TSX moves higher on Eurozone hopes, Aug. 13-17

The S&P/TSX Composite Index jumped 199 points or 1.7% during the Aug. 13-17 trading week to close at 12,089.89.

The boost came in part from positive economic data and Germany’s commitment to save the euro currency union.

The S&P/TSX Global Gold Index edged up 2 points to 300.11, while the spot price of gold declined US$4.70 per oz. to US$1,615.80. The S&P/TSX Capped Diversified Metals Index slipped 8 points to end at 865.62.

Great Basin Gold was the week’s biggest percentage loser and most active stock. The Vancouver-based company said it faces a “liquidity challenge” due to operational problems that impacted revenue in the second-quarter. Its chief projects – the Burnstone mine in South Africa and the Hollister project in Nevada – underperformed during the period thanks to infrastructure and technical problems. The company cited delays in ore development and water management problems at Burnstone and difficulties accessing higher grade stopes at Hollister as the causes of the shortfall in revenue.   

For the period ended June 30, Great Basin generated $32.4 million in revenue, down from $56.7 million a year ago. Net loss climbed to almost $22 million or 5¢ a share, compared $1 million or zero cents a share a year ago.

To deal with the financial problems, the company formed a special committee to consider alternatives to steer the company. It also initiated an agressive cost reduction program and is working with its lenders to restructure its current term loans.

Despite the challenges, the company said the projects won’t need to undergo an impairment charge at this time.

Great Basin’s chief financial officer Lou Van Vuuren has been named interim CEO, replacing former president and CEO Ferdi Dippenaar.

The junior lost 56% to end the week at 23¢ on 26.6 million shares traded.

Barrick Gold also saw heavy trading during the week. The world’s largest miner said it is looking to unload its African assets in Tanzania. It confirmed it was in talks with China National Gold regarding its 74% stake in African Barrick Gold. Analysts say the potential sale will reduce the producer’s average cash cost, while slightly shrinking its production base.

Earlier in the week, it reported initial production at its 60%-held Pueblo Viejo gold mine in the Dominican Republic, with commercial production expected later this year. Barrick expects the mine to produce 100,000-125,000 attributable gold oz. for 2012 at low cash costs. Goldcorp holds the remaining 40%.

Barrick gained $1.30 a share to end the week at $35.60 on 12.2 million shares traded.

Royal Gold was the week’s top value gainer, adding $2.64 per share to close at $77.35. The Denver-based company boosted its gold stream in Thompson Creek Metals’ Mt. Milligan copper-gold project to 52.25% by closing the acquisition of another 12.25% on Aug.13. Thompson Creek estimates that the proposed mine in British Columbia will start commercial production start late next year.