TSX falls 2.5%, Jan. 5-9

Oil prices were down for a seventh straight week, dipping below US$50 per barrel, while Statistics Canada reported job losses for the second month in a row. The unemployment rate in December remained unchanged at 6.6%, with full-time employment growing by 53,500 jobs and part-time jobs falling by 57,700. Reuters reported that Canada’s labour participation rate in December dropped to 65.9%, its lowest level since October 2001, while the Canadian dollar slid to US84.13¢, a level the news agency described as the weakest in more than five and a half years.

The benchmark S&P/TSX Composite Index fell 2.5%, or 368.73 points, to 14,384.92, while the S&P/TSX Capped Diversified Metals & Mining Index lost 3.1%, or 21.97 points, to finish at 685.86. The gold spot price climbed US$33.60 per oz., or 2.8%, to finish the trading week at US$1,223.40 per oz., and the S&P/TSX Global Gold Index advanced 9.9%, or 14.96 points, to 166.24.

Agrium topped the list of gainers, jumping $5.86 to $118 per share. The fertilizer giant announced on Jan. 6 that as part of its portfolio review it would sell its Niota and Meredosia storage and distribution facilities for US$50 million to subsidiaries of Trammo Inc. On Jan. 7, CIBC analyst Jacob Bout raised his price target on Agrium to $125 per share from $118 per share, saying the company is his top pick for 2015. Bout said he expects agriculture and fertilizer stocks to outperform natural resource stocks in general this year, “as agriculture fundamentals remain solid,” and said he expects Agrium “to outperform its peers” because “it has the best growth and margin improvement story of the global fertilizer industry.” The analyst also noted that the “major capex spend is behind Agrium” and forecast a free cash flow yield of 2% in 2015, followed by an 8% yield in 2016.

Argonaut Gold advanced 45% to $2.76 per share. The Toronto-based company released its guidance for 2015, saying it expects to produce between 135,000 and 145,000 equivalent oz. gold this year at a cash cost of US$700 to US$750 per oz. The company also reported that during the fourth quarter of 2014, it produced a record 44,312 equivalent oz. gold. Of that, 27,870 oz. were from its 100%-owned El Castillo mine in Durango, Mexico, and 16,442 oz. were produced at its La Colorada mine near the Mexican city of Hermosillo. For the full year, Argonaut produced 136,706 equivalent oz. gold.

Shares of Lupaka Gold leapt 89% to 17¢ on no company-related news. In mid-December the Vancouver-based junior reported that government officials in Peru had approved the permits and licences it requires to start mine preparation and development work at its Invicta gold project. The polymetallic deposit contains gold, copper, lead, silver and zinc. Lupaka intends to start production at an initial rate of 300 tonnes per day and initially target some of the highest grade gold and copper mineralization within the Atenea vein.