Canadian Markets performed this past week

The holiday shortened trading week proved to be a good one for gold and silver bugs but the equity markets still seem to be in profit taking mode. Gold broke through the US$1,500 per ounce mark, while silver breached US$46 per ounce but the broader resource rich Canadian markets failed to follow suit. Once all the trading was done this past week, the TSX Ventures Exchange, home to more junior exploration companies than anywhere else in the world, had dropped 0.41 of a per cent, while the TSX Gold Index managed to add 1.78 per cent.

Looks like merger mania is continuing in the resource space.

Yep, this past week it was Capstone Mining looking to add more copper to its portfolio and Hathor Exploration looking to consolidate its uranium interests. Capstone has offered to buy Far West Mining in a C$725 million friendly transaction. Under the proposal Far West shareholders will get C$1 in cash, plus 1.825 Capstone shares for each Far West share. Of interest to Capstone is Far West’s Santo Domingo copper-iron-gold project in Chile. The asset has an indicated resource of 485.5 million tonnes grading 0.57 per cent copper equivalent. The bid is being backed by South Korea's state-owned Korea Resources, which will acquire a 30 per cent interest in the Santo Domingo copper project by paying US$210 million to Capstone. Korea Resources will also take an 11 per cent equity interest in Capstone by paying a cool US$170 million. In return Korea Resources will get to buy 50 per cent of the copper and iron concentrate produced by Santo Domingo. Capstone ended the week down C$0.25 at C$3.96, while Far West tacked on C$0.40 to close at C$8.08.

Hathor Exploration has agreed to buy Terra Ventures in a move that consolidates the Roughrider uranium project in Saskatchewan. Under the friendly deal, Terra shareholders will get 0.2 of a Hathor share for each Terra share held. Hathor ended the week up C$0.23 at C$2.18, while Terra added C$0.085 to close at C$0.42.

Right after denying rumours of a possible takeover, Banro announced that it has signed a non-binding memorandum of understanding with China Gold International Resources to negotiate a proposed joint venture transaction on the development of Banro's Twangiza property in the Democratic Republic of the Congo. Banro added C$0.81 to close at C$3.51. Seems a sensible solution for a tricky problem at last.

On the earnings front, Teck Resources tabled first quarter profits that more than doubled thanks to strong coal and copper prices. On an adjusted basis, the diversified base metal miner earned US$450 million, or US$0.76 per share in the first three months of 2011, up from the US$198 million, or US$0.34 per share tabled in the same period of 2010. Teck ended the week up C$4 at C$53.83. Quadra FNX also rode the base metal train by releasing production figures for the first quarter. The miner produced 46 million pounds of copper and that was good enough for a C$1.80 jump in its share price to C$15.54.

On the down side, shares of Eastern Platinum dropped C$0.13 to close at C$1.17 after the company reported a decline in its quarterly production. The Crocodile River mine in South Africa, produced 25,387 ounces of platinum group metals a 17 per cent drop from the same period a year earlier. Chief executive Ian Rozier pointed to an improvement later this year when the shallow Crocette deposit comes on stream.

Over to the drill bit where Extorre Gold sparked some excitement by reporting the initial drill results from the recently discovered Zoe Vein on its Cerro Moro gold-silver project in Argentina. Highlights included 4.84 metre grading 64.6 grams gold and 7,530 grams silver per tonne. Extorre ended the week at C$9 for a C$2.02 gain. Not to be out done, Newstrike Capital cut 230.95 metres running 7.51 grams gold per tonne at its Ana Paula project in Mexico. Newstrike closed up C$0.65 at C$2.29.

Kalimantan Gold got a boost after announcing that it has entered into a joint venture agreement with a wholly-owned subsidiary of Freeport-McMoRan Exploration over the KSK Contract of Work copper project in Indonesia. Freeport can earn a 51 per cent interest in the project by spending US$7 million over three years and then can boost it to 75 per cent by completing a feasibility study. Kalimantan added C$0.01 to close at C$0.11.

Yukon explorer Tarsis Resources added C$0.18 to close at C$0.81 on news that Kinross Gold will buy 9.9 per cent of the company through a private placement at C$0.60 each.

All lights are green as the junior exploration companies edge closer to the field season in northern Canada. Taking center stage should be the Yukon explorers with most getting active in mid-May. We will see what next week has in store.

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