Toronto Stock Exchange, July 22-26

The S&P/TSX Composite Index was down 65 points to 12,647.90 for the period, as it was weighed down by earnings misses and weaker base metal prices.

On the positive side, the S&P/TSX Global Gold Index tracked the price of the underlying metal and was up 4 points to 188.15, while the gold price was up US$25 to US$1,321.50 per oz.

Diversified miners, however, saw their equity track in the opposite direction of the underlying metals, as the S&P/TSX Capped Diversified Metals & Mining Index was up 23 points to 746.94 points, despite the price for copper being down 4¢ to US$3.11 per lb. on weak manufacturing numbers out of China. 

Goldcorp was the latest senior gold producer to announce a big writedown. The company reported a second-quarter loss of US$1.9 billion, compared to a US$268-million profit last year, largely due to softer metal prices. Goldcorp took a non-cash impairment charge of US$1.96 billion, mainly at its Penasquito gold mine in Mexico. It also wrote down its Cerro Blanco project in Guatemala by US$131 million and put it on care and maintenance. But investors were apparently expecting worse news, as the company’s shares climbed up $1.14 to $29.48 per share.

Another member of the senior circuit, Newmont Mining, reported a US$2-billion loss and saw its stock rise. The company’s shares were up $1.45 to $31.20, despite turning a US$279-million profit for the same period last year into a sizeable loss. Investors appeared to be in a forgiving mood, since most of the loss was attributed to a non-cash writedown of assets, stockpiles and ore on leach pads. The writedown tallied US$1.8 billion, with most of it being attributed to its Boddington and Tanami operations in Australia. Newmont maintained its full-year guidance of 4.8 million to 5.1 million oz. gold and 150 million to 170 million lb. copper.

Geovic Mining shareholders were the period’s big winners, as they saw their investment grow by 280%. Geovic went from 3¢ to  10¢ apiece. The spike came after China-based Jiangxi Rare Metals Tungsten Holdings Group (JXTC) signed on to a 60.5% stake in the company, with plans to develop the Nkamouna cobalt-nickel-manganese project in Cameroon. The National Investment Corp. of Cameroon owns the remaining 39.5% interest. Geovic says production can start soon as project financing is arranged, with JXTC also signing an off-take agreement for future production.

And International Tower Hill Mines saw its share price tumble by 27% to finish the period at just 47¢. It has been a long slide for the company since releasing a preliminary economic assessment of its Livengood project in Alaska. The latest drop came after the company released a bankable feasibility study showing a negative US$1.3-billion net present value — using a US$1,300 per oz. gold price — and a negative 7.2% internal rate of return.

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