TSX falls with miners and gold, May 5-9

The S&P/TSX Composite Index was down 223 points to 14,534.06 for the period, as the loonie fell on weak jobs numbers and worries that sluggish economic growth could persist. 

Gold demand also remained weak, but the crisis in the Ukraine has been seen as offering a floor for the yellow metal. The gold price fell US$13 to US$1,289.60 per oz. for the period, and that took gold miners down a notch too, as evidenced by the S&P/TSX Global Gold Index shedding 8 points to finish at 179.70 points. Big-name miners such as Yamana Gold and Barrick Gold both gave up market cap on heavy trading volume. 

The diversified miners didn’t fare much better, as the S&P/TSX Capped Diversified Metals & Mining Index was down 14 points to 841.18 points, despite the copper price being up slightly by a cent to finish at US$3.08 per lb. 

Drill results from Globex Mining’s Eagle mine property in Quebec failed to inspire investors. The company reported a highlight intercept of 5.39 grams gold over 4.8 metres, but the company’s stock traded down 24% to finish the period at 25¢. The company also reported that two drill holes at its nearby Lac à l’Eau Jaune property failed to intersect significant gold values. 

Kinross Gold was one of the period’s most actively traded gold mining stocks after releasing first-quarter results during the period, with 7.5 million shares trading hands. Although it drove costs down, the company still couldn’t generate the same revenues it did a year ago. Revenue fell to US$817 million from US$1.1 billion a year ago, as lower gold prices outweighed increased production. Kinross shares were off 12¢ to $4.41 for the period. 

Uranerz Energy also failed to generate much positive momentum over the period. The company’s stock fell ahead of its first-quarter earnings, as it was down 18% to $1.33 over the period. Fortunately for shareholders the stock rebounded somewhat at press time, moving up $1.43 per share. The big news from the quarter was the commissioning of its first uranium mine: Nichols Ranch in Wyoming’s Powder River basin. While the mine should contribute to the bottom line for the first quarter, the company showed a 6¢-per-share loss. It took Uranerz seven years to get Nichols Ranch into production, and the project has an indicated resource of 2.95 million lb. uranium oxide grading 0.114% U3O8. 

There was some good news in the mining sectors, but investors had to go to the lithium sector to find it. The success of electric car companies like Tesla Motors has put some wind in the sails of lithium miners and Orocobre, a company that is set to mine its flagship Salar de Olaroz lithium property in Argentina. The mine should be commissioned in August. Orocobre’s stock was up 12¢ to $2.36 for the period.

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