TSX retreats, Dec. 12–16

Canada’s largest stock market weakened, after the U.S. Federal Reserve raised its short-term interest rate by a quarter of a percentage point to between 0.5% and 0.75%. The spot gold price tumbled to a 10-month low of US$1,134.60 per oz., down 2.2% from the previous week. The S&P/TSX Composite Index retreated 0.4% to 15,252.90 points. The S&P/TSX Global Mining Index lost 5.4% to finish at 61.44, while the S&P/TSX Global Gold Index plunged 5.7% to 175.76. U.S. West Texas Intermediate crude for January rose 0.8% to settle at US$51.90 per barrel.

OceanaGold shares fell 22¢ to $3.45, as 29.2 million shares changed hands, despite the company announcing a robust 2017 guidance. OceanaGold expects 2017 gold production of 550,000 to 610,000 oz. for a 35% year-over-year increase, due to the Haile gold mine operating shortly in South Carolina. Anticipated all-in sustaining costs are US$600 to US$650 per oz., which is down 15%. This reflects lower costs expected at the Didipio copper-gold mine in the Philippines and the inclusion of the Haile mine. Annual copper output should come in at 15,000 to 17,000 tonnes.

Argonaut Gold sunk 35% to close at $1.60 per share. The drop came after the Mexican environmental authority Semarnat denied the environment impact assessment (MIA) for the company’s San Antonio gold project in Baja California Sur, Mexico. Semarnat said it did not approve the MIA because it needed more information regarding possible impacts to the environment, particularly on the local aquifer, as well as more information on the project’s construction, operation and closure plans. Argonaut is assessing alternatives, including legal options and submitting an updated MIA.

This news follows a recent positive ruling from the Federal Court on the past denial related to a zoning dispute, “which was found to be excused as a reason for denying the MIA,” Desjardins analyst Michael Parkin writes. “We should have a relatively clearer understanding by the second half of 2017 on the potential to develop this project.”

Perseus Mining fell 34% to 37¢ per share, after updating the market on its West African gold mines and projects. Despite the recent operational improvements at the Edikan gold mine in Ghana, production suffered from the extended plant shutdown in October 2016 and lower-than-planned head grades. Perseus expects Edikan will produce between 70,000 and 80,000 oz. gold for the December 2016 half-year, compared to 80,000 to 100,000 oz. previously. All-in site costs should come in between US$1,550 and US$1,650 per ounce.

A revised resource estimate for the Sissingue project in Côte d’Ivoire has lowered the measured and indicated gold resource 20% to 700,000 oz., and inferred resources 8% to 58,000 oz. gold. Perseus says an internal review had found wet drill holes “with possible downhole contamination,” which could have overstated the “gold grade in specific holes or parts of holes.”


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