TSX continues decline, Dec. 8-12

Canada’s benchmark index fell during the trading week as investors fretted over plunging oil prices and weaker-than-expected economic data from China. The S&P/TSX Composite Index lost 742.65 points, or 5%, to end at 13,731.05. The S&P/TSX Global Gold Index stayed relatively flat at 146.32, while the S&P/TSX Capped Diversified Metals & Mining Index dropped 61.19 points to 622.54. The spot price for gold advanced US$28.70 to US$1,221.80 per oz. 

Australian-based copper player Mawson West rose 50% after finalizing a US$33.4-million financing and debt-restructuring package with Galena Asset Management. The transaction provides upfront funding of US$19.4 million and deferred funding of another US$14 million. Galena’s affiliate entity, Trafigura, will also defer US$19 million of repayments on an existing prepayment facility in return for a five-year extension on its copper concentrate offtake agreement with Mawson. 

The miner intends to use the proceeds for working capital to ramp up the Kapulo copper mine in the Democratic Republic of the Congo and bolster its balance sheet. Mawson ended the week at 5¢ with 47.2 million shares traded.  

B2Gold also saw heavy trading after reporting the first gold pour at Otjikoto, its second gold mine in Namibia, ahead of schedule. The Otjikoto mine should produce between 140,000 and 150,000 oz. gold in 2015 at all-in sustaining costs of US$700 per oz. After a mine expansion in late 2015, B2Gold expects production will increase to 200,000 oz. gold in 2016 and 2017. 

Raymond James analyst Chris Thompson describes Otjikoto as the company’s “major growth driver” pushing consolidated output to 530,000 oz. gold in 2015. “We continue to view B2Gold as an aggressive growth story supported by a robust development pipeline of low-cost production, which supports our ‘outperform’ rating,” Thompson notes. He has a $3.25 price target on the stock. B2Gold advanced 7¢ to $2.01, as 22.6 million shares changed hands. 

Yamana Gold is spinning out several of its non-core Brazilian assets into a wholly owned subsidiary next year. The new entity, Brio Gold, will receive a $10-million bridge loan from Yamana and hold the Fazenda Brasileiro and Pilar mines and the halted C1 Santa Luz project, as well as related exploration concessions. Gil Clausen, who was Augusta Resource’s CEO before its acquisition by Hudbay Minerals in September, will head up the subsidiary, as well as evaluate various alternatives for the unit. 

Yamana intends to sell all or a part of its Agua Rica copper-gold project in Argentina. Cowen and Co. analyst Adam Graf says Yamana will seek a joint-venture partner to take Agua Rica into production by 2021.

The stock moved up 6¢ to $4.55, and had 21 million shares traded.