US markets little changed, June 11-15

The prospect of a wider trade war between China and the U.S. escalated during the trading week, as the Trump administration said it would impose a 25% tariff on up to US$50 billion in Chinese goods, and China responded with retaliatory tariffs of its own on $50 billion in U.S. imports. In other news, the U.S. Federal Reserve raised interest rates for the second time in 2018 (up 25 basis points to 2%), and said it planned to raise rates two more times before year-end. Spot gold fell 1.6% to US$1,278.20 per oz. gold. The Dow Jones Industrial Average lost 0.89% to 25,090.48, and the S&P 500 Index rose 0.02% to 2,779.66.

Shares of Kinross Gold were up US14¢ to US$3.72. Kinross is proceeding with the Gilmore expansion project at its Fort Knox mine in Alaska. The Gilmore project could extend mining at Fort Knox six years to 2027, and leaching to 2030, at an initial US$100-million capital expense, and boost life-of-mine production by 1.5 million equivalent oz. gold. The project would generate a 17% internal rate of return and has a US$130-million net present value at a price of US$1,200 per oz. gold.

Endeavour Silver’s shares rose US39¢ to US$3.20. The company is launching an at-the-market offering of up to US$35.7 million. Net proceeds will be used with the company’s cash resources and free cash flow to advance the company’s Terronera project. Described as “potentially Endeavour’s fifth and largest mine,” Terronera is located in San Sebastian, a historic silver mining district in Mexico, 40 km northeast of Puerto Vallarta.

Vale was down US58¢ to US$13.17 per share. The Brazilian miner struck a financing deal with Wheaton Precious Metals and Cobalt 27 Capital Corporation. Vale will receive US$390 million in cash from Wheaton and US$300 million from Cobalt 27 for a combined 75% of future cobalt from underground mining at Voisey’s Bay (Wheaton will receive 42.4% and Cobalt 27, 32.6%). The two companies will also pay on average 20% of cobalt prices on delivery of the metal. The transaction will help fund 40% of the US$1.7 billion Vale will need to build the underground mine in northern Labrador.