TSX falls as global situation weighs on investors

The TSX Composite Index fell 342 points to 11,877.72 in the Nov. 12-16 period as investors continued to focus on a series of tough global issues.

The week began with word that the Eurozone was officially in recession, and while that was considered surprising, when combined with the looming fiscal cliff in the U.S. that could result in a recession south of the border and more signs of slower growth out of China, investors were not in a buying mood.

The selling sentiment carried over to commodities as both gold and oil prices were off. The price for the yellow metal fell US$17 to US$1,714.70 per oz. and the Global Gold Index was down 27 points to 307.99. The Capped Metals & Mining Index was down 45 points to 909.48, while the price of copper was flat at US$3.45 per lb.

On the positive side, the period got rolling with M&A activity as Osisko Mining pitched a friendly all-share deal to acquire Queenston Mining and its Upper Beaver project along with four potential satellite deposits in Ontario’s Kirkland Lake region. The deal values Queenston at $550 million, or a 45% premium to Queenston’s 30-day volume-weighted average price for the period ended Nov. 9. Queenston shares were up 20¢ to $2.75 for the period while Osisko shares fell $1.35 to $8.47 per share.

Investors showed confidence that an upcoming referendum will break in Gabriel Resources favour. The company is trying to get the world-class Rosia Montana gold project in Romania into production and saw its shares rise 19% to close at $2.75. The gain came after Gabriel said it was likely a referendum that could determine the project’s fate was scheduled for December 9.

On the downside, weak third quarter results sent Iamgold shares lower as the gold miner’s shares fell $3.65 to finish at $11.75. Iamgold had lower profits due to lower gold production and sales. Earnings per share came in at US21¢ a share, below both the consensus of US24¢ per share, and last year’s US30¢. Sales were off 13% from last year to 188,000 oz., as production fell at its jointly held operations with AngloGold Ashanti in Mali. The company blamed lower grades and processing issues for the decline in production.

And Nautilus Minerals shares fell by 48% to 40¢ after it said it was halting construction of its Seafloor Production System and firing 60 workers in order to preserve its cash position. The company said it can’t afford to finance the development of its Solwara 1 Project in Papua New Guinea alone any longer. Nautilus is fighting with the government of Papua New Guinea over shared development costs. Nautilus says the government is obliged to pay $23.5 million for costs incurred in the development of the Solwara 1 up to January 2011, and to make pro-rata capital contributions, which total another $51.5 million.