Canadian markets performed over the last week

It seems that every year the start of the PDAC marks a sell-off in resource companies, and this year was no exception. On the bright side, the monstrous earthquake that hit Japan late in the week did not seem to scare investors into selling North American stocks, although all our sympathies are with those affected in Japan. Once all the trading was done, the TSX Ventures Exchange, home to more junior exploration companies than anywhere else in the world, had lost 7.09 per cent, while the TSX Gold Index had dropped 4.32 per cent.

I assume there were no blockbuster deals at PDAC?

Not really, but a couple of rather minor sales were announced. Teck Resources unloaded its 34 per cent stake in the Carrapateena project in South Australia to an affiliate of OZ Minerals for US$134 million. Teck can also receive a further US$25 million when certain milestones are reached on the production front. Drilling by Teck on this property has returned up to 905 metres grading 2.17%. Teck ended the week down C$3.19 at C$50.93.

Elsewhere, Yamana Gold sold a majority stake in its Agua Rica project in Argentina to Xstrata and Goldcorp. Yamana, which is retaining a 12.5 per cent interest, pockets US$310 million in staged payments and gets a revenue stream based on gold sales. Yamana ended the week down C$0.09 at C$12.36.

On the earnings front, Uranium One posted operating earnings of US$50.6 million in the fourth quarter of 2010 and stated that 2011 production will hit 10.5 million pounds of U308 at a cash cost of US$18 per pound. Uranium One ended the week down C$0.49 at C$5.96.

And sticking with earnings, base metal miner HudBay Minerals earned US$24.5 million, or US$0.16 per share, in the fourth quarter of 2010. That is a big jump from the US$7.2 million or US$0.05 per share delivered in the same period of 2009. Included in the latest quarter was a foreign currency loss of US$4.2 million. For the year, HudBay made US$73 million or US$0.48 per share. HudBay closed at C$15.89 for a C$1.03 loss.

Meanwhile, Equinox Minerals, which is in the midst of a US$4 billion takeover battle for Lundin Mining, posted fourth quarter earnings of US$92 million or US$0.13 a share. That compared well with a loss of US$27.5 million or US$0.04 per share in the same period of 2009. The company produced 74.8 million pounds of copper in the quarter, at an average cost of US$1.64 per pound. Equinox ended the week down C$0.55 at C$5.21.

Any drilling news of note?

Yes, although the market wasn’t always overly impressed. Allana Potash failed to gain traction despite tabling a one metre intercept running 44.5% KCl, and another running 22% KCl over 3.8 metres on its project in Ethiopia. Allana ended the week down C$0.02 at C$1.65.

And Batero Gold got caught in the downdraft too, despite cutting 460 metre of 0.7 grams gold per tonne and 0.12% copper on the La Cumbre zone at its Batero-Quinchia project in Colombia. Batero ended the week down C$1.48 at C$4.82.

Anything else going on, aside from the PDAC jamboree itself, of course, to which we’ve already given substantial coverage.

Great Panther Silver got a boost after announcing an update to the mineral resource
at its Topia mine in Mexico. The measured and indicated resource now stands at 171,000 tonnes grading 864 grams silver, 1.56 grams gold, 7.53% lead and 4.37% zinc. The inferred section now amounts to 285,000 tonnes grading 868 grams silver, 1.5 grams gold, 6.5% lead and 3.7% zinc. Great Panther ended the week down C$0.09 at C$4.30.

Still in silver, shares of Wildcat Silver added C$0.31 to close at C$1.49, on news that Silver Wheaton will take down a C$13 million private placement comprised of 10 million shares at a price of C$1.30 each. In return, Silver Wheaton obtains a right of first refusal over any silver stream or royalty financing that Wildcat may choose to sell from its Hardshell project located in Arizona. Silver Wheaton investors were following the general trend in the wider market, though, and its shares closed down C$2.91 at C$40.73.

Also in silver, Endeavour Silver lost C$0.13 to close at C$8.87 after announcing that the proven and probable reserves at its mines in Mexico dropped in 2010, but that gold and silver production exceeded targets.

In other news, Charles Fipke-led Metalex Ventures continued to pull out some nice sized stones from the Metalex-Arctic Star joint venture property in Ontario. Two 0.72 carat diamonds were recovered from two of the latest drill holes. Not enough for investors, though, and Metalex ended the week down C$0.04 at C$0.92.

So, the curse of the Prospectors and Developers Association of Canada Convention Trade show in Toronto hit the Canadian markets once again. Typically, the junior resource stocks perform better in the first quarter of the year than the second so perhaps a period of weakness is to be expected. With no real bombshell deals coming out of the PDAC in Toronto some investors are concerned that significant drill results will be few and far between until the summer drill season heats up in the Yukon. We will see what next week brings us.

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