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Monday, November 23, 2009 11:49 AM
First Quantum diversifies African exposure
Andrew Willis
First Quantum Minerals spent $260-million (U.S.) on Monday to change the way investors view the African mining play.
A copper and gold play, First Quantum FM-T owns a number of properties in Democratic Republic of Congo. And the Congo is a challenging jurisdiction for mining companies, in a continent filled with challenges. Heavy exposure to this country, and its unpredictable politics, translates into a weak stock market valuation.
However, First Quantum also has mines in Zambia, a country with a far more stable track record when it comes to dealing with resource companies. On Monday, the Vancouver-based company boosted its holdings in Zambia with a cash-and-shares bid for London-based Kiwara PLC, which is listed on the London Stock Exchange’s AIM subsidiary. The bid came at a 41 per cent premium to where Kirawa shares were trading, and is supported by 76 per cent of the company’s shareholders.
Link to this postMonday, November 23, 2009 11:38 AM
Toronto should create carbon hub
Tara Perkins
A group led by the former CEO of Barclays Global Investors Canada is asking Ottawa and the banks to try to establish a “carbon hub” in Toronto now, before more regulations develop to make carbon offsetting mandatory.
Pending regulations will spur a market in carbon credits, and Toronto should be working now to position itself as a centre of expertise, says Gerry Rocchi, who is now the CEO of Green Power Action Inc.
Monday, November 23, 2009 10:38 AM
BMO builds mining sales team
Andrew Willis
At the heart of a market-leading mining franchise at BMO Nesbitt Burns is the investment dealer’s strong, focused U.S. equity sales desk.
For a generation, BMO Nesbitt Burns has fielded a team of Manhattan-based stock jockeys who excel at moving mining stocks to global institutional clients. That group, backed by strong research analysts and an annual conference that attracts every mining CEO on the planet, translates into strength that pays off in a number of ways, including institutional trading and corporate finance work.
Last week saw BMO Capital Market, the Bank of Montreal’s BMO-T U.S. investment dealer arm, reinforce that New York equity desk at the expense of rival RBC Dominion Securities.
Chris Kwan joined BMO Capital Markets as a managing director and global mining specialist in Manhattan, after a stint at RBC Dominion. This move was first reported on the Bill’s Buzz blog run by executive search firm Vlaad and Co .
Mr. Kwan arrives after BMO Capital Markets said farewell in August to veteran equity salesman Mike Vitton, an expert in the mining and energy stocks and the head of the desk. He worked at the investment dealer for 25 years, and is now serving on boards and making private investments.
Monday, November 23, 2009 03:02 PM
Here come small cap IPOs
Andrew Willis
Recent months have seen large cap companies debut on the TSX, with Dollarama and Genworth MI Canada staging successful initial public offerings.
Now the small cap crowd is taking a shot at IPOs, with three financings worth a total of $275-million being marketed to investors this week. Successful financings are expected to pave the way for a flood of new deals, while if these IPOs fail to attract support, it would likely chill domestic IPO activity.
The three deals being pitched right now are a $170-million stock sale from Talison Lithium , a $65-million IPO from geothermal play Standard Steam and a $40-million offering from Zungui Haixi, a Chinese shoe manufacturer and retailer.
Monday, November 23, 2009 07:06 AM
Astral's specialty TV ambitions
Andrew Willis
Astral Media Inc. makes no secret of its interest in acquiring the specialty television arm of CanWest Global Communications Corp. if the lucrative, 18-channel network comes up for sale.
While rivals downplay their desire to pick up pieces of troubled CanWest, Astral chief executive officer Ian Greenberg said in a recent conference call with analysts that if the division was to “become available, it certainly is of interest to us. They certainly strategically fit into our plans.”
While Astral, which owns 20 specialty TV channels and 82 radio stations, would take a run at CanWest specialty offerings that include History Television and Showcase, sources say Mr. Greenberg woudl steer clear of CanWest’s money-losing conventional TV network, Global.
Monday, November 23, 2009 06:49 AM
Big Six may surprise - in a good way
Andrew Willis
As a rule, investors don't like to be shocked by corporate news.
But, if analysts are reading the tea leaves correctly, Canada's banks will be offering some surprises to the upside when they start reporting their financial results next week by reporting better-than-expected profits.
Buoyed by strong capital markets performance, the six big banks are expected to exceed expectations as they roll out fourth-quarter and year-end results. Bank of Montreal kicks off the earnings parade tomorrow and Bank of Nova Scotia finishes up on Dec. 8. Regional rivals Canadian Western Bank and Laurentian Bank also report during this two-week stretch.
In recent days, analysts began to bump up their forecasts in advance of these releases, with CIBC World Markets' Darko Mihelic recently raising his fourth-quarter profit forecast for the sector by 4 per cent.
"Capital-markets-related revenues, including trading, are expected to support our earnings-per-share estimates and may also be a source of positive surprise," Mr. Mihelic said in a report. Year over year, the CIBC World Markets analyst expects fourth-quarter earnings at the banks to be up by 7 per cent.
