TSX rises despite uncertainties, Feb. 2-6

Cautious optimism about oil prices that lifted some energy stocks, coupled with decent job numbers showing employment in Canada increased by 35,000 in January (the result of more part-time work), drove the S&P/TSX Composite Index higher by 410.44 points, or 2.8%, to finish at 15,083.92. So far this year the benchmark index is up 3.1%. The S&P/TSX Capped Diversified Metals & Mining Index also advanced, rising 56.04 points, or 9.2%, to 664.02.

Concern that the U.S. Federal Reserve may raise interest rates sooner than later, however, based on positive U.S. jobs data, was bad news for gold stocks. The S&P/TSX Global Gold Index dropped 6.1% to 182.34, with the spot gold price falling 3.9% to US$1,233.30 per oz. Agnico Eagle Mines fell $3.30 to $39.54 per share; Goldcorp lost $2.05 to close at $28.64 and Barrick Gold dropped 81¢ to $15.44, all on no company-related news. The Canadian dollar closed at US79.85¢ against the greenback.

Shares of Cameco advanced $1.01 to $18.89 on hopes of more nuclear restarts in Japan. The company also reported fourth-quarter results after markets closed Feb. 6, posting net earnings of $73 million, or 18¢ per diluted share, compared to $64 million or 16¢ per diluted share a year earlier. Earnings were partially offset by a $126-million writedown of investments in the Eagle Point mine at Rabbit Lake and the $41-million asset writeoff under construction due to changes in the scope of a number of projects. On an adjusted basis, Cameco’s earnings were $205 million, or 52¢ per diluted share, up from $150 million, or 38¢ per diluted share, in the same quarter of 2013. The increase was because of higher uranium gross profits due to better averaged realized prices and lower average unit cost of sales. (Cameco’s average realized uranium oxide price in the quarter was US$50.78 per lb.) The company expects to produce 25. million to 26.3 million lb. U3O8 in 2015, up from 23.3 million lb. in 2014.

Prophecy Development jumped to 8¢ per share, a 25% increase, after the company released assays from samples taken from tailings piles on its Pulacayo silver-lead-zinc property in Bolivia. The tailings accumulated from processing ore extracted from the Pulacayo mining district between 1850 and 1950. Prophecy took 299 samples from 12 tailings piles at random locations. The samples assayed up to 1,200 grams silver per tonne, 7 grams gold per tonne and 154.5 grams indium per tonne. The gold and indium grades open up a new dimension to the district, the company says, given that to its knowledge, there are no known gold sales from the area and the presence of indium had not been mentioned previously. The main source of historic ore production at the Pulacayo mine was the Tajo vein system, is a high-sulphidation epithermal system running 2.5 km wide by 2.7 km long, to a minimum 1,000-metre depth.