.
And with no arbitrage from a market maker and the lack of liquidity in the OTC environment, wide trading spreads were already opening up. Being stuck in such a product without liquidity to exit one’s position is particularly alarming given the volatile nature of leveraged and inverse vehicles.
Significant Decrease
However, Credit Suisse said late Friday in a press release that it was reducing the size of redemption blocks of the ETN from 25,000 notes to just 500.
That means instead of needing to cobble together a group of 25,000 shares of either ETN to redeem it directly from the issuer, a broker just needs to bundle 500 shares to redeem them and get the indicative value minus transaction costs.
The move makes it much easier for investors to exit the shares without taking too big of a hit. Investors will be charged a 0.05% early redemption fee when they redeem shares; further, investors need to go through a broker, according to the release, and cannot implement this action themselves.
Although unexpected, the closure of the ETNs, despite their profitability, does make sense if Credit Suisse is trying to clean up its balance sheets and reduce liabilities by removing the counterparty risk associated with DWTI and UWTI from its ledger.
Contact Heather Bell at hbell@etf.com.
https://finance.yahoo.com/news/credit-suisse-gives-delisted-etn-163854854.html
WTI 54.02 +2.53 +4.91%
Stormy Seas Ahead For Oil Markets
By Osama Rizvi - Dec 09, 2016, 5:34 PM CST
While the November OPEC deal sent crude sailing above $50, oil markets are expected to face some strong headwinds going forward. The Federal Open Market Committee will hold its policy setting meeting from the 14th to the 16th of December. The markets are expecting a rate hike due to strong U.S. economic data and job figures. “U.S. GDP growth in the third quarter of 2016 was revised upward from initial estimates of 2.9 percent to 3.2 percent, according to the Bureau of Economic Analysis.”
This month’s job market report showed a total of 178,000 jobs added in November, with the unemployment rate at 4.6 percent. Also, cases filed for unemployment benefit have dropped to 258,000, significantly below the ceiling of 300,000. This was the 92nd week in a row that claims have been below 300,000. Fed Chair Janet Yellen has incessantly emphasized the case that any job increase above 100, 000 is symptomatic of strong growth. It is no surprise then that many market analysts see a rate hike of 0.25 as a high possibility in December. As a result of this, the dollar index touched a 13-year high. Such a strong dollar is bad news for commodities, with costs increasing in non-dollar markets.
Also, the recent uncertainty over the OPEC deal becoming a reality has added further downward pressure to oil prices. Brent and WTI both shed a few points after news of record production from OPEC and Russia, as well as a 4-million-barrel inventory build at Cushing. Corroborating this uncertainty is the EIA’s short term energy outlook released this November.
“EIA forecasts Brent crude oil prices to average $43 per barrel (b) in 2016 and $52/b in 2017. West Texas Intermediate (WTI) crude oil prices are forecast to average about $1/b less than Brent prices in 2017. The values of futures and options contracts indicate significant uncertainty in the price outlook.”
Another important issue that may affect the demand of oil is China. With the Financial Times reporting that the strengthening dollar could be fatal news for the Chinese economy.
“The Institute of International Finance, a global association of financial institutions, calculates that in the first 10 months of this year net capital outflows from China totaled $530bn, with October marking the 33rd straight month in which more money left the country than flowed in. With money pouring out of China, Beijing has little choice but to tighten domestic monetary conditions in spite of the difficulties for companies already unable to service their debt.”
Simple economics shows that a tight monetary policy will cause imports to feel the heat. Moreover, China is struggling with its transition from a manufacturing to a service based economy. This has led to a weakening in demand from one of the major engines of the oil market.
In addition to this, many oil companies are readying themselves to kick-start previously postponed projects. The purchasing of some stakes in Rosneft by Qatar, the Mad Dog oil field by BP, Royal Dutch Shell’s venture into Iran and many more. The Kazakh oil field, Kashagan, is another addition. All this and the doubts hovering over the deal, certainly doesn’t bode well for the oil industry. So while things may all appear to be hunky-dory, the reality is quite different.
