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August 25, 2015

Monday was murderous for miners @Mineweb #MiningStocks



Picking through the wreckage

HALIFAX – To set the scene briefly: Monday was murderous for miners. A rout in Asia and renewed bearishness regarding China’s slowing economy served as a double whammy, especially in bulks and base metals. Spot copper flirted with $2.20/lb and there were eye-popping sell-offs in the world’s biggest miners on all the world’s major exchanges. The sell-off spared no major category: diversified, base metal miner, gold miner – all were slaughtered. Indeed, it didn’t matter what the metal price did on the day.

Taking a look at the 100 worst performances of miners (excluding microcaps) on the NSYE, LSE, TSX and ASX on Monday confirms the view. The top ten of the losers on Monday were a broad slice of the mining sector. Glencore – a diversified miner – was down 13%, putting in the worst performance among the largest miners. Gabriel Resources – a gold developer sitting on the controversial Rosia Montana project in Romania – was down 15%. First Quantum Minerals, the copper miner, had a 13% loss. A slew of gold and silver miners were among the worst losers: McEwen Mining (down 14%), GoGold (14%), Kinross Gold (13%), Centerra Gold down (12%) and Coeur d’Alene Mines (11%).

And this “100 worst” list was not top heavy. The median loser on it – just to give a sense of the distribution here – was down 7.8%. The average was down 8%. The range was -4.3% to -16.4% encompassing all the big names like BHP, Rio, Cameco, Barrick, Goldcorp. So yes, it was a very bad day.

Interesting too, as the sell-off was agnostic. It punished pretty well any kind of miner regardless of what they mined, where they mined, or who they primarily sold their products too. (Fertilizer miners were notably absent.) The sellers were not interested in the fact that the miners have had an awful few years and now trade at, in many cases, near or at historic lows.

The conspicuous presence of the gold miners was perhaps most notable. For on the day, gold held steady, more or less, and this after a string of gains that has brought at least a smidgen of optimism back to the sector. But the gold companies withered along with the rest anyway. Indeed, they posted among the worst performances – strange, perhaps, given that the sell-off in miners was ostensibly due, in part, to an emerging bearishness on China and largely, a slowdown, in its need for mostly industrial metals like copper. Hence copper flirting with $2.20/lb from closer to $2.30/lb within the day, building on a multi-year decline.

In this respect – for the gold companies – you can reasonably wonder if a rebound is inevitable, at least in the short term. Otherwise put, was there really a good reason to hit down the likes of Barrick or Goldcorp 9% (and you could likely insert any number of other gold mining names here)? If not quite right on the day, Kerry Smith, over at Haywood Securities, was thinking that way. In an email to Mineweb he wrote, “Initially the reaction by everyone is just sell everything, especially when you get the Dow down 1 000 points. But after a bit, the smarter ones look at the metal price (up) and start to buy gold stocks. I expect gold shares generally will be up today.” The rebound was largely absent Monday – so maybe Tuesday?

Indeed, the same argument might be deployed for other metals where the storyline of the day – China’s market meltdown, China’s slowing industrial economy – doesn’t have an obvious direct or heavily bearish effect. Uranium comes to mind. The top 100 losing miners on Monday included many a uranium name, from developer to miner. Yet it’s hard to argue that any news recently from China negates a growth story, ultimately, of reactors and demand for uranium oxide to, the hope is, tip the balance in favour of the miners. Cameco, the top uranium miner, was down 5%; Paladin, another miner, was down 8%; and NexGen, a leading junior, was down 9%, for some examples.

It will be tempting to take this view more broadly of course and include the big guns like BHP, Rio, Teck, and so on, the many other names among the withering base and bulk miners on Monday. If there is a rebound it may be longer in the coming, however. You wonder, with the fall of base metals still in process and some of the negative views growing on China, if the market will be less willing to flock back to them.

Sure – it seems to me – there’s been over zealous selling of names that otherwise might jump back for strong cash flows. That as always will be hard to ignore. Ray Goldie noted over the phone that surely the market went too far among the base metal miners Monday. Indeed, he noted that recently China imports of copper and other metals ticked up (June over July), suggesting healthy or at least not falling copper demand. Still, back over at Haywood, Smith advised staying out of the way of base metal miners. Was there overreaction on the market? Smith answers, “Nope – copper going to $2/lb I think… so stocks still a bit expensive.”

