TSX finishes lower, Aug. 8-11

Increased political tensions on the Korean peninsula triggered more uncertainty across global markets, pushing down Canada’s benchmark index 1.47% to 15,033.38 — its biggest weekly drop since June. The geopolitical volatility was good for gold, however, driving up the price to US$1,288.70 per oz. — a 2.41% gain. The S&P/TSX Global Gold Index rose 3.58% to 199.41. The S&P/TSX Global Mining Index fell 0.47% to 65.89 and West Texas Intermediate crude finished at US$48.80 per barrel.

Second-quarter results sent Franco-Nevada shares up $5.96 to $98.46 per share. The company sold 122,541 equivalent oz. gold for quarterly revenues of US$163.6 million. Net income came in at US$45.6 million, or 25¢ per share. The company has no debt and ended the quarter with US$614.3 million in cash and equivalents. Revenue in the quarter was sourced 91.9% from precious metals (71.2% gold, 13.9% silver and 6.8% platinum group metals) and 82.2% from the Americas (15.8% U.S., 19.9% Canada and 46.5% Latin America).

Pan American Silver rose $2.05 to $22.32 per share. The company lowered its annual guidance range of all-in sustaining costs per silver oz. sold to $10.50, from $11.50 per ounce. During the second quarter, AISCs per silver oz. sold fell to $10.73 per silver oz. sold, down from $11.31 in the second quarter of 2016. Second-quarter revenue totalled US$201.3 million, up 5% from the US$192.3 million in the year-earlier quarter, reflecting higher realized metal prices and lower direct selling costs. Net earnings reached US$36 million (23¢ per share), up from US$34.2 million (22¢ per share) in the same quarter of 2016. At the end of June, the company had US$429.6 million in working capital, US$263.8 million available under its revolving credit facility and US$46.7 million in outstanding debt.

Shares of Primero Mining fell 47.3% to 24¢. The company reported second-quarter results and announced it was selling its Black Fox mine in Timmins to McEwen Mining for $35 million. Interim president and CEO Joseph Conway said the sale would lower the company’s outstanding debt, but said Primero still has outstanding debt that matures in November 2017, which “will require more funding or refinancing to repay in full.” Conway noted that despite improvements at Black Fox, “the strike action at San Dimas early in the quarter followed by more labour disruptions have weighed on the company.” Unionized employees at the San Dimas mine in Mexico went out on strike in February. A bargaining agreement was reached on April 17 and a phased restart began April 22. Primero posted a second-quarter net loss of $300.4 million, compared to a net loss of $19.4 million in the same quarter of 2016. The net loss included a $285-million impairment of the company’s assets. Operating cash flow before working capital changes in the quarter came in at $8.4 million. Primero has $12.1 million in cash and has fully drawn its $75-million revolving credit facility.