TSX posts marginal gains, Dec. 27-29

Canada’s benchmark index rose 0.27% on a shortened trading week to 16,209.10.The S&P/TSX Global Mining Index gained 0.82% to 72.31 while the S&P/TSX Global Gold Index budged slightly, moving from 195.45 to 195.46. West Texas Intermediate crude rose 3.3% to close at US$60.42 per barrel, and the price of gold rose 2.2% to US$1,302.50 per ounce.

Shares of Centerra Gold fell 81¢ to $6.44. In late December, the company was forced to suspend mill processing operations at its Mount Milligan gold mine in British Columbia due to a lack of water. A drier than normal spring and summer produced low water reclaim volumes in the tailings storage facility. Some of that water was then frozen by unexpectedly cold weather.

Centerra drilled more water wells in the fourth quarter of 2017 to offset the water shortage, but was not able to fully recoup its losses. The company is continuing to stockpile ore, and hopes to resume milling in late January. It predicts full operations will resume after the spring melt in April.

PolyMet Mining shares rose 20% to $1.07. The company recently submitted an updated permit application to Minnesota’s Department of Natural Resources for its NorthMet copper-nickel project. Part of the revised application shows US$544 million in financial assurance for the first year of mining, which the state claims would be necessary for closure and reclamation activities, in particular water treatment.

The state water sulfate standard for wild rice is 25 times cleaner than the federal standard for drinking water. Jon Cherry, president and CEO of PolyMet, called the assurance an “insurance policy.”

“Costs of reclaiming and closing the site are already accounted for in our project plan,” Cherry said in a prepared statement. “It protects the state and taxpayers from incurring any costs should PolyMet not be able to do so.”

Cherry went on to say he is confident that PolyMet could execute its reclamation plan cost effectively, and the financial assurance would never have to be used.

Shares of Gabriel Resources are up 29% to 42¢. More than three years ago the Romanian government gave in to pressure from environmental activists to suspend Gabriel’s Rosia Montana gold-silver project over concerns of cyanide use in the extraction process. Then, in 2014, it revoked a bill that would have allowed the mine to enter production. Gabriel said the open pit would have been Europe’s largest gold mine and, in retaliation, sued Romania for $5.7 billion in alleged losses.

In December, Romania approved a new draft law on mining activities. If the law comes into effect, exploration and production licenses would no longer go through the current government review procedure, but only need approval from the National Agency for Mineral Resources.