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First quarter rise in gold a 'big deal' for the Northwest

THUNDER BAY – The surging price of gold in early 2016 led a stock market spike in the value of Canadian mining companies, including those operating in Northwestern Ontario.
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THUNDER BAY – The surging price of gold in early 2016 led a stock market spike in the value of Canadian mining companies, including those operating in Northwestern Ontario.

The Canadian Mining Eye index gained 26 per cent of its value in the first quarter of 2016 with gold companies leading the pack at a 16 per cent increase. That compares to a five per cent decline among the index’s gold companies that occurred in both the third and fourth quarters of 2016.

The price of gold increased from $1,061 USD per ounce on Dec. 31 to $1,237 by the quarter’s end on Mar. 31.

“It’s a big deal,” said John Mason, the mining services program manager for the Thunder Bay Community Economic Development Corporation.

“It bodes well for Northwestern Ontario, for our strong gold theme in terms of production and projects coming into producing in the next few years.”

Mason attributed the confidence in gold to global economic uncertainty but he added the downturn has motivated mining companies to develop cautiously. He pointed to New Gold and Premier Gold reinvesting profits from stable, producing mines into the River Gold and Greenstone Gold projects, respectively.

The market rewarded those companies with gold’s upward swing early in 2016. New Gold’s stock closed 2015 valued at $3.22 per share and it increased substantially to $5.05 by Mar. 31. Premier’s stock closed out the year at $2.64 and was valued at $3.10 at the end of the first quarter.


The markets threw even more weight behind the region’s gold giants. Goldcorp’s stock was trading at $16 on Dec. 31 and closed at $21.07 by Mar. 31. Barrick Gold’s value exploded from $10.24 per share at year’s end to $17.64 through the first quarter and has since increased further, closing at $22.21 on Thursday.

Mason said that kind of investor confidence can stabilize mining's moondog industries, which create between three and four spinoff jobs for every direct job in mining. Should that stability prove to last through the medium term, Mason foresees hopeful mining projects will share in its windfall.

“This type of trend will help projects get to production," he said.

“Treasury or Pure Gold in Red Lake – some of the more advanced projects that might need an injection of cash to say ‘we have the capacity to build this mine. That’s an indirect observation but it’s really going to help the broader culture.”

Pure Gold saw its stock double from $0.12 to $0.25 between January and the end of March. Treasury Metals, which is proposing to build the Goliath Mine near Dryden, saw its stock value increase from $0.50 to $0.53 over that period.

While Minister of Northern Development and Mines Michael Gravelle praised mining companies for cutting costs to survive over a long downturn, he was cautious to put too much stock in a single successful quarter.

“One has to be a little bit careful about saying this means we’ve got the return of a consistent trend of a boom,” he said.

“We have to see a consistency to it but there’s no question, this is encouraging. It’s what we’ve been hoping for, what we’ve been waiting for and may I say, what we’ve been expecting.”

Gold has since slipped slightly to a four-week low of $1,217 USD per ounce on Friday but it’s still over $150 per ounce stronger than it was when 2016 began.





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