TSX continues winning streak, Nov. 3-7

The S&P/TSX Composite Index gained for the fourth straight week, up 77.51 points to close at 14,690.83. Gold and diversified miners both added 10 points, with the S&P/TSX Global Gold Index ending at 144.86 and the S&P/TSX Capped Diversified Metals & Mining Index at 697.71. The spot price for gold rose US$5.60 to US$1,178.50 per oz. 

Duluth Metals skyrocketed after joint-venture partner Antofagasta agreed to buy the Toronto-based explorer for its Twin Metals Minnesota polymetallic project. The Chilean copper producer will provide Duluth $96 million, or 45¢ a share, in an all-cash transaction, reflecting a palatable 284% premium to the junior’s 20-day moving average price. It will also give Duluth $2.3 million in a private placement and extend its US$10-million bridge loan maturity by one year. The deal should close in January 2015. Duluth soared 477%, or 34¢, to 41¢, as 14.3 million shares changed hands. 

Shares in Eastern Platinum more than doubled after the company said it would sell its South African platinum group metal assets for US$225 million to China-based Hebei Zhongbo Platinum. The deal, if it closes, represents a whopping 241% premium to the Nov. 6 close, Raymond James analyst Alex Terentiew writes. 

“We have several reservations about the proposed deal that implies a sizeable premium and comes from a company that [as far as we can tell] has never been mentioned in the press or online,” Terentiew cautions. He has placed the company under review pending more details of the transaction. Eastern Platinum ended at $1.78, up 105%. 

Romarco Minerals saw heavy trading after it received a mine operating permit, the final major permit, for its flagship Haile gold project in South Carolina. It jumped 8¢ to 65¢, on 28.5 million shares traded. 

The permit allows the company to conduct mining, milling and reclamation activities at the site. Before Romarco can start mining, it will need to provide US$30 million for reclamation purposes and another US$30 million over the mine’s life. The mine operating permit should become effective Nov. 21, unless there is written request for review. 

Desjardins analyst Michael Parkin says the chances of a review are slim. He believes the probability of a bid for the Haile project has greatly improved with the latest permit. “It is a desirable project for majors, with production that can move the needle, as we forecast average annual production of 250,000 oz.” Parkin anticipates production will start in the second half of 2016. 

Royal Gold topped the value-added chart, advancing $9.32 per share to $73.96, on no news. In the prior week, the precious metals royalty and stream firm announced a US$18.7-million net income on revenue of $69 million in the period ended Sept. 30, up from a $15.2-million profit, on revenue of $56.5 million a year ago. 


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