By Osama Rizvi for Oilprice.com
http://oilprice.com/Energy/Oil-Prices/Stormy-Seas-Ahead-For-Oil-Markets.html
OPEC Deal Not Enough To Draw Down Record Oil Inventories
By Tsvetana Paraskova - Dec 09, 2016, 11:16 AM CST
Even if OPEC producers’ ministers hail the cartel’s deal to cut collective supply as the beginning of oil market rebalancing and stabilization, Bloomberg News has calculated that global oil stockpiles would be little reduced throughout the entire 2017.
According to Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu, the global oil market would rebalance “toward the middle of next year,” Bloomberg said.
However, analysts are not so optimistic.
Tamas Varga, analyst at brokerage PVM Oil Associates Ltd. in London, commented, “Even with 100 percent compliance from both OPEC and non-OPEC producers, global stocks are unlikely to fall in the first half of 2017.”
Last week OPEC pledged to cut the cartel’s total production to 32.5 million bpd as of January, but made the deal contingent on convincing non-OPEC producers to cut another 600,000 bpd.
OPEC and NOPEC representatives are meeting in Vienna on Saturday to discuss cooperation on production cuts. As we go into the meeting, so far only Russia among the non-OPEC members has pledged a cut, by a gradual 300,000 bpd reduction over the first half of 2017.
Oman, another non-OPEC nation, is also seemingly on board, saying it would announce cuts after the meeting, and indicating prior to the OPEC deal that it might be willing to cut 5-10 percent.
Russia, Mexico, Kazakhstan, Azerbaijan, and Oman are the only countries —out of 14 non-OPEC producers invited to the talks—that have confirmed they would attend tomorrow’s meeting.
Still, concerns are that OPEC members will cheat, Russia would rename its seasonal spring production suspension as its ‘gradual cut’, and Mexico, Azerbaijan and Colombia would wrap up natural declines in production as genuine cuts.
Related: Oil Markets Not Convinced OPEC Deal Can Kill The Glut
According to Bloomberg, OPEC’s track record shows that the cartel delivers 80 percent of pledged cuts.
People familiar with the talks told Bloomberg that OPEC may be ready to accept other non-OPEC producers dressing up natural declines as cuts, but only if Russia made a legitimate production cut.
Should OPEC get in its good old ways and deliver 80 percent of the cuts it had pledged, then it would need non-OPEC producers to slash a total of 600,000 bpd of production—legitimately—so that oil oversupply could draw down in 2017.
“We don’t think too many non-OPEC countries actually have the power and will and influence over the oil companies to actually hold back barrels,” Per Magnus Nysveen, senior partner and head of analysis at Rystad said, as quoted by Bloomberg.
By Tsvetana Paraskova for Oilprice.com
http://oilprice.com/Energy/Energy-General/OPEC-Deal-Not-Enough-To-Draw-Down-Record-Oil-Inventories.html
Are you going to be in UWTIF or UWT?
UWTIF and DWTIF are now trading!
$$$ to be made here!
UWTI is trading now. LOD was 20.00, Current price is 25.10
Bid 24.95, Ask 25.25.
UWTIF and DWTIF are now tradeable through Scottrade.
UWTIF is at 25.00, DWTIF is at 49.10. I just placed some limit orders without any problems.
UWT is at 25.96 (-.06)
DWT is at 24.09 (-.08)
Two new exchange-traded notes announced just as the originals were delisted.
While Credit Suisse CS, +1.93% deslisted the VelocityShares 3x Long Crude ETN UWTI, +5.89% and VelocityShares 3x Inverse Crude Oil ETN DWTI, -5.52% on Thursday, moving them to a less accessible over-the-counter market, VelocityShares said Citigroup C, +1.85% would launch two nearly identical products starting Friday: the VelocityShares 3x Long Crude Oil ETN (UWT) and VelocityShares 3x Inverse Crude Oil ETN (DWT).
Despite their similarities, the new notes are entirely separate products. VelocityShares, which is owned by Janus Capital Group Inc. JNS, +2.96% , said Credit Suisse “is not involved in any way” with the new notes.
http://www.marketwatch.com/story/velocityshares-risky-triple-leveraged-oil-notes-find-new-life-2016-12-08?siteid=yhoof2
No. UWTI and UWT are totally different and run by different companies. Same with DWTI and DWT.
