TSX drops during May 28-June 1 week

The TSX Composite Index tumbled 215 points during the May 28-June 1 trading period to close at 11,361.20 points amid a gloomy economic backdrop.

With the persistent euro zone worries, weaker-than-expected jobs data from the U.S. and slowing growth in China, investors sought out safe haven investments such as gold.  

As a result, the price of the yellow metal climbed US$52.60 per oz. to US$1,626.30 per oz., pushing the S&P/TSX Global Gold Index up 16 points to 327.26.

But diversified miners weren’t so lucky, as the S&P/TSX Capped Diversified Metals & Mining Index lost 27 points to end the week at 843.80.

During the week, the U.S. reported creating 69,000 jobs in May, the fewest since May 2001.

In the euro zone, the jobless rate was 11% in April, unchanged from March, but the highest since the euro zone was created in 1999, with more than 17.4 million people out of jobs.

Adding to the fears, China reported that manufacturing activity in its biggest factories slumped to a year low thanks to weak domestic demand.

The week’s biggest percentage gainer was Mawson Resources, gaining 25% to close at $1.55 per share. The jump came after the company released the first 14 assays from its 39-hole program at the Rompas gold project in Northern Finland.

The best assay returned 6 metres of 617 grams gold per tonne from 7 metres depth, which included 1 metre of 3,540 grams gold starting from 11 metres depth. This is the best result ever sampled or drilled at the property to date.

Strong drill results also lifted Kimber Resources shares up 23% to 80¢. The junior released two holes from the Carmen East area on the Monterde property. One of the holes cut several mineralized structures, including high-grade gold-silver mineralization such as 2.1 metres grading 4.3 grams gold and 166.6 grams silver and 1.5 metres of 3.2 grams gold and 222 grams silver.

Monterde is in the prolific Sierra Madre gold-silver belt of northern Mexico.

The week’s biggest loser was Nautilus Minerals, losing 42% to close at $1.23 apiece after being hit by a double whammy. On June 1, it reported funds for the vessel for the deep sea Solwara 1 project in Papua New Guinea could be delayed, resulting in a potential push back in the vessel build.

The junior and its partner, Harren & Partner, had planned to form a joint venture to own and operate the vessel. But Harren & Partner said it could no longer provide the full amount of equity because of the stricter banking rules with the European crisis and the deflated shipping market.

In a separate press release that day, Nautilus said it’s in a row with the government regarding a joint-venture agreement the parties entered last March. Under that agreement, the State is exercising its option to earn 30% of Solwara 1, but says the company has not met its obligations for it to complete its earn in. However, the junior is refuting those claims and has started a dispute resolution process. Depending on how long the conflict lasts, it could affect the start up of the copper-gold project and costs.