The U.S. Federal Reserve’s quarter-point interest rate hike, combined with the friendly take-over of Aurora Platinum by FNX Mining, sparked a flurry of activity on Wednesday, and Friday’s much improved U.S. job numbers made for a reasonable trading week for Canadian junior exploration stocks.

All eyes were on tiny Aurora Platinum as FNX Mining Company agreed to acquire all of the outstanding shares of the fledgling explorer in a deal valued at $39 million. The friendly acquisition calls for shareholders to get 1 FNX share for each five Aurora shares held. Using FNX’s share price just prior to the announcement – C$9.17 – this offer values Aurora at C$1.83 per share. Little wonder that Aurora shareholders had a good week, as Aurora stock climbed C$0.65 to close at C$1.77. For its part, FNX ended the week up C$0.61 to C$9.20.

Of interest to FNX is Aurora’s ownership interest in the prolific Sudbury Basin mining camp of Ontario where FNX is operating. Aurora owns 60% of the Falconbridge Mine property, which was home to historic production and covers over eight kilometers of favourable, relatively unexplored Sudbury Basin footwall environment considered promising for high-grade, copper-nickel-platinum-palladium-gold deposits.

Bema Gold, on the other hand, has decided not to move forward with its Dec. 2004 offer to purchase shares of Arizona Star Resource Corp. Citing current market conditions and the company’s desire to focus on its Kupol project and the Refugio mine, the deal, originally valued at C$283 million, is off. Arizona Star holds a 25% interest in the Cerro Casale gold-copper project in Chile with Bema holding 24% and Placer Dome the remaining 51%. Bema ended the week up C$0.15 to C$2.72, while Arizona Star dropped C$0.40 to close at C$5.10.

Investors’ love affair with uranium explorers continued as the metal topped $26.25 per pound, double its five-year average. The world’s largest publicly traded uranium producer, Cameco, added C$3.27 to close at C$52.54; Energy Metals added C$0.37 to close at C$2.72, Standard Uranium ticked up C$0.20 to close at C$1.20; Uranium Power added C$0.17 to C$0.61; while Strathmore Minerals managed to stay basically flat at C$1.83.

Hunter Dickinson-led Anooraq Resources fell to a new 52-week low of C$0.86 before recovering to close at C$1.01, well off its C$2.70 high hit in June. Preliminary economic assessment of the Drenthe and adjacent Overysel North platinum group metals deposits, a JV between Anooraq and Anglo American Platinum, indicates that, at metal prices of $850/oz for Platinum, $180/oz for Palladium, $400/oz for gold, $6.60/lb for nickel and $1.40 for copper and an exchange rate of 6:1, the economics for the project are robust with the NPV at a 10% discount hitting US$293.3 million with an internal rate of return of 35%.

An old market darling that fell to a new 52-week low was Philex Gold. Back in 2000, Philex was the story of the day when its joint venture partner discovered significant copper-gold porphyry mineralization on the North property in the Philippines. In 2004, the inferred mineral resource came in at 219 million tonnes grading 0.51% copper and 0.74 grams gold. Oxide material accounts for 99 million tonnes grading 1.09% copper equivalent. Not bad, but too small for mighty Anglo, so the project has languished. Philex ended the week at C$0.21, down C$0.04.

Over on the big board it was a good week for the gold producers. Barrick Gold, which reported decent first quarter results last week, added C$0.27 to close at C$28.72. Placer Dome, which tabled terrible financial results last week, rebounded this week to close at C$17.22, up C$0.42.

Greystar Resources, with nearly 8 million ounces of gold resource outlined on their Angostura deposit in Colombia, inched ever so close to a new 52-week high on robust volume. The Canada-AIM listed company, which has nine drill rigs on site, closed the week at C$4.47, up C$0.37.

So, buyers came back to the market, albeit meekly. But with interest rates rising, the emergence of inflation starting to take shape, and the Summer siesta season on the horizon, the future direction of small cap explorers remains cloudy.


The market for uranium explorers is picking up once again. Check out these companies as a way to invest in the sector: International Uranium Corp, Crosshair Exploration and Mining.