TSX edges lower, June 6-10

Canada’s unemployment rate in May fell to 6.9%, its lowest level since July 2015, but the news was tempered by worries about slowing global economic growth and concerns that Britain would vote to leave the European Union on June 23. The S&P/TSX Composite Index fell 1.3% to 14,037.54 and the S&P/TSX Global Mining Index lost 1.9% at 56.87. By contrast, the S&P/TSX Capped Diversified Metals & Mining Index was up 0.1% to 538.08, while the gold price advanced 2.4% to US$1,273.30 per oz. and West Texas Intermediate crude finished at US$49 per barrel, after hitting US$51 per barrel earlier. The S&P/TSX Global Gold Index rose 0.8% higher to 231.76.

TMAC Resources climbed $1.23 to $15.20 on drill results showing that the company had intercepted high-grade gold mineralization below its current reserves at the Doris deposit in Hope Bay, Nunavut. Highlights included 35 grams gold per tonne over 17.7 metres; 25.4 grams gold over 2.6 metres; 50.6 grams gold over 5.3 metres and 97.7 grams gold over 2 metres. The results confirm that the high-grade, gold-bearing quartz veins and structures in the mine plan are not truncated by the 75- to 100-metre-thick unmineralized diabase dyke at 100 to 200 metres below surface. The company said the results could expand the five-year mine life at the Doris mine, and have helped TMAC “aggressively plan for extending underground infrastructure and production below the diabase dyke” at the project.

Detour Gold advanced $1.68 to $31.37 per share. Management provided an operational update on its Detour Lake mine, noting that the 410-conveyor system installed and commissioned in April was “proving more efficient,” and has been tested up to 4,600 tonnes per operating hour (tpoh), versus the prior system’s maximum rate of 3,800 tpoh. Detour will continue with adjustments to test its upper limit of 5,000 tpoh. The plant processed 2 million tonnes of ore in May, which is a “positive indication” that it is on the right path to reach its target of processing 23 million tonnes of ore per year before 2019. Detour says it will produce between 540,000 and 590,000 oz. gold in 2016 at total cash costs of  US$675 to $750 per oz. sold, and all-in sustaining costs of US$840 to US$940 per oz. sold.

Shares of Silver Bear Resources jumped 45.9% to 27¢ after the junior announced the results of a feasibility study for its Mangazeisky silver project in Russia’s Far Eastern Republic of Sakha. The project, which hosts one of the highest-grade silver deposits in the world, will produce 16.8 million oz. silver over a 7.3-year mine life. Initial capex is estimated at US$48.6 million, and the project should deliver a post-tax payback in just over two years, a post-tax net present value at a 5% discount rate of US$70.7 million and a post-tax, 40.2% internal rate of return, the study says. Mangazeisky is 400 km north of the capital city of Yakutsk.


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