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John Dewdney

Confidence: Mined and manufactured through regulation reform

Few investor sentiments promote larger fluctuations in individual equities and their aggregate markets than confidence, and one thing that impacts that confidence is the effect boundaries imposed by governmental policy have on corporate executive decision making and planning.For Canadian mining companies that grow primarily through expansion and acquisitions, expansion has been very difficult of late. As a nation, we are sitting on a fortune of metals and minerals worth over a trillion dollars, yet the redundancy and longevity of our regulatory processes have mining companies struggling to expand. The government is key to the proper development of these resources, and recently B.C. Premier Christy Clark and Minister of Natural Resources Joe Oliver have been very outspoken on the issue.While environmentalists are already expressing significant concern regarding her $300 million Canada Starts Here jobs plan, Premier Clark intends to go ahead with her promise of eight new B.C. mines by 2015, and nine upgrades to existing mining operations. From an investor’s standpoint, these words can only signal promising futures for some of the 18 mines currently in the early stages of environmental assessment. These potential new projects include plans by companies like Compliance Energy Corporation (TSE:CEC) and Taseko Mines Ltd. (TSE TKO).Nearly a year ago, Ottawa rejected Taseko Mines Ltd’s Prosperity project, citing environmental concerns over the company’s intention to drain Fish Lake and use it for a tailings pond. All this after the government of B.C. approved the proposed copper-gold mine. The contradiction between the two levels of government has sparked numerous controversies, amidst concerns that the approval process is too extensive.Taseko has since re-evaluated the project, and injected an additional $300 million of capital into innovative plans to save Fish Lake; thereby hoping to appease the rightful concerns of local native bands, environmentalists and the federal government. The economic… Read More

Canadian Oil Company Earnings Impress Investors

In “An Overview of Canada’s Mining and Energy Sectors,” I alerted readers to some undervalued stocks listed on the TSX. This article will provide an in-depth, up-to-date analysis of two of those companies; Talisman Energy (TSX:TLM), and Suncor Energy (TSX:SU). Both are fresh off optimistic, pleasantly surprising third quarter earnings. Simultaneously, Crude oil hit a three month high Friday before closing at $94.26, trading significantly below the Goldman Sachs 2012 estimate of $109. This rise in energy prices due to a genuine demand-supply mismatch has me bullish on the prospects of these companies going forward. As this duo outperform industry rivals, investors can expect to see continued growth attributed to recent and proposed commitments to operational reform.Talisman Energy Inc. (TSX:TLM; NYSE:TLM)Company Profile: Talisman Energy Inc. is a global, diversified, upstream oil and gas company operating out of Calgary, Alberta. The company’s principal business activities are located in North America, Southeast Asia, and the North Sea.The Pitch: Talisman offers an attractive combination of upside oil price targets, downside protection, and recent growth in production. Its strong third quarter report, issued on November 2nd, has supported these attributes.On Friday November 4th the stock closed on the TSX at $14.47, down 41.7% from its 52 week high. Talisman, like many other publicly traded Canadian energy companies, has been victimized by bearish market sentiment in 2011. In my opinion, the market has excessively devalued Talisman Energy Inc., overreacting to current macroeconomic conditions and to Talisman’s operational policies in the North Sea. It is a perfect turnaround candidate.In the past, Talisman has been criticized by investors for missing production targets; 2011 has seen a reversal in that trend. According to their latest statement, “Southeast Asia production continues to be very strong, meeting our delivery targets and setting new gas sales records, enabling us to capture… Read More

An overview of Canada’s energy and mining sectors

Natural resources – energy, minerals and metals – are fundamental to the strength of Canada’s economy and important to the income stability of its citizens. In 2009 natural resources generated $133 billion, or 13% of Canada’s GDP, and directly employed close to 759,000 workers. In times of economic boom our trade is robust, as rising commodities prices promote increases in output capacity and opportunities for technological advancement; however, the recent economic downturn has weakened demand for some of these resources. I will provide a brief overview of Canada’s mining and energy sectors, as well as elaborate on current and forthcoming market conditions. It is to serve as background information on future stock pitches and on industry updates of companies primarily listed on the TSX.According to Natural Resources Canada, in 2009 minerals and metals made up for 2.7% of Canadian GDP. Canadian companies make up for about 40% of worldwide mineral exploration, and we are home to three of the top five largest gold extraction companies in the world, including Barrick Gold, the largest of all. It is also important to note that, with the exception of some mid-large-cap firms like Barrick Gold, Canadian firms extract the majority of their resources from Canadian soils; iron and steel are Canada’s largest commodity exports, followed by gold, aluminum and copper. International resource interests are still dominated by the United States, which imports over 50% of Canada’s mineral commodities and plays an even larger role in the Canadian energy sector.Three commodities (crude oil, non-crude oil, and natural gas) constitute roughly 90% of the trade in Canada’s energy products – slightly more for imports and a little less for exports. Crude oil is the largest of the three categories, making up 55% of energy exports and almost 59% of energy imports. In 2010 crude exports… Read More