S&P/TSX index slips, June 29-July 3

Uncertainty over Greece and the euro ahead of the country’s July 5 referendum on austerity measures weighed on markets during the trading week, which was shortened due to the Canada Day holiday on July 1. The S&P/TSX Composite Index fell 0.9% to finish at 14,682.39, the S&P/TSX Capped Metals & Mining Index dropped 4% to 667.73, and the S&P/TSX Global Mining Index declined 1.9% to 60.59.

Shares of Potash Corp. of Saskatchewan continued to build after the company’s proposal to buy German potash producer K&S Aktiengesellschaft (K&S). PotashCorp provided details of its offer on July 2, and said it is confident concerns “can be addressed through collaborative discussion.” PotashCorp said its proposal was “not predicated on closing mines, curtailing production, selling the salt business or cutting jobs” and that its cash offer of €41per share was a 57% premium to the volume-weighted average share price of K&S during the previous 12 months. K&S owns the Legacy potash mine in Saskatchewan near one of PotashCorp’s biggest operations. Shares of PotashCorp rose 27¢ to $38.88. Shares of fertilizer giant Agrium also rose, on no corporate news, climbing $5.52 to $133.96.

A proposed merger between Western Lithium and Lithium Americas sent the latter’s shares up 19% to 48¢ per share. Under an agreement announced June 30, Western Lithium will acquire all of the outstanding shares of Lithium Americas in an all-stock transaction valuing Lithium Americas at about $80 million. Lithium Americas owns the Cauchari-Olaroz lithium project in Argentina, which is permitted for construction, and Western Lithium is advancing its Valley of the Kings lithium deposit in Nevada. Western Lithium shareholders would own 50.5% of the combined company and Lithium Americas shareholders, 49.95%.

First Quantum Minerals’ shares were down 78¢ to $16.32. The company said in the last week of June that it is making progress ramping up its new copper smelter in Zambia. First Quantum noted the smelter’s daily copper concentrate throughput as of June 25 has averaged 3,000 tonnes, “with periods in excess of the 3,500 tonnes per day nameplate capacity.” Feed to the smelter is made up of a mixture of stockpiled and fresh concentrate from its Kansanshi mine, as well as fresh concentrate from its new Sentinel mine. First Quantum also pointed out that the Kansanshi mine’s C1 cost of production has fallen from an average of US$1.77 per lb. in the first quarter of 2015, to between US$1.36 per lb. and US$1.25 per lb. It also forecast that commercial production is expected in the third quarter — well ahead of its previous forecast of the first quarter of 2016.