Higher oil and gold lift TSX, Oct. 2-8

Stocks gained ground as higher oil prices lifted the energy-heavy Toronto Stock Exchange, while the prospects of an interest rate increase in the U.S. receded further into the background. Brent crude futures posted four straight closes above US$50 per barrel last week, while the U.S. Federal Reserve released minutes from its September meeting, during which the central bank said it would wait to see how slowing global economic growth might impact the U.S. economy. The S&P/TSX Composite Index jumped 5.6% to 13,978.66, while the S&P/TSX Capped Diversified Metals & Mining Index surged 40% to 487.74, and the S&P/TSX Global Mining Index advanced 15.5% to 54.19. Gold rose 2.3% — or US$25.50 per oz. to finish at US$1,139 per oz. — lifting the S&P/TSX Global Gold Index by 12.6% to 135.20.

Shares of First Quantum Minerals jumped 75% to $8.56, and were the most traded after the company announced its actions to combat low commodity prices. After a detailed review and reappraisal of capital costs at its Cobre Panama project, First Quantum estimates total project costs of US$5.95 billion, down 7% from its previous estimates, with potential for improvements. The lower estimate was due to “better construction efficiency, continued optimization of detailed design and lower costs for equipment and bulk materials, such as rebar and structured steel,” the company said, as well as better clarity on costs now that the project is 35% complete. First Quantum said the remaining costs to completion will be met by another contribution from partner KPMG of US$666 million, US$1 billion payable from Franco-Nevada under a recent stream agreement and US$1.7 billion from First Quantum.

Other planned capital programs across the company have been “reduced or rephased” by US$700 million. Among other measures, it has hedged 170,000 tonnes of copper production at US$2.41 per lb. over the rest of 2015 and well into 2016, cut the workforce by 644 and reduced salaries by up to 20%. It has also committed to reduce net debt by over US$ 1 billion by the end of the first quarter of 2016 “through a combination of asset sales and other strategic initiatives.”

Copper Mountain Mining surged 58% to 61¢. The company reported that its Copper Mountain copper mine in southern B.C. near Princeton produced 20.4 million lb. copper in the third quarter of 2015. Concentrate shipped during the quarter contained 21.9 million lb. copper, plus gold and silver, and generated an estimated US$60 million in gross revenue.

In the third quarter the mill achieved an average record throughput of 37,400 tonnes per day for a 22% increase over the comparative period of 2014.

The ore grade averaged 0.4% copper for the quarter.

In addition, the company received approval during the quarter for various amendments to its permits, such as including the Virginia Pit in the mine plan, which has a higher-than-average head grade.