Toronto Stock Exchange
Investor frustration over the slow pace of the global economic recovery was seen as the culprit in the S&P/TSX Composite Index’s 143-point decline to 12,392.18 for the period.
Resource stocks and commodities were particularly hard hit, and low faith in materials led to selling of the Canadian dollar, which lost 0.2¢ to finish at US$1.01. Key factors such as the European debt crisis and higher-than-expected U.S. jobless claims shared the blame for the market’s downward trend.
Despite bad news on the global economic front, gold held its value and stayed up US$7 to US$1,669.30 per oz. But the increase didn’t transfer over to the miners, with the S&P/TSX Global Gold Index dropping 6 points to 336.40 points.
The diversified miners fared no better, and the S&P/TSX Capped Diversified Metals & Mining Index dropped 31 points to 1,044.20 points. Selling in the base metals sector drew a mixed bag of metal prices with copper prices flat, aluminum and nickel prices down and lead, zinc and tin prices slightly higher.
Lower nickel prices were the least of Mirabela Nickel’s problems. The Australian-based miner was the period’s biggest loser by percent points, with shares coming off 34% to 58¢ after Standard & Poor’s lowered its credit rating to CCC+ from B-. The downgrade was based on a three-month delay in a processing facility upgrade at its Santa Rita mine in Brazil, and higher production cash costs. The rating agency said these factors, when combined with possible lower nickel prices, could lead to lower liquidity.
On the other end of the spectrum, strong test results from Energizer Resources’ Green Giant project in Madagascar lifted the company’s shares 68% to 42¢. The one-time vanadium project is now being explored for its graphite potential, and initial results from the project’s Fotsy and Molo zones yielded flake sizes greater than 50 mesh, and graphite concentrates at purities exceeding 90%.
Silver producer Scorpio Mining announced a net loss of $1 million during last year’s fourth quarter, and its stock fell 23% to $1.30. Net earnings were down 59% largely because sales for the quarter were off 12% to $13.8 million. The dip came from metallurgical variances in the concentrate Scorpio produces, and a drop in copper production to the tune of 17%. At presstime, Scorpio is being sued by joint-venture partner Golden Phoenix Minerals.
Fortuna Silver Mines was also punished for poor financial results. The company’s shares were off 27% to $4.50 as cost escalations meant it missed last year’s guidance. The company said the higher costs would persist through 2012 and were caused by abnormally high taxes, metal sales that were less than production costs, a price adjustment and higher-than-expected smelter charges. The factors added up to a US$1.8-million loss for the fourth quarter.
TSX most active issues
Lake Shore GldLSG556301.321.021.03-0.22
Potash Cp SaskPOT1325947.2744.9045.54-0.01
Teck Res BTCKB1208436.5933.6135.61+0.47
TSX greatest percentage change
Pac NW CapPFN92126.96.36.199+18.1
Chalice Gold MCXN188.8.131.52+15.0
Lake Shore GldLSG556301.321.021.03-17.6
TSX greatest value change
Rainy River RsRR14634355.81+0.57
Premier Gold MPG22176275.25+0.49
Marklnd AGF PMMPM3480011.20-1.75
TSX Venture Exchange
The S&P/TSX Venture Composite Index rose 10.87 points to 1,566.39 after two days of gains outweighed three days of losses. Volume was up from the week before but still fairly modest at an average of 94.5 million shares traded daily.
Graphite speculation has gained significant buzz in recent months, and reached new heights in the period. Companies that focused on the commodity were clear standouts.
Northern Graphite saw the highest value gains of the index, up 56¢ in the period to $3.19 as investors clamoured to get into the latest hot commodity. The company’s share price has climbed from 90¢ in mid-January, in which time it has announced an extra-large-flake graphite research tie-in, and also closed a $10.6-million offering. The company is advancing its large-flake Bissett graphite project in Ontario, which hosts a resource of 26 million indicated tonnes grading 1.81% graphite and 55 million inferred tonnes grading 1.57% graphite.
Not far behind in gains was Flinders Resources, whose share price climbed 50¢ in the period to end at $2.73 near its closing price of $2.95 on its first day of trading, while in between the company has traded at a low of $1.52. The company owns the past-producing, 13,000-tonne-per-year Kringel graphite mine in Sweden, which hosts a historic resource of 6.9 million tonnes grading 8.8% graphite. In the period the company announced a $15-million proposed financing at $1.70 per unit, and in early March started a 2,500-metre, 35-hole drill program.
