Merger activity helps drive up TSX in Jan. 10-4 trading week

Precious-metals companies may have taken a hit during the Jan. 10-14 trading week but for companies with iron ore, copper, uranium and potash assets, the numbers looked pretty good. The TSX Composite index climbed 191.76 points or 1.45% to finish at 13,464.06, while the Capped Metals & Mining index rose 51.81 points or 3.47% to 1,543.45. Fifty-seven companies listed on the Toronto Stock Exchange reached new 52-week highs, while just three fell to new 52-week lows.

Heated merger activity dominated the headlines. On Jan. 11 Cliffs Natural Resources announced an all-cash offer for Consolidated Thompson valued at about $4.9 billion or $17.25 per share, about a 30% premium to Consolidated Thompson’s closing share price on Jan. 10. The emerging iron ore producer, founded in 2006, operates Bloom Lake, an open-pit iron mine on the south end of the Labrador Trough, an area spanning northeastern Quebec and western Labrador. It also holds two adjacent development properties, Lamelee and Peppler Lake. Shares of Consolidated Thompson ended the Jan. 10-14 trading week $4.18 higher at $17.40 per share.

Meanwhile Inmet Mining‘s shares surged $4.45 to close the week at $78.95 apiece following its proposed “merger of equals” with Lundin Mining. The combined company, to be called Symterra, would have a market capitalization of nearly $9 billion and generate about 80% of its revenue from copper. Symterra would have five operating mines in Europe and two major development projects, one in the Democratic Republic of Congo and the other in Panama.

On other fronts, First Quantum Minerals shares topped the list of value gains for the trading week, up $5.67 per share to $120.32. On Jan. 13 the company reported production of 75,600 tonnes of copper and 48,600 oz. gold for the fourth quarter and 322,700 tonnes of copper and 191,400 oz. gold for the year ended Dec. 31. First Quantum’s copper production reflected new monthly and quarterly records at its Kansanshi operation. Potash Corporation of Saskatchewan, meanwhile, claimed the second spot with an advance of $4.78 to $170.60. The potash giant will release fourth-quarter and year-end earnings on Jan. 27.

Shares of Labrador Iron Ore Mines added $3 to close at $70.48 per share, also on no news. In a progress report in late December the company noted that construction is nearing completion at its wholly owned direct shipping iron project in western Labrador, and that it is on track to start mining and processing activities in April. Before seasonal operations shut down in November, it expects to mine more than 2 million tonnes of ore that will result in shipments of between 1.5 and 2 million tonnes of ore. 

Gold and silver companies dominated the negative side of the ledger. The Global Gold index dropped 10.67 points or 2.8% to 377.76 as the New York spot price for gold fell US$8 per oz. to close the week at US$1,361.80 per oz. Golden Minerals posted the biggest decline, falling $4.39 to $20.92 per share. Goldcorp followed with a drop of $2.33 to close at $40.17 per share and Royal Gold fell $2.27 to $47.25 per share.