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Investors should keep an eye on ShaMaran Petroleum, ATAC Resources and Noront Resources, all of which traded at high volumes on the TSX Venture exchange this past week.
Here’s a look at three stocks — one energy and two mining — that had some of last week’s highest trading volumes (or the most shares exchanged between buyers and sellers).
Shares of ShaMaran Petroleum (TSXV:SM), which is focused on oil exploration in Kurdistan, closed up for the third consecutive day on Monday after news late last week that its exploration block in the Kurdish region of Iraq was tested at a flow rate of more than 42,000 barrels of oil per day.
In addition, “[t]he well was drilled on time and 30% under budget,” the company said in a press release. The company’s shares rose more than 30 percent on September 13, closing at 37.5 Canadian cents. The stock closed at 47.5 cents on Monday. Trading volume jumped from 18.4 million shares on September 13 to more than 27 million on September 17, according to data from Reuters.
Forbes reported that the Atrush-2 well is “colossal … the likes of which hasn’t been seen onshore in the United States in decades. By comparison, most new wells drilled in the Bakken play of North Dakota are lucky to do 1,000 bpd for the first few weeks before quickly falling off.”
The license for the Atrush block is 80 percent held by General Exploration Partners, which is 33.5 percent owned by ShaMaran and 66.5 percent owned by Aspect Energy International. The remaining 20 percent of the Atrush block license is held by Houston-based Marathon Oil (NYSE:MRO).
At its Atrush-1 venture, ShaMaran has forecast that oil production will begin in the first half of 2013. Implementation work is expected to commence before the end of 2012 and first production should occur in the first half of 2013.
Pradeep Kabra, president and CEO of ShaMaran, said the results from Atrush-2 demonstrate “the excellent production capability” of the reservoir, adding that the possibility of discovering additional resource potential at Butmah and Adaiyah, two other reservoir zones, remains.
The trading volume of ATAC Resources (TSXV:ATC)rose nearly four times, to more than 2.1 million shares, on September 17 after the exploration company announced it has made a new Carlin-type gold discovery at its 100 percent owned, 185 km-long Rackla gold project in the Yukon. Shares of the company rose more than 11.5 percent to close at $2.71.
ATAC is focused on Carlin-type gold deposits, the most popular example of which are in Northeastern Nevada. Carlin deposits are massive, and contain sometimes microscopic particles of gold spread throughout a large region. While the deposits may be low grade, and as such were often overlooked by early prospectors, they are large in volume.
Regarding the find announced this week, ATAC said its first diamond drill hole intersected 8.51 meters of 19.85 g/t gold. “We are very encouraged with these latest developments as they demonstrate the effectiveness of our property wide grass roots exploration program and the potential for multiple gold deposits throughout the trend,” CEO Graham Downs said in a press release.
Investor interest in ATAC was so high on September 17 that its shares crossed above their 200-day moving average of $2.70, changing hands at as high as $2.77 per share, Forbes reported. Four analysts rate ATAC an “outperform” and one a “hold,” according to Reuters data.
Although ATAC is a speculative play, Marc Courtenay, founder of Advanced Investor Technologies, said on Seeking Alpha that ATAC’s discovery of Carlin-style mineralization has the market’s attention and the company’s solid management is one of its many assets.
Trading volume of shares of Noront Resources (TSXV:NOT)surged to more than 1.6 million shares on September 17, after the base and precious metals explorer announced positive results for a feasibility study at its nickel, copper and platinum Eagle’s Nest project in the Ring of Fire region of Northern Ontario. Shares of the company have risen from 36.5 cents at the close on September 14 to 38.5 cents on September 17.
In its feasibility study, Noront forecasts an after-tax net present value of $543 million at an 8 percent discount rate, an initial capital expenditure of $609 million, a $160 million life-of-mine-sustaining capex and a three-year payback period. The estimate is based on prices of $9.43 per pound nickel, $3.60 per pound copper, $1,600 per ounce platinum, $599 per ounce palladium and $1,415 per ounce gold.
Noront said Eagle’s Nest contains proven and probable resources of 11.1 million tonnes grading 1.68 percent nickel, 0.87 percent copper, 0.89 grams per tonne platinum and 3.09 g/t palladium. The mine is forecast to produce 1 million tonnes per year, producing 150,000 tonnes of nickel-copper concentrate annually over 11 years at $97 per tonne or $2.34 per pound of nickel equivalent.
With a market cap of around $85 million, Noront could be a takeover target, especially after this positive feasibility study. Responding to this issue, Wes Hanson, CEO of Noront, told the Financial Post in an interview that the company’s shareholders are committed for the long term.
“We have some very strong shareholders. Resource Capital Funds has an 18.5% interest in the company, and Baosteel is sitting at 10%, and both have indicated to us that they’re committed to the long term and want to see value added to advancing the project through the various stages of feasibility and permits.”
Hanson added, “[t]hat is our focus, and so it always helps to have a couple of very strong shareholders with very large interest sitting in your corner, sympathetic to the long-term objectives of the company.”
Securities Disclosure: I, Karan Kumar, hold no investment interest in any company mentioned in this article.
