Tough times for TSX

It was rough ride for investors over the May 2-6 period as the TSX Composite Index fell 383 points to finish up at 13,601.49.

The drop was severe enough, and accompanied by enough volume, to ignite worries that a significant correction to the recent run-up in commodities and equities could be underway.

The fall came after the week started out promising enough. First there was the killing of Osama Bin Laden, and then there was a majority victory for the Conservatives that were meant to bring certainty to the market. Neither event proved beneficial.

With the price of oil moving below US$100 per barrel the Canadian dollar fell in lockstep until stronger-than-expected employment reports offered support and the Loonie settled at $1.04 U.S. by week’s end.

The fall in the Capped Metals and mining Index – an 80 points drop to 1,405.74 points – reflected concerns about global demand. The prices for copper, aluminum, nickel, tin lead and zinc were all lower.

Gold’s stay above the US$1,500 per oz. proved to be brief as the yellow metal fell by US$75 to close out the period at $1,491.00 taking the Global Gold Index down with it as it fell 30 points to wind up at 374.10 points.

But the woe of gold investors was amplified in the silver sector, as the metal fell a dramatic 27% to finish the period at just US$35.29 per oz. That downward pressure exhibited exceptional force on silver miners, with Silvermex Resources, Silver Wheaton and Silver Standard Resources amongst the hardest hit.

But the bleak period for miners didn’t unfold without some stars. Vena Resources gained 18.5% to finish up at 32¢. The uptick came on word that the environmental impact assessment on its Azulcocha project was approved by the Peruvian government.The company said that it, along with its partner at the project, Trafigura, is pushing ahead on construction of the mine.

Continuing with the good news Niocan’s shares jumped 17% to $1.15 after it said it would do a private placement at a 15% premium to its closing price on May 3rd. The placement is being purchased by Forbes & Manhattan and will see the company issue roughly 5 million common shares at a price of $1.15 per share. The money will, Niocan, says, be used to pay for its operating costs and to develop its pipeline of niobium assets.

Extract Resources managed to carve out a 12% gain for the period to finish at $8.05. The boost came on the back of announcement from Kalahari Minerals that CGNPC Uranium Resources is negotiating a cash offer for Kalahari with the deadline for a firm offer being extended to June 17. Kalahari holds a 42.76% stake in Extract, and a takeover by CGNPC could well result in a downstream offer for Extract. Extract’s flagship asset is the Husab uranium project in Namibia. The company is in the midst of an optimization and resource extension program there.