TSX off slightly on recession fears

 Growing concern over the possibility of another recession on the horizon had the TSX Composite Index following global markets as it fell 235 points to 12,317.46 points for the Sept.24-28 period.

The downturn came after the positive winds that accompanied the announced of QE3 began to subside and the Global gold index was relatively flat as it fell by less than a point to 89.60 points with the price of gold falling a dollar to finish up at US$1,773.90 per oz.

Continued fears of a hard landing to the Chinese growth story had diversified miners down as the Capped Metals & Mining Index fell 8 points to 897.53 points and the price of copper fell 2¢ to US$3.76 per lb.

But the red metals sluggishness pales in comparison to the steep decline in iron ores prices recently. Over the month of August the price for the metal fell roughly 30% to below US$85 a tonne by early September. That loss of value had a particularly hard impact on Labrador Iron Mines Holdings, which halted all capital spending in early September and stopped operating one of its processing plants. Such decisions have impacted its market cap and the company’s shares were off 21% to $1.12 for the period. The fall in iron ore prices is connected to reduced demand from China after steelmakers went on a buyer’s strike and liquidated inventories.

The news was better for Aureus Mining as results from a feasibility study on its New Liberty gold project had its shares moving in the right direction. The company’s market cap gained 20% for the period and its shares wound up trading for $1.19. New Liberty is in Liberia and the study outlined a mine that would produce 120,000 oz. per year over eight years and generate a pre-tax net present value of $234 million using a 5% discount rate and a US$1,400 per oz. gold price.

A feasibility study for Sulliden Gold’s Shahuindo project in northern Peru failed to generate the same sort of market enthusiasm. Not entirely surprising given that the company outlined a smaller and more expensive gold operation than what was anticipated. Sulliden is now considering a 10,000-tonne-per-day operation that will cost US$180 million to build and sustain. The mine would produce 84,500 oz. gold and 167,200 oz. silver a year at total cash costs net of silver credits of US$552 per oz. gold. Those numbers help to generate a net present value of $248.6 million using a 5% discount, a gold price of US$1,415 per oz. and a silver price of US$27 per oz. Sulliden shares were off 4% to $1.19 for the period.

Cluff Gold made a break with the past and is changing its name to Amara Mining. The move reflects a change at the top of the western African gold miner as founder and Algy Cluff left the business earlier this year and three non-executive directors have resigned. Amara shares were up 19% for the period and finished at $1.55 per share.