CANADIAN EQUITIES OF INTEREST
Listed Alphabetically by Symbol
Spot Uranium (Ux : U3O8 US$32.00/lb), Net Change: 0.75, % Change: 2.40%
My boy’s gonna play in the Big League, my boy’s gonna turn some heads. This week, spot uranium price increased $0.75 to
$32.00/lb, while long-term price remains unchanged at $33.00. Over the past 18 months within the junior mining sector, we
have seen a significant increase in the number of juniors focused on the exploration and development of uranium. During this
time frame, significant speculative interest and, in some cases, significant price appreciation has occurred. Canadian-based
juniors have quickly moved into many of the known prospective uranium areas of the globe, with the exception of Australia.
Here is a list junior mining companies with Canadian-based uranium projects: Alberta Star Development (ASX), Commander
Resources (CMD), CanAlaska Ventures (CVV), Crosshair Exploration & Mining (CXX), Dejour Enterprises (DJE),
Forum Development (FDC), Fronteer Development Group (FRG), Globex Mining Enterprises (GMX), GLR Resources
(GRS), Hathor Exploration Limite (HAT), Hornby Bay Exploration (HBE), International Uranium (IUC), JNR
Resources (JNN), Marum Resources (MMU), Monster Copper (MNS), Max Resource (MXR), Northern Continental
Resources (NCR), Pathfinder Resources (PHR), Santoy Resources (SAN), Strathmore Minerals (STM), Southern Cross
Resources (SXR), Titan Uranium (TUE), Triex Minerals (TXM), UEX (UEX), Uravan Minerals (UVN) and Wescan
Goldfields (WGF). Year to date, Alberta Star has been the best performer in the group gaining over 333%. While GLR
Resources trails the pack having lost 27% year to date. On average, this group has returned in excess of 85% year to date.
Canadian Dollar (FXCAU : US$0.8542), Net Change: -0.0036, % Change: -0.42%
More than toothless, touque-wearin’ puck heads. Arguably, Canada has the greatest hockey players and currency in the world.
There seems to be a misconception that the Canadian dollar's awesome strength is mostly at the expense of the sick and tired
U.S. dollar and has not changed much against other currencies. Not true! Relative to the British Pound, the Loonie has been on
fire and appears to have "broken out" of the previous ceiling of 0.48 pence/$ (it is currently about 0.485 after hitting 0.49).
Despite the popularity of the euro, the Loonie has been trouncing it as it moved from 0.60 CAD/EUR to 0.72 since January. The
Loonie has moved up about 15% this year alone against the Swiss Franc and about 38% from the lows registered in early 1995.
Even against the otherwise rising Japanese Yen, the Loonie has been up against it since 2000, as it has moved from about 70
YEN/$ to 97.48 yesterday. We recently heard it argued that the Loonie is heading into some trouble as the long-bond is not
expected to see its yield up much from here. Our thoughts to this was twofold: 1) One can say the same for most countries! and
2) Canada sells a whole lot more to the world than just bonds.
Bema Gold* (BGO : TSX : $2.95), Net Change: -0.12, % Change: -3.91%, Volume: 1,295,600
Arizona Star Resource (AZS : TSX-V : $4.50), Net Change: 0.00, % Change: 0.00%, Volume: 51,000
Placer Dome (PDG : TSX : $19.57), Net Change: -0.35, % Change: -1.76%, Volume: 1,886,900
It’s kind of like the NHL’s instant replay. Bema Gold announced that, pursuant to the terms of the Compania Minera Casale
Shareholders’ Agreement, Bema and Arizona Star received a certificate from Placer Dome on September 27, 2005 regarding the
financeability of the Cerro Casale project. The certificate states that Placer has determined that the Cerro Casale project is still
not financeable under the terms of the Shareholders’ Agreement. Bema and Arizona Star question the foundation for the
issuance of Certificate A and have given Placer notice of default under the Shareholders’ Agreement. Bema and Arizona Star
have identified several areas in which Placer is in default of the Shareholders’ Agreement and if Placer fails to remedy these
defaults within 30 days (from October 3, 2005), as specified in the Shareholders’ Agreement, Bema and Arizona Star intend to
pursue arbitration with a view to reclaiming Placer’s 51% interest in the Cerro Casale project. In separate news, the Philippine
province of Marinduque is suing Placer Dome for more than US$100 million, the provincial government blames Placer Dome
for decades of destructive mining on the island. The suit was filled in a Nevada court.
