Stockwatch Gold today
Gold Summary for Jan. 5, 2021
2021-01-05 18:29 ET - Market Summary
by Stockwatch Business Reporter
New York spot continued its 2021 rally, adding $8.30 to Monday's healthy gain, ending the day at $1,950.70. The TSX Venture Exchange continued its run, adding 10.81 points to 899.85, while the TSX gold index lost 3.96 points to 335.05. Canadian golds found investors harder to please today, although Pan American Silver Corp. (PAAS) did manage a 62-cent gain to $48.37 on 1.02 million shares.
Sean Boyd's Agnico Eagle Mines Ltd. (AEM) led the retreat, dropping $2.14 to $94.07 on 1.13 million shares, but news accounted for its move. The company is offering $2.20 per share for Jason Neal's TMAC Resources Inc. (TMR), the latest in a long line of Canadian gold companies looking to work the Hope Bay deposits in central Nunavut. That news, which sent TMAC's stock up 62 cents to $2.19 on 10.04 million shares, is enough to make TMAC's shareholders thank the Canadian government for rejecting, just before Christmas, a $1.75-per-share bid for their company by China-based Shandong Gold Mining Ltd.
Mr. Neal, TMAC's president and chief executive officer, was "very excited to welcome Agnico to Hope Bay," but relief may have been his guiding emotion. TMAC, a $20 stock just four years ago, dipped as low as 44 cents in the great mid-March swoon of 2020. The stock stabilized near $1.40, a perch from which not even the Shandong offer could blast it free. Mr. Neal's sigh of relief marks the end -- he hopes -- of the "uncertainty of a strategic review process" and the Canadian government review of the sale to Shandong.
The acquisition by Agnico "is a great outcome for all stakeholders," Mr. Neal warbled enthusiastically, although the holders with stakes in Agnico Eagle cawed otherwise, having deemed the $286.6-million, 66-per-cent-premium cash offer to be excessive. Mr. Boyd, Agnico's vice-chairman and CEO, was "very pleased to have the opportunity" to apply his company's operational and community experience in Canada's North to Hope Bay, so that it may -- as others have said before -- "[advance] exploration and expansion initiatives to realize the full potential of the mine."
Hope Bay has been in production since 2017 but quarterly production peaked at about 40,000 ounces in the first quarter of 2019 and has declined since then, managing fewer than 20,000 ounces in the third quarter of 2020. At the end of 2019, TMAC listed a reserve of 16.9 million tonnes averaging 6.5 grams of gold per tonne, about 3.55 million ounces, with a total delineated resource of 7.3 million ounces, spread across Madrid, Doris and Boston.
TMAC proposed a significant expansion, rolling out a prefeasibility study last year that called for a $1.29-billion upgrade to 4,000 tonnes per day by 2024, with the mine to yield 3.1 million ounces of gold over a 15-year period. Unfortunately, high costs limited the discounted net present valuation to just $486-million after taxes. Mr. Boyd and his Agnico crew presumably see ways to improve on those numbers.
While Shandong may have missed out with TMAC -- whether to its misfortune or not remains to be seen -- the company looks to land a lesser prize. It is offering $1.075 (Australian) for the shares of Archie Koimtsidis and Kevin Tomlinson's Cardinal Resources Ltd. (CDV) in an off-market bid. Today, Mr. Koimtsidis, CEO, and Mr. Tomlinson, chairman, urged their shareholders to accept the offer, noting that Shandong now owns two-thirds of the shares and all other would-be bidders have fallen by the wayside. Cardinal, which owns advanced gold projects in Ghana, closed unchanged at $1.04 on 2.14 million shares today.
With 2021 now in full flight, promoters rolled out a flock of new assays today. Most received just a so-so reaction, but an exception was a 185-metre hit averaging 2.16 grams of gold per tonne at Bonnefond, east of Val d'Or. The news sent the shares of Brad Humphrey's QMX Gold Corp. (QMX) up 1.5 cents to 19 cents on 8.99 million shares.
The deep hole encountered the promotable interval within 60 metres of surface, and the zone included several high-grade subintervals. One produced 7.62 grams per tonne over 15 metres, while another managed 4.01 grams per tonne over 23.1 metres. QMX also encountered high-grade gold in the bowels of the 1,100-metre hole, with hits of 10.88 grams per tonne over 11.2 metres and 11.31 grams per tonne over two metres. Dr. Andreas Rompel, vice-president of exploration, was sufficiently enamoured with the assays that he briefly dropped his thick geologese accent, gushing that "it is now evident that we have high-grade mineralization from high up to deep down in the intrusion," adding that "we are keenly awaiting the results of the next holes at this location."
So, it appears, are investors, although their reaction today pales in comparison with a brief mid-August spike to 37.5 cents, driven by word that a 73.2-metre hit at Bonnefond had averaged 6.48 grams of gold per tonne. Dr. Rompel kept his geological composure then, gurgling away about the tonalitic and dioritic intrusive with elevated mineralization levels.
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