TSX Flat as Junior Gold Miners Offset Weak U.S. Data

By CanadianMiningReport.com Staff Writer / October 03, 2019 / Article Link

Canada's main stock index was flat on Thursday, as gains in gold stocks offset early weakness following poor readings on U.S. services sector activity.

This marks a continued trend for gold (GC00), which has been performing well since late February with a modest but stable 0.25% increase. At 11:14 a.m. ET (1514 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 15.11 points, or 0.09%, at 16,326.08.

These results were largely attributed to the performance of several junior gold miners. Namely GSPTTMT jumped, with shares in Torex Gold Resources TXG.TO , Yamana Gold Inc YRI.TO and Barrick Gold ABX.TO rising between 3% and 5%, as the safe-haven appeal of the metal got a boost in the wake of the data.

Recent results are an indication that despite a cooling off period, gold is still worth owning and gold miners are coming out strong amidst a broader slowdown of Canada’s economic growth. Mining news from Kinross Gold Corp K.TO are a testaments to that with the company announcing a new development project in Russia in the midst of Western sanctions tightening against the former Soviet country.

The Toronto-based miner in July acquired the undeveloped Chulbatkan asset from closely held N-Mining for $283 million in cash and shares. The acquisition will add 3.9 million indicated ounces of gold to Kinross' books, once the formal review by the Russian anti-monopoly body has been completed.

The Russia asset has a six-year mine life with an initial development cost projected to be $500 million, Kinross said. But production will be delayed for at least five years, and some analysts said the company will need to show sizeable finds during exploration to make it add value.

Buoyed by gold's XAU= rally above $1,500 per ounce, investors have pushed Kinross shares up by a third since the deal was announced, versus a 7% rise in the VanEck Vectors Gold Miners exchange-traded fund GDX .

Consistent project delivery and disciplined operational execution was observed across the board in Canadian companies during the first week of October. Newmont Goldcorp Corporation (NYSE:NEM) has announced that the Borden mine near Chapleau, Ontario has achieved commercial production. Alcoa Corporation (NYSE:AA) received certification from the Aluminium Stewardship Initiative (ASI) for its Baie-Comeau aluminum smelter in Quebec, Canada. Trecora Resources (NYSE:TREC) announced entering into a definitive share sale and purchase agreement with shareholders of Saudi Arabian closed joint stock company, Al Masane Al Kobra Mining Company,

All in all, the TSX posted five new 52-week highs and one new low. The most heavily traded shares by volume were New Gold Inc NGD.TO , Encana Corp ECA.TO and Yamana Gold Inc YRI.TO.