Canoro Resources (CNS : TSX-V : $0.58), Net Change: -0.46, % Change: -44.23%, Volume: 6,545,400
Remember the California Golden Seals, Kansas City Scouts, Cleveland Barons or the Colorado Rockies? Canoro announced
that its first exploration well, South Jorhat 1 in the AA-ON/7 exploration block in the Assam/Arakan Basin, NE India, has been
abandoned. The well was drilled to a total depth of 2,428 meters and encountered oil and gas shows in five separate formations,
but none of the tested formations showed economic quantities of hydrocarbons. A follow-up 2-D seismic program on AA-ON/7is scheduled to begin early next year to evaluate these leads with the objective of maturing a second exploration well for late
2006 or early 2007. The drilling rig is now being moved to Canoro’s Amguri development block to re-enter the suspended
Amguri 5 and Amguri 6 oil wells. Canoro expects to re-establish oil production from these wells. Canoro also reports that
India’s Cabinet Committee on Economic Affairs has approved the award of the AA-ONN-2003/2 block to Canoro (30%) and its
consortium partners. The 295 km2 block is 2.5 km from the producing Kharsang oil field, which Geopetrol jointly operates, and
is approximately 150 km northeast of Canoro’s exploration and development blocks in Assam. Formal notification of the award
to Canoro is expected shortly, following which Canoro will provide additional information for this block.
Fronteer Development Group (FRG : TSX : $3.94), Net Change: 0.49, % Change: 14.20%, Volume: 1,666,600
Altius Minerals (ALS : TSX-V : $3.93), Net Change: 0.43, % Change: 12.29%, Volume: 303,400
So much for clutch ‘n’ grab. Positive exploration news from the area of the historic Michelin uranium deposit in Labrador
sparked a rally in the shares of partners Fronteer (57%) and Altius (43%) yesterday. Fronteer announced that a recent drill hole
returned an intersection of 0.12% uranium over 42 metres. This intersection, which occurred 100 metres below the Michelin
deposit, is the deepest and widest intersection in the Michelin area to date, with the previous best intersection in the area having
been 0.17% uranium over 16 metres. Management believes this result to be quite significant, increasing the volume of the
resource by 50% and suggests that widths and grades of the deposit are improving at depth. Exploration on the property is
continuing and assays are pending on three deep holes that are due within 3-4 weeks. The property has a historical resource base
of 18.2 million pounds grading 0.13% uranium, and management hopes to test the potential that the property could contain a 50
million pound resource over the course of this year. Meanwhile, Fronteer is also exploring its Otter Lade and Jacque’s Lake
properties in Labrador for uranium and is also drilling two gold projects in Turkey that it optioned from Teck Cominco
(TEK.SV.B).
Global Railway Industries (GBI : TSX : $1.78), Net Change: -0.27, % Change: -13.17%, Volume: 569,800
A 24% rollback that’s not good for the owners and fans. After a one-day halt, selling pressure against GBI shares continued
once trading resumed on Tuesday. The selloff had initially been sparked by Friday’s announcement that two of the company’s
directors had resigned. Yesterday, the company announced that it fired its President on Monday and that Terry McManaman, a
director, has been appointed the new President and CEO with fellow director Phil Ogden stepping up to the Chairman position.
The producer of rail products also announced that its YSD Industries division is expected to lose money this quarter despite an
increase in revenues as production efficiencies from recent changes were not realized. After declining nearly 25% at one point
during the day, the shares did start to rebound, but we suspect that sentiment toward the shares is likely to remain cautious until
the new management team outlines its plans for the company.
