Fears cripple Toronto Stock Exchange

With the May 5-11 report period dominated by headlines heralding impending interest rate hikes, China’s decision to try to slow its sizzling economy, and soaring oil prices, one could hardly fault investors for bolting for the doors. And bolt they did, sending the S&P-TSX composite index 252.24 points, or 3%, lower to 8,205.06, despite a period-ending uptick.

With the U.S. dollar climbing on rate fears, the price of gold plummeted US$17.30 per oz., to US$375.25 per oz., in the afternoon in London on May 11 — its lowest level in seven months. Not so shocking was an 8.5-point, or 4.4%, fall by the TSX’s gold index, leaving it at 184.69 points. The diversified miners were not unaffected, dropping 8.6 points to 201.19, with the base metals lower nearly across the board.

Newsmakers included Aur Resources and Inmet Mining. The latter plans to buy the former in a $600-million share-swap deal that will see Inmet shareholders own about 54.6% of the new company, to be named Aur Mining; Aur shareholders will hold the remaining 45.4%. Shareholders will vote on the board-approved deal in late June. Shares in Aur slipped 35 to $5.95, while Inmet lost $1.05 to $16.30.

Ivanhoe Mines recently unveiled an independent estimate which suggests the Hugo North deposit has an inferred resource of 666 million tonnes grading 1.46% copper and 0.34 gram gold. The new figure represents a 37% increase in contained copper and an 84% increase in contained gold from the November estimate. Hugo North is one of five copper and gold deposits at Ivanhoe’s Oyu Tolgoi project in southern Mongolia. Still, Ivanhoe fell 59 to $8.15.

Reuters reported that Barrick Gold plans to take a serious look at Oyu Tolgoi, which Ivanhoe recently put in play. Barrick’s shares finished 98 cheaper at $26.30.

Meanwhile, equal partners Kinross Gold and High River Gold Mines have agreed to suspend development at the New Britannia mine in Snow Lake, Man. Mining dilution has increased, owing to a flattening and thinning of the remaining orebody. Production estimates for the year have been more than halved to 33,000 oz.; the mine is expected to close at the end of the third quarter. Both issues headed south, Kinross to the tune of 42 to end at $7.45 and High River, off 14 at $1.31.

Things are looking even grimmer for beleaguered McWatters Mining, which ended unchanged at half a cent in heavy trading. The TSX is reviewing McWatters on an expediting basis with respect to meeting the requirements for continued listing. The company recently completed a fire sale of its key assets by agreeing to sell its Sigma-Lamaque mining complex in Val d’Or, Que., to Vancouver- listed Century Mining for $25.9 million.

On a brighter note, Goldcorp announced that its flagship Red Lake mine in northwestern Ontario has poured its 5-millionth ounce of gold; the mine is expected to equal the feat by 2012. Still, the accomplishment wasn’t enough to keep the company’s shares out of the vortex. Goldcorp slipped 66 to $15.12.

Teck Cominco‘s good news also failed to save it from a $1.25 loss to $20.80. The company has struck a deal with an Alaskan environmental group to allow construction at the Pogo gold project, 145 km southeast of Fairbanks. The group had snarled work after calling for a review of the project’s water discharge permit.