US markets mixed, March 29-April 1

The Dow Jones Industrial Average rose 0.24% to finish the week at 33,153.21 and the S&P 500 fell 0.77% to 3,913.10. Spot gold dropped US$3 per oz., or 0.17%, to US$1,730.30 per ounce.  

AngloGold Ashanti jumped US$1.95 to US$22.98. Interim CEO Christine Ramon said on March 31 that the company does not need to pursue mergers and acquisitions and won’t add scale for its own sake, dampening speculation that it might take part in further consolidation in the sector. Earlier in the month, Neal Froneman, Sibanye-Stillwater’s CEO, floated the idea of a merger with AngloGold and Gold Fields, arguing that consolidation is needed for South Africa’s gold miners to compete globally. Reuters reported on March 31 that Ramon had declined to comment when asked about a potential tie-up with Gold Fields during a roundtable at the Mining Indaba conference, which also included Froneman. While Ramon acknowledged that consolidation could bring benefits generally, including operational synergies, it can also add complexity and costs. “I think bigger doesn’t necessarily mean better,” Ramon said, according to Reuters. “We wouldn’t look to build scale just for the sake of it.” 

Shares of Vale climbed US38¢ to US$17.12 per share. The company announced that it had concluded the sale of its nickel and cobalt operations in New Caledonia to a consortium called Prony, which includes commodity trader Trafigura. While Vale did not disclose the exact terms of the deal, it said US$1.1 billion would be invested in the New Caledonia assets, with US$555 million coming from its subsidiary Vale Canada. Vale Nouvelle Calédonie, the troubled Goro nickel-cobalt mine operator, has proved to be a financial burden for Vale since it began operations two years behind schedule in 2010. Mounting issues, including a US$1.6 billion write-down related to the ailing mines, pushed the mining giant to announce in 2019 its intention to exit New Caledonia. “Vale’s intent from the beginning of the divestment process was to withdraw from New Caledonia in an orderly and responsible manner,” Eduardo Bartolomeo, the company’s CEO stated in a press release. “This deal accomplishes that.”  

Gatos Silver dropped US$1 to US$10.49 per share. The company reported revenues of $121.5 million last year, a 223% year-on-year increase, but posted a net loss of $35 million, up from $30.9 million in 2019. The company’s Cerro Los Gatos mine in Mexico produced 21,254 tonnes of lead concentrate and 27,728 tonnes of zinc concentrate last year. The mine started production in September 2019, and achieved its designed throughput rate of 2,500 tonnes per day in December 2020. In November, the company raised US$172.5 million in an initial public offering (IPO) on the New York and Toronto stock exchanges. According to Gatos Silver, it was the largest precious metals IPO in 2020. In December, the company kicked off a 27,000-metre exploration program. Earlier this month, the company purchased from its joint-venture partner Dowa Metals & Mining, an 18.5% interest in the Los Gatos JV (LGJV) for $71.6 million, increasing its ownership to 70%.