Canadian market slumps as global outlook sours

Volatility continued to reign supreme as investors had to weather another down period in Toronto as troubles south of the border and across the Atlantic took centre stage. Rattled investors sent the TSX Composite Index down 332 points to 11,871.23 points for the April 30 to May 4 period.

A disappointing payrolls report south of the border put the slow growth theme on the front burner for Canada’s largest trading partner, and across the ocean the news wasn’t much better. Stocks in Toronto followed the global trend downwards as investors worried over how well the sovereign debt crisis will be handled with two new governments coming to power in France and Greece. The election results were read as a sign that the general populations of the respective countries won’t tolerate the path of austerity favoured by Germany.

The bleaker global picture did little to help gold process as the metal fell US$18 to US$1,645.20 per oz. That loss of value hit gold miners as the Global Gold Index was off 11 points to 299.43.

The picture wasn’t any brighter for base metal miners as the prices for copper, aluminum, nickel, tin, lead and zinc were all down and the Capped Metals & Mining Index fell 74 points to 982.08 points.

The news wasn’t all bad for miners, however, as Allana Potash managed to make a 35% gain to 69¢ on the strength of its latest resource estimate from its Dallol Potash Project in northeastern Ethiopia. The company announced an updated resource estimate that put measured and indicated resources at 1.3 million tonnes with an average grade of 19.32% potassium chloride (KCI) for 250 million tonnes of contained KCI. The project now boasts inferred resources of 588.15 million tonnes grading 18.56% KCI.

Scorpio Mining showed the market improving results over its last quarter, and that had investors in a buying mood. The company’s shares gained 19% to finish at $1.07 after the silver miner announced a 13% increase in revenues to $ 15.6 million over the previous quarter. The increase in revenue was a product of better grades and higher metal prices. The results also showed low cash costs of $7.78 per oz., which also beat the previous quarter’s results of US$10.81 per oz.

On the downside Gabriel Resources continued to have a rough go of it. The company that is trying to build the large scale Rosia Montana gold mine in Romania lost 32% of its market cap as its share price sunk to $1.82. The slump came after a centre-left cabinet was gearing up to take office in the country. The new cabinet said it plans to reassess the project in a transparent way so that “decisions are in line with the national interest, environment protection regulations and European legislation”. Prime minister-designate Victor Ponta has already threatened to block the project once he comes to power. Many onlookers believe that the project’s status won’t be truly known until after general elections are held in November.