TSX posts strong gains, Jan. 19-23

The Bank of Canada’s surprise cut of the overnight interest rate to 0.8% from 1% — the first move on rates since September 2010 — combined with the European Central Bank’s decision the next day to buy €60-billion worth of assets each month until September 2016 in a new round of quantitative easing, lifted the benchmark S&P/TSX Composite Index by 3.3% to 14,779.35. The S&P/TSX Capped Diversified Metals & Mining Index climbed 3.8% to 602.52. The S&P/TSX Global Gold Index rose 2.3% to 184.93, driven higher by the spot gold price, which rose 1.1% to finish at US$1,294.10 per oz.

B2Gold was the most actively traded stock in the wake of its production guidance for 2015. The company said it expects strong 35% production growth to between 500,000 to 540,000 oz. gold this year, with cash operating costs per ounce falling to between US$630 per oz. and US$660 per oz. Last year the company produced 384,003 oz. gold (or 391,162 oz., if including the 7,159 oz. pre-commercial production in December from its new Otjikoto mine in Namibia).

Shares of Agrium posted the biggest jump in value — rising $9.98 to finish at $129.87. The company announced on Jan. 22 that it would increase its target dividend payout ratio from between 25% and 30% of free cash flow net of sustaining capital to between 40% and 50% of free cash flow net of sustaining capital. Agrium CEO Chuck Magro said he expects the company’s free cash flow generation to “increase significantly as we complete our major production capacity expansion projects for nitrogen and potash this year. The company also said that over the next 12 months it intends to buy back up to 7.19 million of its common shares (or 5% of its issued and outstanding shares).

Goldcorp’s Jan. 19 announcement that it is acquiring Probe Mines and its Borden gold project in Ontario for $526 million drove up the major’s shares by $1.23 to $29.72. The Borden project is 160 km west of Goldcorp’s Porcupine mine. Two days after the Probe announcement, Goldcorp reported that it had made a deal with Agnico Eagle Mines to buy Agnico’s 7.32 million common shares and 2.35 million warrants of Probe — bringing Goldcorp’s ownership in Probe to 19.9%. 

Assay results from the Ann Mason project in Nevada sent the shares of Entrée Gold up 25.6% to 25¢ per share. Highlights from the first 20 holes of the company’s prefeasibility infill drill program include 390 metres of 0.355 copper; 176 metres of 0.4% copper; and 150 metres of 0.4% copper. CEO Greg Crowe described the results as “promising,” and said they will be used to upgrade the current resource to the measured and indicated category. The company expects to complete an updated resource estimate and a preliminary economic assessment in the first half of 2015 and start updated metallurgy studies.