TSX suffers under global fears of slowdown

Just a week after markets were bolstered by an agreement amongst most European Nations to work towards a new treaty, markets sold off for the Dec. 12-15 period with the 

TSX Composite being no exception. It fell 401 points to finis up at 11,504.42 points as investors worried that the European Central Bank may stick to it guns and avoid quantitative easing at all costs.

Worries that the ECB wouldn’t print money was bad news for gold as it fell US$139 to US$1,577.20, breaking through a technical support level that had been established over the course of the last 12-months. The situation resulted in the Horizons Gold Bear ETF being one of the biggest gainers for the period as it climbed 20% to finish at $9.43. As could be expected, Gold miners moved down in-step with the metal as evidenced by the Global Gold Index coming off 31 points to finish the period at 363.53.

The diversified miners also suffered in the pessimistic environment and the Capped Metals & Mining Index was off 96 points to finish up at 1,020.19 points as the prices for copper, aluminum, nickel, tin, lead and zinc all took hits.

Crocodile Gold was the period’s most actively traded mining stock and also its largest gainer by percentage points. The company saw its share price soar by 32% after word got out that Luxor Capital Group, a New York-based investment company, would make a partial bid for it. Luxor already owns roughly 20% of Crocodile, which operates gold mines in Australia. Luxor plans to acquire another 215.4 million shares at US56¢ apiece, bringing its current stake to 85%. That offer represents a 61% premium to the junior’s 20-day volume-weighted average price but Crocodile said it was an opportunistic and low offer considering the company has recently been trading at its 52-week low of around 32¢.

Ivanhoe Mines shares were one of the big losers for the period as investors sold the stock after an arbitrator ruled in favor of one of its largest investors, Rio Tinto. Rio had filed against Ivanhoe over its right maintain its ownership stake without getting diluted away by Ivanhoe’s shareholders rights plan. The decision paves the way for Rio to increase its ownership in Ivanhoe to above 50%, thus gaining effective control of the Oyu Tolgoi copper and gold deposit in Mongolia without having to pay a hefty takeover premium. Rio will likely move up to just over a 50% stake in Rio sometime in January. Ivanhoe shares were off 25% to $16.70 for the period.

It was all about drilling and length for Golden Peaks, as word that the company had outlined gold mineralization over a 2.3-km strike length sent the company’s shares up 20% to 30¢. The long strike length is associated wit the Sondana vein at its Tanoyan project in Indonesia, where drills returned a highlight intercept of 14.95 metres grading 0.8 grams gold.