TSX makes gains in May, Apr. 29 – May 3

The S&P/TSX Composite Index shrugged off fears that this May would be like the last two and bring about a sell-off. Rather than sliding, the Index headed into the month looking strong, posting a 155-point gain to climb to 12,438.03 for the period.

The momentum was the same south of the border, where the Dow Jones Industrial Average topped 15,000 points for the first time, with jobs numbers improving in the U.S. Meanwhile the TSX got a boost from a Statistics Canada report showing building permits were up for the third month in a row. Municipalities issued $6.5-billion worth of building permits in March — 8.6% more than the previous month.

The good news on the economic front did not help the gold market, as its price was off US$2 to US$1,464.20 per oz. The soft price hurt miners, with the S&P/TSX Global Gold Index falling three points to 197.58.

The diversified miners showed a more positive correlation to the improving economic forecast, as the S&P/TSX Capped Diversified Metals & Mining Index was up 28 points to 821.64, and the price for copper climbed 13¢ to US$3.31 per lb.

Allied Nevada Gold’s news was related to the current gold environment. The company says it is considering scaling back its Hycroft Mill expansion in Nevada. Originally expected to build a 130,000-ton-per-day mill by early 2015, it is now thinking 75,000 tons per day sounds about right. The smaller plant would constitute phase one, with the 130,000-ton plant still in the cards further down the line. A lack of details on the plan, however, left market watchers uneasy. Allied did not offer definite timelines, hard estimates on the new capex or even much in the way of details on the new process. The company’s shares were off $1.40 to $10.11.

Tahoe Resources said it would hike its net smelter return royalty to 5% from the mandated 1%. The move is being made to quell escalating protests around its Escobal silver project in Guatemala. The protests reached such fervor that authorities imposed a state of emergency in nearby communities. By increasing its royalty the company will be the country’s largest taxpayer once the mine starts production in 2014. The company’s shares fell 2% to $16.99.

Capstone Mining is one company intent on taking advantage of the current slump in mining equity valuations. The company said it would spend US$650 million to add a third operating mine to its portfolio — BHP Billiton’s Pinto Valley mine in Arizona — which should increase its copper production by 160%. BHP recently spent $194 million to bring Pinto Valley back to life, after its initial attempt to restart the mine failed in 2008. Capstone shares were among the most actively traded with 20 million shares changing hands. The company’s stock price was up 18¢ to $2.25 for the period.

TSX most active issues

TSX greatest percentage change

TSX greatest value change