TSX accelerates, May 19-23

Energy and banking stocks helped drive the S&P/TSX Composite Index higher, while Canada’s main stock index also got a lift from reassuring comments mid-week in the U.S. from the Federal Reserve that it remains committed to withdrawing support to the economy. The S&P/TSX Composite Index climbed 193.36 points, or 1.33% to 14,708.10, and the S&P/TSX Capped Diversified Metals & Mining Index rose 21.89 points, or 2.54%, to 885.15. The New York spot price of gold stayed relatively flat at US$1,292.90 per oz., and the S&P/TSX Global Gold Index lost 0.27 point, or 0.15%, to close at 176.74.

Sulliden Gold shares surged 35.9% to $1.06 on a $300-million friendly takeover bid by Rio Alto Mining. Under the agreement Rio Alto will exchange 0.525 of its share for each Sulliden share, valuing Sulliden at $1.12 per share — a 43.4% premium over Sulliden’s closing share price on May 20. The deal would combine Rio Alto’s producing La Arena gold oxide mine in Peru with Sulliden’s Shahuindo gold-development project 30 km north, and would create a mid-tier gold firm with low-cost operations in Peru. Rio Alto shares dropped 18¢ to $1.96.

Midway Gold climbed 22% to $1.05 on news that it had signed a binding commitment letter with the Commonwealth Bank of Australia for a US$55-million, three-year senior secured project finance facility for its open-pit, heap-leach Pan project in Nevada.

Ivanhoe Mines dropped 23¢ to $1.40 in the wake of a $150-million bought-deal financing with a group of underwriters led by BMO Capital Markets, CIBC and Macquarie Capital. The offering of 83.3 million units was priced at $1.50 per unit for gross proceeds of $125 million. Each unit was made up of one share and one warrant that allows the holder to buy a share at $1.80 within 18 months. Executive chairman Robert Friedland also privately placed $25-million worth of units under the same terms. With the financing Ivanhoe Mines can work on its projects in the Democratic Republic of the Congo.

Dominion Diamond shares climbed 52¢ to $13.83. The company reported on May 20 that rough diamond production, sales and pricing exceeded targets for the fiscal first quarter (from February to April 2014), and that the estimated value of the company’s production at current sale prices exceeded expectations by $100 million. For the three months ended April 30, 2014, production at the Ekati diamond mine on a 100% basis was 24% ahead of targets, while production at the Diavik diamond mine (40%) was 13% ahead of targets. The company recorded first-quarter sales of $175.5 million. It also reported that overall pricing was up 7% since Dec. 31.

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