TSX loses ground, June 26-30

The S&P/TSX Composite Index fell 0.9%, or 137.37 points, to a 15,182.19-point close. Spot gold prices ventured near eight-week lows, falling US$15.10 to US$1,241.61 per oz., whereas Comex copper prices gained US6¢ to US$2.69 per lb. on increased demand from China.

Kirkland Lake Gold led the value-added category, rising 83¢ to $12.27 per share on news of underground drill results at its flagship Macassa gold mine in Kirkland Lake, Ontario. The drill program extended mineralization at the South Mine Complex (SMC) 259 metres east, with intercepts including 65.8 grams gold per tonne over 2.1 metres and 160.3 grams gold over 0.3 metre, and extended mineralization in the Lower SMC 60 metres west, with intercepts including 302.1 grams gold over 0.8 metre. The company also intercepted a hangingwall gold system at the Lower SMC that returned 82.6 grams gold over 1.7 metres. The company intends to follow up on the zone throughout the year.

Shares of Avnel Gold Mining gained 14¢, or 46%, to 41¢, after the June 29 announcement that West Africa-focused Endeavour Mining intends to acquire Avnel Gold for US$122 million. The transaction, which is expected to close in September, represents a 52% premium to Avnel’s 20-day, volume-weighted average price as of June 29. Avnel owns the feasibility-stage Kalana Main gold project in Mali, which has proven and probable reserves of 21 million tonnes at 2.8 grams gold for 1.9 million oz. gold. A definitive feasibility study last year envisaged an 18-year mine life with annual production of 101,000 oz. gold. The study highlighted an after-tax net present value (NPV) of US$196 million, assuming an 8% discount rate, and a 38% after-tax internal rate of return (IRR).

Goldcorp lost $1.57 to $16.72 per share on falling gold prices. On June 29, the international gold miner announced selling its 21% minority interest in the San Nicolas copper-zinc project in Zacatecas, Mexico, to Teck Resources for US$50 million. The news came two days after Goldcorp announced plans to acquire Exeter Resource, a junior explorer developing its Caspiche gold-copper project in Chile. Goldcorp would acquire 77.4 million shares of Exeter in exchange for a 0.12 share in Goldcorp for each Exeter share, representing a 60% premium based on Exeter’s 20-day, volume-weighted average trading price ending on March 27. Caspiche has 1.4 billion measured and indicated tonnes of 0.51 gram gold and 0.19% copper. A preliminary economic assessment in 2014 reported Caspiche could have an NPV of US$355 million at a 5% discount rate and 34.7% IRR, assuming a 30,000-tonne-per-day mining scenario on the deposit’s oxide resource.


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