By Sarah Pringle, MarketWatch
SAN FRANCISCO (MarketWatch) — Extorre Gold Mines topped a rally Monday across the broader Canadian equities market, jumping 68% on a C$413 million takeover bid from fellow miner Yamana.
Extorre Gold Mines rose C$1.73 to close at C$4.27, a level last hit in early May, after agreeing to be acquired by Yamana Gold Inc. /zigman2/quotes/206359073/delayed CA:YRI -0.82% . Extorre Gold’s mining operations are concentrated in Argentina.
“It is a relatively small transaction in that it represents only 3% of Yamana’s market capitalization yet it could ultimately deliver more than 10% of our total gold equivalent production,” said Yamana CEO Peter Marrone.
Yamana, a Canadian-based gold producer, offered to buy Extorre for C$4.26 a share in a cash and stock deal worth approximately C$413 million, a 68% premium to Extorre’s C$2.54 closing price Friday.
Extorre’s board of directors recommended shareholders approve the deal.
“The Extorre acquisition by Yamana represents a great buy for Yamana as [Extorre] has unusually high grade gold,” said Malcolm Gissen, co-manager of The Encompass Fund.
“We believe that with companies like Yamana sitting on billions of dollars in cash and so many small gold companies deeply undervalued, there will be more acquisitions over the next 12 months,” added Gissen.
Other gold mining stocks also rallied, including shares of Centerra Gold Inc. /zigman2/quotes/209218682/delayed CA:CG +1.23% , rising 7%.
Centerra reported late Friday first-quarter losses of $14.7 million, or 6 cents a share, reversing a year-ago profit of $136.6 million, or 58 cents a share. The company also announced its first quarterly dividend of C$0.04 a share, payable June 15, 2012.
Gold for August slipped $1.10, or 0.1%, to close at $1,627 an ounce on the Comex division of the New York Mercantile Exchange. Read more about gold.
Toronto’s S&P/TSX Composite Index rose 76 points, or 0.66%, to 11,601. The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.24% tacked on 0.14%, while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.13% slid 0.2%.
As for the momentum seen by Canadian stocks Monday, “it appears we have a relief rally as Greece is still part of the European Union,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier Inc.
The strongest performing sectors were metals mining stocks , whose benchmark climbed 2.4%, and the materials sector /zigman2/quotes/210598474/delayed XX:TORGC195 -0.35% , up 2.2%. As one of the top percentage gainers, Ivanhoe Mines /zigman2/quotes/207656050/delayed CA:IVN 0.00% settled 7.1% higher.
“The vote in Greece, statistics about gold consumption increasing rapidly in China, the buoyancy of the American economy, the actions taken by the Chinese Government to stimulate their economy, and the expectation of stimulative action from the Fed as early as this week are all encouraging investors to jump into the commodity companies,” said Gissen.
But not all commodities companies strengthened Monday. Thompson Creek Metals slid 5.1%, while Caledonia Corp. fell 5.9%.
Meanwhile, health-care stocks made headway Monday with the benchmark sector index XX:TORGC191 +1.40% up 2.2%.
The move was supported by Valeant Pharmaceuticals International Inc. , whose shares rose 3.3%, and shares of SXC Health Solutions Corp. , which added 4%. SXC Health Solutions announced Monday that URAC, a health-care accrediting organization out of Washington D.C., had awarded the company Specialty Pharmacy Accreditation.
In the foreign exchange market, Canada’s currency /zigman2/quotes/210561978/realtime/sampled USDCAD -0.2612% declined 0.4% against the greenback, with one U.S. dollar purchasing C$1.0241, up from C$1.0202 late Friday. The U.S. dollar has gained 3.3% on the Canada dollar over the past three months.