US markets fall, August 16-20

The Dow Jones Industrial Average fell 395.3 points or 1.11% to 35,120.08 and the S&P 500 lost 26.33 points or 0.59% to finish the trading week at 4,441.67. Spot gold climbed US$1.00 per oz. to US$1,780.70 per ounce.

Franco-Nevada dropped US$13.54 per share to US$141.34 share on no corporate news. The gold-focused royalty and streaming company reported second-quarter results on August 11.  The company sold 166,856 gold-equivalent oz. in the second quarter, up 59.9% from the 104,330 GEOs sold in the second quarter of 2020. Net income in the second quarter reached US$175.3 million or US92¢ per share, up 86% year-on-year, on revenues of US$347.1 million, up 78% year-on-year. The company generated US$245.2 million in operating cash flow for the quarter. It ended the quarter on June 30 with no debt, US$1.4 billion in available capital, and declared a quarterly dividend of US30¢ per share. Franco-Nevada said its strong financial results mean that it now anticipates gold-equivalent sales in 2021 will be near the higher end of its previously announced guidance and revised the GEOs sold guidance range to 590,000 to 615,000 GEOs. Higher commodity prices, it said, will also lead to greater energy revenue. Its energy revenue guidance is now expected to range from US$155 million to US$170 million, an increase from the prior range of US$115 million to US$135 million.

HudBay Minerals fell 19% to US$5.38 per share. The company reported that gold production started at its New Britannia mill in Snow Lake, Manitoba, on August 11. The company is completing construction of a new copper flotation facility at New Britannia, which remains on track for commissioning and ramp-up in the fourth quarter of this year. Annual gold production from its Lalor and Snow Lake operations are expected to increase to over 180,000 oz. during the first six full years of New Britannia’s operation at an average cash cost and sustaining cash cost, net of by-product credits, of US$412 and US$788 per oz. gold, respectively.

Yamana Gold fell US17¢ to US$4.20 per share. Yamana announced that it has repurchased an initial 1.74 million common shares outstanding for about $10 million under the company’s normal course issuer bid as part of its share repurchase program for up to 5% of its outstanding shares. The company noted that it has not set any formulae or price ranges for its share repurchase program because it “plans to be selective and opportunistic” and intends to enter the market “when permitted and at times when the trading range of its shares do not reflect the underlying value.” Yamana also noted that its share repurchase program is part of its capital returns program, “which also includes cash returns through the company’s dividends, which have cumulatively increased by 500% since the second quarter of 2019.” The company has five operating mines (Canadian Malartic in Quebec, Cerro Moro in Argentina, El Penon and Minera Florida in Chile, and Jacobina), and a number of development projects, including the Jacobina Phase 2 expansion; the Wasamc project in Quebec; the Odyssey underground project at Canadian Malartic) and the MARA project in Argentina.