TSX up on strong job gains, Oct. 1-5 week

The S&P/TSX Composite Index gained 0.8% or 101.53 points during the Oct.1-5 trading week to end at 12,418.88.

The lift came from better-than-expected job gains from the U.S. and Canada. The unemployment rate in the U.S. fell to 7.8% in September – the lowest since Barack Obama became president – as 114,000 jobs were added. 

In Canada, the jobless rate rose to 7.4% from 7.3% earlier despite the economy creating 52,100 jobs in September. That’s five times more positions than expected.

The S&P/TSX Capped Diversified Metals & Mining Index closed at 914.87, up 17.34 points, while the S&P/TSX Global Gold Index slipped less than 2 points to 347.82. The spot price of gold managed to hold onto a US$10 per oz. gain, closing at US$1,781.30.

The week’s top percentage and value gainer was Primero Mining. The Mexico-focused gold producer soared 40%, adding $2.06 per share to $7.20. The boost came after the miner received a favourable tax ruling from Mexican authorities on its advanced pricing agreement with Silver Wheaton, confirming that it’s appropriate to record earnings from sales under the agreement using realized prices rather than spot prices. As a result, analysts believe the positive ruling will bump up the company’s cash flow and valuation as it had roughly a US$56-million contingency plan in place incase of an adverse outcome.

Torex Gold, another Mexico-focused junior, was one of the most actively traded stocks with 23.9 million shares traded, ending at $1.92, down 20¢. On Oct. 1, the firm announced a $350-million bought deal financing and in a separate release said it filed a National Instrument 43-101 technical report in support of the feasibility study released earlier for its Morelos gold project in Mexico.

Under the offering, a syndicate of underwriters led by BMO Capital Markets will purchase on a bought deal basis by way of a short form prospectus, 175 million units for $2 apiece for net proceeds of $350 million. Each unit will contain one share and a quarter of a warrant, where a full warrant will allow a holder to buy one share at $2.65 within 12 months of the transaction closing. The proceeds from the offering, which is expected to close on Oct. 23, will be used to construct the Morelos mine and for general corporate costs.

Sulliden Gold also saw a heavy volume of trades, sliding 9¢ to $1.10 on 23.1 million shares traded. On Oct. 3, the Toronto-based junior said it will scrape the new milestone-based bonus program, where it would reward insiders and consultants for reaching expected goals in developing the Shahuindo gold project in Peru. While the company outlined the program in its Management Information Circular dated Sept. 5, it was largely overlooked until the Oct. 1-5 week. Investors upset with the plan pushed the company’s stock down 23% in the days prior to Sulliden axing the program, after which the stock rebounded, adding 17.8% before the week ended.