TSX rises on higher oil prices, Jan. 18-22

The Toronto stock market ended in positive territory, as oil prices strengthened and investors considered possible monetary easing by central banks in Europe and Japan. The S&P/TSX Composite Index rose 2.6% to close at 12,389.58. The S&P/TSX Global Mining Index, however, slipped 1.2% to 38.67, while the S&P/TSX Capped Diversified Metals & Mining Index added 0.6% to finish at 256.43. The S&P/TSX Global Gold Index dropped 3.2% to 127.30, despite the spot gold price climbing US$9.20 per oz. to US$1,098. The March contract for benchmark crude increased 9.4% to US$32.19 per barrel, and the loonie gained nearly two cents to finish at US70.67¢. 

Nevada Copper shares climbed 25% to 60¢, after announcing Victor Bradley, a lead director since 2013, will become the non-executive chair. Bradley has more than 50 years in the industry. He founded Yamana Gold in 1994 and more recently served as the chair of Osisko Mining, which Agnico Eagle Mines and Yamana acquired in June 2014. Nevada Copper owns the feasibility-stage Pumpkin Hollow copper project in Nevada.

Sherritt International rose 22% to 72¢ per share, after releasing its 2015 production results. Annual nickel output on a 100% basis included 47,271 tonnes from the Ambatovy mine and 33,705 tonnes from the Moa mine, up 28% and 2% from 2014. Oil and gas production totalled 11,158 barrels of oil per day and power production came in at 2,707 gigawatt hours, both slightly higher than the previous year. BMO analyst Aleksandra Bukacheva notes the production results are in-line with forecasts, but cautions that declining nickel prices are a “major overhang on Sherritt’s viability.” The week before, the miner announced it expects a $1.6-billion, after-tax non-cash charge on its 40% stake in Ambatovy, due to softer metal prices. “Unless near-term debt restructuring takes place, we estimate that Sherritt could have a funding shortfall of $95 million in 2016, if commodity prices remain at current low levels,” Bukacheva says. She has a $1 target and “market perform” rating on the stock.

Nevsun Resources advanced 24¢ per share to $3.60 after reporting the zinc expansion project at its Bisha copper mine in Eritrea is on track and under budget. The expansion is over 90% complete and could come $20 million under the $100-million budget. Ore commissioning is expected in the second quarter of 2016, followed by production later in the year. With the expansion, Nevsun can process copper-zinc-gold-silver ore at a rate of up to 2.4 million tonnes a year, and produce copper and zinc concentrates from the copper flotation and zinc flotation plant. Based on the open-pit mine plan, Bisha should crank out an average 225 million lb. zinc and 53 million lb. copper concentrate per year through 2025.