U.S. markets fall but gold miners shine

While fears of an American default amidst a political deadlock on raising the debt ceiling was good news for gold, which hit new highs, the effect on the U.S. markets was less positive.

All three major indexes fell over the July 11-15 period with the Dow Jones Industrials down 176 points to 12,479.73 points, the S&P 500 falling 27 points to 1,316.14 points and the NASDAQ Composite Index shedding 39 points to wind up at 2,789.80 points.

Not surprisingly, the companies spared from the sell-off were associated with gold, especially since Fed Chairman Ben Bernanke hinted that a third round of quantitative easing could be in the cards if growth remained sluggish. He did temper those words, however, by stating his concern over inflation.

Chief among the stocks to benefit from gold’s luster was Midway Gold. The company saw its market cap increase after it announced results calculated from data given to it by Barrick Gold. Barrick is earning into Midway’s Spring Valley Project in Nevada and highlights from the results included gold intercepts of 166 metres of 1.48 grams per tonne gold and 218 metres grading 2.7 grams gold. The news sent Midway shares up 31% to $2.69 for the period.

Samex Mining renewed drilling at its Los Zorros project in Chile at the right time as the market applauded the news and sent the company’s shares 20% higher to $1.42. The company is exploring for multiple precious metal deposits within a district of widespread occurrences of gold, silver, copper and barite.

Staying with the precious metals, Oromin Exploration is having continued success with the drill at its OJVG gold project in Senegal and the market took notice sending the company’s shares up 18% to $1.17. Highlights from the assays included 6.64 grams gold over 13 meters and 4.61 grams over 10 metres. The Golouma deposit at the project currently hosts an indicated resource of 11.1 million tonnes grading 2.94 grams gold for 1.05 million oz. of gold

And after digesting word of Stillwater Mining’s $487.1 million offer for Vancouver-based Peregrine Metals and its Altar copper-gold deposit in Argentina, investors began selling heavily. Stillwater shares were off 27% to $17.28 for the period. Peregrine shareholders would receive 0.08136 of a Stillwater share and US$1.35 in cash for each share held. Based on Stillwater’s closing price on July 8 of US$23.72, the deal values Peregrine at $3.16 per share, a 400% premium to Peregrine’s closing price of 81¢ on July 8.