Significant turnaround in Gold companies
By the close of trade on Monday 13 March, the S&P ASX Gold index had closed up 5.35%, in a sharp reversal of the downward trend seen over the last two weeks. The XGD climbed 220 points to close at 4343.7. The big move in the gold sector from the larger companies came from Perseus Mining Ltd (PRU-AU), up 13.1% after the announcement that the company had procured a $60m debt financing facility from Macquarie to fund a growth strategy. $40m of the facility will be used exclusively to fund the completion of the Sissingue mine, where first gold is expected to be poured 12 month from now. The remaining $20m will be available for general working capital as PRU’s Edikan mine in Ghana is ramped up and cash reserves are diverted to fund Sissingue.
Other gold companies responding today were Capricorn Metals (CNM-AU) up 12.5%, Gold Road (GOR-AU), up 10.8%. At the bigger end of town St Barbara (SBM-AU) was up $0.19, or 8.33% and Evolution Mining (EVN-AU) up $0.13 or 6.8%. The big one, Newcrest (NCM-AU) was up 4.6%, or $0.97 to $21.90.
So why the big move today? The gold price has climbed steadily throughout the day to US$1208.00 per ounce, at the time of writing, a move up of $6.60, which is not earth-shattering in itself. From a technical perspective, the price moving above a psychologically important US$1200 per ounce mark and bargain hunting in gold equities may have been the catalyst. Goldman Sachs has also become a little less bearish on the price for 2017 in a recent note and India’s plan to recycle thousands of tonnes of privately held gold has failed.
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