Toronto Stock Exchange
The S&P/TSX Composite Index was down 342 points to 11,877.72 points during the period, as investors focused on tough global issues.
The period began with surprise news for some that the eurozone was officially in a recession, although the looming fiscal cliff in the U.S. — which could result in a recession south of the border — and more signs of slower growth in China did not put investors in a buying mood.
The selling sentiment carried over to commodities, as both gold and oil prices were off. The price for the yellow metal fell US$17 to US$1,714.70 per oz., and the S&P/TSX Global Gold Index was down 27 points to 307.99. The S&P/TSX Capped Diversified Metals & Mining Index was down 45 points to 909.48 points, with the copper price flat at US$3.45 per lb.
On the positive side, the period got rolling with mergers and acquisitions activity as Osisko Mining pitched a friendly, all-share deal to acquire Queenston Mining and its Upper Beaver project, along with four potential satellite deposits in Ontario’s Kirkland Lake region. The deal values Queenston at $550 million, or a 45% premium, to Queenston’s 30-day, volume-weighted average price for the period ended Nov. 9. Queenston shares were up 20¢ to $2.75 for the period, while Osisko shares fell $1.35 to $8.47 per share.
Investors showed confidence that an upcoming referendum would break the way for Gabriel Resources. The company, which is trying to get the large Rosia Montana gold project in Romania into production, saw its shares rise by 19% to finish up at $2.75. The gain followed Gabriel’s statement that the referendum on Dec. 9 would likely determine the project’s fate.
On the downside, weak third-quarter results sent Iamgold shares down, as the gold miner’s shares fell $3.65 to finish at $11.75. Iamgold had lower profits due to lower gold production and sales. Earnings per share came in at US21¢ a share, below the consensus of US24¢ per share and last year’s US30¢. Sales were off 13% from last year to 188,000 oz., as production fell at its jointly held operations with AngloGold Ashanti in Mali. The company blamed lower grades and processing issues for the decline in production.
Shares of Nautilus Minerals fell 48% to 40¢ after the company said it would halt construction at its sea floor production system and fire 60 workers to preserve its cash position. The company says it can no longer afford to finance development at its Solwara 1 project in Papua New Guinea. Nautilus is fighting with the government of Papua New Guinea over shared development costs. Nautilus says the government is obliged to pay $23.5 million for costs incurred in the development of the Solwara 1 up to January 2011, and to make pro-rata capital contributions, which total another $51.5 million.
TSX most active issues
TSX greatest percentage change
|Pac NW Cap||PFN||104||0.07||0.06||0.07||+||18.1|
|Horizns G Bear||HGD||1594||10.61||8.74||10.25||+||17.1|
|Hard Creek Ni||HNC||685||0.07||0.05||0.05||–||35.7|
|Labdr Iron Mns||LIM||2829||0.89||0.62||0.62||–||29.5|
TSX greatest value change
|Horizns G Bear||HGD||1593767||10.25||+||1.5|
|Belo Sun Mng||BSX||3746888||1.62||+||0.12|
TSX Venture Exchange
The S&P/TSX Venture Composite Index declined in tandem with broader market sentiment during the trading sessions, falling 5%, or 65 points, before closing at 1,235.34.
Markets view the fiscal cliff situation in the U.S. with skepticism, and further struggles in the European Union and a stumble in China’s recovery compounded bearishness.
Global concerns took a toll on natural resources, with gold prices declining US$17 en route to a US$1,714.70 per oz. close, while December contracts on the New York Mercantile Exchange for benchmark oil fell US4¢ to US$85.41 per barrel on Nov. 16.
Ascot Resources got a boost from drill results from its historic Premier gold-silver property north of Stewart, B.C. Ascot led the value-added category during the week by jumping 14¢ to a $1.31 close. The company’s 2012 drill campaign focused on its Big Missouri, Martha Ellen and Sparky zones. On Nov. 14, Ascot announced it cut one metre of 126.5 grams gold per tonne and 622 grams silver per tonne in hole 12-426, which was collared on the Calcite Cut zone in the Big Missouri area. Other highlights from the program include 35 metres grading 2.11 grams gold in hole 12-430 and 24 metres of 2.04 grams gold in hole 12-426. Ascot’s drilling has extended over 5.5 km, and the company is reporting good continuity.
