Earnings from the major metals producers combined with a sprinkling of exploration results from the juniors made the last week in July an interesting one for investors in the Canadian markets. The TSX Venture Exchange, home of Canada’s most junior resource companies, ended the week above the 1,800 level for the first time since April, up nearly 2% on the week.
It was a rough trading week for shareholders of Radius Gold after the Simon Ridgway-led company tabled the initial drill results from the Natividad gold project in Nicaragua. With results in for 33 of the 43 holes punched by joint venture partner Meridian Gold, the property lost some of its much-touted luster. Based on the results it looks like two zones of more than 5 grams gold per tonne could develop, namely Pavon Norte and Ahumada. However, the size and overall grades of these shoots had investors selling. Radius ended the week at C$0.86, down C$0.61 on heavy volume.
Trading in little-known Mindoro Resources was fast and furious on no reported news. The long time Philippine copper-gold explorer surged as high as C$0.57, before settling down to C$0.43, up C$0.10 on the week. Over 9 million shares changed hands. Is there news pending? Or is some promoter playing games? We’ll have to wait and see.
In a case of what goes up must come down, Mustang Minerals once again failed to live up to investors’ high expectations for its M2 zone on the Maskwa/Mayville nickel-copper project in Manitoba. The company had investors frothing at the mouth based on the visual estimates of drill core. But then the assay results came out. While it appears clear that the junior has discovered a significant body of mineralization, the latest results of up to 79 metres grading 0.28% nickel and 0.72% copper were simply not enough. Mustang ended the week at C$0.88, down another C$0.30 and well off its C$1.58 high hit in early July.
Skygold Ventures gained momentum as drilling should be resuming any day now on its Spanish Mountain property in the Cariboo district of British Columbia. The project has produced some excellent intercepts over the years but no one could make the mineralization hang together. But step out holes by Skygold in their last round of drilling cut broad zones of 1-to-1.5 grams gold per tonne material that makes it look like they may be onto something. There is nothing like a good British Columbia drill play to get the speculative juices flowing. The last one I remember was Imperial Metals back in late 2003, when a discovery drove the company’s shares from under C$1 to over C$7 in a matter of months. Skygold ended the week at C$0.62, up C$0.21 on the week.
On the uranium earnings front, Cameco’s profit was impacted by power outages and operational costs at its Bruce power facility in Ontario. This marks the second quarter in a row where Bruce hurt earnings for the world’s largest publicly-traded uranium company. Cameco closed out the week at C$57.49, down C$2.51.
Barrick Gold cashed in on higher gold prices in the second quarter by selling its production into the spot market. The end result was a 56 percent jump in profits to $53 million, or 10 cents a share. But the hedge book remained basically unchanged at 6.6 million ounces, down only 200,000 ounces on the quarter. Barrick poured 1.16 million ounces of gold in the quarter, a drop from the 1.28 million ounces tallied a year earlier and cash costs rose 12 percent to $243 per ounce. Overall investors could care less as Barrick shares ended the week at C$30, down C$0.17 on the week.
Placer Dome on the other hand faced a sea of red in the second quarter. Canada’s second-largest gold miner tabled a loss of $7 million, or 1 cent a share. Adding insult to injury, Placer also increased its gold cash costs per ounce to around $275 and its total cash costs per ounce to about $345. Placer ended the week down C$1.49 to C$17.
Speaking of higher operational costs, Redcorp Ventures, after years of struggle with governmental red tape (since 1998) has been informed that Fisheries & Oceans Canada and Transport Canada have recorded their decision that Redcorp’s wholly-owned Tulsequah base metal project is unlikely to result in any significant adverse environmental effects. Accordingly the project is cleared to proceed. News sent shares of Redcorp up 100% to C$0.24 by the close. Unfortunately, in May, the company suspended a Feasibility Study update of the project due to higher-than-anticipated estimates of capital and operating costs. The company is now looking at ways to trim costs.
Economic data coming out of both Canada and the U.S. looks solid so more interest rate hikes appear to be on the horizon. Investors will be considering the potential impacts of this on metals prices and determining which companies can curb the rising cost of their operations. We’ll see what impact this has during the coming week.
Interested in gold? Check out Eurasian Minerals and their projects in Serbia, Turkey and the Kyrgyz Republic.