TSX approaches 12,000 level, Jan. 11-15

It was a nasty week on the markets as oil sank below US$30 per barrel for the first time since 2003 and the Canadian dollar dropped below US69¢ for the first time in 13 years, closing at US68.82¢. The S&P/TSX Composite Index dropped 2.99% to finish at 12,073.46, the S&P/TSX Capped Diversified Metals & Mining Index plunged 14.9% to 255.03 and the S&P/TSX Global Mining Index lost 7.1% to 39.15. The copper price was down 3.6%, ending at US$1.94 per lb., while the spot gold price slid 1.4% to US$1,088.80 per oz., sending the S&P/TSX Global Gold Index down 7.2% to 131.54. 

Rubicon Minerals was the most traded stock, falling 82%, or 12¢, to 2.5¢ after the company announced on Jan. 11 that a revised geological model and updated resource estimate showed the F2 deposit is uneconomic, and that the company is evaluating strategic options that could include a sale. Rubicon started trial mining the F2 deposit on its Phoenix property in Ontario’s Red Lake district last year, but underground operations stopped in November. Contained gold ounces in the updated 2016 indicated resource category have plunged 91% from the 2013 resource estimate, while contained gold ounces in the inferred category have fallen 86%, compared with the earlier estimate. Shares of Royal Gold, which has provided financing for Rubicon, were also down $11.87, or 22.4%, at $41.25 per share. Royal Gold entered a $75-million gold stream with Rubicon in February 2014.

Eldorado Gold’s announcement that it would suspend construction and development at its Skouries gold project in Greece after investing more than US$300 million to date sent the company’s shares down 27.9%, or $1.28, to $3.31. Eldorado said lobbying by anti-development interest groups had contributed to delays of routine permits and licences from a number of government agencies for developing its mining projects in the country. The company noted that its subsidiary, Hellas Gold, received approval for its environmental impact study in 2011, although since 2012 the Ministry of Energy and Environment and other agencies “have not entirely fulfilled their permitting and licensing obligations.” Last year the ministry revoked or suspended certain permits, which management said has negatively impacted the company’s schedule and budget to develop its assets. At Skouries, Eldorado said a building permit to finish the processing plant had been delayed for over three years. 

The results of a bulk sample at Peregrine Diamonds’ Chidliak diamond project in Nunavut failed to excite the market, and the junior’s shares fell 22.2% to 10.5¢. The 814.0 dry tonne bulk sample from the CH-7 kimberlite pipe returned an overall diamond grade of 0.88 carat per tonne. A total 717.65 carats of commercial-size (+1.18 mm) diamonds were recovered, including 53 diamonds one carat or larger and 183 diamonds over 0.50 carat in size. The largest gem quality diamond recovered was a 5.33-carat white/colourless octahedron with no inclusions.