US markets down, March 18-22: Vale, Wheaton Precious Metals and Franco-Nevada

The Dow Jones Industrial Average fell 1.34% to finish the trading week at 25,502.32, and the S&P 500 Index lost 0.77% to end the week at 2,800.71. Spot gold rose US$11.10 per oz. to US$1,313.40 per oz. gold.

Shares of Vale remained under pressure, falling US38¢ to US$12.82. The Brazilian iron ore miner announced on March 20 that it was suspending operations at the Alegria mine in its Mariana complex because the results of a preliminary analysis of its structures were inconclusive, and it was impossible for the company to guarantee their stability. The company estimated the closure could impact production of up to 10 million tonnes per year. Two days later, Vale reported that a local court injunction had forced it to freeze operations at 13 other tailings dams in the country. Operations at its Brucutu mine, the largest iron ore mine in Minas Gerais state, have been suspended for more than a month, after a tailings dam collapse at its Corrego do Feijao mine killed at least 300 people. The company said it would restart Brucutu, but the injunction on March 25 means Vale will have to delay the restart.

Wheaton Precious Metals’ shares rose US$1.92 to US$24.50 on the back of record gold production and sales recorded for 2018. The company reported operating cash flow for the year of over US$475 million, based on producing over 370,000 oz. gold, 24 million oz. silver and 14,000 oz. palladium. The increase in attributable gold production mainly owed to Wheaton’s gold stream in May 2018 from First Majestic’s San Dimas mine in Mexico and the precious metals stream in July 2018 on the Stillwater palladium mine in the U.S. owned by Sibanye-Stillwater, as well as higher production at both Vale’s Salobo mine in Brazil and Hudbay’s Constancia mine in Peru. Wheaton forecasts 2019 attributable gold production will come to 365,000 oz. gold, 24.5 million oz. silver and 22,000 oz. palladium. For the five years ended 2023, Wheaton expects average annual gold-equivalent production of 750,000 ounces.

Shares of Franco-Nevada fell US85¢ to US$75.90. The company reported 2018 revenues of US$653.2 million, net income of US$139 million, or US75¢ per share, and adjusted net income of US$217 million, or US$1.17 per share.