TSX ekes out small gain, May 19-22

Statistics Canada reported higher demand for cars, food and alcohol, which drove up retail sales 0.7% in March, after a 1.5% gain in February. Markets were closed May 18 to celebrate Victoria Day, but when they reopened, Canada’s main stock index finished at 15,200.76, in a 0.6% gain. By contrast, the S&P/TSX Capped Diversified Metals & Mining Index fell 5.9% to 747.36, and the S&P/TSX Global Mining Index dropped 2.3% to 66.63. The S&P/TSX Global Gold Index decreased 2.4% to 166.40.

First Quantum Minerals’ plan to raise US$1.3 billion through a public offering — and as much as US$1.4 billion if an over-allotment option is exercised — sent its shares down $2.19 to $16.45. The money will be used to advance and expand production facilities, trim debt, and for corporate purposes, including strategic investments.

Shares of Imperial Metals dropped $2.70 to $10.11 after the company said delays at its Red Chris copper-gold mine in B.C. mean it will need to raise more funds. The company said a water shortage caused by a late spring runoff has delayed plant commissioning by a month, and that it will need funds for commercial production.

Turquoise Hill Resources ended 17¢ higher at $5.41 per share. The company made significant concessions at its 66%-owned Oyu Tolgoi copper-gold complex in Mongolia. Turquoise Hill, Rio Tinto (which owns 51% of Turquoise Hill) and the Mongolian government agreed that a 5% sales royalty would be based on Oyu Tolgoi’s gross revenue, rather than its net revenue, as the miner had proposed. The parties also agreed that a 2% net smelter return royalty — which Turquoise Hill bought in 2003 from BHP Billiton for US$37 million — is now worth zero. It was also agreed that the jointly held Oyu Tolgoi LLC, which oversees the project, would pay US$30 million to settle a tax dispute, instead of an earlier estimated figure of US$127 million.

B2Gold was up 12¢ to $2.15. The company announced May 20 that it had secured a US$350-million revolving credit facility (RCF) from a bank syndicate. The facility can increase to US$450 million any time before the maturity date (May 20, 2019), pending binding commitments. The loan will help repay a US$200-million RCF, and aid corporate purposes. The company said that closing the RCF, along with the anticipated operation cash flow from its mine operations, will give it enough resources to keep its operations and build its Fekola project, which is expected by late 2017. B2Gold is on track to meet its 2015 production guidance of between 500,000 and 540,000 oz. gold, at cash operating costs of between US$630 and US$660 per oz.