US stocks slide, Feb. 8-12

U.S. equities rallied on Feb. 12, ending five days of losses in the S&P 500 Index, but not enough to post a weekly gain. The S&P 500 lost 0.8% to finish at 1,864.78. The Dow Jones Industrial Average fell 1.4% to 15,973.84 and the tech-heavy Nasdaq Composite Index retreated 0.5% to 4,337.51. The spot gold price rose 5.5%, or US$64.40 per oz., to US$1,237.90. The Philadelphia Gold & Silver Index, which tracks precious metal mining companies, climbed 9.6% to 60.64. The March contract for crude oil gained US$3.23 the day earlier to close Feb. 12 at US$29.44 per barrel — down 4.6% for the week.

Coeur Mining surged 30.6% to US$3.33 after reporting its 2015 financials. The loss for the year was US$367.2 million, including a US$313-million writedown, compared to 2014’s US$1.2-billion loss. The non-cash writedown reflects the reduced carrying values of the Palmarejo and San Bartolomé mines and the Endeavour silver stream, due to lower gold and silver prices. The adjusted loss was US$96.6 million, or US75¢ per share, down 13% from 2014. Annual revenue came in relatively flat at US$646 million. Raymond James analyst Chris Thompson sees 2015–16 as a “transitional period” for the company, as it “retools its operations to operate more economically in a low metal-price environment.” He has a US$4 target and “market perform” rating, explaining that the rating reflects Coeur’s “inability to generate free cash flow” at current metal prices. However, he says the producer could deliver free cash flow later this year, as its royalty payments drop.

Franco-Nevada advanced US$4.34 per share to US$54.40, after agreeing to pay Glencore US$500 million for a gold-silver stream on the Antapaccay copper mine in Peru. Under the agreement, Franco-Nevada will receive 300 oz. gold and 4,700 oz. silver for every 1,000 tonnes of copper shipped, until Glencore delivers 630,000 oz. gold and 10 million oz. silver. After this Franco-Nevada will get 30% of Antapaccay’s gold and silver production. It will pay 20% of the gold and silver spot prices for the first 750,000 oz. gold and 12.8 million oz. silver delivered, and 30% of the spot prices afterwards. To fund the stream, Franco-Nevada announced a US$550-million bought deal, which it increased to US$800 million a day later.