A look at North American equities heading in both directions
On the rise
Shares of Iamgold Inc. (IMG-T) soared on Tuesday on the announcement of the sale of its assets in Senegal, Mali and Guinea, known as Bamouk, to Moroccan mining company Managem for a total cost of $282 million.
The total resource portfolio of the Bamouk assets exceeds 5 million ounces of gold, Managem said in a statement.
Casablanca-listed Managem, which operates in six African countries, is controlled by the royal family holding company Al Mada. Managem reported a revenue of 7.376 billion dirhams ($700-million) in the first nine months this year, up 45 per cent, on the back of higher precious and base metal prices.
Teck Resources Ltd. (TECK.B-T) gained after saying late Monday it has reached a deal to sell its closed Quintette steelmaking coal mine in northeast British Columbia to Conuma Resources Ltd.
Teck says Conuma Resources will pay $120-million in cash for the mine, plus an ongoing 25 per cent net profits interest royalty payable after Conuma recovers its investment in Quintette.
The Quintette mine is located near Tumbler Ridge, B.C. and was in operation for 18 years, until Teck closed the mine in 2000.
Teck has been managing the mine in a care and maintenance phase since then.
Conuma Resources is a steelmaking coal producer based in northeast B.C. It currently has three mines in operation close to Chetwynd, B.C. and Tumbler Ridge.
The sale is subject to regulatory approval is and is expected to close in the first quarter of 2023.
On the decline
Shares of auto parts maker Magna International Inc. (MG-T) were higher following the premarket announcement it had agreed to buy Veoneer Active Safety business from investment firm SSW Partners for US$1.53-billion in cash to bolster its portfolio of self-driving technology.
A push to incorporate assistive-driving capabilities to bolster safety features in cars has led to greater adoption of self-driving technology with auto suppliers vying to meet the requirements.
However, fully self-driving systems still face regulatory scrutiny among safety concerns. Earlier this year, Ford Motor Co and Volkswagen AG shuttered its self-driving startup Argo AI underscoring the growing realization that automated vehicles may be even further away from mass deployment than industry executives predicted back in 2019.
Magna Electronics, which develops technologies for automated driving and vehicle electrification, and Veoneer is projected to have advanced driver assistance systems (ADAS) sales of about US$1.8-billion in 2022, about US$3-billion in 2024.
Veoneer Active Safety sales are projected to be about US$1.1-billion in 2022 and increase to about US$1.9-billion in 2024.
Veoneer Active Safety systems provides early warnings to alert drivers to prevent accidents by using features such as autonomous emergency braking, forward collision warning, blind spot detection. The deal is expected to add to Magna’s sensor and full systems capabilities, including radar, camera and driver monitoring, and add 2,200 engineers for systems, software and sensor development.
Magna had tried to buy Veoneer last year but was trumped by SSW and Qualcomm who were vying for the company’s expertise in making ADAS.
The deal is expected to close near mid-year 2023.
Imperial Oil Ltd. (IMO-T) was narrowly lower after revealing it is planning $1.7-billion in capital spending for next year.
The company says the plan includes a ramp-up for its Strathcona renewable diesel project, application of solvent technologies at Cold Lake and ongoing investment on an in-pit tailings project at its Kearl oilsands facility.
Brad Corson, Imperial’s chairman, president and chief executive, says the plans reflect the company’s pursuit of attractive opportunities to reduce emissions, increase production and increase profitability.
Imperial says upstream production for 2023 is forecast between 410,000 and 430,000 gross oil equivalent barrels per day, reflecting the sale of the company’s interests in XTO Energy Canada.
The company says the outlook is underpinned by planned strong operating performance in its core oilsands assets and continued growth at Kearl which is on track to increase production to 280,000 total gross barrels per day by 2024.
Throughput in Imperial’s downstream business is forecast to be between 395,000 and 405,000 barrels per day with capacity utilization between 92 and 94 per cent.
Vancouver-based Lithium Americas Corp. (LAC-T) was lower after it said on Tuesday it would buy all the shares of Arena Minerals Inc. (AN-X) it does not already own in a deal that values Arena at US$227-million, giving the Canadian miner additional access to the Pastos Grandes basin in Argentina.
Prices of lithium have more than doubled this year, after an explosive rally in 2021, even after increased supply of the metal used in making batteries crucial to renewable energy transition continues to chase demand.
The deal, expected to close in the third quarter of 2023, would help integrate two neighboring projects operated by the companies in Pastos Grandes basin.
“The significant synergies between our two projects and a better understanding of the basin will enable us to advance development planning and maximize our growth pipeline in Argentina,” said Jonathan Evans, chief executive officer of Lithium Americas.
Consumer banking giant Wells Fargo (WFC-N) declined after it was ordered to pay US$3.7-billion in fines and refunds to customers by U.S. government regulators, the largest fine to date against the bank, which has spent years trying to rehabilitate itself after a series of scandals tied to its sales practices.
The amount is nearly quadruple the previous US$1-billion penalty that Wells Fargo paid in 2018 to cover widespread consumer law violations.
The Consumer Financial Protection Bureau on Tuesday ordered Wells to repay US$2-billion to consumers and enacted a US$1.7-billion penalty against the bank. The bureau spelled out a laundry list of consumer financial law violations, from illegal fees and interest on auto loans and mortgages, as well as incorrectly applied overdraft fees against savings and checking accounts.
The bureau says the bad behavior by the bank impacted more than 16 million customers.
Wells Fargo has been repeatedly sanctioned by U.S. regulators for violations of consumer protections law going back to 2016, when Wells employees were found to have opened millions of accounts illegally in order to meet unrealistic sales goals. Since then, Wells has spent its time saying it’s cleaning up its act, only to be repeatedly fined for additional violations of consumer protection law.
The bank remains under a Federal Reserve order forbidding it from growing any larger until the Fed deems that its corporate culture problems are resolved. That order, originally enacted in 2018, was expected to last only a year or two.
General Mills Inc. (GIS-N) said on Tuesday quarterly sales at its high-margin pet business took a hit due to some key retailers cutting back on inventory, sending its shares down.
The cutback of pet food inventory by retailers “is frankly a bit disconcerting,” J.P. Morgan analyst Ken Goldman said.
General Mills’ pet business, one of its fastest growing business segments, saw flat second-quarter sales of about US$593-million.
“We experienced an unexpected headwind in Q2,” Chief Executive Officer Jeffrey Harmening said, referring to the pet business, adding that the company faced manufacturing capacity constraints for its dry dog food and treats business.
However, Mr. Harmening said he expects retailer inventory to remain stable in the back half of the year.
This along with the company’s strategy to raise prices to combat spiraling costs of labor, raw materials, supply chain and transportation helped General Mills raise its annual forecasts.
The Cheerios cereal maker now expects organic net sales to rise 8 per cent to 9 per cent in fiscal 2023, compared with its previous forecast of a 6-per-cent to 7-per-cent increase.
Producers of staples such as food have seen less pushback from inflation-hit consumers, who are otherwise cautious on their discretionary spending.
The company also forecast full-year adjusted profit per share to rise between 4 per cent and 6 per cent on a constant-currency basis, compared with its prior outlook of an increase of 2 per cent to 5 per cent.
General Mills’ net sales rose to US$5.22-billion in the second quarter ended Nov. 27, compared with analysts’ estimates of US$5.19-billion, according to Refinitiv data.
On an adjusted basis, the company earned US$1.10 per share, beating estimates of US$1.07.
With files from staff and wires
David Leeder