TSX hits rough patch, Aug. 31-Sept. 4

Confirmation that Canada slipped into a narrow recession in the first half of the year (real gross domestic product contracted by 0.5% from April to June and by 0.8% from January to March), coupled with news that the unemployment rate in August rose to 7% from 6.8% (the highest since 2009), weighed on equities. The S&P/TSX Composite Index fell 2.8% to 13,478.31, and the S&P/TSX Capped Diversified Metals & Mining Index fell 9.3% to 414.98. The S&P/TSX Global Mining Index lost 6.3% to 48.83, and the S&P/TSX Global Gold Index dropped 6.3% to 121.97. U.S. crude prices ended at US$46.05 per barrel in their second weekly gain, while the gold price fell US$11 per oz., or 0.97%, to finish at US$1,122.80 per oz.

Underground exploration results from Dynacor Gold Mines’ Tumipampa project in Peru sent the company’s shares up 11¢ to $1.55 apiece. Channel sampling in a 15-metre-long chimney excavated in the Manto Nazareno returned an average 12.14 grams gold per tonne and 0.8% copper over 1.4 metres wide. Two channel samples in the chimney graded 118 grams gold and 1.4% copper over 0.4 metre, and 101 grams gold and 0.7% copper over 0.5 metre. A drift along the southwestern extension of Manto Nazareno and channel sampling returned 11 metres of 9.89 grams gold, and 0.5% copper over 1.5 metres wide.

Cost-cutting by Dalradian Resources to downsize and restructure its management team and relocate its corporate office outside downtown Toronto lifted the company’s shares by 3¢ to 87¢. Dalradian, which is advancing its high-grade Curraghinalt gold project in Northern Ireland, announced that its president and vice-president of project management left the company, and that the CEO and chief operating officer would take over. Dalradian said the changes could save 20% annually in general and administrative costs, while moving its office away from the financial district would cut the annual lease in half.

A corruption and political scandal in Guatemala kept the pressure on Tahoe Resources. Guatemalan President Otto Perez Molina resigned on Sept. 3, and was placed in custody after Congress stripped him of his prosecutorial immunity as head of state. His former vice-president Roxana Baldetti is also in custody after resigning in May. Guatemala’s attorney general’s office accused Molina and Baldetti of receiving bribes in a corruption scandal that reduced taxes for corporations that import products into Guatemala. The two politicians deny the claims. Since authorities publicized the alleged corruption scheme in mid-April, protestors have demanded that the pair resign. Tahoe assured investors that Molina’s resignation “is not expected to affect our Guatemalan operations,” and that its Escobal mine is operating as expected. Tahoe’s shares finished at $10.45, down $1.11.