TSX falls last week on interest rate fears

Stocks fell during the Feb. 21-24 trading period after higher-than-expected U.S. inflation for January of 6.4% a year prompted concerns that central banks would maintain higher interest rates for longer. Analysts had forecast 6.2% inflation last month, while the rate was 6.5% in Dec. Keeping money more expensive to borrow than in recent years could potentially slow the economy.  

The S&P/TSX Composite Index lost 296.05 points or 1.4% to 20,219.19. The S&P/TSX Global Mining Index decreased 6.01 points or 5.3% to 106.74, and the S&P/TSX Global Base Metals Index fell 9.4 points or 4.7% to 188.97. The S&P/TSX Global Gold Index dropped 9.41 points or 3.5% to 261.24, and spot gold ended the week at US$31 per oz. higher, or 1.7%, at US$1,842.20 per ounce. 

Americas Gold and Silver slid 11% to 68¢ per share. The company said Feb. 22 it is targeting a 10% increase in silver-equivalent production this year to 5.5-6 million oz. and to as much as 7 million oz. in 2024 from 5.3 million silver-equivalent oz. last year.  

The forecast is based on more output from the higher-grade silver Upper zone of the San Rafael deposit at the Cosalá operations in the state of Sinaloa, Mexico, and a year of production from the 3700 level at the Galena complex in northern Idaho, which contains higher grade ore. Also, the Galena Hoist project is to be completed by the end of June.   

The company estimates attributable silver production for 2023 at 2.2–2.6 million oz. and 3.5-4 million oz. next year, around an 80% increase. It was 1.3 million oz. last year.  

Capital costs are to stay about the same this year except for a US$1.2 million drill program on the Cosalá North prospect. The company had attributable cash cost per silver oz. of US77¢ and all-in sustaining cost of US$9.63 per silver ounce. 

“The company’s 2023 guidance and 2024 production outlook is expected to continue to deliver solid organic production increases and substantial silver optionality to our stakeholders over the next several years,” Americas president and CEO Darren Blasutti said in the release. “The Galena Hoist project is nearing completion.”  

Signal Gold  fell 13% to 30¢ a share. The company said Feb. 16 it was borrowing up to US$21 million from Nebari Holdings, a Miami-based money manager, to advance the Goldboro project in Nova Scotia. Signal accepted US$16 million from the loan on Monday, using half of it to repay a loan from New York-based metals trader Auramet International. Signal is to repay the new debt through further project financing by year’s end, the company said.  

Part of the loan will be used to update a feasibility study on the Goldboro project, which envisions an 11-year mine producing about 100,000 oz. annually from ore grading 2.3 grams gold per tonne. Last year, Nova Scotia approved the project 175 km northeast of Halifax near Issac’s Harbour. 

“Given the lack of liquidity in the equity markets and the importance of key pre-development activities required to continue to advance the project, the company has partnered with Nebari to progress Goldboro in what it believes to be the most non-dilutive manner to our shareholders,” Signal president and CEO Kevin Bullock said in a news release. “This funding ensures we are able to execute on key optimization and de-risking activities.” 

Sabina Gold & Silver, with its Goose gold project in Nunavut, was one of the top climbers by percentage during the period, gaining 20% to $1.58 per share after B2Gold made a US$1.1 billion all-stock acquisition offer on Feb. 13. Some analysts said the offer was too low and could be beaten by other suitors.  

“We would have expected more of a premium bid given that Sabina is in construction and has done outstanding work de-risking the project technically, environmentally and through its industry leading agreement with the Kitikmeot Inuit Association,” Matthew O’Keefe, a mining analyst for New York-based Investment bank Cantor Fitzgerald, wrote in a note on Feb. 14. “A superior bid may emerge either in response to existing shareholders or from a competitive bid.”  

Goose, the most advanced project in the area about 520 km northeast of Yellowknife, N.W.T. is expected to become Nunavut’s third operating mine in 2025, when it starts commercial production. The other two are run by Agnico Eagle Mines.