The new UWT and DWT are now trading.
VelocityShares’ risky triple-leveraged oil notes find new life
Published: Dec 8, 2016 9:14 p.m. ET
The oil ETNs are a favorite way for some investors to cash in on fluctuations in the oil market.
A volatile oil play popular with millennial investors found new life Thursday, with two new exchange-traded notes announced just as the originals were delisted.
While Credit Suisse CS, +1.93% deslisted the VelocityShares 3x Long Crude ETN UWTI, +5.89% and VelocityShares 3x Inverse Crude Oil ETN DWTI, -5.52% on Thursday, moving them to a less accessible over-the-counter market, VelocityShares said Citigroup C, +1.85% would launch two nearly identical products starting Friday: the VelocityShares 3x Long Crude Oil ETN (UWT) and VelocityShares 3x Inverse Crude Oil ETN (DWT).
Despite their similarities, the new notes are entirely separate products. VelocityShares, which is owned by Janus Capital Group Inc. JNS, +2.96% , said Credit Suisse “is not involved in any way” with the new notes.
“For years we have worked with sophisticated investors who want to utilize daily trading tools to manage their oil exposure, and we are pleased to be launching these new ETNs to continue to service our clients,” said Nick Cherney, a Janus senior vice president and head of exchange products, in a statement.
The original triple-leveraged oil notes gained prominence last year as a way to play fluctuations in the oil market. The highly volatile UWTI saw huge swings between gains and losses, and was seen by many millennial day traders as a bold short-term gamble.
Also read: This volatile oil play popular with millennials is going out with a bang
The UWTI closed up almost 6% on Thursday, but is down 38% year to date. The DWTI fell 5.5% on Thursday, and is down 75% for the year.
The UWTI ranked fifth in TD Ameritrade’s top 10 list of shares most traded by millennials in 2015, although it wasn’t among the top 10 most traded by older investors.
Citigroup isn’t the only firm getting in on the action: ProShare Advisors LLC and U.S. Commodity Funds have also recently announced plans to launch similar triple-leveraged oil ETFs.
http://www.marketwatch.com/story/velocityshares-risky-triple-leveraged-oil-notes-find-new-life-2016-12-08?siteid=yhoof2
VelocityShares Launches New 3x Leveraged Long and Inverse Oil ETNs
DARIEN, Conn., Dec. 08, 2016 (GLOBE NEWSWIRE) --
VelocityShares, a Janus Capital Group, Inc. (JNS) brand, today announced the launch of two new Oil Exchange Traded Notes (“ETNs”) – the VelocitySharesTM 3x Long Crude Oil ETN (NYSE:UWT) and VelocitySharesTM 3x Inverse Crude Oil ETN (NYSE:DWT), both of which are linked to the S&P GSCI Crude Oil Index ER (the “Index”). The ETNs are issued by Citigroup Global Markets Holdings Inc. and guaranteed by Citigroup Inc.
The new ETNs are being launched in order to provide investors with alternative securities to the VelocityShares ETNs UWTI and DWTI, which are being delisted from trading on a public stock exchange, effective this Friday, December 9th.
“For years we have worked with sophisticated investors who want to utilize daily trading tools to manage their oil exposure, and we are pleased to be launching these new ETNs to continue to service our clients,” said Nick Cherney, Senior Vice President, Head of Exchange Products for Janus Capital Group.
The new ETNs are linked to the same Index and each has a similar investment structure as UWTI and DWTI, respectively, both of which are issued by Credit Suisse AG and marketed under the VelocityShares brand. However, the new ETNs (UWT and DWT) differ in important ways from UWTI and DWTI, including the fact that they have a different issuer (Citigroup Global Markets Holdings Inc. with a Citigroup Inc. guarantee). Any investor who has invested previously in UWTI/DWTI and is considering an investment in UWT/DWT should carefully review the pricing supplement for the new ETNs (available at the hyperlink below) and the accompanying prospectus supplement and prospectus to understand the terms of the ETNs. Credit Suisse AG is not involved in any way in the offering of UWT or DWT.
