US markets slide, March 6-10

The Dow Jones Industrial Average closed at 20,902.98, down 0.5%, while the S&P 500 Index fell 0.4% to 2,372.60. The U.S. Department of Commerce announced on March 7 that the country’s goods and services deficit grew to US$48.5 billion in January, up US$4.2 billion from a revised US$44.3 billion deficit in December. The Philadelphia Gold & Silver Index dropped 2.9% to 79.80, as the New York spot gold price slid 2.4% to US$1,204.50 per ounce. West Texas Intermediate crude tumbled 10% to below US$50 per barrel for the first time since December 2015.

Arch Coal refinanced its senior secured term loan and “in response to strong demand and very attractive rates” upsized the loan to US$300 million, from US$250 million. The interest rate for the new term loan, which matures in 2024, is at the London interbank offered rate (Libor), plus 400 basis points, with a 1% Libor floor. The rate represents a drop of 500 basis points from the previous facility. The proceeds, along with cash-on-hand, will be used to pay off Arch’s term loan. “We have reduced our projected annual interest expense US$18 million, or nearly 50%, while extending debt maturities by more than two years,” John Eaves, Arch’s CEO, said in a press release. “In addition to securing much-improved borrowing rates, we used our healthy cash position to trim debt levels more than US$25 million.” Following the transaction, the company has pro forma total indebtedness of $337 million, comprising the new $300-million term loan and $37 million in equipment financing and other debt. The company expects to end March with a cash balance in excess of its total debt. Arch Coal’s shares fell US$7.07 per share to US$64.65.

Tahoe Resources reported 2016 production of 21.3 million oz. silver at total cash costs of US$5.84 per oz., and all-in sustaining costs (AISCs) of US$8.06 per ounce. Gold production reached 385,100 oz. — more than double 2015 — at total cash costs of US$620 per oz., and US$943 per oz. AISCs. The increase in gold production reflected Tahoe’s acquisition of Lake Shore Gold on April 1, 2016; commercial production at the Shahuindo mine in Peru on May 1, 2016; and a full year of results at its La Arena mine, after it was acquired with Shahuindo in April 2015. Tahoe’s shares ended at US$7.35 — a 10% decrease.


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