TSX falls with commodity prices, Nov. 24-28

OPEC’s decision not to cut production sent U.S. oil prices down 10% to US$66.15 per barrel on Nov. 28, the biggest one-day drop in five years. Lower oil prices usally translate to lower inflation rates, crimping investment demand for gold. The mining-heavy S&P/TSX Composite Index dropped 2.4% to 14,744.70 and the S&P/TSX Capped Diversified Metals & Mining Index plunged 7.1% to 706.76. The S&P/TSX Global Mining Index slid 6% to 64.44 and the S&P/TSX Global Gold Index lost 6.6%, dropping to 143.36.

Shares of Dominion Diamond jumped 78¢ to $18.63, with Rio Tinto’s decision to   develop the Diavik Diamond mine’s A-21 pipe at a cost of US$350 million. Rio Tinto is the operator and owns 60% of the mine, and Dominion owns the remainder. The A-21 orebody is under a lake, so a dyke to isolate the open pit will have to be built. Production is planned for late 2018 after four years of dyke construction and pre-stripping. The A-21 pipe contains 3.6 million tonnes of measured resources grading 2.8 carats per tonne and 400,000 indicated tonnes at 2.6 carats per tonne.

Lydian International received government approval of the mining right for its Amulsar gold project in southern Armenia. The approval covers all project infrastructure, including the location for crushers, the conveyor and heap leach facility; a mining permit applicable to all three pits; definition of the area within which operating activities may take place; and a mining agreement that outlines the nature and duration of mining operations. Shares of Lydian closed at 60¢, up 6¢.

Concern that Guatemala would hike royalties on precious metals in its mining law to raise revenue and balance the country’s 2015 budget sent shares of Tahoe Resources plunging $1.85 to $17.77. The Guatemalan Congress passed legislation that, if enacted into law, would mean Tahoe will have to pay a 9% royalty to the federal government and a 1% royalty to the local municipalities for a total 10% royalty payment — a 5% increase to the royalty being paid on its Escobal mine.

Lower gold prices hit miners hard and Agnico Eagle Mines was no exception, falling $3.18 to $26.68 per share. The company completed its acquisition of Cayden Resources and its El Barqueno project in Mexico. CEO Sean Boyd said Agnico will spend $15 million on exploration at El Barqueno in 2015 to delineate an initial resource estimate. 

Petaquilla Minerals plunged 46% to 4¢. The junior reported that an $18-million bridge loan it had announced in October was delayed “due to issues that arose during due diligence,” and two days later announced that the TSX is reviewing its common shares with respect to meeting continued listed requirements. The company’s flagship Molejon gold mine is in Panama.