Mining Stocks Rise With Metals; Silver Shares OutperformBy Allen Sykora of Kitco News
Friday March 11, 2016 11:07
(Kitco News) - Shares of most mining companies that trade in North America rose during the first four days of the week along with the price of most metals, with silver stocks among the outperformers.
As of late Thursday, Comex April gold futures were at $1,273.10 an ounce, a gain of $13, or 1%, for the week so far. Comex May silver was up 8 cents, or 0.5%, for the first four days of the week at $15.625.
During that same time span, the NYSE Arca Gold Bugs index (HUI) was up 7.022 points, or 4.1%, to 178.9846. The Market Vectors Gold Miners exchange-traded fund (GDX), which consists of stocks of gold-mining companies, rose 67 cents, or 3.4%, to $20.38 per share.
Endeavour Silver Corp. (NYSE: EXK) climbed 63 cents, or 30%. The company last week reported a narrower 2015 adjusted loss of $11.2 million, compared to $17.2 million in 2014. “We view the 35% decrease in loss YoY (year-on-year) as significant given average realized silver and gold prices that were 16% and 10% lower in 2015 compared with 2014,” said a research note this week from Rodman & Renshaw, citing cost-containment efforts and a move toward higher-margin ounces by the company.
Taseko Mines Ltd. (TSX: TKO) rose 16 cents, or 26%. The company announced this week that two directors, one of whom is the president and chief executive officer, acquired 2.5 million Taseko shares on the open market. Taseko is the 75% owner and operator of the Gibraltar Mine, the second-largest open pit copper-molybdenum mine in Canada. Advanced-staged projects include the Aley niobium project, Florence copper project and the New Prosperity gold-copper project.
Shares of several silver producers were among the big gainers this week. Silvercorp Metals Inc. (TSX: SVM), which has multiple mines in China, added 27 cents, or 23%. First Majestic Silver Corp. (NYSE: AG), which operates in Mexico, raced ahead 86 cents, or 18%. MAG Silver Corp. (TSX: MAG), which is advancing projects and exploring in Mexico, climbed $1.54, or 15%.
However, Silver Standard Resources (NASDAQ: SSRI) saw its shares decline by 89 cents, or 13%, during a week in which the company made a major announcement. The company agreed to acquire all outstanding shares of Claude Resources Inc., with the companies reporting an implied valuation of C$337 million for Claude as of the announcement.
Officials said the merger would create an intermediate precious-metals producer that would produce approximately 390,000 gold-equivalent ounces at cash costs of approximately $735 per equivalent ounce of gold sold during 2016. Shareholder approval is required. "The addition of the Santoy and Seabee mine complexes to our operating portfolio demonstrates our disciplined acquisition strategy to deliver growth and value to our shareholders,” said Paul Benson, president and chief executive officer of Silver Standard.
Mining giant Rio Tinto PLC (NYSE: RIO), which last month scrapped its dividend policy after an annual loss, slid $1.73, or 6%.
Pretium Resources Inc. (TSX: PVG) slid 40 cents, or 5%. The company is in the process of developing the Brucejack project in northern British Columbia. Construction is still on schedule for commissioning in the third quarter of 2017, Pretium said this week.
Editor’s note: For more on mining, be sure to check out Kitco News’ Prospectors & Developers Association of Canada conference coverage.
By Allen Sykora of Kitco News; firstname.lastname@example.org