Global market downturn hits Toronto hard

The holiday shortened Aug. 2 -5 period may have been brief but it didn’t lack drama. The TSX Composite Index suffered its greatest fall since the recession of 2008 as the Index lost 1,267 points to finish at 11,743.77 points.

And the downward slide doesn’t appear to be coming to a close. With Standard & Poor’s dropping their rating for US debt down to AA from AAA status, markets continued to sell-off.

All that bad news for markets was good news for one commodity however. Gold was shining bright amidst the bearishness as its price rose above the US$1,700 per oz. mark at press time.

Investor’s preference was for the bullion itself, rather than for gold miners, whose stocks fell – though not as far as equities overall. The Global Gold Index was off 13 points for the period, finishing at 370.94.

But gold miners’ woes paled in comparison to those of the diversified miners. With threat of a double dip recession looming, the prices for copper, aluminum, nickel, tin, lead and zinc all fell significantly and the Capped Metals & Mining Index fell in step.

Centamin Egypt ran into the Egyptian bureaucracy at a time when it wants to produce as much gold as it can to cash in on historically high prices. The company was told by government officials that it cannot use the amount of explosives it needs for blasting its way towards its production targets. The restriction meant the company had to lower its guidance down to 210,000 oz. for the year from 290,000 oz. The company’s shares were off 32% to $1.47 for the period.

A downward revision to guidance also seemed to be playing on Lundin Mining. The company said it expects to produce less copper and zinc this year because of unpredictable mining rates at its Neves Corvo mine in Portugal. The new guidance calls for 75,400 tonnes of copper ore – 4,000 tonnes below the previous target – while zinc output is now expected to be 112,000 tonnes, down from 120,000 tonnes. Lundin shares were off 26% to $5.33 for the period.

Greystar Resources also had a rough go of it, as its shares were off 23% to $1.96 after announcing a greater tax liability than previously released. The company revised its financial statements to accommodate the extra $6.6 million in taxes payable. The increase in taxes came as result of the Colombian Congresses passing of a 6% equity tax at the end of last year.

While positive movers were harder to come by, Namibia Rare Earths managed a 10% gain for the period as its shares wound up at 65¢. The boost came after the company announced results from the first 24 diamond drill holes at its Lofdal Rare Earth Project in Namibia. The holes confirmed zones of heavy rare earth enrichment (HREE) in all targets tested. Highlight intercepts included 9 metres grading 0.49%TREO; 12.85 metres grading 0.34% TREO and 15 metres grading 0.3% TREO.