Zenyatta Ventures was the second most active company with 10.3 million shares traded, and was the highest percent gainer with a 23¢, or 144% jump, to 39¢, also due to its graphite holdings. The company released no news in the period, but a February study on its Albany graphite deposit in northeastern Ontario showed the presence of coarse-flake graphite, and a January drill hole intersected eight breccia zones containing graphite. Zenyatta is launching a 4,000-metre drill program to test a 1,400-by-800-metre airborne electromagnetic conductor.
< p>Strike Graphite rose 9¢ to 35¢ after getting a drill permit for its Simon Lake graphite project in Saskatchewan. The company, which changed its name from Strike Gold in January, acquired the Simon Lake and Deep Bay East properties last September from Zimtu Capital, and more recently acquired the Wagon property from Zimtu.
Property aggregator Zimtu bought several graphite projects early on, and in recent months has been optioning them off. Several property deals counted as qualifying transactions for companies and all companies have since seen gains. Orocan Resource, recently renamed Standard Graphite, has gone from 20¢ before making a deal in November to a 90¢ high, and Lomiko Metals has climbed from 5¢ in early January to an 18¢ high.
TSX-V most active issues
TSX-V greatest percentage change
Fort St J NickFTJ2880.100.070.07-46.1
Great Bear ResGBR870.100.080.08-27.2
TSX-V greatest value change
St Elias MnsSLI5419260.59-0.12
The Dow Jones Industrial Average rose 131.31 points, or 1.0%, to 13,212.04 during the trading week, while the S&P 500 Index edged 11.36, or 0.81% higher, to 1,408.47. The Dow and the S&P 500 closed out their best first quarter since 1998, mainly on improving economic data, with the Dow up 8.1% and the S&P 500 12%.
Rio Tinto advanced US$1.85 to US$55.59 per share in the wake of news on March 27 that it has begun a strategic review of its diamond business, including options to sell its diamond assets. The miner operates three diamond mines with a 60% interest in Diavik in Canada, full interest in Argyle in Australia and a 78% interest in Murowa in Zimbabwe. Rio Tinto also has a 100% stake in Blunder, which is an advanced diamond project in India. Separately it announced March 28 that it had received a binding offer for its specialty alumina business from HIG European Capital Partners. The company said the potential sale is in-line with its strategy of streamlining its aluminum group with the divestment of non-core assets. Rio Tinto’s specialty alumina business has three production sites in France and one in Germany.
The first national standards on carbon emissions from new power plants in the U.S. pushed down the shares of coal miners. The new regulations only apply to future power plant sites, and a one-year grace period will be given for plants currently under construction. Under the rules power plants will not be allowed to emit more than 454 kilograms of carbon per megawatt hour. Standard coal plants emit more than 800 kilograms an hour. Alliance Resource Partners plunged US$6.63 to US$60.10, Peabody Energy fell US$1.23 to US$28.96, Arch Coal slid 95¢ to US$10.71 and Alpha Natural Resources dropped 77¢ to US$15.21.
Walter Energy shares took an extra hit when the company announced on March 26 that its first-quarter results would be disappointing, following flat sales volume and weaker coal prices. It plans to decrease production from its Maple underground coal mine in West Virginia by 35%, owing to market conditions. Walter Energy shares ended the week down US$3.51 at US$59.21.
U.S. most active issues
Alpha Nat Res*ANR5995416.2314.5415.21-0.77
Potash C Sask*POT4112147.6744.9545.69+0.17
U.S. greatest percentage change
Gold Am Mng*SILA790.050.030.05+25.0
Legend Intl H*LGDI10710.180.100.13+18.1
Lake Shore Gd*LSG28581.321.031.04-16.1
Lake Vict Mng*LVCA220.100.080.08-11.1
Alliance Rs P*ARLP160068.1156.6960.10-9.9
U.S. greatest value change
Soc Quim&M Ch*SQM182184958.67+0.70
Alliance Rs P*ARLP159977060.10-6.63
Cliffs Nat Rs*CLF1663952169.26-1.52
Natural Rs Pt*NRP25036423.99-1.15