Customers line up at a Second Cup outlet in Toronto in this file photo.
Inside the Market's roundup of some of the Canadian small caps making news and on the move today. This post will be updated during the trading day.
The Second Cup Ltd. has suspended its quarterly dividend as the coffee shop chain says it looks to focus on growth to maximize shareholder value. The company posted a second-quarter adjusted profit of eight cents per share versus 14 cents a year ago.
Shares were down 13 per cent in late afternoon trading.
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Imperial Metals Corp. said there was a significant tailings breach at its Mt. Polley mine in British Columbia on Monday. With initial investigations underway, the extent of the impact to the operations and local waterways is not yet known. Shares of the company plunged 40 per cent at today's open and continued to trade near that level by late afternoon.
M Partners analyst Derek Macpherson said he expects the breach to impact operations near term and is likely to result in clean-up costs for the company. He notes that Mt. Polley represents about 70 per cent of the company's 2014 EBITDA. Both M Partners and BMO Nesbitt Burns put their ratings on Imperial under review.
Analysts with BMO called the spill "extremely negative" and said it could cost the miner about $200-million for repairs and other damages. The bank downgraded Imperial Metals to "underperform" from "outperform."
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TSO3 Inc., involved in sterilization technology for medical devices, reported a second-quarter loss of 2 cents (Canadian), matching Street expectations. The company also said its rate of cash burn during the quarter was $471,402 a month, in line with the expectations of Desjardins Securities analyst Chase Bethel.
Mr. Chase commented, "Management also provided additional colour on the current 510(k) review process for the STERIZONE VP4 Sterilizer. It appears that the company is currently working with the FDA on documenting the performance of the sterilizer for US customers. We view this as positive given that the nature of discussions seems to have moved past the science behind the product. (Recall, however, that the FDA can review any portion of the 510(k) during the review process, meaning that questions about science could arise in the future.) TSO3's CEO, Ric Rumble, also noted that channel partner negotiations are moving forward at an accelerated pace, which is likely attributable to the apparent progress that is being made on the regulatory front."
The stock is one of the top advancers on the TSX today, with a gain of 30 per cent at midday.
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Canaccord Genuity has downgraded two Canadian energy producers with operations in Ukraine, citing the announcement of a hike in royalties in the country at a time when the geopolitical conflict with Russia shows little sign of resolution.
Analyst Christopher Brown downgraded Cub Energy Inc. to "sell" from "buy" and removed his price target until more is known about the impact on the company's operations in Ukraine. All of Cub Energy's revenue is generated in the country.
On Aug. 1, the Ukrainian government passed a law increasing natural gas and condensate royalty rates to 55 per cent and 45 per cent from 28 per cent and 42 per cent, respectively, for a five-month period ending Jan. 1, 2015. Wells put on production after Aug. 1, 2014 will have a royalty rate of 30.25 per cent, and this will apply to new wells drilled over the next two years.
Cub Energy is re-evaluating its 2014 work program, as the royalty changes will result in reduced cash flow for the next five months.
Meanwhile, Mr. Brown downgraded Serinus Energy Inc. to "hold" from "buy" and slashed his price target to $1.75 (Canadian) from $4. He noted that Serinus Energy's management estimates that the new royalty regime will result in about a 45 per cent decline in the company's Ukraine after-tax cash flow over the five-month period.
Cub Energy shares were down 26 per cent in mid-afternoon trading, while Serinus Energy was down 16 per cent.
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Premier Gold Mines Ltd. announced it has signed a binding agreement with Newmont Mining to consolidate the former's interest in the Cove-McCoy properties in exchange for $21-million (U.S.) and all of Premier's interest in the south Carlin project.
Cantor Fitzgerald Canada analyst Rob Chang reiterated a "buy" rating and $4.10 (Canadian) price target after reviewing the deal. He commented, "The Cove-McCoy project is a high quality exploration project located in the world-class Eureka-Battle Mountain trend near several mines including Lone Tree, Marigold, and Phoenix. Moreover, the agreement also provides Premier with a commitment with Newmont to process ores from this property over a 10-year period. We believe the consolidation of the project and the elimination of back-in rights to Newmont gives Premier full control of a potentially world-class project."
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CCL Industries Inc., which provides specialty labels and packaging to businesses, announced it signed a binding agreement to acquire Bandfix AG of Zurich, Switzerland. Bandfix is a privately owned label company increasingly focused on European Specialty customers with estimated sales for the calendar year of 2014 of $47.0-million and anticipated adjusted EBITDA of approximately $3.5-million.
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Foraco International SA said its second-quarter revenue fell to $48.4-million (U.S.), a 35 per cent drop from a year earlier, as many customers continued to push the execution of projects into the second half of this year.
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Fission Uranium Corp. released more results from 12 new angled drill holes at its PLS property in Canada's Athabasca region. All 12 holes returned wide mineralization, with seven holes returning substantial intervals of greater than 10,000 cps radioactivity, the company said.
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Richmont Mines Inc. said it has signed a definitive agreement to acquire the outstanding 31 per cent ownership of four patented claims on the Island Gold Mine property. Elaine Ellingham, Interim President and CEO of Richmont Mines, commented: "Consolidating Richmont's ownership to 100 per cent of the Island Gold Mine property is an important step and clears the path for us to accelerate our mine development." The company also reported its latest quarterly earnings.
Shares in Richmont Mines were up 14 per cent in afternoon trading.
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Gabriel Resources Ltd. reported a disappointing net profit of $700,000 for the second quarter. The company's flagship Rosia Montana gold project in Romania has been held up as political uncertainties due to an upcoming election continues to delay government approval of the mine. With the election set to take place in November 2014, the company says a decision is not likely to be made until after that date. The company now continues to scramble to preserve capital, having had to lay off 80 per cent of its Romanian workforce back in May.
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Canfor Corp. has acquired two sawmills in Georgia from Balfour Lumber company. The operations produce southern yellow pine lumber and have a combined capacity of 210 million board feet.
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Tricon Capital Group Inc. announced that it has closed a $142.5-million (U.S.) investment to support the acquisition of a large-scale, infill residential master planned community located in Corona, California.
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Clarke Inc. is upping its stake in Holloway Lodging Corporation with the purchase of another 5.7 per cent of common shares, in addition to the 10.8 per cent Clarke already owns. The investment company said that the purchase was due to Holloway's recent acquisition of Royal Host Inc.
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Teuton Resources Corp. said that after consultations with its shareholders, it will be cancelling the private placement announced on July 29. The combined flow-through and non flow-through share offering was considered too complex. Instead, there will be a new private placement that will comprise of 9 million units at a price of 5 cents per unit, for gross proceeds of up to $450,000.
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Desjardins Securities downgraded Bonavista Energy to "hold" from "buy" and cut its price target to $16 (Canadian) from $17.
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Canaccord Genuity downgraded Surge Energy to "hold" from "buy," but hiked its price target to $8.50 (Canadian) from $8. CIBC World Markets also downgraded Surge Energy to "sector performer" from "sector outperformer" and hiked its price target to $9.50 from $9