Canadian Market Roundup - Week of 4/20/07
By Doug Hornig
April 20, 2007
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It was more of the same for Canadian resource stocks this past week, as despite some volatility, strong metal prices propelled Canada’s resource-heavy junior market to highs last seen in May 2006. By the end of the week, the TSX Ventures Exchange, Canada’s largest junior exploration bourse, rallied 1.27%.
Cuba-focused miner Sherritt International stepped into the merger hype by offering to buy Dynatec in a C$1.42 billion stock transaction. Under the friendly proposal, Dynatec shareholders will receive 0.19 Sherritt share and about 0.0635 of a FNX Mining share for every one of their shares. The FNX stake comes because Sherritt owns a 25% stake in the junior nickel miner, which concurrent with the transaction has agreed to buy Dynatec's Mining Services Division for cash at a price to be determined based upon independent valuations. Meanwhile the attraction to Sherritt is Dynatec’s 40% stake in the Ambatovy nickel project in Madagascar. Sherritt investors bailed on the news, driving its stock down C$2.11 to C$15.03, while Dynatec added C$0.63 to close at C$4.42 and FNX soared C$1.20 to C$26.66.
It has been a while since positive news has put Canadian diamonds back onto investor radar screens, but that changed this past week with Dianor Resources bagging a big stone on its Leadbetter deposit 12 km northeast of Wawa, Ontario. The junior recovered a 1.52-carat diamond from the processing of four 60-tonne conglomerate samples being completed by Kennecott Canada at its dense-media-separation facility in Thunder Bay. The full processing is expected to be completed by mid-May, with a full report and diamond results to follow shortly thereafter. The large stone is described as a light-yellow and 7.8 mm in its longest dimension. Previously, the largest diamond ever recovered from the Leadbetter conglomerate tipped the scales at 0.667 carat. Dianor ended the week up C$0.52 to C$1.45.
Even tantalum sparked the interest of investors as Commerce Resources
announced that it is taking action to get environmental approval for its Upper Fir tantalum-niobium project near Blue River in British Columbia. A new resource estimate came out in early March this year. The project has an indicated resource of 23 million tonnes grading 177 grams Ta2O5 per tonne, or 9 million lbs., and 1,100 grams per tonne Nb2O5, or 58 million lbs., using a cut-off grade of 100 grams per tonne tantalum. The inferred resource is 13.3 million tonnes grading 178.4 Ta2O5, or 5.25 million lbs. and 1,100 grams per tonne Nb2O5, or 33.7 million lbs. With environmental approval, the company can go ahead with a pre-feasibility study for the Upper Fir project this fall, which would allow it to start applying for mine construction permits. Commerce ended the week at C$1.34, for a robust C$0.60 gain.Moly mania continued as the Sprott Molybdenum Participation closed its initial public offering and in the process raised C C$189 million on the sale of 37.8-million units at $5.00 apiece. Sprott Molybdenum Participation was launched as a holding company to principally invest in molybdenum exploration and development companies. It also has a mandate allowing the purchase, sale and trade of the physical metal or equivalents. Shares of Sprott Molybdenum closed at $5.80.
Catching the ire of shareholders, uranium producer Denison Mines came out and said that it will continue to seek acquisitions but it won't buy properties in early development that carry a stiff price in today's heated market. Company president, Peter Farmer told shareholders at the company's annual meeting that the current uranium spot price of US$113 a pound is not sustainable for the long term. Denison ended the week down C$0.79 at C$13.89.
It was a good week for shareholders of Marathon PGM as the company announced yet another discovery on its advanced namesake project in Ontario. The latest results included 23.4 grams platinum group metals plus gold and 0.28% copper over 20 metres. Marathon ended the week up C$0.50 at C$6.55.
High than expected inflation data out of Canada has pundits calling for an interest rate hike, while first quarter economic growth out of China hitting more than 11% means interest rate hikes could well be in the offing in that part of the world. Will a global trend to higher rates quash demand for the metals? Only time will tell, so stay tuned.