Canada’s benchmark index posts marginal advance, May 29-June 2

Canada’s real growth domestic product advanced at a 3.7% annualized rate in the first quarter, or more than triple the 1.2% rate posted in the United States. Business investment was also on the rise — climbing 10.3% during the first three months of the year — with investment in mineral exploration up 67.1%, machinery and equipment investment up 25.3%, and investment in intellectual property products up 6.3%, according to TD Economics. The S&P/TSX Composite Index advanced 0.2% to 15,442.75 and spot gold rose 0.93% (US$11.80 per oz.) to finish at US$1,278.50 per ounce. The S&P/TSX Global Gold Index fell 0.35% to 208.76 and the S&P/TSX Global Mining Index dropped 1.16% to 64.72.

Shares of Richmont Mines rose 31¢ to $9.84 per share after positive results from a preliminary economic assessment (PEA) of expanding the company’s Island gold mine in northern Ontario. The study confirms that an increase in underground mine and mill productivity to 1,100 tonnes per day would support production growth of 22% at low industry cash costs and a solid cash flow stream over the eight-year, phase one period, with low incremental capital required of $28.2 million (US$20.9 million). The PEA only incorporates 24% of the current inferred resources as of Dec. 31, 2016, which excludes more than 750,000 inferred ounces, and doesn’t take into consideration the most recent drilling to the east, as well as below 1,000 metres. The PEA forecasts the expanded operation could produce 125,000 oz. gold per year, excluding the 2017 and 2018 ramp-up. Over the PEA period, cash costs would be $650 per oz. (US$480 per oz.), all-in sustaining costs would be $835 per oz. (US$620 per oz.) and all-in costs, which includes all project and sustaining capital, would be $910 per ounce (US$675 per ounce).

Torex Gold Resources’ shares advanced 97¢ to $23.20 on news of a US$400-million debt facility to refinance the company’s project debt. The loan is available by way of a US$300-million term loan and a US$100-million revolving loan facility, and the funds will be used to refinance the project finance facility that was used for building Torex’s El Limon-Guajes mine in southwestern Mexico, as well as for general corporate purposes. The revolving facility and the term facility will mature on June 30, 2020, and June 30, 2022. The commitment letter states that the loan facility bears interest at a London interbank offered rate (Libor), plus 4% for the first two years, Libor plus 4.3% for years three and four, and Libor plus 4.5% thereafter. Torex’s El Limon-Guajes mine entered commercial production in March 2016, and the company is advancing its Media Luna project on the same 290 sq. km property, 180 km southwest of Mexico City in the Guerrero gold belt. The company did a PEA on Media Luna in 2015. TNM