U.S. equities fall, Jan. 23-27

The U.S. economy in the final three months of 2011 grew at its fastest pace in more than a year and a half with GDP growth of 2.8%, up from 1.8% growth in the third quarter and 1.3% in the second quarter. Federal Reserve Chairman Ben Bernanke said the central bank would keep interest rates near zero until at least 2014. The Dow Jones Industrial Average fell 0.47% or 60.02 points to close at 12,660.46 and the S&P 500 index slipped 0.07% or 0.95 of a point to finish at 1,316.33. The Philadelphia Gold and Silver index gained 15.66 points or 8.37% to 202.68, while the New York spot price for gold rose US$70.3 per oz. to end the week at US$1,7377.30 per oz.

Randgold Resources advanced US$5.11 to close the week at US$114.24. The company announced that its new Gounkoto mine in Mali is expected to recoup its relatively low capital cost by the end of the first quarter of 2012. Randgold also noted that Gounkoto accounted for a significant part of the Loulo complex’s 2011 production, which enabled Loulo to grow overall output while getting its Yalea underground mine on track and pressing ahead with underground development at its Gara deposit.

Allied Nevada gained US$4.51 to US$37.23 per share following news of its preliminary 2011 operating results and 2012 production guidance. Its Hycroft mine produced 104,000 ounces of gold and 479,440 ounces of silver last year with adjusted cash costs of about US$490 per oz. In 2012 production is expected to be in the range of 180,000 to 220,000 ounces of gold and 750,000 to 850,000 ounces of silver.

Kinder Morgan Energy Partners’ decision to invest about US$140 million in expanding coal handling facilities along the Gulf Coast sent shares of Arch Coal up 64¢ to US$14.51. The companies also signed a long-term throughput agreement that will help support the expansion of the export facilities. The two companies are also in final discussions to include, in the throughput agreement, port space for coal shipments at KMP-owned facilities on the East Coast.

Rio Tinto’s move to take a majority stake in Ivanhoe Mines sent Ivanhoe shares down US$2.03 or 10.6% to US$17.08. On Jan. 24 Rio Tinto announced that it had purchased shares in Ivanhoe taking its interest to 51%. Rio acquired an additional 15.1 million common shares representing 2% of Ivanhoe’s outstanding common shares from two sellers in a privately negotiated transaction. The shares were purchased for an aggregate of $302 million at a price per share of $20. Rio said the move further demonstrated its “commitment to the safe and successful development of the Oyu Tolgoi mine for the benefit of all stakeholders.” About 70% of the construction at Oyu Tolgoi is  complete and commercial production of copper concentrate is expected in the first half of 2013.