US markets struggle, Oct. 6-10

The S&P 500 Index posted its biggest weekly decline since March 2012, as anxiety about weak global economic growth in Europe and China and concerns about the winding down of the U.S. Federal Reserve’s bond-purchasing program drove stocks lower. The S&P 500 fell 3.14% to 1,906.89 and the Dow Jones Industrial Average dropped 2.74% to 16,544.10. The gold price gained 2.7% to end the trading week at US$1,223 per oz., lifting the share prices of many precious metal companies, while the oil price slumped to a four-year low.

Fortuna Silver Mines topped the list of percentage gains advancing 19.8%, or US74¢, to US$4.46 per share. The company reported third-quarter production for its two underground mines: San Jose in Mexico and Caylloma in Peru. Silver production reached 1.80 million oz. — a 63% increase over the third quarter of 2013 — while gold production climbed 116% year-on-year to 9,751 oz. and zinc rose 11% year-on-year to 7.2 million lb. (Lead production fell 11% year-on-year to 4.2 million lb.) The company said it has mitigated the impact of a double-digit percentage fall in silver prices so far this year by gearing the Caylloma mine towards its base-metal zones. Fortuna also said it is moving forward with its plan to expand capacity to 3,000 tonnes per day at San Jose by mid-2016.

Franco-Nevada posted the biggest jump in value after announcing early in the week that it would acquire a gold-and-silver stream from the Candelaria copper-mining complex in Chile from Lundin Mining for a US$648-million upfront deposit. Franco also agreed to subscribe for up to C$50 million in Lundin’s planned subscription receipts financing. Lundin is acquiring Freeport-McMoRan’s 80% stake in Candelaria for US$1.8 billion. Japan’s Sumitomo will continue as a 20% partner. Franco shares jumped 9.6%, or US$4.51 to US$51.26, while Freeport’s shares fell US$1.35 to US$30.66.   

Newmont Mining’s shares fell US49¢ to US$22.21 after a jailed opponent to the company’s Conga project was re-elected to lead the highland region of Cajamarca. Gregorio Santos won a second four-year term in regional elections on Oct. 5. Newmont suspended the project in November 2011 after concerns about its potential impact on the water supply.

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