Wall Street gains, Feb. 21-24

The S&P 500 Index added 0.69% to close at 2,367.34, while the Dow Jones Industrial Average climbed 0.96% to 20,821.76, both finishing at new highs during the holiday-abbreviated week. The Nasdaq edged up 0.1% to 5,845.31. Spot gold gained 1.8% to close at US$1,256.90, up 9% for the year.

Freeport-McMoRan was the most actively traded stock with 184.8 million shares traded, closing at US$13.25 per share, down 11%, after updating the market on its subsidiary PT-FI’s Grasberg copper-gold operation in Papua, Indonesia.

PT-FI has been unable to export concentrates since Jan. 19 due to a change in government regulations, which requires it to terminate its contract of work and convert to a special license in order to export concentrates. PT-FI argues the regulation violates its contract and that the new license has no fiscal or legal assurances.

As a result, PT-FI plans to freeze investments in Papua, reduce production by 60% from normal levels and trim its work force and spending with local suppliers. PT-FI explains its share of production decreases by 70 million lb. copper and 70,000 oz. gold each month due to the export ban.

Vale saw 172.7 million shares traded, as it retreated US45¢ per share to close at US$10.52. Vale reported that it wouldn’t renew CEO Murilo Ferreira’s six-year contract when it expires in May. The announcement comes days after Vale said it would get rid of its controlling shareholder agreement to give its management team more control and independence.

Primero Mining shares lost a dime to finish at US67¢. Primero said gold and silver reserves fell 24% and 20%, respectively, at year-end 2016 from a year ago. Contained gold dropped to 1.34 million oz. from 1.76 million oz. and contained silver tumbled to 56.6 million oz. from 70.7 million oz. Primero states the decrease resulted from mining depletion and from modified modeling parameters, namely a two-pass cut-off grade methodology and increased geological constraints.

Total measured and indicated resources at year-end 2016 were 3 million oz. gold and 83.7 million oz. silver, marking a 3% and 5% decline from year-end 2015.

Primero is conducting an annual accounting impairment review. BMO analyst Brian Quast has trimmed his target price to $1.20 from $1.30 to reflect reduced mine lives and an increased chance of impairment.

Primero also said that its president and CEO Ernest Mast would step down by March 6 to pursue other opportunities. Joseph Conway, currently vice chairman, will take on Mast’s role in the interim. Conway served as Primero’s president and CEO from June 2010 to January 2016.


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