ANY DOUBTS?
Reuters
Mining firms crowd key Toronto bourse index
Wednesday December 10, 5:21 pm ET
By Nicole Mordant
VANCOUVER, British Columbia , Dec 10 (Reuters) - For anyone still doubting that a metals' price rally is in full swing, the addition of a swathe of mining firms to the Toronto bourse's key index, could prove persuasive.
Announcing its quarterly revisions to the S&P/TSX Composite Index (Toronto:^GSPTSE - News), the Toronto Stock Exchange (News - Websites) said on Tuesday, eight mining firms would be included from Monday in the market barometer, having grown big enough in the past three months to meet the index's size, trading volume and other criteria.
Inclusion in the index is sought after as it opens companies to investment from tracker funds, who invest billions of dollars of investors' money every year in the shares featured in the index in a bid to mimic or beat the market's overall performance.
None of the market's 10 sectors have this year delivered as many newcomers to the main index as have the gold (Toronto:^SPTTGD - News) and other mining (Toronto:^GSPTTMN - News) groups, said Tony North, marketing and communications manager for the Canadian index services of Standard and Poors'.
"Gold has continued to rise and base metals as well, so these companies' share prices are going up in anticipation of better prices for their product," North said.
S&P has managed the Toronto bourse's indices since the middle of last year.
MARKET VALUES BENEFIT FROM SHARE ISSUES
But higher stock prices are not the only reason for the newfound swollen market values of many mining firms. Miners and stockbrokers have taken advantage of investor appetite for exposure to metals such as gold, nickel, platinum and copper and launched a raft of share issues.
Higher share prices multiplied by more shares has seen issuing firms' market capitalizations leap -- helping them meet the size threshold for entry into the composite index.
Gold producers, whose stock prices have been helped by bullion's 17 percent rise this year, dominate the list of new entrants announced on Tuesday.
The newcomers are Nevsun Resources Ltd. (Toronto:NSU.TO - News), a Vancouver-based firm with a potentially exciting gold deposit in Eritrea; Southwestern Resources Corp. (Toronto:SWG.TO - News), which is exploring for gold in China and Peru; and Rio Narcea Gold Mines Ltd. (Toronto:RNG.TO - News), which despite its name is better known for its nickel project in Spain.
Others include Miramar Mining Corp. (Toronto:MAE.TO - News), whose share price has jumped about 140 percent since last year, and Northgate Exploration Ltd. (Toronto:NGX.TO - News), which is active in British Columbia's gold country.
In the materials sector, First Quantum Minerals Ltd. (Toronto:FM.TO - News), which is mining copper in Zambia, FNX Mining Company Inc. (Toronto:FNX.TO - News) and Inmet Mining Corp. (Toronto:IMN.TO - News) will be added.
At S&P's index rejig in March, it added Eldorado Gold Corp. (Toronto:ELD.TO - News) , a miner with a big gold project in Turkey and that . In June high-flyer Wheaton River Minerals Ltd.