U.S. markets take another hit, Jun 18-22

News mid-week that the U.S. Federal Reserve will deliver more monetary stimulus by extending its program of selling short-term securities to buy longer-term ones in order to keep long-term borrowing costs down, was followed by a rash of troubling economic news that kept U.S equity markets under pressure. Ratings agency Moody’s downgraded fifteen of the world’s largest banks, Goldman Sachs recommended shorting the S&P 500, and U.S. home re-sales fell in May. The Dow Jones Industrial Average fell 126.4 points or 1% to 12,640.78 and the S&P 500 dropped 7.8 points or 0.6% to 1,335.02. The Philadelphia Gold and Silver index lost 7.8 points or 4.8% to 156.29.

Molycorp climbed US$1.82 to US$21.82 per share and Rare Element Resources was up 64¢ to US$5.01 after China’s state-owned Xinhua news agency published an English-language version of a government White Paper detailing the country’s plans to further restrict rare earth exports. The White Paper said China has just 23% of the world’s reserves of rare earths, not the 36% the U.S. Geological Survey estimates. The White Paper follows a complaint to the World Trade Organization   about China’s rare earth quotas and tariffs by the U.S., the European Union, Japan and Canada. China’s White Paper said excessive mining of rare earth elements had caused environmental degradation and depletion of the country’s most easily accessible reserves. 

Vancouver-based Extorre Gold Mines jumped 53.3% or US$1.42 to close at US$4.08 per share after Yamana Gold offered US$404 million in cash and shares to acquire the junior. Shares of Extorre have fallen sharply since the beginning of March as the company mulled development options at its Cerro Moro gold-silver project in Argentina’s Santa Cruz province. Yamana is offering $3.50 in cash plus 0.0467 of its own shares for each share of Extorre, a total value of $4.26 per share.

Shares of Arch Coal rose 12¢ to US$6.13. The coal producer announced on June 21 that it was letting go roughly a tenth of its workforce—about 750 jobs—as it shuts down three higher-cost thermal mining complexes and associated plans to grapple with the feeble coal market in the U.S. The company also said it is temporarily closing its Hazard/Flint Ridge complex and reducing production at some of its other operations in Kentucky, Virginia and West Virginia. The actions will cut Arch Coal’s thermal coal production by more than 3 million tonnes a year, but the company says it expects thermal coal sales volume in 2012 will range between 128 million and 134 million tonnes.