TSX Venture takes a step back, Jan. 14-18

VANCOUVER — The S&P TSX Venture Composite Index took a breather this week after posting two consecutive periods of gains to start 2013, dropping 4.93 points or 0.4% en route to a 1,235.32 point close on Jan. 18.

Markets rallied later in the week following further signs that China was moving towards economic recovery, with the world’s second largest economy posting 7.9% growth during the fourth quarter of 2012. Though the growth figures were an improvement from the 7.4% seen during the third quarter, China posted its weakest annual growth rate since 1998 at 7.8% in 2012.

Commodity prices were a mixed bag this week with February contracts for gold bullion dropping US$3.80 to US$1687 per oz., while February crude contracts rose 7¢ to US$95.56 per barrel on the New York Mercantile Exchange. Copper rallied on the back of the Chinese economic figures, with March contracts rising 2¢ to close the week at US$3.68 per lbs.

Kelowna-based Fission Energy had a busy week following the announcement it had agreed to a US$70-million acqusition by Denison Mines. Fission saw 2 million shares trade hands this week, as the company’s stock jumped 21¢ before closing at 76¢ on Jan 18.

Denison has been targeting a larger presence in Saskatchewan’s prolific Athabasca Basin, and Fission’s 60% interest in its 402-sq.km Waterbury Lake uranium project seems to fit the bill with roughly 13 million lbs. of indicated and inferred uranium resources.

As part of the transaction, Fission shareholders will receive 0.355 of a Denison share and one share of a new spin-out company for each share held. The offer represents a 49% premium to Fission’s Jan. 15 close and a 42% premium to the 20-day volume weighted average price.  Assuming the deal is finalized, Fission shareholders will own about 11% of the Toronto-based firm. 

Vancouver-based Great Quest Metals found out how socio-political events can trigger a share price rally, after news of French troops in the troubled African nation of Mali saw the company’s shares jump 28¢ en route to a 97¢ weekly close. The company was forced to issue a press release following the market activity, with CEO Joel Jeangrand stating that the developments “signal a turn in the geopolitical crisis that has affected the country for the past 10 months.”

In mid-December Great Quest released a preliminary economic assessment on its 1,206-sq.km Tilemsi phosphate project — located in Mali — that demonstrated a US$649 million net present value (NPV) and 34% internal rate of return (IRR) at a 10% discount rate. The US$143 million project would produce 1.18 million tonnes worth of fertilizer products annually over a 20 year mine life.

Quebec-based Arianne Resources received a 17¢ boost during the week before closing at $1.29. The company announced it would be changing its name to Arianne Phosphate in a bid to represent its focus on the Lac à Paul phosphate project, located roughly 200km north of the town of Saguenay.

Arianne will also be divesting itself of all non-phosphate assets, which include Canadian-focused gold projects: Heva, La Dauversière, Black Dog, Chico, Dulain, and Terres Rares. The company expects to complete the divestment process during 2013.

Lac à Paul boats 348 measured-and-indicated tonnes grading 6.5% P2O5, and would produce roughly 3 million tonnes of phosphate annually over a 17 year life at costs of roughly $175 per tonne. The project would cost roughly US$583 million in upfront capital, and carries a US$985 million NPV, and 23.2% IRR at an 8% discount rate.