The new ETNs are the first VelocityShares ETNs issued by Citigroup Global Markets Holdings Inc. VelocityShares ETNs are now offered by three different issuance partners. Janus’ exchange traded products business represents approximately $3.8 billion in assets across more than 25 investment products as of September 30, 2016.
Exchange-traded notes are senior, unsecured debt securities issued by financial institutions that provide knowledgeable investors with sophisticated tools for executing their trading strategies. There are restrictions on the minimum number of ETNs investors may redeem pursuant to the ETNs’ early redemption right. There may not be an active trading market in ETNs. The ETNs are subject to significant risks, as described in the pricing supplement for the ETNs.
About Janus Capital Group Inc.
Janus Capital Group Inc. (JCG) is a global investment firm dedicated to delivering better outcomes for clients through a broad range of investment solutions, including fixed income, equity, alternative and multi-asset class strategies. It does so through a number of distinct asset management platforms, including investment teams within Janus Capital Management LLC (Janus), as well as INTECH Investment Management LLC (INTECH), Perkins Investment Management LLC (Perkins) and Kapstream Capital Pty Limited (Kapstream), in addition to a suite of exchange-traded products. Each team brings distinct asset class expertise, perspective, style-specific experience and a disciplined approach to risk. Investment strategies are offered through open-end funds domiciled in both the U.S. and offshore, as well as through separately managed accounts, collective investment trusts and exchange-traded products. Based in Denver, JCG has offices located in 12 countries throughout North America, Europe, Asia and Australia. The firm had complex-wide assets under management and Exchange Traded Note assets totaling $198.9 billion as of September 30, 2016.
An investment in the ETNs involves significant risks. Please read the more detailed explanation of risks relating to an investment in the ETNs in “Risk Factors” in the applicable pricing supplement (available at the hyperlink below).
The ETNs are intended to be daily trading tools for sophisticated investors to manage daily trading risks. They are designed to achieve their stated investment objectives on a daily basis, but their performance over different periods of time can differ significantly from their stated daily objectives. The ETNs are riskier than securities that have intermediate- or long-term investment objectives, and may not be suitable for investors who plan to hold them for a period other than one day. Any decision to hold the ETNs for more than one day should be made with great care and only as the result of a series of daily (or more frequent) investment decisions to remain invested in the ETNs for the next one-day period. Accordingly, the ETNs should be purchased only by knowledgeable investors who understand the potential consequences of an investment linked to the Index and of seeking daily compounding leveraged long or leveraged inverse investment results, as applicable. Investors should actively and frequently monitor their investments in the ETNs, even intra-day. If an investor holds the ETNs for more than one day, it is possible that the investor will suffer significant losses in the ETNs even if the performance of the Index over the time the investor holds them is positive, in the case of the 3x Long Crude Oil ETNs, or negative, in the case of the 3x Inverse Crude Oil ETNs.
The ETNs are subject to a daily investor fee accruing at a rate of 1.50% per annum. In addition, ETNs purchased from Citigroup Global Markets Inc., the agent for the offering of the ETNs, will be subject to a creation fee, and any ETNs redeemed at the option of the holder will be subject to an early redemption fee. Such fees, charges and transaction costs may materially increase the costs of investing in the ETNs. In addition, because of daily compounding, the actual investor fee realized may exceed the stated amount. Please see the pricing supplement for the ETNs for disclosure of fees or charges relating to the ETNs.
The term of the ETNs is 15 years. The ETN issuer has the right to accelerate all outstanding ETNs at any time as described in the pricing supplement. In addition, the ETNs will be subject to automatic acceleration if their intraday indicative value falls below a specified percentage of the prior day’s closing indicative value, as described in the pricing supplement. If the ETNs are automatically accelerated, investors are likely to suffer a significant loss.
The ETNs do not pay any interest and do not guarantee any payment at maturity or upon acceleration or early redemption. The crude oil futures underlying the Index have historically been highly volatile. The ETNs are fully exposed on a 3x leveraged basis, compounded daily, to a decline in the level of the Index (in the case of the 3x Long Crude Oil ETNs) or to an increase in the level of the Index (in the case of the 3x Inverse Crude Oil ETNs). An investor may lose all or a significant portion of its investment in the ETNs. An investor will have 3x leverage only if the ETNs are purchased at the most recent closing indicative value; ETNs purchased for more or less than the most recent closing indicative value will have effective leverage on that day that is less or more, respectively, than 3x.
