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A variety of companies have been added and deleted to the S&P/TSX Global Mining Index. Here we look at what qualifies a company to be added to the index and what the newly added companies have been doing lately.
This quarter’s list proved to be more positive than the December 2014 review, with four additions made to the S&P/TSX Global Mining Index (INDEXTSI:TXGM): Kirkland Lake Gold (TSX:KGI), Premier Gold Mines (TSX:PG), Romarco Minerals (TSX:R) and Fission Uranium (TSX:FCU).
Here’s a look at what qualifies a company to be added to the index and some information on what those four companies have been doing lately.
S&P/TSX Global Mining Index methodology
The S&P/TSX Global Mining Index is “designed to provide an investable index of global mining securities,” and is recalculated every quarter, with additions only being made as part of that quarterly review process.
In order for companies to be added to the S&P/TSX Global Mining Index, they must meet the eligibility criteria outlined on the S&P Dow Jones Indices website. Eligibility factors include having a market cap of at least US$30 million, being listed on the TSX, NYSE or NASDAQ stock exchange, having a liquidity ratio of 0.3 or higher, holding eligible securities and having shares outstanding.
New to the list
As mentioned, four companies were added to the index this quarter — that’s up from the first quarter of 2014, when only one company was added, and from this past quarter, when no additions were made. Here’s a breakdown of what they’ve done in recent months.
- Kirkland Lake Gold — Up 50.45 percent year-to-date, Kirkland has been doing quite well for itself this past quarter. The company just released its fiscal 2015 Q3 results, which show it achieved a head grade of 15.1 g/t. The report also highlights net income of $4.2 million, or $0.06 per share, and free cash flow of $11.6 million.
- Premier Gold Mines — Premier has been busy, and is currently operating multiple projects in North America, including the newly acquired Hasaga property in Red Lake, the Trans-Canada property, which is a joint venture with Centerra Gold (TSX:CG), and the McCoy-Cove property in Nevada. The company recently released drill results from its joint venture Rahill-Bonanza project in Red Lake, noting that drill hole D36987 intercepted up to 6.58 g/t gold across 6.3 meters. Up 42.86 percent year-to-date, Premier has proven itself by taking on the right projects and forming beneficial partnerships.
- Romarco Minerals — Romarco has been busy in recent months, closing a bought-deal financing of C$300 million through the sale of 517,300,000 common shares priced at C$0.58 each and receiving all construction and operating permits for its Haile gold project. The feasibility study for Haile shows a measured and indicated gold resource of 71.2 million tonnes at 1.77 g/t for 4 million ounces (including proven and probable reserves) and an inferred gold resource of 20.1 million tonnes at 1.24 g/t for 800,000 ounces. Romarco’s share price has been flat since the beginning of the year, and is currently sitting at $1.25.
- Fission Uranium — Up 45.35 percent year-to-date, Fission has had some great results come down the pipeline recently. Most notably, drill results from its Triple R deposit have revealed high-grade mineralization, including 9.31 meters of 10,000 cps radioactivity within a 65.5-meter-thick zone. Hitting this measure of off-scale radioactivity has put the relatively shallow zone into the elite class, according to some analysts, and has boosted the company’s confidence in the property.
Better luck next year
Aside from those additions, a fair amount of companies got the boot from the S&P/TSX Global Mining Index. Once a company is removed from the list, it is not eligible for re-inclusion for 12 calendar months, with an occasional exception. Here are the ones that didn’t make the cut this quarter: Endeavor Silver (TSX:EDR,NYSE:EXK), McEwen Mining (TSX:MUX,NYSE:MUX), Paladin Energy (TSX:PDN,ASX:PDN), Platinum Group Metals (TSX:PTM,NYSEMKT:PLG), Silvercorp Metals (TSX:SVM,NYSE:SVM), Taseko Mines (TSX:TKO) and Trevali Mining (TSX:TV).
If a company meets your investment criteria, but has been deleted from the index, is it still worth reviewing? What’s important to note when answering that question is that while there are many reasons why it may have been removed, none are based on project merit. The challenges of moving a resource project forward are far greater then being included on an index, and it’s possible many of the above companies will have promising futures.
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.
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