Toronto Stock Exchange, Sept. 23-27

Positive economic data out of China firmed up commodity prices and took the resource-heavy S&P/TSX Composite Index higher. The Index was up 33 points for the period, finishing at 12,844 points.

But the positive momentum is not likely to be sustained, with stocks selling off at press time as investors braced for a possible shutdown of the U.S. government. Squabbling between Democrats and Republicans south of the border wasn’t the only bad news for investors, as increased tension in Italy suggested that one of the biggest bond markets in Europe could be headed for more stormy waters.

Perhaps the anticipation of such events was behind gold’s strong period, as the yellow metal, which often shines in serious periods of distress, was up US$20 per oz. to US$1,341 per oz. But the strong performance of the underlying metal couldn’t boost the equity of the companies that mine it, as the S&P/TSX Global Gold Index was off 2 points to 175 points.

Denison Mines has scuttled the planned merger of Rockgate Capital and Mega Uranium. Denison took advantage of Mega’s sliding market fortunes by tabling a superior offer for Rockgate. In August Mega made a stock offer that valued Rockgate shares at 25¢ apiece. Rockgate shareholders were set to vote on the deal on Sept. 25. But by Sept. 17, the day Denison made its pitch, Mega’s offer was down to just 19.5¢ due to the falling value of its stock. Denison’s bid values Rockgate at 23¢ a share at current prices. Rockgate paid Mega a $1-million termination fee and endorsed Denison’s offer. All three companies’ shares traded flat for the period, as Denison ended at $1.13, Rockgate at 20¢ and Mega Uranium at 8¢.

Mirabela Nickel saw its share price sink after running into trouble with a big customer. Mirabela shares were off 71% over the period after saying that Votorantim, who smelts Mirabela’s nickel concentrate, would close its smelting facilities in November because of the weak nickel market. The news came just a day after Mirabela said it would voluntarily de-list from the Toronto Stock Exchange due to weak trading volume. It signed a deal with Votorantim in 2008 that called for Votorantim to smelt half of the nickel produced from Mirabela’s Santa Rita mine in Brazil. Mirabela says the contract wasn’t set to expire until 2014, and is exploring its legal options. Mirabela also said it may not hit its production guidance due to a nitrate supply disruption.

Vista Gold’s shares fell 41% to 47¢ after announcing that tight market conditions have led to a need to drastically cut costs at its Mount Todd gold mine in Australia. It also announced a one-year extension on the maturity date for its $10-million loan with Sprott. The extension cost $350,000 of its shares. The cash crunch had already forced the company to cut salaries of its senior staff by 20%.

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