US stocks rise, Oct. 2-8

U.S. equities advanced, with the Dow Jones Industrial Average climbing 4.8% to 17,050.75. The S&P 500 Index advanced 4.7% to 2,103.43 for its highest level in seven weeks. The Nasdaq Composite jumped 4% to 4,810.79. The spot price for gold gained US$33, or 2.9%, to close at US$1,145 per oz.

The Federal Reserve’s latest policy meeting indicated low inflation could limit interest rates in the near-term. As a result, the US Dollar Index fell 0.8% to close at 95.30. Oil prices traded above US$50 a barrel for the first time since July, after a positive outlook from PIRA Energy Group. The closely watched oil forecaster estimates prices will climb to US$75 per barrel in the next two years.

Teck Resources was the week’s percentage winner, soaring 59% to US$7.31 per share. On Oct. 7, the firm reported a long-term silver streaming agreement with Franco-Nevada for its Antamina copper-zinc-silver mine in Peru. Teck owns a 22.5% interest in the mine, along with BHP Billiton (33.75%), Glencore (33.75%) and Mitsubishi (10%). In exchange, Franco-Nevada will make a one-time US$650-million payment, and pay 5% of the spot price at the time of delivery for each silver ounce delivered under the stream. After 86 million oz. silver have been delivered, estimated to occur in 30 years, the stream will be reduced by one-third. Haywood Securities analyst Kerry Smith sees the transaction as a “good deal” for Teck, as it helps strengthen the company’s balance sheet and offsets the development costs for the Fort Hills oilsands project in Alberta. BMO analyst Andrew Kaip says annual stream contributions could average 3.2 million oz. silver, which would increase Franco-Nevada’s gold-equivalent ounce profile by 13%. “The transaction adds a low-cost, long-life operation to the FNV profile, with meaningful exploration potential beyond the current mine plan,” Kaip writes.

Rubicon Minerals was the biggest percentage loser, dropping 27% to US53¢. On Oct. 5, the company said the Ministry of Environment and Climate Change ordered it to suspend mill operations at its Phoenix gold project in Ontario so it could treat elevated ammonia levels, discharge water from its tailings management facility and upgrade the facility by certain timelines. Rubicon says Phoenix’s underground development, construction and trial stoping haven’t stopped, and its mill will resume shortly. Rubicon appointed director Michael Winship as interim president and CEO, after Michael Lalonde left the company.