TSX rises as investor’s expect future growth

The TSX Composite Index was up 127 points to 11,841.98 for the holiday shortened Aug. 7-10 period after beginning the period on a tear as it caught up to U.S. markets.

The run was based on the notion that Central Banks were prepared to do almost anything to help stimulate growth. By mid-week, however, that enthusiasm cooled as doubts arose over the European Central Bank’s bond buying. Investors feared that the move may come too late and may not be effective. Investors were still of the belief that poor Chinese economic data will push that country’s central bank to step in and stimulate.

In Canada the unemployment rate rose one-tenth of a point to 7.3% in July as the economy shed 30,400 jobs — far worse than the 6,000 jobs analysts were expecting to be added.

The Global Gold Index was up 5 points to 298 as the price for gold was US$8 higher to US$1,622.80 per oz. while the Capped Metals & Mining was up 31 points to 874.1 points as the price for copper moved a penny higher to US$3.39 per lb.

One of the more interesting deals of the period was a streaming agreement between Silver Wheaton and HudBay Minerals. HudBay, which is looking to finance its $1.5 billion Constancia copper mine in Peru, sold some silver and gold production from both Constancia and its 777 mine in Manitoba to Silver Wheaton for US$750 million. That amount buys Silver Wheaton all of the silver and gold production from the 777 mine until the end of 2016 and the start of commercial production at Constancia. Once Constancia is up and running, Silver Wheaton will receive all of the silver production and 50% of the gold production from 777 and 100% of the metal from Constancia. Silver Wheaton shares were up $2.71 to $30.33 for the period.

In a more conventional deal, Endeavour Mining it looking to buy Avion Gold for stock worth $389-million. If completed the deal would consolidate its position in West Africa and grow its expected gold production by 50% this year. To get that bump in production Endeavour is offering a 56% premium to Avion’s share price. News of the proposed takeover lifted Avion shares by 30% to 69¢.

Drill results helped lift Elemental Minerals fortunes as the company gained 44% to finish the period at 85¢. The results were from its Kola deposit in the Republic of Congo and represented the highest grade of potash found by Elemental yet at 37.80% K2O over 3.11 metres and 34.20% K2O over 3.75 metres.

And Semafo saw its share price rise 23% to $3.75 after it said it was dealing with production issues by bringing in a new Chief Executive. Semafo’s founder, Benoit La Salle will make way for the company’s Chief Operating Officer Benoit Desormeaux after the company reported a net loss of $17.5 million for the second quarter, compared a profit of $30.6 million a year earlier. Gold production for the quarter fell 5% to 60,500 oz.