US equity markets down from June 21-25

British economist John Maynard Keynes’s maxim that “markets can remain irrational a lot longer than you and I can remain solvent,” was borne out in U.S. equities trading during the week of June 21-25. The Dow Jones Industrial Average tumbled 306.83 points or 2.94% to 10,143.81, while the S&P index lost 3.65% or 40.75 points to finish at 1,076.76. The Nasdaq Composite bottomed at 2,223.48, down 3.74% or 86.32 points.

With gold closing on June 25 at US$1,255.70 per oz. in New York, many gold companies continued to prosper. Africa-focused Randgold Resources topped the charts with an advance of US$3.19 per share to US$98.17 on no news, while Papua New Guinea-focused Lihir Gold was up US$1.16 to US$39.24 per share. In late May Lihir agreed to a merger with Newcrest Mining in a deal valuing it at A$9.5 billion (US$8.3 million). Lihir’s merger with Australia’s top gold producer will be completed in September, and will create a gold company with operations in five countries. On June 28 Lihir announced it would delist the company’s shares from the Toronto Stock Exchange from July 12 due to the low turnover of its shares and the small level of Lihir share ownership in Canada.

Not all gold companies fared well, however. Royal Gold was down US$3.99 to US$49.80 per share on news that it was offering 5.98 million shares at US$48.50 apiece for total proceeds of US$276.4 million to pay for general corporate purposes, including repaying debt and funding acquisitions of additional royalty interests. The company owns royalties on 189 properties spread across six continents. Agnico-Eagle Mines, meanwhile, tumbled US$2.08 per share to US$62.70, despite the fanfare of an official opening ceremony at its new Meadowbank gold mine in Nunavut, Canada. The open-pit mine, with gold reserves of 3.6 million oz. grading an average of 3.5 grams gold per tonne, is expected to produce 300,000 oz. gold before the end of this year. The mine is expected to produce gold until 2019.

Peabody Energy posted the second-highest gain for the week after Randgold Resources with an advance of US$2.29 per share to US$43.55. On June 18, the world’s largest private-sector coal company announced that it had completed a new five-year senior unsecured credit facility to replace its existing facility, which was scheduled to mature in September 2011. The new facility includes a $1.5 billion revolver and $500 million term loan.