TSX gains on higher oil prices, Sept. 26–30

Canada’s benchmark index rose 0.2% to close at 14,725.86, on the back of higher oil prices that led to a strong performance in the energy sector, offsetting lower gold prices and a weak performance in the financial sector. The S&P/TSX Global Gold Index fell 2.7% to 237.28, as the spot gold price lost 1.6% to close at US$1,315.90 per ounce. The S&P/TSX Global Mining Index, however, edged up 0.6% to 65.01. The November contract for crude oil surged 8% to settle at US$48.24 per barrel, while the December contract for Brent crude soared 9% to US$50.19 per barrel. Oil futures increased after major oil producing nations agreed they would need to curb output to reduce the world’s supply glut.

Shares of Ontario junior Kirkland Lake Gold tumbled after it said it would tie the knot with Australia-focused Newmarket Gold to create a mid-tier company that would have a $2.4-billion market capitalization and produce 500,000 oz. gold a year. Each Kirkland Lake share would be exchanged for 2.1053 Newmarket shares. The transaction, expected to close by year-end, implies a value of $1 billion, or $5.28 per share, to Newmarket. The combined firm would boast seven mines and five mills, with the main operations being Kirkland Lake’s Macassa mine complex in Ontario and Newmarket’s Fosterville gold mine in Australia.

“Without significant synergies from integrating a group of Australian mines with a group of Canadian mines, we find that this transaction is fairly neutral to our valuation in that the transaction is somewhat dilutive to the net present value and somewhat accretive to 2017’s estimated cash flow per share,” BMO analyst Brian Quast wrote, who covers Kirkland Lake.

Shareholders of Kirkland Lake and Newmarket would own 57% and 43% of the combined entity. Kirkland Lake shares lost 13.5% to close at $9.95.

B2Gold shares were the most traded, after a potential ban of 20 more metallic mines in the Philippines after the country’s Department of Environment and Natural Resources (DENR) completed a nationwide audit. The company, which operates its large Masbate gold mine there, is confident it can resolve the “administrative” issues related to Masbate before the deadline. B2Gold shares fell 40¢ to $3.44, as 42.7 million shares changed hands.

The pending suspension also hit shares of OceanaGold, which runs the Didipio gold-copper mine on the island of Luzon. The company said it would work with the DENR to resolve the matter, without disrupting its operation. OceanaGold shed 73¢ to close at $3.94 per share on 16.1 million shares traded.

Kerr Mines and Argex Titanium both rose after announcing they have completed a delisting review and meet the Toronto Stock Exchange’s listing requirements. Kerr shares advanced 45% to 15¢, and Argex shares climbed 42% to 9¢.

Shares of Ontario junior Kirkland Lake Gold tumbled after it said it would tie the knot with Australia-focused Newmarket Gold to create a mid-tier company that would have a $2.4 billion market capitalization and produce 500,000 oz. gold a year. Each Kirkland Lake share will be exchanged for 2.1053 Newmarket shares. The transaction, expected to close by year-end, implies a value of $1.01 billion, or $5.28 per share, to Newmarket. The combined firm will boast seven mines and five mills, with the main operations being Kirkland Lake’s Macassa mine complex in Ontario and Newmarket’s Fosterville gold mine in Australia.

“Without significant synergies from integrating a group of Australian mines with a group of Canadian mines, we find that this transaction is fairly neutral to our valuation in that the transaction is somewhat dilutive to the net present value and somewhat accretive to 2017’s estimated cash flow per share,” wrote BMO analyst Brian Quast, who covers Kirkland Lake.

Shareholders of Kirkland Lake and Newmarket will own 57% and 43%, respectively, of the combined entity. Kirkland Lake shares lost 13.5% to close at $9.95.

B2Gold shares were the most actively traded, following a potential ban of 20 more metallic mines in the Philippines, after the country’s Department of Environment and Natural Resources (DENR) completed a nationwide audit of its mines. The company, which operates its large Masbate gold mine there, remains confident it could resolve the “administrative” issues related to Masbate within the required timeframe. B2Gold shares fell 40¢ to $3.44 as 42.7 million shares changed hands.

The pending suspension also hit shares of OceanaGold, which runs the Didipio gold-copper mine on the island of Luzon. The company said it would continue to work with the DENR to resolve the matter, without disrupting its operation. OceanaGold shed 73¢ to close at $3.94 per share on 16.1 million shares traded.

Kerr Mines and Argex Titanium both rose after announcing they have successfully completed a delisting review and meet the Toronto Stock Exchange’s listing requirements. Kerr shares advanced 45% to 15¢, and Argex shares climbed 42% to 9¢.