TSX slips, Feb. 24-28

The S&P/TSX Composite Index dipped nearly 4 points to 14,209.59 during the trading week. Both the gold and diversified miners edged down. The S&P/TSX Capped Diversified Metals & Mining Index dropped 2.28 points to 835.14, while the S&P/TSX Global Gold Index fell 6.44 points to 198.38. The spot price for gold, however, advanced US$2.50 to US$1,328.60 per oz., up 10% over last year’s US$1,205.50 close.

Moneta Porcupine Mines was the week’s percentage winner. Its share price doubled to 16¢ on the back of a new gold zone discovery at its Golden Highway project in Timmins, Ont. The discovery hole returned a thick intercept of 114.5 metres grading 2.02 grams gold per tonne. The hole was drilled only 100 metres from the project’s existing 4.3 million oz. resource base, suggesting potential to add more ounces. Due to the discovery, the Toronto-based explorer has deferred its resource estimate to the second half of the year.

Western Lithium, which is developing its Kings Valley lithium deposit in Nevada, saw its stock jump nearly 95% to 75¢, as 13.3 million shares changed hands on no news. The company said it was “not aware of any circumstances that could reasonably be expected to justify the recent trading activity.”

On the flip side, Vancouver-based Northern Dynasty Minerals fell 31% to $1.17 after the U.S. Environmental Protection Agency (EPA) said it’s starting a process under the Clean Water Act to study the potential effects of developing the proposed Pebble copper–gold–molybdenum mine on the fish populations in Alaska’s Bristol Bay.

CIBC analyst Tom Meyer notes Northern Dynasty has not started Pebble’s permitting process and has yet to disclose the project’s scope to state and federal regulators. “Thus, the EPA discussion is in the domain of hypotheticals and not project specifics,” he said in a note. Meyer has a “sector perform” rating and a 12- to 18-month price target of $2.50 on Northern Dynasty.  

Uranium producers Cameco and Energy Fuels topped the value-gainers’ list, adding $3.28 and $1.58 to close at $26.81 and $11.90. While neither company reported news during the week, their shares rose after news of a nuclear restart in Japan.

The Japanese government unveiled the final draft of its new Basic Energy Plan, where it highlighted nuclear power as a crucial long-term electricity source for the country. This strengthens Japan’s aim to restart its 48 commercial reactors, which have been offline since the Fukushima disaster in 2011. The cabinet could approve the plan by the end of March.

“Reactor restarts remain the most important near-term catalyst for the uranium space, in our view,” notes Raymond James analyst David Sadowski. He expects six units to come online by year-end.