For the tale of the tape, the TSX Exchange added 0.20%, while the TSX Gold Index was the big winner by jumping 2.8% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, dropped 0.71% with the declining issuers beating out the advancers by a 504 to 350 margin on pathetic volume of 84 million shares traded.

Shares of Yukon-Nevada Gold (YNG) got hammered for the second time in as many weeks as the company faces a liquidity issue at its Jerritt Canyon gold mine in Nevada. On August 8 Yukon Nevada Gold suspended underground mining. The junior ended the session down C$0.15 at C$0.13.

Aquila Resources (AQA) moved higher thanks to results from its Back Forty Project in Michigan. Highlights included 14.6 grams gold and 285.8 grams silver per tonne over 2.1 metres. Aquila ended the day up C$0.01 at C$0.28.

Longview Capital Partners (LV) lost C$3.9 million or C$0.04 per share in the three-month period ended June 30, compared to a loss of C$17.1 million or C$0.16 per share in the same period of 2007. The investor in junior exploration plays held stock valued at C$72.6 million, down from C$105.6 million at the end of 2007. Longview ended the session at C$0.155, down C$0.005

A stock to watch is ATAC Resources (ATC). The junior was halted from trading pending news at C$0.32. The news is that all the holes reported to date at its wholly owned Rau property in the Keno Hill district of central Yukon have hit the goodies. The latest includes 78.54 metres grading 1.71 grams gold per tonne. The discovery drill hole returned 1.24 grams gold per tonne over 68.69 metres.

Most of the junior companies appear to be keeping their heads down on the news front these days because even good results are getting treated with distaste. This is often the sign of a bottom but we will see what Tuesday trading has in store.
Source: Resource Stock Roundup Tuesday, August 19, 2008

–That’s the percentage increase in the annual iron ore contract price Aussie producers charge major Chinese steel makers. It includes the much sought after “freight premium” which recognizes that its cheaper to ship ore from Australia to China than from Brazil to China.

–So what does it mean? Well, Chinese producer were hoping to NOT have pricing power in the ore industry lie with suppliers. But that hope seems to have faltered. Time for plan B. Plan B is to take equity stakes in a large number of smaller Aussie ore producers (see yesterday’s DR, and don’t discount the possibility of China Inc. taking a large stake in BHP a la Chinalco in Rio Tinto).

–Plan B also includes raising steel prices. Granted, as you can see from the chart below, courtesy of Macquarie Research, steel prices are already up 65% this year alone. But as you can also see, Chinese steel prices trade at about a US$400 discount to U.S. and world export steel prices. Whether this is how the Chinese subsidise domestic steel consumption or not, we can’t really say.

–But we can say that Chinese producers will increase exports this year and raise prices. Prices for domestic steel in China might differ from export prices. Who knows? But either way, you can be sure the Chinese steel producers aren’t simply going to absorb the huge increases in coking coal and iron ore. Chinese steel is going to get more expensive, whomever the buyer is.

–Normally, you’d expect to see higher commodity prices curtail demand. But for both steel and oil (see below) you haven’t seen any evidence yet that higher prices are slowing down demand. In fact, as this second chart from Macquarie shows, Chinese steel production is slated to grow by 10% this year. It even looks like the double bottom in steel production growth rates is in. Is it the beginning of a new steel boom?

–One company that hopes steel prices keep going up is Aquila Resources (ASX: AQA). The company told investors yesterday that it could produce about 25 million tonnes of iron ore per year from its ore bodies in the Pilbara…for the tidy sum of $4.1 billion.

–Welcome to the iron ore boom, Aquila (a company which also has coal and manganese assets). The company’s announcement was a little like a new doctor in a small town hanging out his shingle right across from the old doctor. The company isn’t producing anything yet. But like the other ore hopefuls in the Pilbara, it believes that with a little capital and a little deep water port facility at Cape Preston, its pre-feasibility study indicates it would have a nice little business.

–What is the difference between a shingle and a “for sale” sign?

–Meanwhile, the original third wheel in the Pilbara, Fortescue Metals (ASX:FMG), begins loading its ore for shipment to China this week. It’s been a long time coming. But FMG’s business has opened the door in the Pilbara and the Mid West for a long roster of other, smaller ore producers. The good old days of just BHP and Rio are long gone.

–What about oil? It just keeps going up. It reached nearly US$123 in New York trading over night. The Masters of the World at GoldmanSachs repeated their claim that a ’super spike’ in oil could drive it to US$200, on the back of red-hot demand in the developing world and the “non-recession” in the U.S. Supply bottlenecks won’t help.