Canadian markets performed over the past week

Even though it was a holiday-shortened trading week last week in both Canada and the United States, traders were kept extremely busy by the continued flow of corporate earnings for the fourth quarter of 2010 and by some interesting drill results that came in. Once all the trading was done the TSX Ventures Exchange, home to more junior exploration companies than anywhere else in the world, had dropped 1.98 per cent, while the TSX Gold Index had fallen 1.50 per cent.

Anything new on the proposed merger between the TMX Group and the London Stock Exchange Group?

Well, funny you should ask because the Ontario government has started to throw its weight around, and has announced plans to set up a committee to review the proposed merger. Given that the Federal government is already looking at the deal from the Canadian Investment Act perspective, and that the Ontario Securities Commission and the entire province of Quebec all want their say in the matter, there is now a bigger risk that the entire deal could hit a political snag. But we will see.

Speaking of big politics, I see that the gigantic Pebble project in Alaska is in receipt of a positive preliminary economic assessment.

Nothing we did not already know, though, and the market responded accordingly. The copper-gold-molybdenum project hosts a measured and indicated resource holding 55 billion pounds of copper, 67 million ounces of gold, and 3.3 billion pounds of molybdenum. The reference model projected that over a 45 year period the project could produce 31 billion pounds of copper, 30 million ounces of gold, 1.4 billion pounds of moly, 140 million ounces of silver, 1.2 million kilograms of rhenium and 907,000 ounces of palladium, all while mining only 32 per cent of the total Pebble resource. Capital costs are a staggering US$4.7 billion, excluding the costs for outsourced power, road and port infrastructure. Be that as it may, Pebble has met with steep opposition from environmental, sportsmen's and fishery groups. Northern Dynasty, which owns 50 per cent of the project, closed down C$1.89 at C$17.45. London-listed Anglo American owns the other 50 per cent.

You were speaking of earnings a moment ago, before politics intervened?

Goldcorp came out with some stellar numbers. The gold major tabled fourth quarter earnings of US$331.8 million compared with US$66.7 million for the same period in 2009. The company produced 678,600 ounces at a total cash cost of US$164 per ounce. For 2010 as a whole Goldcorp had earnings of US$1.6 billion, or US$2.14 per share, compared with US$240.2 million or US$0.33 per share in 2009. Goldcorp ended the week up C$1.53 at C$46.

Meanwhile, Yamana Gold posted record revenues of US$535 million for the fourth quarter of 2010, and earnings of US$160 million, or US$0.22 per share. Production came in at 286,682 gold equivalent ounces at cash costs of negative US$34 per gold equivalent ounce. For 2010 as a whole, earnings hit US$451 million, or US$0.61 per share, on production of 1,047,191 gold equivalent ounces at a cash cost of US$50 per gold equivalent ounce. Yamana ended the week up C$0.17 at C$12.35.

And Centerra Gold reported fourth quarter earnings of US$153.1 million, or US$0.65 per share, on revenues of US$323.3 million. That was slightly better than 2009 fourth quarter earnings of US$140 million, or US$0.60 per share. The company produced 249,866 ounces at a total cash cost of US$311 per ounce. Centerra ended the week up C$0.13 at C$18.44.

Lots of happy faces there. How about drilling news?

International Northair Mines sparked a trading frenzy when it announced a drill intercept of 80.45 metres running 123.5 grams silver per tonne from the San Gregorio zone on its La Cigarra project in north central Mexico. Shares of International Northair closed at C$0.38 for a C$0.225 gain, on over 32 million shares traded. That’s impressive stuff, given that the company only has a little over 50 million shares, fully diluted, on issue.

Elsewhere, Hathor Exploration cut new uranium mineralization 40 metres to the east of the East Zone on its Roughrider project in Saskatchewan. Highlights included 16.5 metres of 2.14% U308 and 18 metres of 1.3% U308. Hathor ended the week down C$0.03 at C$3.06.

In corporate news, but sticking with uranium, Denison Mines launched a friendly A$57 million cash bid for White Canyon Uranium. Under the terms of the deal, Denison would pay A$0.24 cash per White Canyon share. White Canyon owns a number of advanced exploration projects in Utah, close to Denison’s White Mesa mill. Denison also announced a C$65 million share issue priced at C$3.55 per share. The uranium producer ended the week down C$0.32 at C$3.76.

The copper market had a rather volatile week. How did the Canadian companies react?

Price action was driven by individual company news rather than the price of copper itself. A case in point was Copper Mountain, which announced that it remains on track to begin full production at its Copper Mountain open-pit copper project in British Columbia by June 2011. That was good enough to keep the ship fairly steady, and Copper Mountain closed at C$6.72 for a C$0.08 gain.

Also ticking up was Redzone Resources, which bucked the downtrend in copper by cutting 108 metres grading 0.81% of the red metal as well as 0.015% molybdenum at its Lara project in southern Peru. Redzone added C$0.06 to close at C$0.71.

There was a bit of a pull back on the junior bourse this past week, but with the TSX-V having recently hit two and a half year highs, a modest correction is probably a good thing. Commodity prices look set to remain high for the foreseeable future and that should bode well for the resource-rich Canadian markets. We will see what next week has in store.

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