The ETNs are senior unsecured debt obligations of the issuer, Citigroup Global Markets Holdings Inc., and are guaranteed by Citigroup Inc. The ETNs are not, either directly or indirectly, an obligation of or guaranteed by any other party and do not provide an investor with any entitlement to crude oil or crude oil futures contracts. Any payment to be made on the ETNs, including any payment at maturity, or upon acceleration or early redemption, depends on the ability of Citigroup Global Markets Holdings Inc. to satisfy its obligations as they come due, and upon the ability of Citigroup Inc. to satisfy any obligations under its guarantee. As a result, the actual and perceived creditworthiness of Citigroup Global Markets Holdings Inc. and Citigroup Inc. will affect the market value, if any, of the ETNs prior to maturity, acceleration or early redemption. In addition, in the event Citigroup Global Markets Holdings Inc. and Citigroup Inc. were to default on their obligations, an investor may not receive any amounts owed under the terms of the ETNs.
The daily resetting of each ETN’s leveraged exposure to the Index is likely to cause each ETN to experience a “decay” effect, which is likely to worsen over time and will be greater the more volatile the Index. The “decay” effect refers to a likely tendency of the ETNs to lose value over time independent of the performance of the Index. Accordingly, the ETNs are not suitable for intermediate- or long-term investment, as any intermediate- or long-term investment is very likely to sustain significant losses, even if the Index appreciates (in the case of the 3x Long Crude Oil ETNs) or depreciates (in the case of the 3x Inverse Crude Oil ETNs) over the relevant time period. Although the decay effect is more likely to manifest itself the longer the ETNs are held, the decay effect can have a significant impact on ETN performance even over a period as short as two days.
The ETNs require an understanding of futures contracts and path dependence of investment results and are intended for sophisticated investors to use as part of an overall diversified portfolio, and should not be used as a buy and hold investment. The ETNs are risky and may not be suitable for investors who plan to hold them for more than one day.
There may not be an active trading market in the ETNs; sales in the secondary market may result in significant losses. The issuer is not obligated to maintain the listing of the ETNs on any exchange and may delist the ETNs from any exchange for any reason at any time. Any such delisting may adversely affect the liquidity and trading price of the ETNs.
The issuer is not obligated to issue any particular amount of the ETNs and may suspend further issuances at any time. If the issuer suspends further issuances of the ETNs, it is possible that the ETNs could begin to trade at a premium to the indicative value. Any premium that develops may be reduced or eliminated at any time, including as a result of an announcement that the issuer will restart issuances or an announcement that the issuer will exercise its right to accelerate the ETNs for an amount based on the indicative value. Paying a premium purchase price over the indicative value of the ETNs could lead to significant losses in the event the investor sells the ETNs at a time when such premium is no longer present in the marketplace or the ETNs are accelerated at the issuer’s option.
Investors should exercise caution in trading the ETNs between 2:30 p.m. and 4:00 p.m., New York City time. During this time period, due to delays in the publication of the closing level of the Index (which is based on futures trading as of 2:30 p.m. but is not published until after 4:00 p.m.), there is expected to be uncertainty about the intrinsic value of the ETNs. The published intraday indicative value will not be based on fully up-to-date information (which will not be available) during this time period, and trading prices during this time period are likely to diverge from the published intraday indicative value. For more information, please refer to the pricing supplement for the ETNs.
VelocityShares is a trade name used by Janus Distributors LLC, in connection with the marketing services it provides for the VelocityShares-branded ETNs. Janus Distributors LLC, a registered broker-dealer, does not offer or sell the ETNs, and will only conduct business in states in which it is registered, unless it is otherwise excluded or exempted from being registered in each state.
Citigroup Global Markets Holdings Inc. and Citigroup Inc. have filed a registration statement (including a pricing supplement, prospectus supplement and prospectus) with the Securities and Exchange Commission (”SEC”) for the ETNs. Before you invest, you should read the pricing supplement dated December 8, 2016, the accompanying prospectus supplement and prospectus and the documents incorporated by reference into the registration statement to understand fully the terms of the ETNs and other considerations that are important in making a decision about investing in the ETNs. The pricing supplement for the ETNs may be obtained by clicking here:
https://www.sec.gov/Archives/edgar/data/200245/000095010316018586/dp70998_424b2-vsl.htm.
