U.S. markets wind down before Christmas

U.S. markets felt the chill in the air during the week before Christmas. The Dow Jones Industrial Average edged up 81.59 points or 0.72% to finish at 11,491.91, while the S&P 500 rose 3.51 points or 0.28% to 1,243.91. Fifteen companies reached new 52-week highs on the New York Stock Exchange (down from 27 the previous week). Most were base metal, iron ore, uranium and potash companies.

Cliffs Natural Resources touched a new 52-week high (US$77.57 per share) before ending the Dec.13-17 trading week at US$76.10, a gain of US$1.77. Cliffs has successfully concluded arbitration proceedings with Essar Steel Algoma and a binding decision by the American Arbitration Association has redefined world prices for blast furnace pellets, a factor used in determining annual price increases or decreases under Cliffs’ supply agreement with Essar Steel Algoma. The redefinition entitles Cliffs to use an increase in excess of 95% over 2009 prices for seaborne blast furnace pellets in the supply agreement’s pricing formula. Cliffs anticipates collecting a cash payment from Essar Steel Algoma for the portion of revenue from 2010 pellet sales that were disputed in the arbitration.

Shares of Ivanhoe Mines were up 70¢ to US$24.64 on news the company had approved a US$2.3 billion capital budget in 2011 for construction at the Oyu Tolgoi copper-gold mining complex in Mongolia. Work includes measures to facilitate future expansion of production capacity to up to 160,000 tonnes per day from an initial 100,000 tonnes per day. Initial production is expected in 2012 with first sales of copper and gold in concentrate anticipated in the fourth quarter of 2012. About 13% of the construction work has been completed.

Fronteer Gold climbed US$1.00 to US$11.57 per share on news that a wholly owned subsidiary, Aurora Energy Resources, was selling its uranium assets in Newfoundland and Labrador to Paladin Energy in an all-share deal worth $260.9 million. Paladin will acquire 100% of the Aurora deposits by issuing 52.1 million of its shares to Fronteer, making Fronteer Paladin’s largest shareholder with a 6.7% stake. The deal values Aurora’s resources at US$1.90 per pound of U308 in the ground.

The Philadelphia Gold and Silver index dropped 4.44 points or 1.99% while gold ended the week at US$1,375.50 per oz. Agnico-Eagle Mines dropped US$7.27 to US$75.66 per share and Buenaventura lost US$2.62 to close at US$47.36. Silver companies weren’t spared despite the surge in silver prices. Silver Wheaton slid US$1.81 to US$36.70 and Silver Standard Resources fell US$1.75 to US$26.31.