Mining and Exploration: Delistings and Suspensions Rising

The news this week that Magna Entertainment Corp. will be delisted from the Toronto Stock Exchange April 1, brought to light once again the sheer magnitude of the current bear market and the drastic effect it is having on North American stock valuations.

On the New York Stock Exchange there are currently about 65 companies in danger of being suspended for non-compliance, which has forced the exchange to consider relaxing rules that require shares trade above a dollar.

In Canada, the number of companies considered non-compliant is also growing, in particular within the country's resource sector, where falling commodity prices have wreaked havoc on mining and exploration companies.

"Stock exchange notices to companies defaulting on list requirements, have been on the rise," said Wendell Zerb, analyst at Canaccord Adams. "Precious metal equities have largely avoided the issue; however, many others are not so fortunate."

Mr. Zerb provided clients a list of mining companies who have been delisted from the TSX and TSX Venture from Dec. 1, 2008 through Jan. 28, 2009 that includes; Delta Exploration Inc., Golden Oasis Exploration Corp., Aranka Gold Inc., Pinewood Resources Ltd., Winchester Minerals and Gold Exploration Ltd., Patricia Mining Corp., Oromin Explorations Ltd., Fusion Resources Ltd., GLR Resources Inc., Gateway Gold Corp., and Campbell Resources Corp.

He also listed all the mining companies that have been suspended during the same period. They include Pine Valley Mining Corporation, Tahera Diamond Corporation, Big Bar Resources Corporation, Emerald Isle Resources Inc., Great Gold Mines N.L, Gulfside Minerals Ltd., Kansai Mining Corporation, Majestic Gold Corp., Neo Alliance Minerals Inc., Pacific Imperial Mines Inc., Superior Canadian Resources Inc., Vega Gold Ltd., Vostok Minerals Inc. and West Hawk Development Corp.

Comments

[mac.barron:]

Investment myopia is gripping the markets which are punishing the "good" as well as the "bad." Economic cycles are inevitable and it is expected that the weak will perish on the downswings. The part that is frustrating, IMHO, is that very good companies with rock solid balance sheets, wide moats and great management are dragged down too.

As a random example I'll use Noble Corp. (NYSE:NE) an offshore drilling contractor with a strong backlog of orders from the likes of Exxon (NYSE:XOM) and Chevron (NYSE:CVX). I'll admit that there may be some questions around Noble's long term foreign corporation tax status and that a number of their rigs were offline in Q4 for repairs but there is no way this stock should be dipping the way it has.

Mining and Exploration is a vital segment of the economy. In a more sane investment universe it would be a lot less volatile. I never mind seeing a worthless piece of crap stcok take a hit, I hate to see solid ones get pounded.

Disclosure: I own a small position in NE.

Mar 07 07:44 PM