Grande Cache Coal (GCE : TSX : $5.93), Net Change: -1.52, % Change: -20.40%, Volume: 413,800
Still waiting to get out of the penalty box. While an update from this emerging coal producer suggests that it is starting to move
forward from recent difficulties on some fronts, lingering uncertainties in other areas continued to weigh over Grande shares
yesterday. In its last quarter, Q1F06, the company reported a loss of $12.2 million, lowered its F06 sales target by 6% to 1.6
million tonnes and raised its cost outlook by 14% to $80 per tonne. Yesterday, the company announced that sales volumes have
improved in recent months and are becoming more consistent, and as such, it has met its 0.4 million tonne sales forecast for
Q2F06, which ended last week. Management indicated that in the second half of F06, which ends in March, it expects its strip
ratio to decline, which should increase coal production and lower per unit costs. The company did note, however, that the the
arrival of a roof bolter for its underground mine has been delayed to November, slowing the depillaring process for that part of
the mine and indicated that it is reviewing its expansion plans closely in light of higher material and energy costs. Grande Cache
is expected to report results on November 9, and while the shipment guidance suggests that revenues should improve, the key
element in the release to watch for will likely be the company’s performance on the cost side and its growth plans.
Intermap Technologies* (IMP : TSX : $5.77), Net Change: -0.03, % Change: -0.52%, Volume: 89,400
A US$3.7 million contract would be a dream for many NHL players after the CBA. Intermap announced that its has been
awarded a new data acquisition contract in the amount of US$3.7 million. The contract is for delivery of Intermap’s highresolution
digital elevation data and radar imagery. Intermap has two aircraft deployed onsite and data collection for the project
is already underway. The majority of the revenues from this contract will be recognized in Q3 and Q4 of 2005. A number of
significant developments announced over the last few weeks have attracted new interest to this developer of Geographical
Information Systems. To date, Intermap has announced three pre-orders by different U.S. Federal Government agencies
totalling US$28.5 million in contracts, which represents approximately 35% of the estimated total build-up costs for NEXTMapUSA. This shows traction in the company’s mapping program build-out, which in turn lessens the funding risk, a key risk for
Intermap shareholders at this point.
Kereco Energy* (KCO : TSX : $16.10), Net Change: 0.00, % Change: 0.00%, Volume: 692,800
Innova Exploration* (IXL : TSX : $8.61), Net Change: 0.22, % Change: 2.62%, Volume: 323,000
Setting the tone for the season with an opening-night win? Kereco and Innova announced Tuesday that they have made a
significant find in the Blair Creek area of northeast B.C. In response to market rumours, Kereco indicated that in a production
test, a recent well in the area flowed at rates up to 14mmcf/d of natural gas, or 2,300 boe/d. The well is operated by Kereco,
while Innova has a 29.4% working interest. Both companies noted that the well is currently being tied in and that they will be
better able to determine the well’s production capability once production is underway. In addition, the companies noted they do
not normally comment on individual well results, as they prefer to consider results in the context of their overall drill programs.
Nonetheless, if these rates hold up, this well could significantly add to both companies’ production bases. In its last quarter,
Kereco produced at a rate of 3,970 boe/d, while Innova has forecast average production for F05 2,600 boe/d and an exit rate of
4,700 boe/d. Both companies recently increased their capital budgets for this year, Kereco by 54% to $85 million and Innova by
44% to $100 million. While it is still early in the fall/winter drilling season, it would appear that both companies are off to a
good start.
TransAlta (TA : TSX : $24.30), Net Change: 0.40, % Change: 1.67%, Volume: 1,006,100
Bob Hastings is our Scotty Bowman. Hats off to Canaccord Capital Pipes & Power Analyst Bob Hastings, who went positive
on TransAlta almost a year ago when shares traded at $16.75. Hastings believes that TransAlta’s shares should rise in three
phases from the recent trough. The first phase, now largely realized, was when investors concluded that the company’s dividend
was safe, with the stock then reflecting the full value of its $1.00 dividend. The next phase will occur as earnings rebound to a
normalized level, likely as a result of improving power prices and as underutilized assets begin to earn a return. This phase
should drive earnings to around $1.40-1.50 and could push the stock to $24-28. Hastings believes TransAlta is now entering this
phase of the cycle. The last phase will begin when power markets get tight and electricity prices rise in order to attract new
capacity. This could potentially push the stock over its previous $30.00 high. TransAlta has the best leverage to higher
electricity prices, suggesting significant upside and a healthy dividend to be had while investors wait. We note for every
$1/MWh increase in average annual spot prices, TransAlta’s earnings could improve by about $0.05 per share. Scotty Bowman
is considered by many as the greatest coach in the history of the NHL.
