Inside the Market's roundup of Canadian small caps making news and on the move today. This post will be updated during the trading day.
Laurentian Bank Securities today initiated coverage on Denison Mines Corp. with a "buy" rating and $1.90 (Canadian) price target, sending shares in the uranium miner higher this morning. It cited several reasons for its bullish view, including its belief that uranium prices are bottoming, the company's strong exploration potential and significant existing resources, low political risk and strong management.
But also key is that Laurentian Bank believes Denison Mines is an attractive takeover candidate, especially given the scarcity of quality uranium assets in the marketplace.
"We believe Denison represents an attractive target given its very significant resources within the world-class Athabasca Basin along with the company's minority ownership interest in the strategic McClean Lake mill. In our view, uranium producers looking to get a foot print within the Athabasca Basin would likely have an interest in Denison in order to secure sufficient resources to justify a development decision," said analyst Chris Chang.
Mr. Chang believes Denison's flagship Wheeler River project could become one of the highest grade undeveloped uranium projects in the world.
Shares in Denison are up about 2 per cent in early TSX trading, despite overall uranium sector weakness. Cameco, by contrast, is down nearly 3 per cent.
TransForce Inc. announced late Thursday second-quarter adjusted earnings per share of 48 (Canadian) cents, beating the Street consensus of 41 cents. Revenue of $889-million met Street expectations. Margins were much improved, thanks to operational improvements and positive contributions from its recent acquisition of Clarke and Vitran.
The company also announced Thursday evening that it will acquire freight transportation service provider Contrans Group Inc. for $495-million. Benoit Poirier, analyst with Desjardins Securities, said this morning he estimates the acquisition could contribute 15 cents to 20 cents annually to TransForce's EPS in the long term, which should boost the company's stock price by $2 to $3 per share.
"On balance, we view the transaction positively given that (1) we believe further consolidation of the Canadian trucking market with the addition of Contrans should improve TFI's pricing power, and (2) we estimate the combination could generate synergies of at least $15-million (Canadian)," Mr. Poirier said.
TransForce also announced it has appointed Alain Raquepas, previously a high-profile executive with CAE, as CFO. "We believe he will be an excellent addition to the team," Mr. Poirier said.
Investors have reacted favourably to all the news, sending shares up nearly 7 per cent in morning TSX trading.
DragonWave Inc. has announced a $25-million public offering, consisting of 13.85 million units at a price of $1.80 (Canadian). Shares in the broadband wireless equipment company are down 13 per cent on the news.
CIBC and H.C. Wainwright & Co. are the underwriters. They have been granted an option, exercisable at the offering price for a period of 30 days following the closing of the transaction, to purchase up to an additional 15 per cent of the issue to cover over-allotments.
Each unit consists of one common share and one half of one warrant. Each whole warrant entitles the holder thereof to purchase one common share of the company at an exercise price of $2.25 for a period of two years from the closing date of the offering.
The offered shares and warrants are immediately separable. The company intends to apply to list the Warrants on the Nasdaq and the Toronto Stock Exchange.
The company intends to use the net proceeds from the offering to strengthen its balance sheet, fund working capital and for general corporate purposes.
Osisko Gold Royalties Ltd. said it has signed a letter of intent to acquire 14 million flow-through common shares of NioGold Mining Corp. for 35 cents per share through a private placement worth $4.9-million. In addition, Osisko will purchase from NioGold the right to repurchase certain royalties on its claims for an aggregate purchase price $150,000.
NioGold shares surged 33 per cent, or 7 cents, on the news to 28 cents.
FirstEnergy Capital downgraded Greenfields Petroleum to "speculative buy" from "outperform" and cut its price target to $9 (Canadian) from $11. Shares in the company are down 6.4 per cent in early afternoon trading on the TSX Venture Exchange.
Shoreline Energy Corp. announced that it has agreed to sell its royalty interests in its Canadian land base to PrairieSky Royalty Ltd. for $9-million (Canadian). The deal is expected to close in early August. PrairieSky is the publicly traded spin-off of Encana.
Shares in the company are up nearly 5 per cent on the TSX at midday, though that's still a far cry from their 52-week high of $3.45.
Progressive Waste Solutions Ltd. announced a 6.7 per cent hike to its quarterly dividend to 64 cents (Canadian) per share as it reported its second-quarter results today. Revenues in the quarter declined 0.6 per cent to $513.5-million but net income per share rose to 36 cents from 28 cents.
