TSX spirals downward May 14-18

VANCOUVER — The Toronto Stock Exchange continued to gather downward momentum during the May 14-18 trading period as growing uncertainty in the Euro zone and lagging commodity prices drove the index to seven month lows.

The S&P/TSX Composite Index hit its lowest point since October, dropping 414.03 points during the week en route to an 11,280.64 close.

Spot gold experienced a large swing as prices in New York fell to eight-month lows of US$1527 per oz. on May 16 before rebounding to US$1592 per oz. to end the week. As a result the S&P/TSX Global Gold Index remained flat, closing at 286.13.

Gold producers dominated volume trading, as investors scrambled to deal with the weekly swing in spot prices. Kinross Gold (K-T, KGC-N) saw the highest volumes with 29.6 million shares changing hands en route to an 8¢ loss. Eldorado Gold (ELD-T, EGO-N) also experienced high volumes with 17.1 million shares traded resulting in a 37¢ net loss during the week. Canadian producer Barrick Gold (ABX-T, ABX-N) was next in line with 16.3 million shares exchanged en route to a 78¢ gain in share price.

On the base metals side, Mercator Minerals‘ (ML-T) shares plunged 24% or 19¢ during the week on 17.1 million share trade volumes following the release of the company’s first quarter results. Mercator reported first-quarter earnings of US$1.5 million, resulting in a net zero earning per share. The company’s operating cash flows clocked in at US$7.1 million, leading analysts to question its ability to fund a series of growth prospects.

Mercator had previously downgraded its full-year production forecast at its flagship Mineral Park mine due to lower ore grades and difficulties with mill processing. The mine is now expected to produce 89-million copper-equivalent pounds, a decrease from an earlier guidance range falling between 90 million and 100 million lbs. of copper equivalent.

McEwen Mining (MUX-T, MUX-N) saw shares plummet 24.5% to $2.21 following news that the Argentinean government was seeking a repatriation of funds from its 49%-owned San José gold mine in the country’s Santa Cruz province. The repatriation could affect McEwen’s ability to internally fund ongoing development at its El Gallo gold-silver project in Mexico’s Sinaloa State.

The bottom continued to fall out for Baja Mining (BAJ-T) as the company announced it may not be able to find capital for further development at its copper-cobalt-zinc Boleo project near Santa Rosalia, Mexico. Baja shares tumbled 30% to a 24¢ close on 7.2 million weekly volumes as chief executive officer John Greenslade also resigned.