TSX picks up steam, March 16-20

Canada’s benchmark index gained after the U.S. Federal Reserve signalled it was in no hurry to raise interest rates. The news lowered the U.S. dollar and increased commodity prices, as commodities priced in U.S. dollars became more affordable to holders of other currencies. The S&P/TSX Composite Index rose 1.4% to finish at 14,942.41, the S&P/TSX Capped Diversified Metals & Mining Index increased 4.9% to 691.28, and the S&P/TSX Global Gold Index advanced 4.4% to 164.78. The gold price rose 2% to US$1,182.40 per oz. — after hitting a two-week high of US$1,187.80 — while silver advanced 6.5% to US$16.74 per oz., and copper climbed 3.3% to US$2.76 per lb. The Canadian dollar finished the week at US79.50¢ — a 1.6% gain.

Higher metal prices helped lift the shares of First Quantum Minerals by $1.15 to $15.01. First Quantum also reached an agreement with a bank syndicate on changes to its net debt to earnings before an interest, taxes, depreciation and amortization covenant under its $3-billion facility and the $350-million Kansanshi facility. The miner requested the changes due to Zambia’s new tax and royalty regime, and the fall in commodity prices.

Silver Wheaton advanced $1.35 to $25.48 per share. It closed an US$800-million bought-deal financing with a syndicate of underwriters. The money will be spent on acquiring another 25% gold stream from Vale’s Salobo mine in Brazil. Silver Wheaton also reported its 2014 results. Revenues in 2014 totalled US$620.2 million, down 12% from US$706.5 million in 2013. After including a US$68.2-million impairment charge related to its Mineral Park and Campo Morado silver interests, the company’s annual net earnings were US$199.8 million, or 56¢ per share, compared with US$375.5 million, or $1.06 per share, in 2013 — a 47% decrease. 

Potash Corp. of Saskatchewan fell 86¢ to $40.70. The fertilizer giant expects its 2015 pre-tax earnings will decrease by $75 million to $100 million, due to changes to potash taxation in conjunction with Saskatchewan’s 2015–16 provincial budget. The company said the impact reflects “a significant change in the timing of the annual allowable deduction for expansion and maintenance capital expenditures and is most pronounced in 2015 — and to a lesser extent 2016 — as we wind down our capital-expansion projects and incur higher maintenance capital spending as a result of these expansions.” Potash Corp. noted that the provincial government is planning a potash taxation review. “While we understand the difficult revenue situation facing the government, we are nearing completion of a $6-billion investment in Saskatchewan, which was based on the existing tax structure remaining in place,” president and CEO Jochen Tilk stated in a news release. “Changing the rules midstream impacts the ability of our shareholders to earn a fair return on their capital and undermines Saskatchewan’s relative competitiveness.”