Earnings and acquisitions were the name of the game this past week as the Canadian junior market consolidated for the second straight week following eight weeks of stellar gains. Helped by a strong showing on Friday, Canada’s junior exploration bourse, the TSX Venture Exchange, trimmed its early week loses to close out the week only modestly lower with a 0.8% drop.
On the earnings front, Inco recorded its best year ever in 2005 with a full-year profit of $836 million or $3.75 per share, compared with 2004 net income of $619 million, or $2.95 per share. Not to be outdone, bride to be Falconbridge reported that its fourth-quarter profit had nearly doubled to $280 million, or $0.75 per diluted share and full-year earnings totaled $872 million, or $2.50 a diluted share. Investors however, elected to focus on potential problems with the pending C$12.5 billion takeover of Falconbridge, which would create the world’s biggest nickel miner. Of concern are delays in obtaining approval from U.S. and European competition regulators for the acquisition. Inco ended the week up C$2.74 to C$57.91, while Falconbridge added C$1.06 to close at C$37.76.
Silver Wheaton reported earnings of $25.3 million, or 15 cents per share, from the sale of 9.7 million ounces of silver in 2005. Sales tallied $70.9 million for the year. The company holds the rights to purchase all of the silver produced by Goldcorp Luismin mines in Mexico, and by Lundin Mining’s Zinkgruvan mine in Sweden. Lundin Mining posted a pre-tax profit of $44.06 million, up from $5.94 million in 2004. Silver Wheaton shares were up C$0.50 to C$8.43, Goldcorp shares were up C$0.70 cents at C$28.80 and Lundin Mining shares dropped C$1.85 to close at C$22.50.
On the acquisition front, Wolfden Resources agreed to pick up Inmet Mining’s Izok development project in Canada’s far north for 13.5 million shares or 18% of Wolfden’s issued and outstanding shares. The Izok deposit is one of the world’s highest grade undeveloped base metal deposits with an indicated resource of 16.5 Million tonnes grading 2.2% copper, 11.4% zinc and 60 grams silver. The deposit lies 200 km south of Wolfden’s 100% owned High Lake and Ulu deposits in Nunavut. The move also promoted Wolfden to announce plans to spin-out certain of its gold assets into a new gold focused company. Wolfden ended the week at C$3.77, down C$0.05.
Shares of Agnico-Eagle Mines hit a new 52-week high after the company said it exercised its option to acquire 100% of the Pinos Altos project in northern Mexico from Industrias Penoles. Under the deal, Agnico-Eagle will pay $32.5 million, issue 1.809 million shares and an additional $6.5 million worth of shares (valued near the closing date). The closing date is set for March 15. With an indicated resource of 12.5 million tonnes grading 3.9 grams gold and 102 grams silver per tonne, investors liked the deal. Agnico-Eagle closed out the week at C$29.67, up C$2.66.
Another company to hit a 52-week high on heavy volume was Skye Resources. Inco agreed to exercise its pre-emptive right to participate in Skye’s C$25 million financing at a price of C$4.25 per share in order to maintain its 12.4% interest in the junior. Skye holds the Fenix nickel project in Guatemala and is gearing up to put the past producer back into production. A couple of weeks back I mentioned that the big volume interest in Skye suggested something is in the works and based on this week’s action the feeling still exists. Skye ended the week at a new 52-week high of C$6.55, up C$0.90.
In the “investors elected to yawn” column, Greystar Resources hit multiple intersections on a step out hole some 250 meters beyond the previously known limits of the mineralization in the Veta de Barro area of its wholly-owned, multi-million ounce Angostura gold-silver deposit in northeastern Colombia. The hole cut 1.35 grams gold per tonne over 74 metres, plus 2.41 grams gold per tonne over 28.1 metres, 2.06 grams gold per tonne over 11.6 metres and 11.3 metres grading 2.09 grams gold per tonne. Shareholders couldn’t have cared less, as Greystar ended the week up C$0.10 to C$8.40.
Canada’s biggest gold miner, Barrick Gold, lost C$0.12 to close at C$32.88, Placer Dome ended the week down a penny at C$27.12 and Kinross Gold, which finally filed its long awaited financial results, ended down C$0.30 at C$10.99.
The price of bullion closed out the week on a strong note and investor interest in junior resource stocks showed solid signs of life late Friday. Could the two-week down-trend be nearing an end? Only time will tell, so stay tuned.