You may also get these documents without cost by visiting EDGAR on the SEC website at www.sec.gov.
Alternatively, you can request these documents without cost by calling toll-free 1-877-5-VELOCITY or 1-203-992-4301.
https://finance.yahoo.com/news/velocityshares-launches-3x-leveraged-long-224041180.html
What Purpose Did UWTI/DWTI Serve?
Thursday is the final trading day for two popular crude oil trading instruments: VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE: UWTI) and VelocityShares 3X Inverse Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE: DWTI). At the closing bell, Credit Suisse will no longer issue exchange-traded notes for the two ETNs, which will continue to trade on the OTC markets.
Credit Suisse hasn’t given an explanation for why the firm is choosing to discontinue the products, but the decision likely came about due to recent regulatory investigations into DWTI, UWTI and other leveraged trading products likely played a large role.
The DWTI and UWTI portfolios were comprised of options, swaps, short positions and other derivatives that targeted +/-3X exposure to oil prices. Unfortunately, due to their construction, both ETNs tended to underperform their targets over time. Since the beginning of 2013, WTI crude oil prices are down 44.5 percent. In that same time, UWTI was down 99.2 percent, while DWTI was up just 14.1 percent.
Never Meant To Be Long-Term Strategies
The ETNs were never designed to be held long term, and their holdings are structured to deliver levered returns on a one-day basis only. The contango associated with futures contracts and the time decay associated with options contracts severely eat into leveraged ETNs long-term performance. In addition, the ETNs had extremely high expense ratios in the 1.3 percent range, which also weighed on long-term returns.
Starting Friday
Once UWTI and DWTI are delisted following Thursday’s session, ETF.com warns that the two ETNs “will no longer have an active arbitrage mechanism to keep the price and net asset value aligned. That means traders should be even more cautious trading UWTI and DWTI on the OTC market.
Instead, investors may want to consider the ProShares Ultra DJ-UBS Crude Oil (NYSE: UCO) is a 2X-leveraged oil play that traders can use in the future. However, a word of caution: UCO suffers from many of the same shortcomings when used as a long-term investment.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
https://finance.yahoo.com/news/purpose-did-uwti-dwti-serve-194516468.html
Fidelity, Interactive Brokers Block Buying of Oil ETNs as Deslisting Looms
Different tacks from brokersage in alerting retail clients about risks
By Chris Dieterich and Asjylyn Loder •
Dec 8, 2016 3:43 pm ET
Photo: Bloomberg News
Online brokerages are taking different tacks in alerting mom-and-pop traders about the imminent delisting of two popular oil-tracking exchange-traded products.
Some went as far as blocking investors from buying new shares.
The VelocityShares 3x Long Crude Oil ETN and the VelocityShares 3x Inverse Crude Oil ETN will be delisted from the NYSE Arca exchange at the close of trading Thursday and pushed into the over-the-counter market, a so-called gray market where regular investors find it difficult and costly to transact. Credit Suisse Group AG, the issuer of the exchange-trade notes, announced the delisting in a news release last month, though nearly $1 billion remained in outstanding notes at the close of trading on Wednesday, according to data from XTF.
ENLARGE
Ahead of the risky situation, Fidelity Investments blocked investors from initiating new buy orders in both ETNs late last week, a spokesman said. Investors remain able to sell the notes. Owners of both products received notifications via the brokerage’s online message center that the products will be dropping into the over-the-counter market. Fidelity also eliminated the ability of clients to trade the notes with borrowed money.
Clients of Interactive Brokers Group received a delisting notice and were barred from opening new positions, according to a copy of the message sent to clients. Interactive Brokers also warned clients that customers with short positions could face a “forced close-out” should Credit Suisse recall its outstanding notes.
Other brokerages took action to alert clients but did not block them from buying new shares.
