Mathieu Dupuis
Inside the Market's roundup of some of the Canadian small caps making news and on the move today. This will be updated through the morning.
Osisko Gold Royalties Ltd. and Virginia Mines Inc. said they have agreed to combine to create a company with "two world-class gold royalty assets in Quebec." Virginia Mines shareholders would receive about $14.19 per share in Osisko shares, a 41 per cent premium based on Friday closing prices. The friendly deal values Virginia Mines of Quebec City at about $479-million.
Osisko also initiated a quarterly dividend program. The first dividend of $0.03 per common share will be payable on January 15, 2015 to shareholders of record as of the close of business on December 31st, 2014.
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Transcontinental Inc. announced that it is selling its consumer magazines and their websites, as well as all related platforms, to TVA Group Inc. The $55.5-million transaction is subject to approval by regulators, including the Competition Bureau; it also covers the printing of these magazines by TC Transcontinental Printing and the extension to 2022 of the contract signed in 2013 to print some of the TVA Group Inc. publications.
"In the context of the highly competitive magazine industry that is experiencing a proliferation of platforms and generated content as well as migration of advertising revenues towards digital media, Transcontinental Inc. has decided to sell its consumer magazines produced in Montreal and Toronto to TVA Group whose platforms will enable the continued evolution of these magazines," said Francois Olivier, President and Chief Executive Officer. "Furthermore, Transcontinental Inc. has decided to now focus on the local advertising market, which offers us more business opportunities through our 180-odd newspapers in Quebec, Ontario, Saskatchewan and the Atlantic provinces. This important phase in the evolution of the Corporation also gives TC Media full latitude to further develop its digital and interactive marketing products for retailers, among others, and to advance the production and delivery of content in the fields of business and education."
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Manitoba Telecom Services Inc. appointed Jay Forbes chief executive officer. Mr. Forbes was president and CEO of Teranet, a developer, operator and owner of electronic land registration systems.
Pierre Blouin will remain the existing CEO and as a director until his retirement Dec. 31, 2014.
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Labrador Iron Mines Holdings Limited reported a net loss of $204.7-million, or $1.62 per share, in its fiscal second quarter. It conducted no mining and recognized no revenue.
"LIM did not recommence mining operations for the 2014 operating season, due to a combination of the prevailing low price of iron ore and an assessment of the current economics of its iron ore projects and did not recognize any net revenue from mining operations during the quarter.
"Since January 2014, the spot price of iron ore has fallen 45 per cent to almost $75 per tonne today, compared to an average price of $135 per tonne in 2013," the company said. "Iron ore exports from Australia to China rose significantly in 2014 as the world's top iron ore producers substantially increased production, pushing prices to the lowest levels in five years and contributing to a growing global surplus."
"In view of the prevailing iron ore price outlook, and based on our experience over the past three operating seasons, LIM made a strategic shift in corporate focus towards establishing a lower cost operating framework, while concurrently re-negotiating the commercial terms of major contracts and seeking additional capital investment and working capital."
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AutoCanada Inc. said it has obtained approval from General Motors of Canada to purchase an 80 per cent equity interest in Bridges Chevrolet Buick GMC in North Battleford, Saskatchewan. The company will also purchase the dealership land and facility, which is 18,076 square feet situated on a 3.53 acre parcel of land.
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Atna Resources Ltd. said it has agreed to sell its Reward Gold Mine near Beatty, Nevada, and the Clover gold-exploration property in Elko County, Nevada, for $10-million (U.S.) to Waterton Nevada Splitter, LLC, a subsidiary of Waterton Precious Metals Fund II Cayman, LP. Half the proceeds will be applied towards paying down principal and interest owed under the company's senior secured credit facility with Waterton.
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Imperial Metals Corp. reported a net loss for the September 2014 quarter of $49.2-million (Canadian) ($0.66 per share), compared to net income of $14.7-million ($0.20 per share) a year earlier.
"The variation in net income this quarter compared to the 2013 quarter is largely attributable to the remediation costs of $67.4-million related to the Mount Polley tailings dam breach. In addition to variances in revenues and income from mine operations described above, variations in net income period over period are attributable to movements in foreign exchange and realized and unrealized gains and losses on derivative instruments and taxes."
"The tailings dam breach at the Mount Polley mine has resulted in the loss of production for an indeterminate period of time. In addition, the company is incurring costs for rehabilitation and restoration. While the precise costs of rehabilitation and restoration are presently unknown, the company believes the costs can be managed over time, given the underlying value of the company's assets, the current sources of liquidity, insurance proceeds and the expected cash flow from the Red Chris mine. Options for the resumption of Mount Polley operations are being studied."
M Partners analyst Derek Macpherson commented, "While the financial results missed our and consensus estimates, we believe investors should focus on the announcement of dry commissioning at Red Chris and a clean-up cost estimate of $67.4-million at Mt. Polley." He maintained a "hold" rating and $8.50 price target.
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GuestLogix Inc. announced an agreement to deploy its OnTouch Destination Merchandising platform offering passengers local attraction and transportation tickets onboard a leading North American bus operator."This agreement represents GuestLogix' expansion into the bus travel sector, and the Company will leverage this agreement to demonstrate how its technology may be used to enhance the passenger experience and drive ancillary revenue generation across this vertical," GuestLogix said in a statement.
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Cardiome Pharma Corp. announced that an affiliate of the company has entered into an agreement with Pharmacare Ltd., which trades as Aspen Pharmacare and is a part of the Aspen Group, to sell and distribute the drug Brinavess exclusively in South Africa. Financial details of the agreement have not been disclosed.
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Olympia Financial Group Inc. announced it has formed Olympia ATM Inc. as a wholly-owned subsidiary to focus on building an ATM distribution network and on acquiring existing ATM assets from smaller operators in the industry in order to grow its portfolio of ATM machines.
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Exall Energy Corp. said it had a working capital deficit as of September 30, 2014, excluding bank indebtedness, of $1.7-million.
"The company was not in compliance with the working capital covenant at September 30, 2014 and was not in compliance at December 31, 2013 and the violation has not been waived by the bank. The credit facility technically expired on April 30, 2013 and the bank has informed the company that it is demanding the loan."
"While Exall continues to seek debt restructuring alternatives, and will maintain this focus until completed, the capital expenditure program for 2014 has been deferred to the last quarter of 2014, subject to available funds."
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Manitok Energy Inc. said its funds from operations in the third quarter rose to 49 cents a share from 38 cents a year earlier.
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In analyst actions today involving Canadian small caps:
Raymond James downgraded Alaris Royalty to "market perform" from "outperform" and maintained a $34.50 (Canadian) price target.
Jacob Securities downgraded Alterra Power to "hold" from "buy" with a price target of 40 cents (Canadian).
Jacob Securities downgraded Primary Energy Recycling to "hold" from "buy" with a price target of $5.40 (Canadian).
TD Securities downgraded Dream Office Real Estate Investment Trust to "buy" from "action list buy" with a price target of $32 (Canadian).
Cormark Securities upgraded K-Bro Linen was upgraded to "buy" from "market perform" with a price target of $47 (Canadian).
Cormark Securities downgraded Luna Gold to "market perform" from "buy" with a price target of 45 cents (Canadian).
Cormark Securities upgraded Midway Gold to "speculative buy" from "market perform" with a price target of $1.10 (Canadian).
Cormark Securities upgraded OceanaGold to "top pick" from "buy" with a price target of $4 (Canadian).
TD Securities downgraded Spyglass Resources to "reduce" from "hold" with a price target of 60 cents (Canadian).