The sharp slowdown in China has led to a pullback in global markets since the start of this year.
Although the Chinese economy grew close to 7% in 2015, many analysts believe that the world’s second-largest economy is in far worse condition than the GDP figures suggest.
The slowdown in China is also hurting economies that rely heavily on commodities export. The outlook for countries such as Brazil and South Africa is extremely bearish over the next two years.
The slowdown has also pushed commodity prices sharply lower. Indeed, the Basic Materials sector has been one of the worst performers since the start of this year due to these developments.
Although mining stocks remain under pressure, True North Gems Inc. (TSX-Venture:TGX) has bucked the trend today and is higher in mid-day trading. Based in Vancouver, True North Gems is engaged in the acquisition, exploration and development of mineral properties.
The company is focused on the exploration and development of colored gemstone deposits.
True North Gems shares are gaining momentum in trading today after the company announced that it has entered into an offtake agreement with Chinastone, a world-leader in high tolerance gemstone polishing and an international supplier to fine jewelers, watchmakers and luxury trade professionals.
According to the terms of the supply agreement, True North is obligated to supply and Chinastone to purchase a minimum of $7 million in rough gemstones per year for the next three years resulting in a sales commitment total of $21 million. TGX said that the sales will be based on the fair market value with qualifying allotments being made available for purchase five times per year.
Commenting on the development, Nicholas Houghton, President and CEO of True North Gems, said that the historic offtake agreement represents another milestone in bringing its gemstones to market and acknowledgement by an industry leader of the potential offered by a secure supply.
Houghton further said that the partnership endorses the quality of stones from the Aappaluttoq mine, assuring a consistent source with the guarantee of a natural and responsibly produced product that consumers demand today. He added that the company looks forward to working with Chinastone to develop the ruby and pink sapphire markets globally.
True North Gems also announced the appointment of Lisa May as Manager, Investor Relations, effective immediately. May has more than 15 years of experience in corporate communications and investor relations in the resource sector.
With today’s announcement, shares of TGX find themselves up over 6% and also near their 52-week high as investors seem to see the long-term potential in the miner that’s bucking the overall downtrend experienced by its peers.
