TSX Completes Dramatic Comeback To Close Higher For Second Straight Day; Imperial Metals In The News

For the second day in a row, Canada's main stock market, the Toronto Stock Exchange, managed to rally late in the day and turn earlier big losses in to a gain. On this Friday, the index was under pressure from the off and eventually hit a day low of 15,182 almost right in line with the midday chimes amid geopolitical concerns - especially those stemming from the first reports of increasing tensions in Ukraine.

But the re-emergence of bargain hunters - and also maybe news that a ceasefire appears to be holding in Gaza and that the new leader in Iraq is calling for unity among locals against insurgents - all led to a dramatic improvement and the overall index slowly but surely recovered all of its earlier losses, and some more, over the second half of the day. The TSX completed a near 120 point turnaround it closing above 15,300.

Early Friday we learned that Canadian employment in July was up 42,000, twice the original consensus expectation and many more times above the meagre figure of 200 jobs reported initially last week, before a human error in calculating the original number was corrected. But CIBC was among those to say that while the headline number appeared impressive, details within the report were not quite as strong.

Sectors were mixed, but the influential Energy and Mining sectors were higher, which helped the resources heavy index.

Of commodities, brent and West Texas Intermediate crudes gained on supply concerns after Ukraine forces reportedly attacked and partially destroyed a convoy entering the country from Russia.

December gold futures were down Friday, settling at near US$1,306 an ounce on the Comex division of the New York Mercantile Exchange, representing a fall of near 0.4% on the week. September silver fell Friday, settling at just under US$20 an ounce, or down near 2% over the week.

Imperial Metals Corporation (III.TO), which have been under severe pressure all this month and lost 7% in hitting fresh 52 week lows yesterday,recovered near 16% Friday amid reports it is raising $100 million in debt to cover cleanup costs at its Mount Polley copper and gold mine in British Columbia. The tailings dam burst at the mine, an incident that could cost the company up to $500 million to clean up.

Bloomberg said Imperial Metals plans to raise $100 million selling convertible notes to help pay for the cleanup. Imperial's largest shareholder, oil-sands investor Murray Edwards, has committed to buying $40 million of the 6%, 6-year senior unsecured convertible debentures via Edco Capital Corp., a company Edwards controls.

The Fairholme Partnership LP committed to another $40 million of the notes

Funds from the sale and Imperial's operations, and insurance proceeds, will cover costs at Mount Polley as well as the completion of its Red Chris project, Bloomberg reported.

Investors appear to taking some solace from this, as well as a statement last night in which Imperial said: "While the precise costs of remediation and repair are presently unknown, the company believes that the costs can be managed over time, given the underlying value of the company's assets and by the resources provided by the additional financing."

Thursday night's Q2 result may also be underpinning the stock. The company said adjusted net income in the June 2014 quarter was $8.9 million ($0.12 per share) compared to $6.0 million ($0.08 per share) in the June 2013 quarter. Revenues were $51.1 million in the June 2014 quarter compared to $41.3 million in the comparative 2013 quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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