It has been a rough past six weeks for investors, most particularly those heavy into junior resource stocks. The TSX Ventures Exchange, home to Canada’s most junior exploration issues, lost 5.5% of its value in March and so far in April the losses have only accelerated with another 6% drop during the past week. It has been a broad-based sell off with no specific sector being spared. The hardest hit, however, appear to be the formerly high-flying uranium players.
Saskatchewan’s Athabasca Basin yellowcake hunters JNR dropped C$0.17 to C$0.72 on heavy volume, Strathmore Minerals dropped C$0.31 to close at C$1.69, Harry Barr-led Canalaska Ventures lost C$0.11 to close at C$0.30, while UEX Corp. dropped C$0.69 to close out the week at C$1.40. Investor’s who bought these stocks a month ago have now seen their values essentially cut in half. Even Cameco, the world’s largest publicly traded uranium company, felt the impact of falling energy prices. The Saskatoon-based major saw its shares drop C$7.30 during the week to close at C$45.30.
Cardero Resources also felt the impact of the sell-off, losing C$0.53 to close out the week at C$3.25. This diversified explorer has much riding on its Mexican iron oxide copper-gold (IOCG) project currently under joint venture to Anglo-American. Located in the Baja, this project hosts at least two geophysical signatures consistent with large IOCG systems. Unfortunately, legal issues have forced a delay in the drilling.
Fronteer Development Group, which has gold exploration projects in Turkey and Mexico, as well as uranium targets in Labrador, saw its rather robust share price cut by C$0.60 to C$2 even – well off its recent 52-week high of C$3.82.
Bucking the downward trend was fellow IOCG explorer Twenty-Seven Capital, which picked up projects in Mexico and British Columbia. While both appear to have merit it is the BC project called Muskwa that immediately catches the eye. Located in the northern part of the Province, the project hosts a reported resource of 1.6 million tonnes grading 3.38% copper with much of the lower grade-looking material never having been assayed. Twenty-Seven’s main exploration aim is to evaluate potential IOCG-type deposits, like those that host the massive Olympic Dam mineralization in Australia, home to the world’s largest uranium resource. And now that the uranium moratorium in BC is over, it is these type of targets – well mineralized but never tested for U308 – that could yield the goods for uranium as well as copper. In total, the company holds seven properties in the Yukon, three in northeastern British Columbia and one in the Northwest Territories, to go along with its Mexican Property. Twenty-Seven ended the week up C$0.04 to C$0.85.
Another winner during the somber week was long-time Bolivia explorer Eaglecrest Explorations. This Vancouver-based junior added another C$0.03 to the previous week’s C$0.03 tally to close at a new 52-week high of C$0.17 on robust volume. The company is gearing up to launch a 15,000-tonne underground program on the Dona Amelia zone on its San Simon property in Bolivia.
Moving over to the big board, where both small and large gold miners got hit, Placer Dome ended the week down C$1.34 to close at C$18.05, while Barrick Gold, which successfully completed the issuance of $50 million of debt securities aimed at partially funding its Lagunas Norte project, lost C$1.34 to close at C$28 even. Located in the Alto Chicama district, Lagunas Norte is expected to begin operations in the third quarter 2005 and produce between 545,000 and 550,000 ounces of gold this year at a cash cost of $110 to $120 per ounce.
The smaller gold producers fared no better, with Meridian Gold losing C$1.82 to close at C$18.85, while Kinross dropped C$0.77 to finish the week at C$6.61 and Iamgold closed at C$6.80, down C$0.67.
The bears were the clear winners last week but moving forward the markets will looking for investors to step up to the plate and buy stocks when there is blood in the streets. That said, the panic selling could be far from over and at the end of the day it will be the direction of interest rates, China’s economic growth prospects and the price of oil that will probably rule the economic day. Stay tuned.
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