TSX gains despite poor jobs data, July 4–8

Toronto equities soared during the first week of July, despite the Canadian economy unexpectedly losing 700 jobs in June. However, the number of people seeking jobs also dropped, pushing the unemployment rate down 0.1% to 6.8%. The S&P/TSX Composite Index rose 1.4% to 14,259.84. The S&P/TSX Global Gold Index added 9.2% to finish at 275.55, thanks to higher gold prices. Spot gold advanced 1.8%, or US$23.50 per oz., to US$1,365.40. The S&P/TSX Global Mining Index jumped 6.2% to 65.92, while the S&P/TSX Capped Diversified Metals & Mining Index added 4.2% to finish at 609.04.

Prophecy Development, previously known as Prophecy Coal, led the percentage winners, gaining 91% to close at $5 per share. “The company is not aware of any undisclosed material information,” Prophecy’s executive chairman John Lee said in an emailed response. In its latest release, dated June 16, the company said it had started a sampling program at the Paca deposit on its Pulacayo silver-zinc-lead project in southern Bolivia. It expects to analyze 90 samples from an area within the Paca resource boundary, that was not part of the current inferred resource estimate of 1.3 million tonnes at 444 equivalent grams silver. The results should be out later this month. “Pulacayo is one of very few high-quality silver projects that are fully permitted,” Lee added.

Gold junior Kerr Mines rose 45% to 15¢ per share, after reporting on July 7 that the Toronto Stock Exchange has extended its delisting review of its shares for another 30 days, after a 60-day extension on May 9. Kerr — focused on developing the McGarry gold project in Ontario’s Virginiatown — first announced its shares were under review in March.

Franco-Nevada, a gold-focused royalty and stream company, topped the value gains, advancing $5.15 per share to $103.39. The stock is up 58% year-to-date. Franco Nevada will report its second-quarter results on Aug. 8.

Uranium producer Cameco fell 41¢ to $13.78 per share. After markets closed on July 8, it reported that 230 unionized employees at its Port Hope plant accepted a new collective agreement. The three-year contract includes a 7% wage increase over the term. The previous contract expired on June 30. Port Hope is Canada’s only uranium conversion facility that makes uranium hexafluoride and the only commercial supplier of uranium dioxide conversion services.

Centerra Gold shares slipped 14¢ to $7.56, after its bid to acquire debt-laden Thompson Creek Metals for US$1.1 billion. Thompson Creek operates the Mount Milligan mine in B.C., and combined with Centerra’s Kumtor gold mine in Kyrgyzstan could lower Centerra’s geographic risk. The offer values each Thompson share at 79¢, marking a 32% premium over its July 4 close. This is Centerra’s second foray into Canada, after its joint venture on Premier Gold’s Trans-Canada property in Ontario last year.