TSX rallies on ECB plans, stimulus hopes

The S&P/TSX Composite Index gained during the Sept. 3-7 trading week to close at 12,268.01, up 319 points from where it began.

The lift followed two major announcements during the week, including the European Central Bank’s plan to buy up government bonds from euro-zone countries struggling with their debts, and a poor U.S. jobs report that strengthened expectations that the Federal Reserve will launch another round of stimulus soon.

This helped boost the spot price of gold to close at US$1,735.50 per oz., the highest level since February. The S&P/TSX Global Gold Index gained 14 points to 328.62. The S&P/TSX Capped Diversified Metals moved in-line, adding 94 points to end at 919.33.

Petaquilla Minerals was the week’s top percentage gainer and most actively traded stock soaring 70% after Inmet Mining announced its intention to buy the junior producer for $112-million in cash or shares. The acquisition would allow the global base-metal miner to consolidate the concession where it is developing the $6.2-billion Cobre Panama copper-gold project near Petaquilla’s small gold mine in Panama. Essentially, the takeover would reduce any environmental or social risks related to the Cobre Panama construction.

Petaquilla added 26¢ to end the week at 62¢ on 27.7 million shares traded.

On the proposed bid, Inmet closed at $49.16, up $5.15 a share, representing the week’s biggest value gain. 

It was a busy week for Mexico-focused Torex Gold as it reported a feasibility study for its Morelos gold-silver project; drill results from an exploration target on Morelos; and its third-quarter financials. All this news brought on heavy trading, making the company the week’s second-most active stock with 25.2 million shares traded. The junior closed up 10¢ at $1.90 per share.   

The feasibility study envisions two separate pits at Morelos feeding a 14,000-tonne-per-day mill to produce an average of 337,000 oz. gold and 211,000 oz. silver during its first 10 years. The mine is slated to start initial production in 2015.

During the third quarter ended July 31, 2012, Torex reported a net loss of $15.1 million, almost double the loss from a year ago. However, it spent $13.2 million on exploration and evaluation expenditures during the period, roughly twice the amount spent a year earlier.

Detour Gold saw its shares add $2.37 to end at $27.17 after it published an updated production plan for its eponymous gold mine in northeastern Ontario.

Detour says by the end of August, construction reached the 87% mark, with the Detour Lake mine on track to come online early next year.

 It did note, however, the mine’s pre-production capital crept up slightly as expected because of rising costs for inputs. While pre-production capital is unchanged at $1.45 billion, sustaining capital rose to $1.2 billion from $998 million estimated last January, and average total cash costs increased to $749 per oz., up from $542 per oz.