Today's small-cap stocks to watch

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Inside the Market's roundup of some of the Canadian small caps making news and on the move today. This post will be updated through the morning.

A financing arrangement between Petro One Energy Corp. and Korea Myanmar Development Corporation (KMDC) has been conditionally accepted by the TSX Venture Exchange, but the deal has still not closed.

Petro One announced on Aug. 1, 2014, that it had arranged non-brokered private placements to raise a total of $6-million in conjunction with an initial $14-million drilling fund to be established by KMDC. The funding is to be used to drill up to 11 oil wells on some of Petro One's oil and natural gas leases in Saskatchewan and Manitoba. MDC would also have the option to provide additional funding through a future Phase 2 financing that could total as much as $82-million.

Petro One said it was advised by KMDC last week that it was in the final stages of obtaining approval from Korean financial authorities for its $2.150-million subscription to the initial private placement funding, which had been scheduled to close Tuesday. But the company Tuesday received a request from KMDC for an extension to Oct. 7, 2014 to complete its share of the private placement. It cited the need for additional time to meet requirements of financial authorities.

The value of Petro One shares were cut nearly in half in TSX Venture Exchange trading today. They closed down 36 cents, or nearly 48 per cent, at 39 cents. But prior to the drilling joint venture with KMDC being announced in late July, they were trading near the 20-cent level.

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Northstar Healthcare Inc. said it has reached an agreement with First Surgical Partners Holdings Inc. to form a new entity to own and operate the Houston, Texas hospital and surgical centre businesses owned by First Surgical. Northstar and First Surgical will form a new limited liability company to assume the operations of First Street Hospital and First Street Surgical Center. Northstar will manage the operations of the hospital and surgical centre and will contribute $7.5-million to the new entity which will be raised by an anticipated brokered private placement.

Shares in Northstar spiked 12 per cent on the TSX today.

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Crescent Point Energy Corp. late Tuesday announced that it has entered into a $378-million (Canadian) agreement with Lightstream Resources Ltd. to acquire conventional oil assets in southeast Saskatchewan and Manitoba. The Lightstream Assets include significant free cash flowing, conventional oil production of approximately 3,300 boe/d and 76 net sections of land that are contiguous with Crescent Point's existing land base in the area. Crescent Point will also acquire 44 net sections of undeveloped freehold interests from Lightstream. The purchase of the Lightstream Assets is expected to close on or before Sept. 30, 2014.

BMO Nesbitt Burns analyst Jim Byrne said the sale has no change on his thesis for Lightstream Resources as he reiterated an "underperform" rating and $6 (Canadian) price target. "The company still suffers from a weak operational track record; an inability to meet targeted capital efficiencies and a shrinking production profile," he said in a note.

Similarly, Credit Suisse analysts reaffirmed an "underperform" rating and $6.50 price target on Lightstream. We have been supportive of the company's initiative to redeploy sale proceeds into debt repayment rather than into the drilling program. While the transaction is certainly indicative of this, we do not see a very meaningful move in the deleveraging story, although liquidity has improved," Credit Suisse said in a note.

Crescent Point Energy shares were down more than 3 per cent at midday, while Lightstream was up 0.8 per cent.

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Stream Oil & Gas Ltd. said it has been bought by TransAtlantic Petroleum Ltd. for $41.2-million. Each common share of Stream will be exchanged for 0.05657 common share of TransAtlantic, which values each common share of Stream at $0.67 (Canadian), based on TransAtlantic's 10-day volume weighted average price -- a 43 per cent premium to Stream's 10-day VWAP as of market close on August 29, the company said in a statement.

M Partners analyst David Buma commented, "The valuation appears reasonable given the company's funding challenge, although with a bid now in place, the landscape has now changed and could potentially setting the starting point for a competing bid. "

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Uranerz Energy Corp. announced it has delivered its first drums of uranium produced from its Nichols Ranch ISR uranium project in the Powder River Basin of Wyoming.

"This is a milestone event for Uranerz,  as the shipment of approximately 36,000 pounds was received at ConverDyn's Metropolis Works Facility, for subsequent transfer to second sales agreement with another major U.S. utility later this year," commented Cantor Fitzgerald analyst Michael Wichterle in a research note.

The delivery will satisfy a portion of Uranerz' existing long-term sales contracts and the company expects to make its next shipment of uranium later this quarter.

"We expect nearly 500,000 pounds of uranium to be produced in this year of initial production and note that the Nichols Ranch processing facility has a licensed capacity for 2 million pounds per year," added Mr. Wichterle. He rates Uranerz a "buy" with a $1.80 (Canadian) price target.

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Concordia Healthcare Corp. has agreed with Eisai Inc. to acquire epilepsy drug Zonegran for commercialization and sale in the United States for $90-million (U.S.) in cash, plus approximately $1.5-million for purchased inventory. Management plans to pay for the acquisition through debt financing.

Beacon Securities analyst Doug Cooper raised his price target to $47.50 (Canadian) from $45 on the deal. "Zonegran fits into the true definition of a legacy drug as there have been generic versions of the drug available since 2005. Zonegran's sales have already taken the generic hit and sales have stabilized at about $22-million," Mr. Cooper commented.

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Duluth Metals Ltd. is quickly running out of cash and could be heading towards a highly dilutive financing to stay afloat, warns CIBC World Markets analyst Tom Meyer. He reiterated a "sector underperformer" rating and slashed his 12- to 18-month price target all the way to 5 cents, from 40 cents.

