Promise of stimulus lifts TSX

TSX Composite Index rose 231 points to 11,766.36 for the July 23-27 period as investors chose to focus on the themes of potential monetary easing and a leveling off of the European debt crisis.

Such optimistic investor sentiment was spurred on by the European Central Bank’s pledge to do whatever it takes to save the euro currency union, which could include market intervention to lower the borrowing rates of countries like Spain.

The news coupled well with an emerging theme postulating that Central Banks in both the U.S. and Europe will provide stimulus, and that belief outweighed news of slowing U.S. second quarter GDP growth.

The price of gold made a nice recovery as the yellow metal was up US$37 to US$1,1618 per oz. The gain transferred over to miners as the Global Gold Index was up 13 points to 291.12.

The period saw two stalwarts of the gold industry in Canada trending in different directions as Agnico-Eagle Mines shares climbed $4.23 to $43.39 while Barrick Gold shares fell $2.09 to $32.49.

The difference in fortunes had to do with investor reaction to quarterly results. Agnico showed that it was getting a handle on technical issues at its Meadowbank mine, and announced increased production overall from its five mine portfolio.

Barrick, however, was hampered by cost increases and delays at Pascua-Lama, more setbacks at Lumwana, the shelving of the Cerro Casale and Donlin Creek projects and the revision of its gold and copper production base. Such issues led Standards & Poors rating agency to lower the company’s credit rating to BBB+ from A-.

The Capped Metals & Mining Index was also up for the period as it climbed 24 points to finish at 831.99 despite the price for copper falling a penny to US$3.43 per lb.

Canada’s biggest diversified miner, Teck Resources, failed to partake in the Index’s uptick, however. The company’s shares fell $1.54 to $28.66 after it said the global economic downturn was hitting its bottom line. Second quarter results from the miner were lower than expected thanks to weak coal and copper prices as the Chinese growth story lost some steam. Teck said second quarter profits dropped 65% to $268 million or 46¢ per share, down from $756 million or $1.28 per share, while revenues for the quarter fell to $2.6 billion, compared with $2.8 billion a year ago. The fall comes despite record copper production of 90,000 tonnes for the quarter.

Dalradian Resources saw its share price climb 36% to 90¢ after releasing its preliminary economic assessment for an underground mine at its Curraghinalt Gold deposit in Northern Ireland. The study estimated that a mine would generate an internal rate of return (IRR) of 51.7% over a 15-year-mine life. The average head-grade is expected to be 8.1 grams per tonne gold and the mill would process 1,700 tonnes per day for production of 145,000 oz. of gold per year.