Saturday, November 21, 2009 05:59 PM
Why home prices are frothy
Andrew Willis
In what amounts to a battle of real estate agency versus economists, Scotia Capital is out to prove that the Canadian housing market is frothy, and runs the risk of overheating.
At a time when agents are enticing home buyers with claims that “affordeability” has rarely been better, Scotia Capital economists Derek Holt and Karen Cordes put out a report Friday that shows this is just one measure of a market that now features “lofty” valuations on residential real estate.
Affordability measures the cost of owning a home – mortgage payments, utilities and property taxes – against personal income. By this measure, the cost of home ownership has been dropping steadily since 2007. A recent report from Royal Bank of Canada showed this index has been moving home-owners way for five consecutive quarters, and “at the national level, affordability has now been restored to pre-housing boom levels, that is, those prevailing in late 2005-early 2006.”
Partly as a result of perceived affordability, home sales are soaring, and prices in Canada's resale housing market are up 12 per cent on a weighted average basis from last year, according to Canadian Real Estate Association figures released last week.
The problem with the affordiability index is it reflects interest rates, and mortgage rates, that are at or near historic lows. When rates rise, the cost of home ownership will soar.
Friday, November 20, 2009 01:15 PM
Osisko forgets it's a target
Andrew Willis
Someone forgot to tell Osisko Mining it’s a takeover target.
The junior mining play owns what’s likely Canada’s next great gold mine, under the town of Malartic in west-central Quebec. For months, Osisko OSK-T has been stalked by rivals, with Goldcorp G-T emerging as significant minority shareholder.
However, rather than simply developing its single property and waiting for a near-inevitable offer, Osisko is doing exactly what it takes to become the next Goldcorp, or Barrick Gold. The company is attempting to use the balance sheet strength that comes from owning one great mine to build a strong portfolio of properties.
Friday, November 20, 2009 12:45 PM
Caisse launches $5-billion bond sale
Andrew Willis
The Caisse de dépôt et placement du Québec gave itself a year to build an $8-billion borrowing program when it announced the concept earlier this month.
It looks like the provincially owned money manager could hit its goal within a few weeks.
CDP Financial, an arm of the $120-billion fund, launched a $5-billion (U.S.) bond sale early Friday. CDP Financial is the latest in a string of borrowers to lock in financing ahead of the U.S. Thanksgiving holiday at the end of next week.
Friday, November 20, 2009 11:51 AM
Bond blitz
Andrew Willis
As frantic as the equity new issue market was this week, and it was plenty busy, the stock jockeys can't keep pace with the incredible rush of fixed income financings hitting Canadian markets.
Wednesday saw the equity sales desks launch a $2.5-billion share sale for Manulife Financial, the second largest deal of a year that’s featured massive stock sales.
While impressive, the Manulife financing and other stock sales pale beside the volume of fixed income new issues, as $8-billion of new Canadian bonds were sold on Wednesday alone, and another $1.1-billion of new issues hit the market on Thursday.
Streetwise Contributors
Andrew Willis
Andrew Willis joined The Globe and Mail in September of 1995. His career has included stints at a number of publications, including The Financial Post, The Financial Times of Canada, Dow Jones/Wall Street Journal, and MacLean's magazine. He also did freelance writing for Investment Executive magazine. He appears on television for BNN TV and CBC Newsworld.
Andrew has co-written a book, The Bre-X Fraud, with business journalist Douglas Goold.
Read Streetwise Tuesday through Friday in the pages of Report on Business.
Boyd Erman
Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail. Over the years, his areas of coverage have included economics, monetary policy, debt markets and corporate finance.
In addition, he is a regular commentator and guest host on Business News Network.
Steve Ladurantaye
Steve Ladurantaye wrote about technology companies in Ottawa before reporting for the Peterborough Examiner and Kingston Whig-Standard, where he won a National Newspaper Award for explanatory journalism. After joining the Globe and Mail in 2007, his work has regularly appeared in Report On Business and Globe Investor Magazine.
Tara Perkins
Tara Perkins has been a business reporter since 2004, following a brief stint as overnight editor of globeandmail.com. She has been writing for the Globe's business section since the spring of 2007, covering the banking sector during the course of the financial crisis. Prior to that, she worked for the Toronto Star. Tara has a Bachelor of Journalism from Ryerson University and a Bachelor of Commerce from the University of Guelph.
Jacquie McNish
Jacquie McNish has been a business writer with The Globe and Mail since 1988. Prior to that she was a reporter with The Wall Street Journal.
During her time at The Globe and Mail, she has served as the paper's New York correspondent and won three National Newspaper Awards. She is the author of The Big Score: Robert Friedland and The Voisey's Bay Hustle and Wrong Way: The Fall of Conrad Black, for which she and co-author Sinclair Stewart won the National Business Book Award. She is a co-host of Market Morning on the Business News Network.
