Mining Stocks Rise With Precious Metals; Investors Reward Producers Meeting Output Guidance
San Francisco (Oct 16) Shares of gold- and silver-mining stocks rose during the first four days of this week along with the prices of the metals themselves, with some of the biggest winners also reporting third-quarter production results showing they are on track to meet guidance for the full year.
As of Thursday’s official close, Comex December gold futures settled at $1,187.50 an ounce, a gain for the week of $31.60, or 2.7%. December silver settled at $16.164, a gain of 34.6 cents, or 2.2%.
Higher prices for metals portend stronger earnings for companies, of course, since they will generate more revenues for the same amount of mined commodities.
During that same time span, the NYSE Arca Gold Bugs index (HUI) was up 5.0815 points, or 3.8%, to 138.4414. The Market Vectors Gold Miners exchange-traded fund (GDX), which consists of stocks of gold-mining companies, rose 63 cents to $16.89, which was a gain of 3.9%.
Great Panther Silver Ltd. (NYSE MKT: GPL) was among the biggest winners for the week, jumping roughly 9 cents, or 17%, after reporting strong production. Output at its two Mexican silver-mining operations totaled 1,080,296 silver-equivalent ounces, up 21% compared to the third quarter of 2014. Metal production to date in 2015 exceeds 3.1 million silver-equivalent ounces and production for the year is expected to exceed the annual guidance, which was increased last quarter to 3.8 million to 3.9 million ounces, Great Panther said.
"Great Panther's third quarter continued this year's trend of delivering strong operational performance at the Guanajuato Mine Complex and the Topia Mine,” said Robert Archer, president and chief executive officer.
Shares of Great Panther Silver rise as company reports strong third-quarter output
Endeavour Mining Corp. (TSX: EDV) surged 10 cents, or 16%. The company this week reported gold production of 124,893 ounces during the third quarter and output for the first nine months of the year totaling 379,802 ounces. BMO Capital Markets described the report as positive.
"Group production from the mines continues to be at the high end of production guidance,” says Neil Woodyer, chief executive officer of Endeavour. “AISC (all in sustaining costs) per ounce will be reported in the Q3 2015 financial results to be released in November, and it is expected that AISC will continue to be below our full-year $930 to $980 guidance range."
OceanaGold Corp. (TSX: OGC) jumped 28 cents, or 12%. The company’s big news this year was the acquisition of Romarco Minerals Inc. and its Haile flagship Gold Mine in South Carolina. This week, OceanaGold also reported that it has received approval from New Zealand's Overseas Investment Office for the acquisition of the Waihi operation from Newmont Mining Corp., with the closing expected on Oct. 30. "The Waihi operation represents a strong strategic fit with our existing business and we are excited to welcome this high-quality asset and its talented team into OceanaGold,” said Mick Wilkes, OceanaGold's managing director and chief executive officer.
Fortuna Silver Mines (TSX: FVI) climbed 38 cents, or 11%. Fortuna is another of the many companies reporting third-quarter production over the last week, saying output remains on track to meet 2015 guidance. The company listed third-quarter production from its two mines in Latin America, the San Jose Mine in Mexico and the Caylloma Mine in Peru, of 1.7 million ounces of silver and 10,963 ounces of gold.
Silver Standard Resources Inc. (NASDAQ: SSRI) added 73 cents, or 11%. As last week wound down, the company reported as-expected gold production and a quarter-on-quarter rise in silver output for the period from July to September. The Marigold mine produced 41,262 ounces of gold in the third quarter, and the company said the mine is on track to meet increased 2015 production guidance of between 195,000 and 205,000 ounces of gold. Further, an increase in both tonnes and grade of ore stacked on the leach pads is expected to result in increased gold production in the fourth quarter, Silver Standard said. Meanwhile, the Pirquitas mine produced 2.6 million ounces of silver during the third quarter and is on track to meet its increased 2015 silver production guidance of between 9.5 million and 10.5 million ounces, which would result in a record annual silver production for the mine, Silver Standard reported.
Sibanye Gold Ltd. (NYSE: SBGL) surged 69 cents, or 10%, jumping for the second straight week. Last week, for the second time in two months, Sibanye announced a major deal in the platinum sector, agreeing to buy Aquarius Platinum Ltd. for $294 million, contingent on factors such as Aquarius’ shareholder approval. Last month, Sibanye struck a deal to buy Anglo American Platinum’s Rustenburg mine, which is the world’s largest platinum mine.
One company that announced a new chief executive officer this week, Centerra Gold Inc. (TSX: CG), added 19 cents, or 2%. Centerra reported that industry veteran Scott Perry will become chief executive officer on Nov. 1, succeeding Ian Atkinson. Centerra announced back in March that Atkinson would retire by year-end.
Meanwhile, one of the companies that was the biggest winner a week ago saw one of the bigger declines in its share prices this week. First Quantum Minerals Ltd. (TSX: FM) lost 81 cents, or 9.4%. Prices apparently corrected after a four-day rise of more than 60% last week after First Quantum announced a number of financial-stability measures that were well received by the market.