TSX slips, March 4-8: Serabi, Euro Sun and North American Palladium

Canada’s benchmark index fell 0.44% to 15,996.21 to start March 2019 after a strong February. The S&P/TSX Global Mining Index rose 0.43% to 73.60, and the S&P/TSX Global Gold Index rose 3.7% to 195.25. The gold price rose 0.37% to US$1,297.70.

Shares of Serabi Gold rose 32.1% to 80¢. In early March 2019, the company boosted the mineral resource for its Coringa gold project in Brazil 37% to 845,000 indicated tonnes grading 7.95 grams gold for 216,000 oz. gold, and 1.4 million inferred tonnes at 6.46 grams gold for 298,000 oz. gold. Coringa’s indicated resource grade fell 5%, while its inferred resource grade increased 50%.

The updated mineral resource includes seven of nine known gold-bearing zones at Coringa. The company has done more  drilling beyond this resource that will feature in a preliminary economic assessment for Coringa it aims to release by the end of June 2019. 

The company produced 3,671 oz. gold in January 2019 at its Palito and Sao Chico gold mines in Brazil. It expects to produce as much as 44,000 oz. gold in 2019. It ended January with US$12.8 million in cash.

Shares of Euro Sun Mining rose 14.9% to 27¢. In February 2019 the company tabled a positive preliminary economic assessment for its Rovina Valley gold and copper project in west-central Romania. The study contemplates the proposed Colnic open pit, which would be the first stage of development at Rovina. The study does not include a potential open pit at the project’s Rovina gold-copper deposit or underground operation at its Ciresata gold-copper deposit, but does include processing facilities that will help treat both deposits.

According to the study, Colnic could produce 139,000 equivalent oz. gold per year over 12 years, at a processing rate of 20,000 tonnes per day. The project would average US$752 per equivalent oz. gold all-in sustaining costs, and require a US$352-million initial capital expense. The project would have a US$168.8-million after tax net present value at a 5% discount rate and a 13.5% after tax internal rate of return at a US$1,325 per oz. gold price, and a US$3.10 per lb. copper price. The company intends to do a private placement for up to $3 million.

Shares of North American Palladium fell $9.10 to $15.88, after spiking as high as $26.30 in March 2019. Shares of the company had traded below $16 per share before Feb. 14, 2019, when the company announced it ended 2018 with $167.8 million in earnings before interest, taxes, depreciation and amortization — more than double the $86.2 million it earned the year before. The company’s net income for 2018’s fourth quarter was $77.5 million, which is up from $14.3 million the year before. Its net income rose from $36.1 million in 2017 to $119.2 million in 2018. It lowered its net debt from $74.5 million in December 2017 to $36.8 million in December 2018.