Tuesday, September 5, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Canada advanced on the day, as traders returned from the long
weekend to see the last piece of a once-US$40 billion mining mega-merger
fall away, as Inco declared it would not get enough support from its
shareholders to be acquired by Phelps Dodge. Mining shares climbed as the
Inco story was absorbed, and copper prices rose sharply.
* The S&P/TSX Stock Exchange Composite Index rose 53.53 points, or
0.44%.
* With the exception of energy shares, resource-related issues rallied
on the day. In the headlines, Scott Hand, CEO of Inco, conceded that the
Canadian nickel miner's shareholders would not give it the votes needed to
approve the Phelps Dodge agreement entered into June 25th, with its C$19.3
billion stock- and-cash bid. Stockholders appear to prefer the all-cash
C$19+ billion bid of Brazil's CVRD, although Inco's board warned that that
deal was not certain either. The Sept. 7 Inco shareholder's meeting was
cancelled, and Inco now owes Phelps Dodge a US$125 million termination fee
(US$350 million if Inco finds an alternative bid by Thursday). The fee will
be offset, however, by the US$450 million owed to Inco by Falconbridge,
which was acquired out from under Inco by Europe's Xstrata.
* Drilling to a depth of over 28,000 feet (nearly the height of Mt.
Everest), Chevron conducted deepwater tests in the "Jack" prospect in the
Gulf of Mexico, discovered in 2004, and while not willing to give official
estimates, said that the find could hold 15 billion barrels of oil and gas,
which would add 50% to U.S. reserves. The Jack 2 well sustained 6,000
barrels per day, in a ridge area 435 kilometres southwest of New Orleans,
in the deepest successful well test ever in the Gulf. Chevron owns the
prospect and a 50% working interest, with Devon Energy and Norway's Statoil
owning the rest. All three companies rocketed up on the American markets.
* In other oil market news, Talisman Energy rose as it announced a plan
to sell off some of its oil sands in Alberta and its small stake in
Syncrude. The sale, which should net more than C$1 billion, will be used by
Talisman to buy back its own shares.
* Alcan and Alcoa, its U.S. rival, might be in trouble if a merger of
two giant Russian aluminum companies, OAO Rusal and Sual Group, happens
this fall. The deal would be worth US$30 billion, but analysts say that the
new company probably wants to diversify and will not try to buy Alcan. The
Rusal-Sual merger shows that the consolidation of the middle-range
commodities, to protect themselves from volatile prices, is not just a
Canadian phenomenon.
* Payday advance company Rentcash reported fourth-quarter profits of
C$3.6 million, up from C$144,000 last year, as it prepares to spin off its
rental division into a new company. Revenues were up 17% to $37.6 million.
* Vasogen shot up on news that its new Celacade heart treatment, which
had failed an important clinical trial in June, can help reduce deaths by
31% in certain early cases of heart failure. It plans to manufacture
Celacade in Europe by 2007.
* Crude was down on Chevron's Gulf discovery, as well as a period of
relative political and climatic calm. Oil skidded down US$0.81 to close at
US$68.38.
* Gold surged, rising US$14.40 and ending the day at US$646.90, as the
U.S. dollar rose against the Euro.
* In other U.S. reports, Intel, the planet's biggest microchip maker,
plans to cut 10% of its staff worldwide, possibly 10-20,000 jobs, according
to a Financial Times report.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate
Services
This is Thomson Financial Corporate Services Canadian Commentary, which
is updated twice daily. The information herein is believed to be true and
accurate, we take no responsibility for inaccurate information and reserve
the right to update our reports. For more financial information at your
fingertips, please visit http://www.irchannel.com. If you have any questions
please e-mail James Sang at james.sang@tfn.com or call 646.822.6233 For
more information about Thomson Financial visit us on-line at
http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
back to top
