Global uncertainty weighs on TSX, March 10-14

China’s first corporate bond default and fears of a slowdown in the Chinese economy and concern over the crisis in the Ukraine ahead of a referendum in Crimea combined to send the S&P/TSX Composite Index down 0.50% to 14,227.66 and the S&P/TSX Capped Diversified Metals & Mining Index down 7.92% to 762.60. The global uncertainties pushed the gold price up 3% to end the week at US$1,382 per oz.

Carpathian Gold was the most actively traded of the week with 30.7 million shares changing hands. Carpathian’s shares fell from 6¢ to 3¢ after the company announced that it could not file its audited financial statements for the year ended Dec. 31, 2013, because it had “identified possible irregularities associated with a third-party service provider that formerly provided services to the company’s Brazilian operations.” Carpathian said it needed more time to investigate the irregularities before it could audit its financial statements. Carpathian also announced that delays in starting up its Riacho dos Machados gold mine in Brazil and the resultant delays in cash flow had increased the company’s debt to Macquarie Bank to US$141.2 million, and that management “continues to pursue strategic initiatives” that include “various potential restructuring alternatives and the potential sale of the corporation or some of its assets.” The company also informed shareholders that it is recommissioning the processing plant at Riacho dos Machados, after its provisional operating licence was reinstated in February. 

B2Gold was the second most actively traded stock of the week with 23.1 million shares changing hands. The company ended the week 14¢ higher at $3.43 per share. Fourth-quarter results released March 14 showed net income of US$26.2 million, or 4¢ per share, and record quarterly production of 105,577 oz. gold, in a 138% increase over the fourth quarter of 2012. Consolidated cash-operating costs came in at US$638 per oz. gold. The company ended 2013 with US$252.7 million in cash and equivalents. B2Gold also released results of a preliminary economic assessment on its 49%-owned Gramalote project in Colombia. Despite a positive net present value and internal rate of return, B2Gold said that it would not move forward on a feasibility study for the large capital project at current gold prices. AngloGold Ashanti holds the remaining 51% stake in the project.  

Goldcorp was the fourth most actively traded with 13.6 million shares changing hands, and its shares finished the week $2.26 higher at $31.84 per share. The company announced at the beginning of the week that it was extending its offer to acquire Osisko Mining until March 21. Goldcorp offered 0.146 of a share and $2.26 in cash for each Osisko share, but the junior has recommended that its shareholders reject the offer.

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