US markets down, gold up, Aug. 5-9: Franco-Nevada; Kirkland Lake; Pretium

President Trump’s declaration on Aug. 1 that he would impose a 10% tariff on a further US$300 billion of Chinese imports to the U.S. starting on Sept. 1, and his subsequent description of China as a “currency manipulator,” hammered markets and sent gold prices soaring over US$1,500 per ounce. New York spot gold closed at US$1,496.20 per oz., up US$56.20 per oz., or 3.90%, while the Dow Jones Industrial Average fell 0.75% to 26,287.44, and the S&P 500 Index dropped 0.46% to 2,918.65.

Franco-Nevada climbed US$4.20 to US$93.74 per share on strong second-quarter results. The company reported net income and adjusted net income of US$64 million, or US34¢ per share, on revenues of US$170.5 million. Revenue in the quarter was sourced 83.8% from gold and gold equivalents (62.2% gold, 9.7% silver, 8.6% platinum group metals and 3.3% other mining assets), and 16.2% from energy. Franco-Nevada received its first gold and silver stream ounces from the Cobre Panama mine in early July. In late July, the company acquired a 1% overriding royalty interest on 1,416.4 sq. km in Marcellus for US$300 million. The royalty applies to existing production and future development from the Marcellus formation, as well as future development from the Utica and Upper Devonian formations. With the addition of Cobre Panama, Franco-Nevada forecasts deliveries of gold-equivalent ounces (GEOs) at the higher end of its previously announced 2019 guidance of 465,000 and 500,000 GEOs. The new Marcellus royalty is expected to lift revenues from its energy group up to US$115 million, versus previous guidance of US$85 million.

Shares of Kirkland Lake Gold rose US$1.96 to US$46.03. The company reported adjusted net earnings of US$105.5 million, or US50¢ per basic share, which is 66% higher than the comparable second quarter of 2018. Revenues were up 31% to US$281.3 million, compared to the year-earlier quarter’s US$214.7 million. The company produced 214,593 oz. gold for a 30% increase year-on-year.

Pretium Resources’ shares rose US$1.31 to US$12.92. The company’s Brucejack mine delivered another profitable quarter in the three months ended June 30, producing 90,761 oz. gold for adjusted earnings of US$17 million, or US9¢ per share on revenues of US$113.2 million. Pretium eliminated US$65 million of debt in the first six months of 2019. TNM