TSX ends in the red, May 11-15

Canada’s main stock index retreated during the trading week. The S&P/TSX Composite Index fell 0.4% to 15,108.12. The S&P/TSX Capped Diversified Metals & Mining Index dropped 1.4% to 794.05, and the S&P/TSX Global Gold Index moved up 3.1% to 170.48, as spot gold shot up US$36, or 3%, to close at US$1,223.50 per oz.

Belo Sun Mining jumped 30% to 26¢ per share. The boost came after Agnico Eagle Mines said it would pay $15 million to buy 62.5 million Belo Sun shares at 24¢ apiece. This gives the major a 17.4% interest in the junior. Belo Sun intends to use the proceeds to advance its Volta Grande gold project in Brazil, where construction should kick off in early 2016. Based on reserves, the project could produce 205,000 oz. gold annually for 17 years. Volta Grande has reserves of 116 million tonnes grading 1.02 grams gold per tonne for 3.8 million oz.

Agnico was the top value gainer, up $1.97 per share to finish at $40.29. The major also made a $2.2-million equity investment in Pershimco Resources, where it bought 13.2 million shares at 17¢ apiece. It holds 52.8 million Pershimco shares, or 19.9% of the junior.

Silver Standard Resources climbed $1.39 per share to $7.86 on the back of strong first-quarter results. Net income was US$9.1 million, or US11¢ per share, up from last year’s a net loss of US$12.4 million, or US15¢ per share. Adjusted earnings per share came in at US14¢, above the average consensus of US6¢. Revenues were US$111.7 million, compared to US$33.7 million. Income from mine operations was US$30.4 million, up from US$5.9 million in the first quarter of 2014. Quarterly production came in at 2.7 million oz. silver, 55,600 oz. gold and 3.8 million lb. zinc, keeping the company on track to meet its annual production guidance.

Midway Gold plunged 70% to 11¢ after it updated the resources at its Pan gold mine in Nevada, showing a 36% drop in measured and indicated ounces, largely due to a 15% drop in grade. The heap-leach project has measured and indicated resources of 503,800 oz. from 35.9 million tonnes at 0.44 gram gold, compared to a 2011 estimate of 788,300 oz. from 47.3 million tonnes at 0.52 gram. This comparison excludes the 4,300 oz. produced to date and the estimated 36,000 contained oz. under leach at the mine.

The firm says the resource revision came after drilling this year compared the production model and the 2011 feasibility study. The results showed that mineralization was less continuous than previously thought. Inferred resources have increased from 10,200 oz. to 141,100 oz., but they are not in the mine plan.


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