TSX falls despite gold’s gains

The TSX Composite Index fell 223 points to 11,596.56 for the June 25-29 period as investors were skeptical that the latest European Union summit would agree upon concrete measures to tackle the region’s debt crisis.

A lack of confidence in Europe’s ability to deal with its problems didn’t crossover into a lack a faith in gold, however, as the yellow metal was up US$25 to US$1,597.70 per oz. Gold miners continued to feel slighted as they didn’t participate in the underlying metal’s gain as evidenced by the Global Gold Index finishing the period where it began at the 304 point mark.

The diversified miners fared somewhat better as evidenced by the performance of the Capped Metals & Mining Index, which was up 17 points to 868.71. The index tracked the price of copper as the red metal was up 16¢ to finish the period at US$3.47 per lb.

And while gold companies in general did not fare well, the period’s biggest winner in terms of percentage gains was a gold miner. Australian-based Allied Gold saw its shares shoot up by 69% to $2.45 thanks to a generous offer from a fellow Australian gold miner. St. Barbara said it wanted to merge the two mid-tiers into a company worth over $1 billion and it was willing to pay Allied Gold shareholders $1.067 in cash and 0.8 of St. Barbara shares for each share in Allied Gold. Those numbers value Allied Gold at $578 million or roughly $2.83 per share — a 90% premium to its closing price the day before the deal was announced.

Western Potash shareholders weren’t feeling quite so flush. The company’s shares plunged 25% to 80¢ cents on heavy volume after talks ended with a potential Chinese investor. The break down in negotiations had investors fretting over whether the company would be able to get into its Milestone potash project into production. Western insists, however, that there is another suitor and that the two parties are well into negotiations. The company is continuing to work towards finishing its feasibility study at Milestone, which is located in Saskatchewan.

Investor sentiment also turned sour towards Tahoe Resources, only this time political risk was the culprit. The company saw its share price fall by 21% to $14.07 despite its assurances that mining law reforms in Guatemala wouldn’t affect its Escobal silver project in the country. The government in Guatemala wants to allow state ownership in mining projects which triggered fears of nationalization. Tahoe, however, says its conversations with high level officials lead it to believe there is no intention of acquiring an interest in the Escobal project.

Going back over to the positive Redhawk Resources shares gained 22% to finish the period at 53¢. The move comes months after the company updated its resource estimate for its Copper Creek project near Tucson Arizona. That estimate increased measured and indicated resources to 502 million tonnes grading 0.49% copper equivalent for 4.45 billion lbs of copper and inferred resources increased to 481 million tonnes grading 0.38% copper equivalent for 3.3 billion lbs. of copper.