TSX grows as investors anticipate strong earnings

With earnings season right around the corner the TSX Composite Index was up 203 points to 13,494.63 for the July 18-22 period. The move came as investors anticipated solid numbers from the resource sector thanks to strong commodity prices overall.

The Capped Metals & Mining Index reflected that optimism as it was up 22 points to 1.447.77 points. The rise in the shares of diversified miners came as the prices for aluminum, nickel, tin and zinc were all higher while lead prices were lower and copper prices were flat at US$4.39 per lb.

Continued grappling between Democrats and Republicans over the debt ceiling in the U.S. helped the price of gold to gain another US$5 and it broke through the US$1,600 mark finishing the period at US$1,601.50. The strength behind the metal was of little help to those that mine it, however, as evidenced by the Global Gold Index diminishing by a point to 397.11 points for the period.

AngloGold Ashanti’s $28 million investment in First Uranium helped lift the uranium and gold miner’s shares by 40% as they finished the period trading for 59¢ and were the largest gainer for by percentage points. AngloGold bought the nearly 20% interest in the company from South-African platinum miner Village Main Reef Limited, and has lock-up and right of first refusal privileges on Village’s remaining 6% stake in First Uranium.

Lake Shore Gold’s second quarter production results failed to impress the market and the gold miner’s shares fell by 28% as a result, winding up at $2.39. The company said that production for the quarter was lower than expected thanks to a change in the mining sequence at its Timmins Mine. That change had to be made due to backfill delays causing lower grade sources to be mined earlier than expected. The lower grade material meant overall head grade came in at just 60% of what was planned for the quarter.

Where Lake Shore managed to disappoint, Orocobre managed to impress. The Lithium and potash junior jumped 19% to $2.20 for the period after announcing the completion of initial drilling at its Salinas Grandes project in Argentina. The program confirmed the presence of two brine bodies containing, what the company says, are attractive chemistries thanks to low magnesium to lithium ratios and high potassium to lithium ratios. That led the company to say that high recoveries of potassium and lithium could come from a simple and low cost mine.

And word that Nautilus Minerals had been awarded tenements in the Eastern Pacific helped lift the company’s shares by 20% to $3.17. The company is one of the first to be granted exploration licenses in the Clarion Clipperton Zone (CCZ) which lies in international waters between Hawaii and Mexico. Exploration work done at CCZ in the 1980’s found polymetallic nodules, or golf ball sized nuggets, that are rich in copper, nickel, manganese and cobalt on the seafloor in water depths starting at 4,500 metres.