TSX down as commodities continue to slide

The TSX Composite Index was off 278 points to 12,103.11 for the holiday shortened April 2 -5 period despite a solid job creation report from Statistics Canada. The report showed far more jobs were created in March than economists had predicted.

But investors seemed to put more stock in negative news outside of Canada’s borders.

First there was a poor bond auction out of Spain and then there was a bad U.S. payrolls report — whose results had investors questioning the strength of the recent economic recovery.

Commodities continued to find little favor with investors as the price of gold fell US$41 to US$1,630.10 per oz. and the Global Gold Index went down 24 points to 311.36 points.

The diversified miners followed the same trend as the Capped Metals & Mining Index was off 28 points to finish at 1,022.20 with the prices for copper, aluminum, tin and lead all falling while nickel and zinc prices edged slightly higher.

Gabriel Resources continues to struggle to put its world-class Rosia Montana gold project in Romania into production. The latest word out of the Eastern European country was that a court had annulled a zoning plan, which could delay the project further. Project development has been ongoing for 14 years and still requires a key environmental permit. The court annulled the company’s town planning documents after a trial was brought to the court by two non-government organizations opposed to the project. Gabriel share were off 25% to $3.53 for the period.

Shares of Rockgate Capital also took a tumble on political risk, as the coup d’état in Mali led the company to suspend drilling at its Falea project in the country. The company says drill crews have been moved across the border to Senegal to avoid sanctions that may be imposed on Mali by its neighbours. The sanctions could close the country’s borders and cut-off staff from supplies. Rockgate shares were off 18% to 72¢ for the period.

A proposed merger between First Majestic Silver and Silvermex Resources’helped to lift the latter company’s fortunes. Silvermex shares climbed 15% after the deal was announced. First Majestic is looking to acquire Silvermex’s flagship La Guitarra project in Mexico — an asset that First Majestic says will help take it to the next tier of silver producers. The offer values Silvermex at 60¢ per share or a 33% premium to its closing price on April 2. First Majestic shares finished the period 6% lower at $15.60.

And IC Potash managed a gain of 11% to 99¢ after striking a deal to sell a 19.9% stake in the company to Norwegian fertilizer maker Yara for $39.9 million. Yara will pay $1.32 a share, a 50% premium, for 30.1 million new shares of ICP. As part of the deal, Yara is entering into an off-take arrangement for 30% of all products produced by ICP’s Ochoa sulphate of potash mine in New Mexico over 15 years.


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