Vanguard Group notified clients about the delisting but left it up to investors whether to buy or sell, a spokesman said. Clients of Charles Schwab said they were able to still able to buy new shares of the product on Thursday afternoon but received a message while buying: “Be advised: This security will cease trading on any national securities exchange after December 8, 2016.” A spokeswoman for Schwab did not immediately return a call for comment.
Mobile-device oriented brokerage Robinhood sent a notification on Nov. 30 that one of the ETNs “may still exist in your account, but you will no longer be able to purchase” shares, according to the alert.
http://blogs.wsj.com/moneybeat/2016/12/08/fidelity-interactive-brokers-block-buying-of-oil-etns-as-deslisting-looms/?mod=yahoo_hs
Delisted crude-oil play ETNs get replacements from Citigroup
WallaceWitkowski
Published: Dec 8, 2016 5:50 p.m. ET
Credit Suisse's Velocityshares 3x Long Crude ETN UWTI, +5.89% and VelocityShares 3x Inverse Crude ETN DWTI, -0.85% were delisted at the close of markets Thursday, but Citigroup plans to launch two exchange-traded notes for betting on oil prices on Friday. The Velocityshares ETNs gained popularity with young traders as a way to play the gyrations in the price of crude oil over the past year. While UWTI closed up 5.9% on Thursday, it was also down 38% for the year. The DWTI finished Thursday down 5.5%, and was down 75% year to date. The new Citigroup notes will go by the same names but be listed under the tickers "UWT" and "DWT" respectively.
http://www.marketwatch.com/story/delisted-crude-oil-play-etns-get-replacements-from-citigroup-2016-12-08?siteid=yhoof2
In Twist, VelocityShares Unveils New Leveraged Oil ETNs
Products are nearly identical to popular ETNs that were bumped off exchange
By Asjylyn Loder and Chris Dieterich
With just minutes remaining in the last trading session for its popular triple-leveraged oil exchange-traded notes, VelocityShares launched two nearly identical products with a new bank as partner.
The two new VelocityShares 3x long and short oil ETNs will be available for trading on Friday under the tickers UWT and DWT. The original ETNs, which will be delisted after Thursday, traded under the ticker UWTI and DWTI.
Imminent delisting of the latter products, popular among day traders, prompted some brokerages to impose trading restrictions ahead of the uncertain future.
VelocityShares partners with different banks to issue its ETNs. Last month, Credit Suisse Group AG, the original issuer of the triple-levered oil ETNs, announced plans to delist both products after Dec. 8. While the products will technically remain active, they will move into the over-the-counter market, making them more difficult and costly to trade.
The new ETNs will be issued by a unit of Citigroup
“Credit Suisse is not involved in any way in the offering of UWT or DWT,” VelocityShares said in a statement released Thursday.
ETNs are similar to exchange-traded funds: they trade on exchanges like a stock, and track the price of stocks, bonds or commodities in an easily tradeable form. But there’s one big difference. ETFs own the underlying assets that they track. ETNs, on the other hand, are debt issued by a bank, similar to a corporate bond. If the issuing bank goes broke, investors can be left with pennies on the dollar, as ETN investors learned when Lehman Brothers Holdings Inc. collapsed in 2008.
“Our objective was to get these products out as soon as possible, and this was the soonest we could do it,” said Nick Cherney, head of exchange-traded products for Janus Capital Group, the owner of the VelocityShares brand.
VelocityShares may soon have competition. ProShare Advisors LLC on Dec. 5 announced its plans to launch triple-leveraged oil ETFs. And US Commodity Funds, the company behind the U.S. Oil Fund ETF, filed a preliminary prospectus to do the same on Nov. 29.
http://blogs.wsj.com/moneybeat/2016/12/08/in-twist-velocityshares-unveils-new-leveraged-oil-etns/?mod=yahoo_hs
Tomorrow should be interesting.
https://si.wsj.net/public/resources/images/BN-OE974_CMDRET_M_20160526134118.jpg
Uncertainty Looms as Triple-Leveraged Oil Bets Go Dark
Two popular ETNs that deliver triple returns on the price of crude oil are being delisted
By Chris Dieterich • Dec 8, 2016 12:30 pm ET
Thursday is the final day of ordinary trading for a pair of popular exchange-traded products that deliver turbo-charged returns on the price of crude oil.
