TSX Venture takes a step back, March 18-22

VANCOUVER — The S&P TSX Venture Composite Index managed to avoid a week in the red, with a positive showing on Friday limiting a 10.8 point or 0.97% loss en route to a 1,106.35 weekly close.

Global factors continue to haunt Canadian markets, with ongoing drama in the European Union overshadowing promising earning reports in the U.S. In the Eurozone the tiny Mediterranean country of Cyprus continued to make big waves as it negotiates a potential bail out for its struggling banking sector, while retail and luxury earning numbers in the U.S. bested many analysts’ expectations.

Meanwhile Canadian Finance Minister Jim Flaherty outlined a relatively unassuming Federal budget, though tougher rules on mortgages may impact Canada’s cooling housing market with regulations increasing on bank-issued insurance for higher-ratio loans. The Canadian dollar closed out the week at US97.78¢.

Commodities had a fairly positive trading period, with June contracts for gold bullion jumping US$4.70 to close at US$1607.70 per oz., while May contracts for crude oil gained 1.5% or US$1.38 per barrel en route to a US$93.86 weekly close. Copper futures were the sole loser on the week, dropping US1.8¢ to close at US$3.47 per lb.

Saskatoon-based rare earth outfit Great Western Minerals was the most active company on the Venture, trading 8.3 million shares before closing at 18¢. Early in the week Great Western revealed a preliminary economic assessment for its past-producing Steenkampskraal rare earths project located roughly 350 km north of Cape Town, South Africa.

Steenkampskraal hosts 176,000 monazite tonnes in the indicated category that grade 18.2% total rare earth oxides (TREO), as well as 278,000 inferred tonnes averaging 15.2% TREO at a 1% cut-off grade. The US$176-million project carries a $555 million after-tax net present value and 66% internal rate of return at a 10% discount rate. The project would have around a 4 year payback period from the start of underground production.

Uranium explorer Fission Energy also had a busy week after roughly 8 million shares traded hands as the company gained 5¢ before closing at $1.08 per share. Fission issued two news releases mid-week focusing on drill results from its 50%-owned Patterson Lake South joint venture in Saskatchewan’s Athabasca Basin.

Fission announced the discovery of a third mineralized zone at Patterson Lake, when a discovery hole intersected a band of weak to moderate mineralization over 22 metres roughly 390 metres east of the R390E zone, which has returned highlights of 11.65 metres of off-scale radioactivity in 57.5 metres of mineralization and 13.89 metres of off-scale in 53 metres of mineralization.

Patterson Lake continues to demonstrate expansion potential, with all three mineralization zones being open along strike and width. Fission is exploring the project under a joint venture agreement with Alpha Minerals.

Vancouver-based Encanto Potash experienced a flurry of activity as 7.9 million shares were on the move following news that the company’s Muskowekwan First Nation potash project had been accepted by the federal government under the First Nations Commercial and Industrial Development Act.

The mine will be the first potash development located on a First Nation reserve, and the move allows the federal government to begin the process of developing a regulatory framework for a joint-venture between Encanto and the Muskowekwan.

The US$2.86 billion project boasts a mine life in excess of 50 years, and carries a US$2.84 billion after-tax net present value and 18% internal rate of return. Encanto would utilize solution mining to produce 2.8 million tonnes of K62 potash annually at an average grade of 98% potassium chloride.