US markets dip, Feb. 19-23

Gold closed at US$1,328.20, down 1.36% over the previous week, as U.S. markets slipped. The Philadelphia Gold and Silver Index fell 3.24% to 80.53 and the Dow Jones Industrial Average fell 0.36% to 25,309.99, while the S&P 500 Index rose 0.55% to 2,747.30.

Shares of Sibanye Gold fell 11.4% to US$4.12. The stock plunged after the South African miner said it would consider selling assets and metal streams to lower debt after its US$2.2-billion acquisition of U.S.-based Stillwater Mining. The company may also move its primary listing to North America from Johannesburg to help fund future deals.

Meanwhile, the company faces ongoing safety issues at its South African operations. In February 2017, two trapped miners were confirmed dead at Sibanye’s Kloof gold mine in Gauteng after a ground fall. A few weeks earlier, 955 miners were trapped in Sibanye’s Beatrix gold mine near Welkom after an electrical outage during a storm. The miners were eventually rescued.

Shares of Kinross Gold fell 8.9% to US$3.59. The company bought two hydroelectric plants for US$257 million to power its Paracuta gold mine in Brazil’s Minas Gerais region. The company has said that the power plants, located 660 km west of Paracuta, will cut future power purchases by 70%.

In 2017, Kinross produced 360,000 equivalent oz. gold at Paracuta, and the mine still has 8.8 million proven and probable oz. gold. Kinross expects to mine ore at Paracuta until 2030, but process stockpiled ore until 2032.

Shares of Southern Copper rose US$1.67 to US$52.17. In February, the company won a tender to develop Peru’s Michiquillay copper project by outbidding Minera Milpo. Michiquillay is located in the country’s northern Cajamarca region and is expected to process 80,000 tonnes of ore per day. The asset belonged to Anglo American until the company dropped it in 2014 after deciding to reallocate capital to projects it said offered greater value.

Southern Copper reported US$1.86 billion in fourth-quarter 2017 net sales — 33% higher than the same quarter of the previous year. However, the company also faced a one-time, non-cash income tax reform adjustment after new U.S. income tax legislation that cost it US$743 million. The payout lowered the company’s 2017 net income to US$728.5 million.