US stocks slip, Dec. 11-17

U.S. equities closed lower, despite receiving a boost after the Federal Reserve raised interest rates. The Dow Jones Industrial Average fell 0.5% to 17,495.84, while the S&P 500 Index lost 0.5% to close at 2,041.89. The Nasdaq dipped 0.8% to 5,002.55.

Almaden Minerals shares were still on the rise, after releasing a positive preliminary economic assessment (PEA) on its Ixtaca gold-silver project in Mexico on Dec. 9. Its shares gained 8.4% to close at US58¢. The study, including the benefits of the recent mill purchase, envisions Ixtaca as a 7,000-tonne-per-day operation, with a 13-year mine life. The throughput is similar to the 2014 PEA’s alternative scenario that envisioned Ixtaca has a small mine, before ramping up to 30,000 daily tonnes in year six. Of note, the initial capital has dropped from US$244 million to US$100.2 million, improving the project’s economics. Assuming a US$1,150 per oz. gold price, the after-tax net present value at a 5% discount rate is US$166 million, with a 30% internal rate of return. Annual production should average 55,660 oz. gold and 3.6 million oz. silver, at operating costs of US$684 per equivalent oz. gold.

Cliffs Natural Resources sank 30.5% to US$1.59 per share, after Champion Iron Mines opted to buy the Bloom Lake iron ore mine in the Labrador Trough for $10.5 million — compared to the wallet-busting  $4.9 billion Cliffs paid for it when it acquired Consolidated Thompson Iron Mines in 2011. As part of the deal — expected to close in early 2016 — Champion will also receive related rail and mineral assets in Quebec.

Hudbay Minerals fell 20% to US$3.36 per share, on no new corporate news. On Dec. 4, it announced president and CEO David Garofalo would resign so he could become president and CEO at Goldcorp. Hudbay appointed Alan Hair as Garofalo’s replacement, effective Jan. 1, 2016. Hair hosted an investor and analyst luncheon and Q&A session on Dec. 11. The company notes its balance sheet is tight after building the large Constancia mine in Peru, BMO analyst Aleksandra Bukacheva writes in a note. “The Rosemont project is unlikely to go ahead if copper prices stay at or below US$2 per lb.,” she adds, noting Hudbay believes market condition will improve towards 2019.