Daily Round-Up: Goldcorp Does Deals, Dolly Varden Releases Maiden Resource

Tough times continued in the resource space on Thursday, with Reuters reporting that the gold price took its biggest one-day drop in five weeks. The yellow metal has now fallen for four days in a row, and as of 2:29 p.m. EST, was sitting at $1,122.45 per ounce. 
The declining gold price is affecting companies large and small, with the most recent casualty on the larger side being Acacia Mining (LSE:ACA). It experienced a 70-percent drop in Q2 profits, citing higher mining costs and lower bullion prices as the reasons for this decline. All in all, the company’s net income came to $5.6 million, down from $18.4 million in the year-ago period. At the same time, the company reported a 4.2-percent rise in gold output to 185,641 ounces.

Big moves from Goldcorp

Amid these difficult conditions, the mining community is banding together to find opportunity. On the positive side Thursday, Goldcorp (TSX:G,NYSE:GG) revealed plans to buy New Gold’s (TSX:NGD,NYSEMKT:NGD) 30-percent stake in the El Morro project. The company will give New Gold $90 million in cash and a 4-percent stream on gold production from the property, and will also cancel New Gold’s $93-million carried funding loan. The transaction is anticipated to occur in Q4 2015, and once it’s complete Goldcorp will own 100 percent of the project.

Goldcorp also announced an agreement with Teck Resources (TSX:TCK.B,NYSE:TCK) under which the companies will combine their interests in the Chile-based El Morro and Relincho projects into a 50/50 joint venture. Teck President and CEO Don Lindsay commented, “combining these two neighbouring assets is a common sense approach that allows us to consolidate infrastructure to reduce costs, reduce the environmental footprint and provide greater returns over either standalone project. Through Project Corridor, we will work to establish meaningful relationships with the community, Indigenous Peoples and other stakeholders that will help guide the project’s development and create greater value for all parties.”

Dolly Varden publishes promising resource estimate

The silver space also got some good news Thursday. Dolly Varden Silver (TSXV:DV) reported its maiden NI 43-101 mineral resource estimate for four deposits at its British Columbia-based Dolly Varden project. The indicated mineral resource came in at 31.8 million ounces of silver contained in 3.07 million tonnes of material with an average grade of 321.6 g/t silver. The inferred mineral resource sits at 10.8 million ounces of silver grading 373.3 g/t.

Rosie Moore, interim president and CEO at Dolly Varden, commented, “[w]e are very excited to receive this confirmation of the magnitude of mineralization immediately adjacent to historically mined or developed deposits. The fact that the estimated silver grades are greater than 250 grams per tonne in the Indicated category for all of the deposits, and 625 grams per tonne at the Dolly Varden deposit, means that this project warrants attention even at today’s metal prices.”
As of 2:50 p.m. EST, the company’s share price was up 32 percent, at $0.165.

 
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.
Related reading: 
Goldcorp and Teck Resources Form Chilean Mega Project to Cut Costs