Toronto Stock Exchange
Canada’s main index fell during the trading week, as investors fretted over the U.S. economy toppling over the “fiscal cliff” with several laws — the Bush tax cuts among them — set to expire at year-end, after which a drop in government spending and tax hikes are slated to kick in at the start of 2013. This could drive the U.S. economy back into a recession, unless U.S. lawmakers reach an agreement on how to avoid the fiscal cliff.
The S&P/TSX Composite Index lost nearly 183.61 points to end at 12,380.41, while the spot price of gold gained US$53.90 per oz. to finish at US$1,738.80, pushing up gold miners. The S&P/TSX Global Gold Index rose 9.57 points to 334.13, but the diversified miners didn’t do as well, with the S&P/TSX Capped Diversified Metals dropping l8.24 points to 953.95.
Entrée Gold was one of the week’s top percentage gainers, advancing 39.5% to 60¢ after announcing that Turquoise Hill finalized a power-purchase agreement with Inner Mongolia Power to supply power to the Oyu Tolgoi mining complex.
Entrée is a joint-venture partner with a carried interest on part of Oyu Tolgoi, including the Hugo North Extension deposit and the larger Heruga deposit. The junior expects first development production on its jointly held property as early as 2015.
Gold miner Centamin jumped 24.4% to end at $1.12 after it shares took a blow in the previous week when it announced on Oct. 30 that its 18-year-old concession agreement to extract gold from the Sukari mine in Egypt was annulled.
A day later it clarified only a part of the agreement was deemed invalid, and on Nov. 5 it said the administrative court indicated its exploitation lease was invalid because it didn’t have a copy of the agreement Centamin and Egypt’s Mineral Resources Authority had reached, something the company believes could be resolved during the appeal process, as it has the original lease documentation in hand.
Uranium One was the most actively traded stock after posting its third-quarter results. It reported a headline loss of US$61 million, or US6¢ a share, and an adjusted profit of US1¢ a share, missing the analyst consensus of US3¢ a share.
The loss included a US$79-million impairment charge at the Zarechnoye South exploration property, near the Zarechnoye mine in Kazakhstan. The miner said it was uneconomic to mine the property at current uranium prices.
During the quarter, the company reported revenue of US$142.6 million on sales of 2.9 million lb. uranium oxide, at an average price of US$49 per lb. It sold 6.6 million lb. year-to-date, and has reiterated its full-year sales guidance of 11 million lb. Attributable production for the quarter was 3.1 million lb.
Uranium One closed the week up 6¢ to $2.05, on 23.2 million shares traded.
TSX most active issues
|Platinum Gp Mt||PTM||9265||1.03||0.98||1.03||+||0.06|
TSX greatest percentage change
|Coeur d Alene||CDM||457||31.07||22.74||24.78||–||19|
TSX greatest value change
|Rainy River Rs||RR||692386||5.84||+||0.63|
|Coeur d Alene||CDM||457450||24.78||–||5.82|
|Potash Cp Sask||POT||4304700||39.04||–||0.76|
|Silver Std Res||SSO||668959||14.82||–||0.38|
|Horizns G Bear||HGD||1307103||8.75||–||0.36|
TSX Venture Exchange
The S&P/TSX Venture Composite Index dropped 9.8 points, or 0.74% during the trading period, before closing at 1,300.92.
Renewed uncertainty surrounded the U.S. economy following President Barack Obama’s re-election, though the Venture benefitted from rising commodity prices and good economic data out of China.
Gold jumped US$53.90 before closing the week at US$1,738.80 per oz., with speculators viewing Obama’s strong showing and the Democratic party’s gains in the U.S. Senate as foreshadowing more quantitative easing going forward. December crude contracts were up US98¢ on the New York Mercantile Exchange to US$86.07 per barrel, while copper remained relatively stable, dropping US2¢ prior to closing the week at US$3.45 per lb.
The Chinese government reported higher consumer spending with retail sales rising 14.5% in September, as factory output expanded by 9.6%. Inflation is easing in China, leading to speculation the government has further room to work with stimulus measures, including interest rate cuts.
Vancouver-based Brixton Metals posted strong gains after announcing results from a 1,700-metre drill program that expanded its polymetallic Oban Breccia zone at the company’s flagship Thorn property, 130 km southwest of Atlin, B.C. Brixton jumped 79% before closing out the week at 22¢ per share. Drilling established a 100-metre, true-width zone at depths of 300 metres that runs 130 metres along strike. The depth of the holes ranged from 45 metres to 338 metres. Hole 12-83 extended mineralization 70 metres southeast at a true thickness of around 100 metres. Highlights from the hole include 150 metres of 5.67 grams gold equivalent and 315 grams silver equivalent. Brixton has an earn-in agreement with Kiska Metals that could see it hold as much as a 65% interest in Thorn, conditional on $10 million in exploration expenditures.