 CompanyTickerChange (Aug. 24)
1Aureus Mining IncAUE.TO-16.4%
2Gabriel Resources, Ltd.GBU.TO-14.6%
3Mcewen Mining IncMUX.TO-13.9%
4Gogold Resources Inc.GGD.TO-13.6%
5Glencore Xstrata PlcGLEN.L-13.0%
6First Quantum Minerals Ltd.FQM.L-12.7%
7Kinross Gold CorporationKGC-12.6%
8Centerra Gold Inc.CG.TO-11.9%
9Peabody Energy Corp.BTU-11.8%
10Coeur d`Alene Mines Corp.CDE-10.8%
11ST Barbara Ltd.SBM.AX-10.8%
12Yanzhou Coal Mining Co. Ltd.YZC-10.6%
13IAMGOLD Corp.IMG.TO-10.5%
14Yamana Gold, Inc.YRI.TO-10.3%
15Denison Mines Corp.DNN-10.2%
16Dominion Diamond CorporationDDC-10.1%
17Gold Fields Ltd.GFI-10.1%
18Endeavour Silver Corp.EDR.TO-10.0%
19Anglo American plcAAL.L-9.9%
20Compania de Minas Buenaventura SABVN-9.8%
21Endeavour Mining CorporationEDV.TO-9.7%
22Sibanye Gold Limited American DSBGL-9.6%
23New Gold, Inc.NGD-9.5%
24Freeport-McMoRan Copper & Gold Inc.FCX-9.4%
25Fortuna Silver Mines Inc.FVI.TO-9.3%
26Hecla Mining Co.HL-9.3%
27Whitehaven Coal LimitedWHC.AX-9.3%
28BHP Billiton plcBLT.L-9.2%
29Nexgen Energy LtdNXE.V-9.2%
30Torex Gold Resources IncTXG.TO-9.2%
31Barrick Gold CorporationABX.TO-9.0%
32Harmony Gold Mining Co. Ltd.HMY-9.0%
33Lundin Mining CorporationLUN.TO-9.0%
34Timmins Gold CorpTMM.TO-9.0%
35Kazakhmys PLCKAZ.L-8.9%
36Tahoe Resources Inc.THO.TO-8.8%
37Goldcorp Inc.GG-8.7%
38Capstone Mining Corp.CS.TO-8.6%
39Syrah Resources LimitedSYR.AX-8.5%
40TNG LimitedTNG.AX-8.5%
41Metals X LimitedMLX.AX-8.3%
42Pan American Silver Corp.PAA.TO-8.1%
43Silver Wheaton Corp.SLW.TO-8.1%
44China Gold International Resources Corp LtdCGG.TO-8.0%
45Eldorado Gold Corp.ELD.TO-8.0%
46HudBay Minerals, Inc.HBM.TO-8.0%
47Nautilus Minerals Inc.NUS.TO-7.9%
48Paladin Energy LtdPDN.AX-7.9%
49Perseus Mining LimitedPRU.AX-7.9%
50Primero Mining Corp.PPP-7.9%
51Alamos Gold Inc.AGI.TO-7.7%
52B2Gold Corp.BTO.TO-7.7%
53First Majestic Silver Corp.FR.TO-7.7%
54Independence Group NLIGO.AX-7.6%
55Teck Resources LimitedTCK-B.TO-7.5%
56NovaGold Resources Inc.NG.TO-7.4%
57PH&N US Multi-Style All-Cap Equity Sr CP.TO-7.4%
58Sirius Resources NLSIR.AX-7.4%
59Royal Gold, Inc.RGL.TO-7.3%
60Energy Fuels Inc.EFR.TO-7.2%
61Ivanhoe Mines LtdIVN.TO-7.1%
62Asanko Gold Inc.AKG.TO-7.0%
63OceanaGold CorporationOGC.TO-7.0%
64Resolute Mining LimitedRSG.AX-7.0%
65Newmont Mining Corp.NEM-6.9%
66Rio Tinto PLCRIO.L-6.9%
67Romarco Minerals Inc.R.TO-6.9%
68CONSOL Energy Inc.CNX-6.8%
69Imperial Metals Corp.III.TO-6.8%
70Suncoke Energy Partners L.P.SXCP-6.8%
71Western Areas NLWSA.AX-6.8%
72Gem Diamonds LimitedGEMD.L-6.3%
73SEMAFO Inc.SMF.TO-6.2%
74Silver Standard Resources Inc.SSO.TO-6.2%
75Hochschild Mining PLCHOC.L-6.1%
76Mineral Resources LtdMIN.AX-6.0%
77OZ Minerals LimitedOZL.AX-6.0%
78Katanga Mining Ltd.KAT.TO-5.9%
79Petropavlovsk PLCPOG.L-5.9%
80Asanko Gold IncAKG-5.8%
81Dundee Precious Metals Inc.DPM.TO-5.7%
82Aquarius Platinum LimitedAQP.AX-5.6%
83Natural Resource Partners LPNRP-5.6%
84Richmont Mines Inc.RIC.TO-5.6%
85Fresnillo PLCFRES.L-5.5%
86Altius Minerals Corp.ALS.TO-5.4%
87Cameco Corp.CCO.TO-5.4%
88Seabridge Gold, Inc.SEA.TO-5.4%
89Antofagasta PLCANTO.L-5.3%
90Gold Road Resources LimitedGOR.AX-5.3%
91Franco-Nevada CorporationFNV.TO-5.2%
92Iluka Resources Ltd.ILU.AX-5.2%
93Lake Shore Gold Corp.LSG.TO-5.2%
94New Hope Corporation LimitedNHC.AX-5.2%
95Rubicon Minerals CorporationRMX.TO-5.1%
96Agnico-Eagle Mines Ltd.AEM.TO-5.0%
97Pretium Resources Inc.PVG.TO-4.6%
98Centamin PLCCEE.TO-4.6%
99Alacer Gold CorpASR.TO-4.3%
100Turquoise Hill Resources Ltd.TRQ.TO-4.3%


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