Daily Round-Up: BHP Disappoints, Gold Juniors Make Discoveries

The gold price dropped Tuesday morning in the aftermath of Black Monday, and as of 11:00 a.m. EST was at $1,150.90 per ounce. That’s down from Monday’s high point of $1,166.20. 
According to The Wall Street Journal, the decline came as investors abandoned the security of gold for riskier investments. Many are feeling reassured by the fact that Beijing cut interest rates following Monday’s bloodbath.
Tuesday also brought the release of BHP Billiton’s (ASX:BHP,LSE:BLT,NYSE:BHP) annual results, and they include some interesting comments on China from CEO Andrew Mackenzie. During a conference call following the release of the results, he said that though China’s economic reform program has made world markets more volatile, he sees factors such as interest rate decreases and more infrastructure and property spending buttressing BHP’s growth for the rest of the year.
BHP could definitely use a little help from China. The company relies on the Asian nation for about 30 percent of its revenues, and said in Tuesday’s report that it experienced an 86.2-percent fall in after-tax profit for the year, accruing just US$1.91 billion.

Gold juniors see success

While BHP has certainly been struggling, some smaller companies are experiencing exciting breakthroughs. ATAC Resources (TSXV:ATC) announced a new gold discovery at the Anubis cluster at its Rackla gold project in Yukon on Tuesday. One highlight is the intersection of 47.24 meters of 3.79 g/t gold at what’s now called the Orion target. Graham Downs, ATAC’s president and CEO, commented, “[t]he Orion discovery hole is the most significant drill intersection to date within the 18 sq/km Anubis Cluster of targets. This hole is particularly significant as it demonstrates the exploration potential of the 30 km long Nadaleen Trend which is developing into a major North American Carlin-type district.”
West African Resources (TSXV:WAF,ASX:WAF) also reported promising news, announcing high-grade results from shallow-oxide reverse-circulation drilling at the Mankarga 1 prospect, located at its Burkina Faso-based Tanlouka permit. According to Managing Director Richard Hyde, “9m at 7.8g/t Au from only 8m at the M1 prospect shows there is potential to add ounces and grade to our heap leach starter project from nearby targets. M1 mineralisation will be incorporated resource inventory later this year.”

Investor impact

Those results show that there are still opportunities for investors within the gold sector, and indeed the resource space as a whole. Another encouraging sign is that EY’s Canadian Mining Eye index showed growth for the first time this year, gaining 4 percent in the second quarter and outperforming the S&P/ TSX Composite index (INDEXTSI:OSPTX), which slipped 2 percent during the quarter
Meanwhile, a new Gold Report interview with Haywood Securities analyst Mick Carew puts the mining market into perspective for investors. In the interview, Carew is quoted as saying:

As we approach what we hope is the bottom of the commodity cycle, we view this as an opportune time for consolidation in the mining space. We’ve seen a migration toward increased mergers and acquisitions (M&A) activity over the last couple of years. This year in particular has seen a number of high-profile mergers, including Alamos Gold Inc.’s (AGI:TSX) acquisition of AuRico Gold Inc. and Tahoe Resources Inc.’s (TAHO:NYSE; THO:TSX) acquisition of Rio Alto Mining Ltd. We’ve also seen major gold miners, including Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) sell non-core assets to address debt concerns.

As the second half of 2015 begins, investors will have to keep their eyes peeled to see if this trend towards M&A continues.
 
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article. 
Related reading: 
Black Monday: China Leads Selloff in Global Stock Markets
Black Monday: What Does it Mean for Metals Investors?