TSX gains despite geopolitical woes, July 14-18

The S&P/TSX Composite Index ended the week in positive territory, advancing 141.07 points to 15,266.57, as investors shrugged off war in the Middle East and Ukraine, and focused on corporate earnings. The S&P/TSX Capped Diversified Metals & Mining Index dropped 34.55 points to 891.63, while the S&P/TSX Global Gold Index slipped 3.44 points to 200.48. The spot price for gold fell US$29 to US$1,310 per oz.

Besra Gold got a boost after its board approved a subscription agreement from Victory Corp. Group of Switzerland. Under the agreement, VCG, or its affiliates, will buy 250 million Besra shares at US5.7¢ apiece for gross proceeds of US$14.25. The net proceeds will repay the outstanding interest under Besra’s convertible and gold-linked notes, and normalize production at its Phuoc Son and Bong Mieu gold mines in Vietnam. The investment is set to close on July 31, after which VCG will become Besra’s largest shareholder with a 40% stake. Besra, which is facing a de-listing review, rose 14% to 4¢.

Copper-focused Mercator Minerals hit a rough patch, with its shares plunging 41% to 5¢ after reporting that a proposed life-saving business combination with Intergeo, a Russian-based resource firm, might not close. The Vancouver-based junior noted that the Russian Federation Anti-Monopoly Services wanted to extend its review of the merger by another two months, and that Intergeo said it would not push out the completion deadline of the deal beyond Aug. 1, 2014. 

Analysts say the Russian regulators will not finish their review in time, leaving Mercator with the debt problems it had before the deal was announced last December. Mercator says it’s seeking other alternatives. 

Laurentian Bank Securities analyst Christopher Chang estimates the junior has nearly US$114 million of debt due in the next year. He says another mid-sized base metals firm, such as Capstone Mining, might want to buy Mercator’s assets, which include the Mineral Park copper mine in Arizona, and two exploration projects in Mexico.

B2Gold saw heavy trading after missing its second-quarter and six-month production targets due to a change-out at its Masbate semi-autogenous grinding mill. It recorded 85,704 oz. gold produced in the quarter, and 182,007 oz. in the half-year — 5% and 6% below budget. But the firm has kept its 2014 production guidance of 395,000 to 420,000 oz. at operating cash costs of US$667 to US$695 per oz. B2Gold operates three gold mines: Masbate in the Philippines, and La Libertad and El Limon in Nicaragua. It ended the week at $2.94, down 15¢, on 24.9 million shares traded.

Barrick Gold also saw heavy trading after announcing CEO Jamie Sokalsky would resign come September, with executives Kelvin Dushnisky and Jim Gowans serving as co-presidents. John Thornton is the company’s new chair. Barrick slipped 9¢ to $20.62, on 15 million shares traded.

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