Weakness dominates TSX, Sept. 2-5

The holiday-shortened trading week saw the S&P/TSX Composite Index fall 55.81 points, or 0.4%, to 15,569.92, and the S&P/TSX Capped Diversified Metals & Mining Index drop 2.01 points, or 0.2%, to 877.98. The S&P/TSX Global Gold Index plunged 13.68 points, or 6.8%, to 188.42, while the gold price fell 1.5%, or US$18.80 per oz., to end the week at US$1,268.40 per oz.

Western Lithium soared 31%, or 18¢, to 77¢ per share after news that electric carmaker Tesla Motors has chosen Nevada as the site for its proposed $5-billion lithium ion battery plant. Western Lithium’s lithium-rich Kings Valley clay deposit is situated in northern Nevada’s Humboldt County, and the company lost no time in announcing on Sept. 8 that it has started calcination of its lithium clays in the first of three planned campaigns to show the viability of extracting lithium on a large scale. Calcination is the first step to turn the lithium-bearing clay into water soluble lithium sulphates, so that a brine can be produced through leaching.

The 12-ton-per-day (10.9-tonne-per-day) calcination plant is now operating, with the downstream leaching, crystallization and precipitation process undergoing construction until November 2014. Lithium compounds will be produced until early 2015 to determine engineering parameters and equipment selection for a definitive feasibility study under the company’s patented U.S. extraction process. Western Lithium estimates that producing up to 26,000 tonnes per year of lithium carbonate equivalent would meet lithium demand for between 500,000 and more than 1 million electric cars.

Strong second-quarter results sent Dominion Diamond shares up 36¢ to $15.09. The company reported that its 80%-owned Ekati mine and its 40%-owned Diavik mine performed “exceptionally well” in the second quarter of fiscal 2015 — or the three months ended July 31 — with rough diamond production, sales and pricing all exceeding expections. Consolidated net income attributable to shareholders totalled US$26.6 million, or US31¢ per share. The company said growth in diamond jewellery sales in the U.S. and China — which together account for more than half of the world’s diamond jewellery sales — drove up rough diamond prices by 8% in the first half of fiscal 2015. As of July 31, the company held cash and equivalents of US$384 million.

Shares of Goldcorp were down $2.53 and finished the week at $28. The gold producer reported an unstable pit wall at its El Sauzal mine in Chihuahua, Mexico. The company said there was movement in the highwall slope of the Trini pit and has suspended operations until a geotechnical survey team can assess the potential impact of the instability. This year marks the last year of operations at El Sauzal.  

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