U.S. markets move higher, June 11-15

U.S. factory output contracted in May for the second time in three months and consumer prices fell 0.3 percent, but news late in the week that major central banks were prepared to take collective action to provide liquidity and prevent a credit squeeze should elections in Greece trigger bedlam in financial markets, lifted U.S. equities. The Dow Jones Industrial Index climbed 212.97 or 1.70% to 12,767.17, while the S&P 500 advanced 17.18 points or 1.30% to 1,342.84. The Philadelphia Gold and Silver index rose 1.99 points or 1.23% to 164.09.

Randgold Resources topped the list of value gains with an increase of US$5.11 to US$92.70 per share on no news, while Agrium claimed the second-largest advance with a jump of US$2.68 to US$82.17 per share. The Calgary-based company announced that it expects its first-half earnings will be near or at the top end of its previously released guidance range of US$5.50 to US$6.10 diluted earnings per share on continuing operations. Agrium said the positive guidance was based on compelling fundamentals including strong global grain prices and a balanced-to-tight international nutrient supply-demand situation.

Shares of Cameco jumped US$1.44 to close at US$20.67 on news that it had closed its $150 million agreement with AREVA Resources to buy its 27.94% stake in the Millennium uranium project. The deal increases Cameco’s interest in the project in the Athabasca Basin to 69.9%. The remaining 30.1% stake is owned by JCU (Canada) Exploration Company. Millennium is a proposed uranium mine with indicated resources of 50.9 million pounds of U3O8 (507,800 tonnes with an average grade of 4.55%) and 16.7 million pounds of U3O8 (297,800 tonnes with an average grade of 2.54%). Under the agreement, AREVA receives a 4% royalty on revenue from 27.94% of any production that exceeds 63 million pounds U3O8 from the project.

Royal Gold was down US$1.62 to US$77.49 on news that it had priced an underwritten public offering of $325 million of convertible senior notes due 2019 and has granted the underwriters a 30-day over-allotment option to purchase additional notes worth up to $45 million. The initial conversion price (about US$105.31 per share) represents a premium of 35% to the US$78.01 per share closing price of Royal Gold’s common stock on the NASDAQ Global Select Market on June 14. The company plans to use the net proceeds to repay its term loan facility and for general corporate purposes, including future acquisitions.