TSX slips with gold price in Feb 27 to March 2 period

Vancouver — The S&P/TSX Composite Index closed down 81.95 points at 12,643.82 points in a period that saw gold plunge over US$96 per oz. at one point before ending at US$1,712.40 per oz. The price of gold dropped from US$1,788 per oz., the highest level since November, to as low as $1,691.60 per oz. after Ben Bernanke gave no indication the U.S Federal Reserve would start any new quantitative easing. The gold drop was accelerated by auto selling and trading as the price dropped below thresholds, but it was then propped up by those who saw a buying opportunity.

Needless to say the S&P/TSX Global Gold Index was down in the period, though only 15.85 points to 369.82 points as the significant price drop in the period only puts gold slightly lower than it was in mid-February. The S&P/TSX Capped Diversified Metals and Mining Index fell 28.95 points to 1,179.73 points.

Pretium Resources hit an all-time trading high of $18.15 in the period before ending at $17.92 for a $1.12 gain. The company built on gains it made the week before after it released an updated scoping study on its Brucejack project that outlined a US$1.45-billion net present value at a 5% discount rate and an internal rate of return of 25%, both after tax and based on US$1,100 per oz. gold. Pretium recently announced a 24,000-metre infill drill program at Brucejack as the company works towards a feasibility study, and it also recently closed a $23.1-million financing at $18.50 per flow-through share.

Little-traded Ursa Major Minerals managed the highest percentage gain after announcing an all-share merger with Venture-listed Prophecy Platinum, jumping from 5.5¢ to 12.5¢ for a 127% gain. The deal has Ursa Major shareholders receiving one Prophecy share for every 25 Ursa shares held, which, based on share prices the day before the deal was announced, represents 15¢ per Ursa share. Prophecy holds the sizable Wellgreen polymetallic deposit in southwest Yukon and a nickel-platinum project in Manitoba, while Ursa holds the Shakespeare platinum-group-nickel-copper mine near Sudbury where it recently suspended production.

Eldorado Gold was the most traded company on the TSX with 38.5 million shares traded in the period following the release of its annual results on the last day of the previous period. The company reported US$318.7 million in profits attributable to shareholders for 2011 after selling 659,000 oz. gold at an average operating cost of US$405 per oz. Eldorado also just completed its acquisition of European Goldfields. The activity saw the company’s stock price go up as much as 44¢ during mid-week trading but ultimately it ended down 42¢ at $14.63.

Cline Mining was the second highest traded company on the TSX with 20.5 million shares traded, though like Eldorado its share price ended down. The company released its 2011 annual results, reporting comprehensive income of $11 million, and warned that coal prices continue to weaken. Cline stated that the benchmark price for Australian coking coal was $320 per tonne in April 2011, and this April it expects it to be $210 per tonne. After rallying 20¢ the day before the news, Cline’s share price dropped 30¢ on the results and ended down 19¢ at $1.72.