Healthy

Gold Reserve deal with Venezuela a potential turning point for Canadian miners with arbitration wins

Gold Reserve Inc. shocked many onlookers by reaching a potentially favourable settlement with the Venezuelan government, which it has been battling in court for more than six years.

Canadian mining information mill putting together an excellent winning streak in international arbitration cases against foreign governments.

But their record of receiving full payment for those awards is a lot more mixed.

Late a week ago, a tiny firm called Gold Reserve Inc. shocked many onlookers by reaching a potentially favourable settlement using the Venezuelan government, so it continues to be battling in the court in excess of six years. However, Khan Resources Inc. and Stans Energy Corp. have won high-profile decisions against Mongolia and Kyrgyzstan and have yet to see any benefit from their efforts.

Gold Reserve spent much of the 1990s and early 2000s developing the Brisas project in Venezuela, while another Canadian firm called Crystallex International Corp. worked on an adjoining gold deposit called Las Cristinas. Each company invested hundreds of millions of dollars in Venezuela before Hugo Chavez’s government expropriated both of them in 2008.

Both firms filed international arbitration suits. As well as in September 2014, Gold Reserve won an award more vital than US$740 million. (The Crystallex case is still ongoing.)

Related


Healthy

Enbridge Inc equity offering seen as catalyst

Enbridge Inc.'s storage terminal in Cushing, Oklahoma

Enbrige Inc.’s $2.3 billion equity offering has been viewed as a sensible move during challenging times for a lot of energy-related companies.

The company also reduced its dividend growth forecast to Ten to twelve per cent between 2015 and 2019, from 14 to 16 per cent previously, an expression of its more cautious outlook.

Calling the offering a “key catalyst,” J.P. Morgan analyst Jeremy Tonet noted it serves as an essential step to de-risk Enbridge’s balance sheet.

He also considers the revised dividend outlook prudent, as it now only incorporates commercially secured projects.

Tonet added the stock to J.P. Morgan’s analyst focus list like a top growth pick, highlighting its de-risked outlook, discounted full-cycle valuation, and a 4.5 per cent yield that’s “paying investors to wait.”

The analyst noticed that the equity offering removes near-term financing needs for Enbridge and it is group of companies.

These concerns were reflected in Enbridge Energy Partners L.P.’s 14 per cent yield and also the sharp decline Enbridge Income Fund Holdings Inc. is still digesting from 2015.

Following the offering, Enbridge expects to fufill the family’s equity funding requirements through 2017.

“The size and timing of issuance came larger and earlier than we expected, de-risking near-term equity financing requirements inside a highly uncertain capital markets environment for a lot of participants,” Tonet told clients,

He also noted that Enbridge retained alternative financing and joint venture-level financing levers for a “rainier day.”

To Top