Newstrike Capital dropped 31¢, or 11%, en route to a $2.30 close. On Nov. 6, the company announced results from 8,000 metres of drilling over 15 holes at its Ana Paula gold-silver project in Mexico’s Guerrero gold belt. The holes in the series were collared in the northeast and southeast quadrants of the property and focused on lower-grade mineralization. Newstrike reported results from exploratory holes and an ongoing delineation program targeting a maiden resource estimate. Program highlights include: 31 metres of 0.07 gram gold per tonne and 24 grams silver per tonne in hole 12-116; 13 metres grading 0.91 gram gold and 3.5 gram silver in hole 12-121; and 12.2 metres averaging 1.15 grams gold and 5.3 grams silver in hole 12-123.
TSX-V most active issues
|Rio Cristal Rs||RCZ||3311||0.05||0.04||0.04||–||0.01|
TSX-V greatest percentage change
|New Guinea Gld||NGG||449||0.01||0.01||0.01||–||50|
|Plains Ck Phos||PCP||1823||0.02||0.01||0.01||–||50|
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|Pac Booker Min||BKM||27694||4||+||0
|Atacama Pac Gd||ATM||306200||3.3||–||0.15|
|West Cirque Rs||WCQ||50000||0.29||–||0.11|
The U.S. election results may have settled who will lead the country for the next four years, but that did little to quell fears that a recession could be on the horizon if the “fiscal cliff” situation is not resolved in the coming months.
Such worries sent U.S. markets lower, with the Dow Jones Industrial Average losing 277 points to 12,815.39, the S&P 500 off 35 points to 1,379.85 and the Nasdaq Composite shedding 79 points to finish the period at 2,904.87 points.
Caterpillar, the world’s largest maker of mining equipment, set a sombre tone for the period, as it offered the slowest forecasted sales growth in four years. The company said growth would range from 5% up to 5% down next year, as the global economy decelerates. That compares with an estimated growth of 13% for this year. The company’s shares were coming under pressure at press time after J.P. Morgan analysts cut their rating to “neutral” due to cost pressures in the mining sector, and the negative impact President Obama’s re-election may have on the U.S. coal and energy sectors.
Entrée Gold was the largest percentage gainer for the period, as its share price was up 45% to 60¢. The upward swing came thanks to a power-supply deal for the Oyu Tolgoi mine in Mongolia. The deal is seen as a critical step in further developing the Oyu Tolgoi mine, which is set to begin a seven-week commissioning of the ore-processing equipment. The main deposit at Oyu Tolgoi extends on to Entrée’s ground.
Avino Silver & Gold Mines also got a lift after it announced an update from its San Gonzalo mine in Mexico. The company said underground mining development is progressing as expected, and drift-mining along the San Gonzalo vein on the fourth level returned an intercept of 14,768 grams silver over 0.4 metre. The company’s shares were up 11% for the period to $1.80 per share.
Royal Gold is well capitalized after the company sold 5.25 million shares of common stock to a group of underwriters led by Goldman Sachs, and raised US$472.5 million. The company plans to use the money to acquire more gold royalties from developing and producing mines.
U.S. most active issues
|Alpha Nat Res*||ANR||108435||9.8||7.82||8||–||0.76|
|Cliffs Nat Rs*||CLF||32152||38.3||34.79||36.44||+||1.3|
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|Alderon Irn O*||AXX||89||1.68||1.44||1.59||+||8.1|
|Gold Am Mng*||SILA||117||0.02||0.01||0.01||–||29.4|
|Coeur d Alene*||CDE||23058||31.17||22.85||24.76||–||19.1|
|China Shen Zh*||SHZ||298||0.29||0.19||0.21||–||15.8|
|El Capitan Pr*||ECPN||2056||0.32||0.25||0.3||–||14.5|
|Lake Vict Mng*||LVCA||505||0.08||0.07||0.07||–||13.3|
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|Cliffs Nat Rs*||CLF||32151876||36.44||+||1.3|
|Coeur d Alene*||CDE||23057583||24.76||–||5.85|
|Alliance Rs P*||ARLP||627446||58.28||–||5.31|
|Natural Rs Pt*||NRP||244285||19.26||–||1.7|