CANADIAN STOCK EXCHANGES -
What Will 2012 Bring To Resource Stock Investors ? – I Wish I Knew
By E.A. Schiller
As 2011 comes to an end we have all encountered speed bumps ranging from wars in distant lands and economic uncertainties in Europe. Hopefully these effects will be minimized in 2012 and give some market stability to our domestic stock exchanges. As European countries replace old leaders with new leaders we wonder if this new blood will made economic changes more palatable. All we can do at this time is review what happed this year and hope for the best next year. Here in Canada the Hathor- Cameco/Rio Tinto take over has dominated the uranium news front and I am sure we have lots of US Hathor Exploration Limited (HAT-TSX) shareholders looking for news of a higher bid. In August 25, Cameco started the bidding war with a $3.75 offer, followed by Rio Tinto offer for $4.15 in October 14 and on November 14 Cameco countered with a $4.50 bid with a November 29 expiry date. On November 17th Rio Tinto stepped up with a $4.70 bid per share and accepted by the Hathor board. The new bid excited shareholders into anticipated frenzy and on the 17 th Hathor shot up to $5.00. Hathor shareholders now have to decide whether to wait for a higher Cameco bid or take $5.00 and bale out. Hathor directors and officers have tendered their approximately 6,351,400 or 4.6% of the outstanding common shares to Rio Tinto subject to certain exceptions in the event of a Superior Proposal, among other things, support the Offer. The Rio Tinto bid expires on November 30 subject to certain conditions. With weapons drawn the battle field leaves shareholders trying to decide if higher bids are forthcoming. The bottom line comes down to the value of Hathor’s Roughrider deposit and the price of uranium now, or in the future.
For those looking for a Hathor look-alike in Saskatchewan, Fission Energy Corporation (FIS-TSX-V) is well positioned in the Athabasca basin that is host to the richest uranium deposits in the world and dominated by Cameco and its producing mines and a strong candidate in the Hathor bidding war. Fission and its limited partner, the Korea Waterbury Uranium Limited Partnership will begin a $7.3 million winter exploration program, including 25,000 meters of drilling with three drills at its flagship Waterbury Lake project. The program comprising an estimated 69 holes will be directed to a variety of uranium mineralized or high priority geophysical targets. In addition, Fission and 50% partner ESO Uranium Corp (USO-TSX-V) will be drilling, scheduled for November their PLS property (Patterson Lake South project) located near the former producing Cluff Lake mine and the UEX-Areva Shea Creek discoveries. Fission has an impressive stable of uranium properties – a total of 13 in Saskatchewan, two in Alberta, one in Quebec and one in Peru. Fission stock trades in the $0.95 - 1.00 range up from 50 cents earlier this fall.
Returning to mergers, shareholders of Grande Cache Creek Corporation (GCE-TSX) welcomed the definitive take-over bid by Winsway Coking Coal Holdings and Maruben Corporation at a cash price of $10.00 per share. This offer represents a 70% premium to the price of the stock at the time of the offer and amounts to an approximate $1.0 billion transaction. Grand Cache holds coal leases containing 346 million tonnes of coal resources in the Smoky River Coalfields located in west-central Alberta. On October 28 after the take-over bid announcement GCE stock rose $4.00 to $9.80 and continued trading in that range throughout November
Another definitive merger that had a lot of premium built into it was the Detour Gold Corporation (DGC-TSX) offer to take over Trade Winds Venture Inc. (TWD-TSX-V). TWD shareholders will receive 0.0142 shares of a Detour Lake share and 0.0001 in cash for each TWD share held. At the time of the offer, September 23, Detour shares traded at $32.00 and TWD shares were trading at 29 cents. The offer equates to $ 0.455 per share for TWD. In mid-November TWD was trading at 44-45 cents a share. Detour Gold’s primary focus is the advancing the development of its flagship Detour Lake gold project, north of Timmins in northern Ontario. The project has a current mineral reserve of 14.9 million ounces using a gold price of US$850/oz and schedule to commence production in 2013. Trade Winds have claims adjacent to this project and offer potential new gold resources to the operation. Detour trades around $31.00 in mid-November up from $27.00 in early October.
Another topical story I have been following that has brought nothing but good news to shareholders comes from Ontario and Gold Canyon Resources Inc. (GSU-TSX-V) and their Springpole Project east of Red Lake. This has been a Cinderella story that continues to extrude good news as the company’s drill program expands the size of the Portage Zone by way of impressive drill hole intersections highlighted by Hole SP11-077 that intersected 106 meters of 3.36 grams per tonne gold (348 feet at 0.098 oz/t Au) including a high grade core of 10.10 g/t Au over 28.0 meters. In mid-November results from hole SP11-091 was released and it intersected 310 meters (1,017 feet) of 1.87 g/t Au including 129 meters at 3.30 g/t demonstrating excellent continuity within the higher grade core of the Portage Zone. Two barge-based drills have ceased operating due to freeze-up conditions and two land-based drills will continue operating over freeze-up until the Christmas break. Drilling will continue in January from both land and lake based sites. The stock has performed accordingly rising from $1.60 this summer to $3.00 in mid-November then dropped to $2.80 in late November. A $15 million financing was completed in early November to allow the company to aggressively evaluate the project.
To become better informed investors, two venues worth attending are the Mineral Exploration Round-Up in Vancouver January 23-26 and the Prospectors and Developers Conference in Toronto March 4-7. In both cases hotel reservations should be made earlier rather than later to insure you have accommodations within walking range of the meetings. It can rain in January in Vancouver and it can snow in March in Toronto, so come prepared for inclement weather.