Most people think of warrants as being associated primarily with micro/nano cap i.e. junior gold and silver mining companies but that is not entirely the case. Of the 35 companies offering warrants of 24 or more months duration (of which there are 47 in total) 6 are large-cap commodity based companies (2 gold mining companies; 2 royalty companies; 1 oil and gas company; and 1 molybdenum miner). Below is a description of each of these companies and the performance of their stock and associated warrants
week-ending July 10th.
Silver Wheaton Corp. (
) is a
silver focused royalty company with nine long-term purchase agreements with companies in Mexico, Sweden, Peru, Portugal, Greece, USA and Canada to purchase a fixed percentage of their silver production at contracted prices for the life of the mines involved.
Blackmont Capital analyst Richard Gray has called Silver Wheaton’s May 2009 $243-million acquisition of smaller rival
Silverstone Resources Corp. a "very astute move" as it eliminates Silver Wheaton's primary competitor in the silver streaming business. It also gives the company three silver streams from low-cost copper mines and is accretive on a number of key metrics increasing Silver Wheaton's sales to 20 million for the year, growing to 27 million in 2010 and 32 million by 2012.
UBS Securities analyst Dan Rollins pointed out that with $400-million available under Silver Wheaton's revolving debt facility, the company has the financial capability to make more silver stream acquisitions within the next 12 months.
BMO Capital Markets analyst David Haughton maintains that while Silver Wheaton's main catalyst for growth is still
Goldcorp Inc.'s Penasquito mine the Silverstone acquisition appears accretive to "all" valuation metrics, and has the potential to provide additional royalty revenue in the future through expansions and development of new products.
Silver Wheaton stock was down 11.78% while (TSX: ) is a gold focused royalty company with additional interests in platinum group metals, oil and gas and other assets. The majority of the company’s revenue is derived from properties located in the USA, Canada and Australia.
According to
Canaccord Capital the closing of Franco-Nevada’s financing on June 16
th that raised more than $370 million Canadian now gives F-NC total acquisition firepower exceeding $750 million Canadian. This money will be used in the near future to aggressively pursue additional growth opportunities by investing in gold royalties, buying existing royalties and creating new royalties, often by funding development companies.
Franco-Nevada stock was
down 11.42% while its 96 month duration warrant (wt.A) was
down 8.12% and its 32 month duration warrant (wt) was
down 20.90%.
Kinross Gold Corp. (NYSE:
) is a
gold mining and processing company and, as a by-product, silver ore, and the exploration for, and the acquisition of, gold bearing properties in the Americas and the Russian Federation.
- Toronto, Ontario, July 8, 2009 -- Unionized employees at Compañía Minera Mantos de Oro in Chile, a subsidiary of Kinross, have initiated strike action at the La Coipa mine following unsuccessful collective agreement negotiations.
