TSX falls as ECB fails to follow through

The TSX Composite Index was off 101 points to 11,662.59 for the July 30 to Aug 3 period after the European Central Bank disappointed investors.

In the previous period ECB President Mario Draghi ignited a market rally by saying the central bank would do “whatever it takes” to support the euro. But the ECB failed to signal that it was ready to buy government bonds – sending Spanish and Italian bond yields soaring. Mitigating the downward pressure on stock markets, however, was a U.S. labour report which delivered better than expected numbers.

The price of gold fell US$5 to US$1,616.20 per oz. causing the Global Gold Index to drop by 3 points to 287.63 points, while the Capped Metals & Mining Index was down 11 points to 826.89 points as the price of copper was off 3¢ cents to $3.39 per lb.

One of the period’s big successes was Jaguar Mining. After getting beaten up on the markets recently for a failed takeover bid, the company’s shares climbed 49% to $1.01 after it increased measured and indicated resources at its Gurupi Project in Brazil by 30% to 3.2 million ounces of gold. The resource includes 35.65 million tonnes of measured at 0.86 grams gold and 75.02 million tonnes of indicated at 0.93 grams gold. Jaguar is doing a revised feasibility study on Gurupi which it says will be done by the fourth quarter.

Bad news turned to good news and Intrepid Mines’ share price recovered from an earlier sell-off to finish the period 44% higher than where it began. The rally was on the back of the company winning an important Indonesian investor as the country’s media tycoon Surya Paloh is taking 5% stake in the company. The move comes only a few days after the company was pushed out of its US$5-billion Tujuh Bukit gold, silver and copper project in the country. It is believed Paloh will help in talks with Intrepid’s joint venture partner PT Indo Multi Niaga (PT IMN). On July 20, PT IMN suspended operations at Tujuh Bukit and kicked Intrepid off the site.

Coalspur Mines also received a healthy boost to its market valuation after its scoping study confirmed the potential for a larger mine at its Vista Extension project. The project is now expected to produce 3.8 million tonnes per year of marketable coal from a resource of 108 million tonnes with a mine life of 28 years. The study estimated capex of $346 million, and an after-tax NPV of $445 million using an 8% discount rate. Coalspur shares were up 38% to 83¢ for the period.

And Rockgate Capital gained 34% to reach 38¢ after it extended a high-grade uranium, copper and silver zone at its Falea project in Mali. Highlights from the Plateau Edge Structure (PES) included intercepts of 9.5 metres grading 0.19% U3O8, 0.24% copper and 83.6 grams silver per tonne and 8.3 metres grading 0.15% U3O8, 0.11% copper and 258.6 grams silver. The company plans to release a resource on the zone later this fall.