U.S. markets robust in Jan. 31-Feb.4 trading week

A drop in the unemployment rate, rising metal prices and accelerated merger and acquisition activity combined to boost optimism about economic recovery in the United States, sending the Dow Jones Industrial Average and the S&P 500 index to new two and a half-year highs. The S&P 500 index posted its best week in nine, rising 2.71% to 1,310.85 points, while the Dow Jones Industrial Average was up 2.3% to 12,092.15. The price of gold climbed US$10.20 per oz. to close the Jan. 31-Feb. 4 trading week at US$1,348.60. The Philadelphia Gold and Silver index gained 3.78% to 207.25. Eleven companies reached new 52-week highs, while none sank to new 52-week lows.

With copper hitting record highs, Freeport-McMoRan Copper & Gold posted the largest jump in value, climbing US$7.62 per share to close the week at US$56.76. In late January the company reported net income attributable to common stock in 2010 reached US$4.3 billion or US$9.14 per share, compared with US$2.5 billion or US$5.86 per share in 2009. At Teck, where copper contributes 31% of operating profits, shares gained US$4.61 to close the week at US$62.51. Teck has five producing copper mines spanning Chile, Peru and Canada.

Potash Corporation of Saskatchewan was up US$7.28 to US$181.44 per share. On Feb. 1 the company announced that it would soon begin an 18-month process to restart its anhydrous ammonia plant in Geismar, Louisiana, which was suspended in 2003 because of the high price of natural gas. Since then Potash Corp. has had to use imported ammonia to make its other products at Geismar. The company will invest about $158 million to restart the plant. Agrium, meanwhile, was up US$3.80 to US$91.70 on no news.

Cliffs Natural Resources advanced US$7.18 to US$90.27 per share. On Feb. 3 Cliffs  published details on a base case scenario for the development of its Black Thor chromite deposit in northern Ontario. The company plans to build a ferrochrome production facility that at full capacity would produce 1,500 tonnes of ferrochrome per day. The ferrochrome metal would be sold for use in stainless steel manufacturing in North America and worldwide. Cliffs said it expects to complete a prefeasibility study on Black Thor by September.

Newmont Mining’s proposed acquisition of Fronteer Gold drove the Nevada-focused gold explorer’s shares up 46.9% or US$4.62 to US$14.46 per share. Newmont’s offer represented a premium of about 37% to Fronteer’s closing share price on Feb. 2, and values the company at about $2.3 billion.