TSX slides, Dec. 11-17

The United States Federal Reserve’s decision to raise interest rates for the first time since June 2006 lifted Canada’s main stock index by 1.9% to 13,166.08, before finishing at 13,009.93, in a 0.05% decline. The central bank raised the range of its benchmark rate by a quarter of a percentage point to between 0.3% and 0.5%, driving the U.S. dollar higher and the Canadian dollar lower. The loonie closed at $1.3950 to the greenback, or US71.7¢, near the $1.40 level it last reached in 2004. Spot gold closed at US$1,072 per oz. after the interest rate hike on Dec. 16, up from US$1,060.90 per oz., on Dec. 15, before dropping to US$1,050.60 per oz. on Dec. 17. The S&P/TSX Global Gold Index slid 5.3%, the S&P/TSX Global Mining Index fell 4.7% and the S&P/TSX Capped Diversified Metals & Mining Index plunged 10.6%.

Shares of Orocobre jumped 27% — or 39¢ to $1.83 — on no corporate news, prompting the company to issue a statement saying it was unaware of any information that could explain the activity in its shares. The company is ramping up its Olaroz lithium facility at its flagship brine-based Salar de Olaroz resource in Argentina, and expects to reach a 17,500-tonne-per-year nameplate capacity of high-quality lithium carbonate to begin 2016. The company noted, however, that the Paris Agreement signed by 195 countries at the recent United Nations Climate Conference, which aims to limit future global warming to less than 2°C, makes renewable energy sources and greener technology like rechargeable lithium ion batteries even more important. Orocobre also noted that in contrast with most commodities in the current downturn, the price of lithium carbonate has increased, with recent market prices in excess of US$10,000 per tonne reported in China. 

Third-quarter production and financial results drove up the shares of Starcore International Mines by 19¢ to 28¢. The company’s San Martin mine, 250 km northwest of Mexico City, produced 5,105 equivalent oz. gold in the three months ended Oct. 31, at operating cash costs of US$787 per equivalent oz. gold, and all-in sustaining costs of US$973 per equivalent oz. gold. The miner’s net income rang in at $0.6 million, and at the end of the quarter, held cash and short-term investments of $7.2 million. The company consolidated its shares and traded on the TSX on a one-for-four consolidated basis effective Dec. 14.

Barrick Gold’s shares were off $1.53, and closed at $9.69 apiece. The company sold its 70% stake in Spring Valley and its 100% interest in the Ruby Hill mine to subsidiaries of Waterton Precious Metals Fund II for $110 million in cash. President Kelvin Dushnisky said Barrick’s portfolio is “now much more focused on core mines that generate free cash flow,” and added the miner would meet its debt reduction target of $3 billion for 2015. This will represent a 23% reduction in total debt since the start of the year.