TSX falls on weak economic data

While the TSX Composite Index was down 68 points to 11,524.90 for the June 11 to 15 period it could have been much worse.

With bad economic data coming out of the U.S. — industrial production, consumer sentiment and manufacturing conditions all worsened — investors were bracing for a steep sell-off. But such negative momentum was mitigated by another key economic indicator: inflation. With inflation numbers coming in under the Fed’s target rate, investors speculated that there is more room for the Fed to pursue another round of quantitative easing, which should bolster asset prices.

Assurances from Central bankers and policy makers that the necessary plans were in place to respond to any market volatility should Greece’s weekend elections trigger any chaos also helped.

The Global Gold Index was off a point to 321.82 despite the price of gold gaining US$26. The yellow metal finished the period trading for U$1,628.10 per oz.

The Capped Metals & Mining Index was down only slightly, as it fell 6 points to 894.6 points as base metal prices were a mixed bag. While copper, zinc and lead prices were higher, nickel and aluminum prices fell.

First Uranium shares were up 26% to 24¢ for the period after its shareholders overwhelming voted in favour of deals to sell its Mine Waste Solutions tailings recovery operation in South Africa and its Ezulwini gold mine. AngloGold Ashanti will get the Mine Waste Solutions operation for a mere $335-million while Gold One International gets the Ezulwini mine for $70-million. The deal was threatened by a group of dissident shareholders who favoured a rival offer from Kumvest. The dissidents, however, reversed their position and supported the deal favored by management. First Uranium expects the deals to be closed by the end of the month.

Construction progress of a full scale alumina plant got Orbite Aluminae’s share price rolling. The company’s shares were up 19% to $1.97 after it announced that it was converting its Cap-Chat pilot plant in Quebec into a full-scale facility. In February of last year the company announced it had managed to produce high-purity alumina at the plant using its own proprietary technology. The larger facility will cost between $26 and $30 million and is expected to produce three tonnes of alumina per day.

Investors weren’t as enthused with news from South American Silver. The company’s shares were off 23% to $1.05 after it updated investors on its Malku Khota project in Bolivia. The company is having problems issues with a group of artisanal miners on the property are spreading as the artisanals are encouraging confrontations between the communities and the company, and have been impeding the project the company says. The artisanals have also joined with activists from outside the local community and have recently protested in La Paz as well as near the project site. To help settle the issue the Minister of Mines has mandated a consultation period with the local indigenous communities before the extraction phase of the project begins — which is targeted for 2014 or 2015.