TSX rises despite sagging commodity prices, May 1-5

Despite declining prices for gold and oil, Canada’s benchmark index has finished in positive territory. The S&P/TSX Composite Index rose 0.2% to 15,582.04. The S&P/TSX Global Mining Index, however, lost 3.3% to finish at 63.71, and the S&P/TSX Global Gold Index declined 2.8% to 201.82. The spot gold price in New York retreated 3% to US$1,227.90 per oz. Crude oil delivery for June fell 6.3% to US$46.22 per barrel, its lowest level in nearly six months.

Dominion Diamond was the second-biggest value gainer, gaining 55¢ to close at $17.14 per share, following Tahoe Resources’ 69¢ per share gain.

On May 1, Dominion updated shareholders on its ongoing strategic alternative review process, including a potential sale of the company. Dominion noted interested parties, including Washington Corp. — which previously made an unsolicited US$1.1 billion bid for Dominion — have signed confidentiality agreements in exchange for access to the company’s confidential data room.

“Given that Dominion suggests that multiple parties are involved, Washington must have dropped its demands for exclusivity, although one imagines that Dominion may have had to soften its demand for a 12-month standstill agreement,” BMO analyst Ed Sterck notes. Talks between the two parties previously fell apart due to the standstill agreement.

Dominion has also started its search for a new CEO. But it hasn’t established a timetable for either activity and doesn’t plan on commenting further until its board approves a transaction or appointment.

Dominion will hold its annual and special meeting of shareholders on June 13, 2017. Sterck has an outperform rating and a $20 price target on the stock.

Kinross Gold was the most actively traded stock, jumping 42¢ to $5.17 as 39.6 million shares changed hands. On May 3, Kinross reported 2017 first quarter adjusted profit of US$23.4 million, or US2¢ per share. This was similar to the same period a year ago, but higher than the nil per share that analysts on average had expected.

Kinross produced 671,956 gold-equivalent oz. at all-in sustaining costs of US$953 per gold-equivalent oz., relatively in-line with the figures from the earlier year. Quarterly revenue grew less than 2% to US$796.1 million.

The producer is on track to reach its annual gold-equivalent guidance of 2.5 million to 2.7 million oz. at all-in sustaining costs of US$650 to US$720 per oz.

Kinross notes phase one expansion at its Tasiast gold project in Mauritania should reach full production in the second quarter of 2018, with the phase two feasibility study set for completion in the third quarter of 2017.

“Appealing value and consistent delivery of solid operating results appear to offset the risks of project delivery and geopolitical exposure,” CIBC analyst David Haughton writes. He has upgraded Kinross to outperformer from neutral, while maintaining a $4.75 target price.