Kaminak Gold saw its shares fall 35¢ during the week after releasing drill results from a 2012 program at the Coffee gold project in the Yukon’s White Gold district. The company closed at $1.41 per share. On Nov. 14, Kaminak announced it had concluded a 69,000-metre drill program and received final assays for a maiden resource estimate due next quarter. The company extended its oxidized gold zone at Coffee’s Supremo T5 target by 200 metres north along strike, with highlights including 58 metres grading 1.72 grams gold from 36 metres depth in hole 342, 23 metres averaging 3.63 grams gold from 61 metres depth in hole 339 and 14 metres of 4.96 grams gold from 44 metres depth in hole 341.
On the financing side, B.C.-based Diamcor Mining announced it raised an additional $4 million from its partner, luxury diamond retailer Tiffany & Co. The financing includes a $2.4-million term loan and a $1.6-million convertible debt debenture. In March 2011, Tiffany & Co. agreed to an alliance wherein it would have a first right of refusal to buy 100% of future production from Diamcor’s Krone-Endora at Venet
ia project in Limpopo, South Africa. Diamcor picked up Krone-Endora from De Beers in February 2011, and the junior is commissioning and expanding its project in a bid to pursue near-term production.
TSX-V most active issues
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|New Destiny Mg||NED||108||0.1||0.06||0.1||+||66.6|
|Upper Can Gold||UCC||188||0.16||0.1||0.16||+||60|
|Western Melv M||WMM||75||0.31||0.2||0.2||–||41.1|
TSX-V greatest value change
|Argex Silver C||RGX||2230457||1.2||+||0.1|
Mounting concern about Washington’s ability to avoid the fiscal cliff drove markets lower. The Dow Jones Industrial Average fell 1.8%, or 227.08 points, to end the week at 12,588.31, while the S&P 500 Index dropped 1.5%, or 19.97 points, to 1,359.88. The Philadelphia Gold and Silver Index was down 8.5%, or 15.44 points, at 165.67.
Stocks in positive territory included Harry Winston Diamond, which announced it would pay $500 million in cash for BHP Billiton’s diamond division, which consists mainly of its 80% stake in the Ekati mine in the Northwest Territories. Harry Winston also owns 40% of the nearby Diavik diamond mine. Harry Winston shares ended the week up 13¢ at US$13.45.
Quaterra Resources rose 13.8%, or 5¢, to US42¢ per share after discovering a new silver zone at its Nieves silver property in Mexico. Two kilometres west of its current resource, drill hole 190 intersected 0.8 metre of 1,865 grams silver per tonne, part of a larger vein interval starting at 243.6 metres averaging 341 grams silver. Holes 191 and 192, drilled 200 metres west and east of 190, intersected 0.9 metre of 289 grams silver and 1.1 metres of 284 grams silver. The Nieves project is a joint-venture with Blackberry Ventures I.
Cornerstone Capital Resources jumped 38% higher to US7¢ per share on news that its mineral rights to the Cana Brava gold-silver concession in Ecuador had been restored after an appeal. The rights had been revoked in November 2008 because the concessions had been mistakenly placed on a list of ones whose owners allegedly had not filed their preliminary environmental impact statements by the time Ecuador’s 2008 Mining Mandate and moratorium was declared.
Strong operating cash flow in the third quarter sent shares of OM Group up US67¢ to US$19.23. The specialty chemicals group generated US$96 million of cash flow from operations, compared with US$22 million in last year’s third quarter. The figure was the highest in nearly four years and the second-highest in a decade. Diluted earnings per share from continuing operations were US18¢, compared with negative US$2.18 per share in the third quarter of 2011.
U.S. most active issues
|Alpha Nat Res*||ANR||72229||8.16||6.88||7.1||–||0.9|
U.S. greatest percentage change
|China Shen Zh*||SHZ||240||0.28||0.19||0.24||+||13.2|
|Lake Vict Mng*||LVCA||73||0.05||0.02||0.04||–||38.4|
|Gold Am Mng*||SILA||380||0.02||0.01||0.01||–||33.3|
|Rare Elemt Re*||REE||2177||3.9||3.03||3.16||–||20|
|Avalon Rare M*||AVL||1486||1.55||1.2||1.23||–||18|
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|Soc Quim&M Ch*||SQM||1318297||58.03||+||0.38|
|North Am En P*||NOA||33907||3.06||+||0.04|
|China Shen Zh*||SHZ||239914||0.24||+||0.03|