"We performed well on many measures in the second quarter and we are making progress on several components of the strategic plan we initiated to improve EBITDA(A) margins and free cash flow through operational excellence," commented CEO Joseph Quarin.
A trading halt was lifted this morning on shares of EnerCare Inc., which announced Thursday afternoon that it will acquire the Ontario home and small commercial services business of Direct Energy Marketing Limited for $550-million. Shares opened down 2 per cent on the TSX.
Celestica Inc. reported that second-quarter revenues had risen to $1.471-billion (U.S.), up from $1.495-billion last year. However, the company missed Street earnings estimates by a wide margin, reporting an EPS of 21 cents per share compared to the estimated 25 cents. The company is currently shifting towards their higher-margin diversified manufacturing business, which has grown to represent 28 per cent of their total revenue, up from 25 per cent last year.
Canfor Corp. reported second-quarter earnings of $54.3-million, up from last quarter's $45.5-million but a far cry from last year's $110.3-million. The company had an EPS of 42 cents, beating estimates of 41 cents. The past year has seen the company struggle with lower lumber prices and a strike in Vancouver.
While lumber production was down 2 per cent from the previous quarter, lumber shipments were up 33 per cent due to improved demand. The company said that the production decrease was in large part due to the closure of its Quesnel sawmill in B.C. and the sale of the its Daaquam Sawmill in Quebec. Shares have lost 21 per cent since the beginning of March.
Alaris Royalty Corp., which provides alternative financing for private businesses, announced second-quarter revenues of $16.24-million, 39.6 per cent higher than last year's $11.63-million. The gains were driven by deals with four new companies over the past 13 months. The company's EPS of 30 cents was in line with estimates.
MDC Partners Inc. has more than doubled analysts' EPS estimates of 15 cents, reporting an EPS of 33 cents. Second-quarter revenues have risen 10.5 per cent from last year to $317.7-million. The company also declared a dividend increase to 19 cents per share from 18 cents.
Shares are up 3.5 per cent in early trading today.
Gold Reach Resources Ltd. said it will adopt a shareholder rights plan that would provide adequate time for its board and shareholders to assess an unsolicited takeover offer for the company.
However, it said it was not adopted by the board in response to, or in anticipation of, any takeover bid.
Ceres Global Ag Corp. announced the appointment of Pat Bracken as its new president and CEO. Mr. Bracken has over 30 years of experience in both the agribusiness and energy sectors and has held senior management positions throughout his career with a major international agribusiness and energy company.
Fortune Minerals Limited has announced that after a preliminary economic assessment of its silver mine in Colorado, the project's after tax internal rate of return is 73.2 per cent. The mine is ramping up to a 400 ton per day production rate according to the company, though commercial production has not started and the operation is still in commissioning.
Sierra Metals Inc. has announced the appointment of a new CEO, replacing its outgoing CEO Daniel Tellechea, who has served the role for the past seven years. Shares have fallen almost 20 per cent so far this year.
Hammond Power Solutions Inc. said its second-quarter sales rose 4.5 per cent year-on-year while its net profit increased 84 per cent.
"The increase in sales, consistent margin rates, and lower general and administrative costs as well as a lower foreign exchange loss were the main contributing factors to the quarterly improvement," the company said in a statement.
Peregrine Diamonds Ltd. said a technical report for its Lac de Gras project had concluded that "there are reasonable prospects for eventual economic extraction" of kimberlite pipe at one of its properties, DO-27.
"DO-27 hosts an indicated mineral resource of 18.2 million carats of diamonds in 19.5 million tonnes of kimberlite at a grade of 0.94 carats per tonne and is open at depth and laterally."
"Peregrine is reviewing options, including commercial opportunities, to advance the project," the company said.
Shares in the company are up 3.7 per cent in early afternoon trading.
TAG Oil Ltd. has started drilling at its Waitangi Valley-1 exploration well in New Zealand's East Coast Basin.
Independent assessments have estimated an undiscovered resource potential of approximately 14 billion barrels of oil initially in place within less than 20 per cent of the company's East Coast Basin acreage, TAG said in a statement.
"Waitangi Valley-1 will provide TAG with the opportunity to acquire additional sub-surface data on this major exploration prospect, as well as potentially establish the first unconventional production in the East Coast Basin. The company has previously confirmed that these source rocks are responsible for the oil seeping to the surface just 5 km from the Waitangi Valley-1 location, so this well may give us the chance to produce oil directly from the source," chief operating officer Drew Cadenhead said in the statement.