TSX posts slight increase, Aug. 1-5

Disappointing employment numbers and a widening trade gap kept Canada’s benchmark index relatively flat at 14,648.77, up just 0.5% from the previous trading week. Statistics Canada reported that the country’s unemployment rate in July increased to 6.9%, up from 6.8% in June, as full-time employment fell by 71,400 jobs, the largest drop in full-time positions in five years. Meanwhile, Canada’s merchandise trade deficit increased to $3.63 billion in June — the largest trade deficit on record — and up from $3.5 billion the previous month. The Canadian dollar ended at US75.96¢. On the mining front, the S&P/TSX Capped Diversified Metals & Mining Index fell 2.5% to 671.50, and the S&P/TSX Global Gold Index lost 0.3% to 273.06. Spot gold fell 1.1% to US$1,335.40 per oz. gold.

The first trading week of August saw Silver Wheaton post the largest gain, jumping $1.48 to $37.93 per share. The streaming company announced that it is acquiring more gold equal to 25% of the life-of-mine gold production from Vale’s Salobo mine in Brazil, which Vale says is the largest copper deposit in the country. The acquisition comes along with half of the gold production at Salobo that Silver Wheaton already is entitled to, bringing the total amount to 75%. (Salobo could produce 300,000 oz. gold a year between 2016 and 2020.) With the extra stream, Silver Wheaton forecasts that attributable gold production in 2016 will be 305,000 oz., up from 265,000 oz. previously. Over the next five years, Silver Wheaton says its average attributable gold production (including 2016) would be 330,000 oz. a year. Silver Wheaton president and CEO Randy Smallwood said the company “did not hesitate at the opportunity” to increase its exposure to the mine, which has “one of the lowest copper cash costs in the world, 50 years of mine life on reserves alone, and what we believe to be substantial exploration and expansion potential.”

Shares of Karnalyte Resources fell 95¢, or 42% to $1.30, on news that negotiations had ended with Gujarat State Fertilizers & Chemicals for a US$700-million financing for the first phase of Karnalyte’s potash project in Wynyard, Sask. The talks ended after Karnalyte and GSFC couldn’t agree on terms of the transaction, including governance matters and how Karnalyte’s secondary minerals, including magnesium, would be developed to help Karnalyte shareholders benefit from untapped assets.

Endeavour Mining’s shares fell $2.66 to $22.71. The West Africa-focused gold producer announced that mining entrepreneur Frank Giustra had stepped down from the board of directors. Giustra had served as a director since September 2013. Endeavour operates five mines in Côte d’Ivoire (Agbaou and Ity), Burkina Faso (Karma), Mali (Tabakoto) and Ghana (Nzema). It expects to produce between 575,000 and 610,000 oz. gold this year at all-in sustaining costs of US$870 to US$920 per oz. gold.


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