TSX moves higher on jobs data, March 31-April 4

Strong jobs data in Canada helped lift the S&P/TSX Composite Index by 0.93% to 14,393.10. The unemployment rate in March dropped for the first time this year, falling to 6.9%, as the economy added 42,900 jobs. The majority of the new jobs went to young people in the 15- to 24-year-old age group. The news sent the Canadian dollar higher, ending the week at $1.0981 to the U.S. dollar, or US91.07¢. The gold price also ended the week higher at US$1,302.30 per oz., up 1.39%, but the S&P/TSX Global Gold Index declined 0.21% to 185.26. By contrast, the S&P/TSX Capped Diversified Metals & Mining Index climbed 0.52% to 802.26.

Osisko Mining and Yamana Gold were the most actively traded stocks, after the two companies worked out a deal to trump Goldcorp’s hostile bid for Osisko. Yamana is offering $441.5 million in cash and 95.7 million of its shares —worth $929.6 million — to buy a 50% stake in all of Osisko’s mining and exploration assets, including the Canadian Malartic mine. Under the deal, Osisko shareholders will receive $2.194 in cash, 0.2119 of a Yamana share (worth $2.06 based on its April 1 close) and one new Osisko share valued at $3.35. This puts the total offer price at $7.60 per share, or $3.4 billion, a 22% premium over Goldcorp’s bid. Goldcorp is offering 0.146 of its shares and $2.26 in cash for each Osisko share held, which, based on its April 1 close, values Osisko at $6.21 per share. Shares of Osisko advanced 47¢ to $7.38, while Yamana’s shares dropped 42¢ to $9.50 and Goldcorp’s declined 43¢ to $27.36.

Cameco posted the biggest jump, rising $1.45 per share to $26.88. The company announced it is ending its toll-conversion agreement with Springfields Fuels effective Dec. 31, 2014. The agreement was originally set to expire in 2016. Cameco signed the 10-year, toll-conversion agreement in 2005 to process up to 5 million kilograms of uranium a year at the Springfields conversion facility in Lancashire, England. Springfields receives uranium trioxide from Cameco’s Blind River uranium refinery and converts it to uranium hexafluoride (UF6), which is needed to produce fuel for light water reactors. Cameco agreed to pay Springfields $18 million to get out of the agreement early, but management said that with the current weak market for UF6 conversion, Cameco can meet its customer requirements from its conversion facility in Port Hope, Ont., and “benefit from better use of existing assets.”

Sherritt International shares advanced 60¢ to $4.14 after the company went on the offensive against an attack by dissident shareholder George Armoyan, CEO of Clarke Inc. In a letter to shareholders Sherritt said Armoyan had “no experience in Sherritt’s lines of business, a poor track record on corporate governance, no credible ideas for creating value beyond what management is already doing and a demand for a veto over potential growth plans that threatens to throw a wrench into the company’s progress.”

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