U.S. markets, Aug. 12-16

Rising borrowing rates dampened consumer sentiment and the major U.S. stock indexes fell for the second week. The Dow Jones Industrial Average sank 2.23% — or 344.04 points to 15,081.47, its sharpest decline in a year — and the S&P 500 Index tumbed 2.1%, or 35.59 points, to 1,655.83, in its biggest weekly loss since June. The Nasdaq Composite Index dropped 1.57%, or 57.33 points, to 3,602.78. The gold price rose 4.75% to US$1,377.20 per oz., while silver rose 13.5% to US$23.26 per oz. The Philadelphia Gold and Silver Index jumped 11.89%, or 11.61 points, to 109.27.

Randgold Resources jumped US$7.10 to US$80.25 per share on no news. In early August chief executive Mark Bristow told shareholders that increased production and reduced costs would keep the company profitable despite a decreased gold price, because its business model had been designed to deliver returns at lower prices and it had not been forced to write down its reserves, which were calculated at US$1,000 per oz. gold. In the three months to June, profit fell to US$54.1 million from US$81.6 million in the first quarter. The company said it was in a good position to fund growth projects, with US$44.8 million in cash and equivalents and a revolving credit facility of US$200 million. Its Kibali project is scheduled to begin producing gold in October.

Alderon Iron Ore advanced 34% to US$1.35 per share on news that it ordered long-lead items for its Kami iron ore project in the Labrador Trough. Daniel Greenspan of Macquarie Equities Research said the order for the concentrator’s autogenous grinding mill and ball mill, which are due for delivery in the fourth quarter of next year, “keeps the project on track for plant commissioning and start-up for production in late 2015.”

Lake Shore Gold rose 51% to 51¢ after posting second-quarter results that included record gold production of 30,800 oz. gold (230,920 tonnes at 4.3 grams gold per tonne) and sales of 27,600 oz. gold at US$1,409 per oz. Cash-operating costs per oz. sold averaged US$908, while total all-in sustaining costs reached US$1,257 per oz.

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