Mining Stocks Mostly Higher; Kinross Boosted By Tasiast NewsBy Allen Sykora of Kitco News
Friday April 01, 2016 10:42
(Kitco News) - Shares of most gold-mining companies rose with the metal itself during the first four days of the week, with Kinross Gold Corp. among the top gainers after announcing new plans for further developing its Tasiast mine.
As of late Thursday, Comex June gold futures were at $1,234.50 an ounce, a gain of $15.80, or 1.3%, for the week so far. Comex May silver was up 25 cents, or 1.6%, for the first four days of the week at $15.45.
During that same time span, the NYSE Arca Gold Bugs index (HUI) was up 6.8412 points, or 4%, to 178.2414. The Market Vectors Gold Miners exchange-traded fund (GDX), which consists of stocks of gold-mining companies, rose 51 cents, or 2.6%, to $19.97 per share.
Of the major producers, Kinross (NYSE: KGC) was one of the biggest winners as the company got favorable analyst reviews after saying it will go ahead with the phase-one expansion of the Tasiast mine in Mauritania. Shares were up 38 cents, or 13%.
Kinross officials said the phase-one expansion is expected to increase the mine’s annual production by 87% and reduce the production cost of sales per ounce by 48%. The company estimated capital expenditures of some $300 million, which will be self financed. The company also released results of a prefeasibility study on a second phase of expansion.
“We view KGC's phase-one plan and decision to execute on Tasiast positively. KGC offers high leverage to the gold price and improving margins due to currency tailwinds,” said Credit Suisse.
CIBC said that with Kinross having total liquidity of $2.2 billion between cash and the available revolving credit facility, the company could fund the first and second phases of expansion “within the constraints of the current balance sheet at prevailing metal prices.”
Elsewhere, Excellon Resources Inc. (TSX: EXN) added 14 cents, or 30%. The company announced a C$3 million investment by Eric Sprott, with proceeds to go toward implementation of an optimization plan at the Platosa mine and for general corporate purposes.
Arizona Mining (TSX: AZ), a mineral exploration and development company looking to develop its Hermosa project in Arizona, climbed 15 cents, or 22%. Compania de Minas Buenaventura (NYSE: BVN) was up 89 cents, or 14%.
Torex Gold Resources Inc. (TSX: TXG) gained 20 cents, or 12%. The company reported that commercial production has been achieved at the El Limon-Guajes mine In Mexico ahead of schedule and under budget. The plant is “advancing steadily” toward full-production capability and has exceeded year-to-date expectations, with output of 38,161 ounces as of Wednesday, Torex said.
BMO Capital Markets characterized the news as “positive” and rated Torex “outperform,” adding that analysts are removing the “speculative” designation from its rating.
Two of the bigger declines were copper companies during a four-day period when Comex May copper lost 5.5 cents, or 2.5%, to $2.1830 a pound. Copper Mountain Mining Corp. (TSX: CUM) shed 7 cents, or 12%.Imperials Metals Corp. (TSX: III), which reported an adjusted loss for 2015, fell 39 cents, or 9%.
Two companies that are merging, Tahoe Resources Inc. (TSX: THO) and Lake Shore Gold Corp. (TSX: LSG), both lost 6%, with Tahoe shedding 77 cents and Lake Shore 11 cents. Shareholders of the two companies Thursday approved a previously announced all-stock acquisition in which Tahoe will take over Lake Shore Gold.
Silver Wheaton Corp. (NYSE: SLW) lost 65 cents, or 4%. Shares lost more than $1 Thursday alone and gapped lower on a daily price chart after the company announced a bought-deal-financing offering of 33,135,000 shares at $16.60 per share. This will result in gross proceeds to Silver Wheaton of approximately $550 million. “The net proceeds of the offering will be used to repay a portion of the debt that was drawn on the company's $2 billion revolving credit facility in November 2015 for the $900 million purchase of the silver stream on the Antamina mine in Peru,” Silver Wheaton said.
By Allen Sykora of Kitco News; firstname.lastname@example.org