Mergers, mergers and more mergers continue to be the story for Canadian-listed mining and exploration stocks. Some of the offers to buy out fellow rivals are being met with friendly faces, while others are turning nasty. The industry consolidation cannot, however, awaken the traditional summer slumber in resource stocks as the TSX Venture Composite Index, reflective of Canada’s most speculative exploration bourse, lost a touch more than 0.75% on rather lackluster trading.
The mega merger battle for Inco continued with Teck Cominco admitting defeat in its bid, leaving Phelps Dodge and Brazil’s Companhia Vale do Rio Doce (CVRD) to duke it out. Teck’s stock-and-cash offer failed to meet the minimum tender condition. Teck did try to up its offer by trying to raise nearly C$6 billion in an overnight equity offering. Investors shied away from the offering forcing Teck to walk away from Inco. In the end, the move helped Teck’s stock and naturally hurt Inco’s value. Teck Cominco added C$1.70 to close at C$80.80, while Inco ended the week down C$2.28 to C$85.80.
Stocking with the consolidation theme, Yamana Gold has tabled a friendly takeover offer for Viceroy Explorations. Yamana is offering up 0.97 of a Yamana share for each Viceroy share. Viceroy’s Board of Directors unanimously supports the transaction and recommends that shareholders tender. At stake is Viceroy’s advanced Gualcamayo gold project in Argentina, which hosts a measured and indicated resource of 11.8 million ounces of gold. Viceroy ended the week up C$1.11 at C$10.35 and Yamana closed at $10.66, down C$0.78 on the week.
The World’s largest gold miner is not having such an easy time with the management of NovaGold as Barrick Gold tries to take over both NovaGold Resources and Pioneer Metals. Barrick has offered NovaGold shareholders $14.50 per share in cash, along with a friendly C$1 per share cash bid for Pioneer. The move would give Barrick Gold 100% of the Donlin Creek gold project in Alaska, as well as end a legal dispute between NovaGold and Pioneer that could hold up development of NovaGold’s Galore Creek copper-gold-silver deposit in British Columbia.
Pioneer is on side with the offer but NovaGold not only recommended the rejection of Barrick Gold’s proposal but has also filed a lawsuit in the Supreme Court of British Columbia against Barrick claiming that, among other things, Barrick misused confidential information in its competing bid for Pioneer Metals. Barrick says that the suit is defensive in nature and unfounded. Having just gone through the IMA Explorations-Aquiline Resource’s lawsuit that saw IMA lose its project, investors know that the only good lawsuit is no lawsuit. NovaGold ended the week up C$0.21 at C$18.84.
It maybe a sign of the times when surface sample results spark a buying binge but that is what happened this past week to Bravo Venture Group. The junior reported several multi-ounce gold surface outcrop and rubble samples including one grading nearly 477 grams gold per tonne on its wholly owned Woewodski Island project in Alaska. Bravo soared to over a buck before settling down at C$0.88 for a C$0.23 gain.
Astron Resources got a boost on news that it acquired a BC company that holds the Pumpkin Hollow copper property in Nevada. The project hosts a measured and indicated resource of 312 million tones grading 0.44% copper. Astron ended the week at C$1.07 for a stellar C$0.67 gain.
Bear Creek Mining continued to move higher on drill results from the Corani silver project in Peru. The values for 36 additional drill holes included 124 metres grading 81 grams silver per tonne. Bear Creek ended the week at C$8 even, up C$0.30.
On the uranium front, Aurora Energy Resources, held 49.3% by Fronteer Development Group moved higher on news that it hit 0.25% U308 over 15 metres at White Bear Lake just 20 km east of its Michelin uranium deposit. Aurora added C$1.39 on the news to close at C$7.39, while Fronteer added C$0.42 to close at C$5.40.
For the big gold guys it was a mixed week as Barrick Gold gained C$0.42 to close at C$35.54, while Goldcorp lost C$1.16 to end the week at C$32.22 and Kinross Gold gave back C$0.15 to close at C$13.84.
Overall the resource markets remain quiet but, despite the notion that the U.S. has inflation in hand, my pocketbook seems to suggest otherwise. This fact along with strong drill results and merger activity should propel the market forward once investors get back from their summer holidays. But only time will tell, so stay tuned.