Shares in the company opened down 6.6 per cent on the TSX this morning to 28 cents.

Duluth released highlights of a pre-feasibility study on its 60-per-cent owned Twin metals copper-nickel-platinum group metals project on Aug. 20. Although details of the study will not be available until early October, Mr. Meyer expects the project to have a negative net present value based on his projections for commodity prices. Net present value is the difference between the present value of future cash flows and the amount of investment that is being made.

Mr. Meyer notes that Duluth Metals only had $6-million in cash remaining as of Aug. 12, is budgeting $3.3-million in second half 2014 general and administration expenses, and is looking at a $4.2-million (U.S.) funding requirement for Twin Metals. A $30-million (Canadian) convertible debenture and a $12.1-million (Canadian) bridge loan are outstanding, as is a $1.1-million (Canadian) interest payment that is due in the fourth- quarter of this year.

"A strategic review of alternatives is under way, but, in our view, the cash may run out before it can be completed," Mr. Meyer said in a research note. "Failing to find a buyer for the project or the company as a whole would force Duluth into a highly dilutive financing in order to continue as a going concern."

Other analyst actions on small-cap stocks today:

Raymond James upgraded Wajax to "outperform" from "market perform" and hiked its price target to $45 (Canadian) from $38.50.

Morgan Stanley initiated coverage on Detour Gold with an "equal-weight" rating and $15.50 (Canadian) price target.

Morgan Stanley initiated coverage on Semafo with an "underweight" rating and $5 (Canadian) price target.

M Partners initiated coverage on Sandvine with a "buy" rating and one-year target price of $4.50 (Canadian).

CIBC World Markets downgraded Dundee Precious Metals to "sector perform" from "sector outperform" with a price target of $6 (Canadian) per share.

Cormark Securities initiated coverage on Spartan Energy with a "buy" rating and $5.50 (Canadian) price target.

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Tanzanian Royalty Exploration Corporation has announced the completion of its heap leach pad construction at its Buckreef Re-development Gold Project, located in the Lake Victoria Goldfields of Tanzania.

Four heap leach cells with dimensions of 100 metres by 30 metres each are now complete. This will support the processing of stacked ore delivered from the Buckreef South Pit. The Company has also completed a significant portion of the Buckreef South Pit preparation, including grade control drilling, maps and roads.

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Ultra Petroleum Corp. announced late Tuesday that, subject to market conditions, it intends to offer $700-million in aggregate principal amount of senior unsecured notes due 2024 in a private placement. Ultra intends to use the net proceeds of this offering to fund a portion of the purchase price of its recently announced Pinedale field acquisition.

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Largo Resources Ltd. said it has made its first shipment of vanadium pentoxide from its Maracas Menchen mine in Bahia, Brazil, and that production rates are stabilizing between 8 and 12 tonnes of material per day, which represents approximately 40% of the project's phase 1 target capacity and is in line with the company's expected production for this stage of the ramp-up.

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CGI Group Inc. said it is joining forces with Aon Corp. to provide cyber-insurance risk assessment services across Finland.

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Oryx Petroleum Corp. Ltd. said it has resumed operations in Iraq's Kurdistan region. "The resumption of production at higher levels after only a short interruption is very positive and, while the interruption will result in delays in our development schedule, we hope to minimise those and continue our rapid ramp-up in production," chief executive officer Michael Ebsary said in a statement.

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First Capital Realty Inc. said it has agreed to sell 5.250 million common shares in a bought deal at a price of $19.06 per share. Proceeds will be $100-million.

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U3O8 Corp., a Canadian-based company focused on exploration and development of uranium resources and associated commodities in South America, said that South American Silica Corp., in which U3O8 Corp. has a 39 per cent equity interest, has staked concessions covering 1,225 hectares in the Polanco project in central Uruguay. The principal target market for frac sands from Uruguay is Argentina's Vaca Muerta shale basin, which is ranked as the world's third largest shale-hosted gas reserve, and its fourth largest shale-hosted oil reserve, the company said in a statement.

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Northern Blizzard Resources Inc. said it has completed the optional redemption of $148.8-million (U.S.) principal amount of its 7.25 per cent senior notes due 2022. The total redemption price was approximately $160.5-million, which was funded with a portion of the net proceeds from Northern Blizzard's recently completed initial public offering, the company said in a statement.

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Seabridge Gold Inc. said that early results from this year's drill program at its 100 per cent-owned KSM Project in northwestern British Columbia have confirmed a major new gold-copper occurrence beneath Iron Cap, one of the project's four large porphyry deposits. The drill program is now being intensified in order to generate sufficient data for an initial resource estimate expected by January, 2015.

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Tinkerine Studios Ltd., a manufacturer and distributor of 3D printers, announced it has signed a Memorandum Of Understanding with SBCK Corp., a subsidiary of SoftBank Corp, one of Asia's biggest technology related service providers.

Under the terms of the deal, SBCK will be granted exclusive rights to distribute and sell Tinkerine's full suite of 3D printing products. Further, the parties will jointly develop various collaborative business opportunities covering the education, retail and enterprise sector.

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Elgin Mining Inc. announced that it has received shareholder approval for Mandalay Resources Corp. to acquire the company.

Elgin Mining shareholders will receive 37 cents (Canadian) in cash for each Elgin share they hold, or 0.4111 of a Mandalay common share.