TSX drops, July 6-10

Canada’s benchmark index tumbled 1.9% to 14,411.07 after a weak jobs report, the continuing debt crisis in Greece and a slump in China’s stock market. The S&P/TSX Capped Diversified Metals & Mining Index fell 5.5% to 630.99, and the S&P/TSX Global Gold Index lost 3.5% to finish at 146.56. The spot gold price retreated US$5.50 to US$1,162.80 per oz.  

First Quantum Minerals was one of the top value gainers, climbing 39¢ per share to $15.41, on 10 million shares traded. Salman Partners analyst Raymond Goldie has a “top-pick” rating on the stock, with a $25.80 target in 12 months. Goldie says that the miner’s shares are the “most liquid and relatively pure copper equities available on the North American market,” with copper accounting for 85% of the company’s revenues. Moody’s Investors Service warns that First Quantum could use the proceeds from its recent $1.4-billion equity raise to fund capital investment instead of repaying its debt, which would weaken its credit metrics. It says that Zambia’s general elections in 2016 could also affect the company’s B1 rating. The company’s flagship operations are in Zambia. 

Canarc Resource shares fell 41% to 5¢, after announcing that it would acquire Marlin Gold Mining’s subsidiary Oro Silver Resources to get its hands on the El Compas gold-silver project in Zacatecas, Mexico. Following a definitive agreement, Canarc will give Marlin 19 million shares, plus 55 troy oz. gold (or the U.S. dollar equivalent) each year for three years. The agreement depends on Canarc raising $750,000 in equity. The junior has until September to complete its due diligence on Oro.

Silver Standard Resources rose 22¢ to $7.67 per share, since increasing its full-year 2015 production guidance after second-quarter production results. Silver Standard’s Marigold gold mine in Nevada produced 48,700 oz. gold and its Pirquitas silver-zinc mine in northern Argentina delivered 2.4 million oz. silver — both slightly below the earlier quarter’s output. But the company is pleased with the assets’ first-half performance, and boosted Marigold’s gold guidance this year by 19% to 205,000 oz. gold, and Pirquitas’ annual silver forecast by 5% to 10.5 million oz., while keeping the zinc estimate at 12 million lb.  

Teck Resources gave back 89¢ per share to end at $11.37 on heavy volumes. The diversified miner entered a long-term gold stream with Royal Gold, while ending a 2010 royalty agreement with the company for a US$345-million penalty. Under the new stream, Royal Gold will pay US$525 million upfront to buy the first 900,000 oz. gold produced from Teck’s Carmen de Andacollo mine in Chile, and half of the production afterwards. Upon each monthly delivery, Royal Gold will pay 15% of the monthly average gold price. The agreement will increase Teck’s cash position by US$162 million.