Investors holding slivers of nearly $1 billion in notes after the closing bell could face wildly divergent prices in the over-the-counter market — if they can trade at all.
Unlike an outright closure, where investors receive their money back at the value of the underlying assets, the VelocityShares 3x Long Crude Oil ETN, ticker UWTI, and the VelocityShares 3x Inverse Crude Oil ETN, ticker DWTI, will drop off the NYSE Arca exchange and into a purgatory-like grey market, where no public price quotes are available. Credit Suisse Group, the issuer, said will also suspend new issuance of ETN shares, according to a statement, another potential complication for trading the notes over the counter.
The Credit Suisse statement, released in November, said it was delisting the notes “to better [align] its product suite with its broader strategic growth plans.” A spokesman for the bank declined to comment beyond the statement. A spokesman for Janus Capital Group, which owns VelocityShares, declined to comment.
The ETNs were designed to deliver triple the daily price move of futures on crude and have become popular plays among day traders looking to profit from quick jolts in oil prices.
Recent flow data suggest that not all owners got the message that the ETNs are moving over the counter. The bullish oil ETN, UWTI, has seen $586 million in outflows over the past week, according to data from XTF, but ended Wednesday with $700 million in notes still outstanding. The outstanding notes on the bearish ETN, ticker DWTI, totaled $233 million at the close on Wednesday, after investors pulled $36 million over the past week.
In fact, some traders have been busy buying the ETNs ahead of the delisting. Trading volume in the UWTI ETN hit a record 63 million shares a week ago, the day that OPEC struck a long-sought agreement to reduce production. More shares of UWTI changed hands that day than all but three stocks on the S&P 500, according to data from Bats Global Markets.
Investors with at least 25,000 shares, a position of around $600,000, can redeem their notes with the bank for cash. But smaller investors who have flocked to the notes over the past several years could face significant headaches when they try to unload their stakes after Thursday’s close.
Some traders say they’re dismayed by what they said was a lack of communication about the looming deadline.
Simon Tate, 53, a former investment banker in London, said that he uses leveraged ETNs in his retirement portfolio. Mr. Tate said that he learned of the delisting only after being contacted by a Wall Street Journal reporter last week and quickly unloaded his position.
“I didn’t have a bloody clue,” Mr. Tate said. “I didn’t get any email or anything else and might have had a whole lot of money stuck in a product with no idea how to get out — it’s actually outrageous.”
ETNs are debt instruments issued by banks that promise the performance of an index in exchange for a fee. Credit Suisse, the issuer of the leveraged oil-tracking ETNs, retains an option to wind down the products, though it hasn’t said it will do so.
http://blogs.wsj.com/moneybeat/2016/12/08/uncertainty-looms-as-triple-leveraged-oil-bets-go-dark/
WTI 50.84 +1.07 +2.15%
The Last Day For 2 Popular Oil ETFs
By Johanna Bennett
December 8, 2016, 10:05 A.M. ET
While big banks favor a paring back of regulations, they but apparently don’t want President-elect Donald Trump to outright trash Dodd-Frank. — WSJ
5 stock picks from Jerome Dodson, founder of Parnassus Investments and manager of the Parnassus Endeavor Fund (PARWX). — Barron’s
Bill Ackman isn’t the only big Wall Street name moving to Manhattan’s West Side. BlackRock (BLK) has inked a tentative deal that includes $25 million in state tax credits. WSJ
Circle Internet Financial, one of the most heavily-funded digital currency startups, will no longer offer customers the ability to buy and sell bitcoins. — WSJ
It’s the last day before the UWTI and DWTI are delisted and nearly $1 billion remains in two popular oil ETFs that are delisting today — ETF.com
Winners emerge in hedge fund industry despite rocky start to year — FT.com
How Donald Trump’s victory in the 2016 presidential election is offering hedge funds managers a new lease on life. — Bloomberg
http://blogs.barrons.com/focusonfunds/2016/12/08/a-m-funds-roundup-circle-says-bye-bye-to-bitcoin-the-last-day-for-2-popular-oil-etfs/?mod=yahoobarrons&ru=yahoo