Canada stocks lower at close of trade; S&P/TSX Composite down 0.13%

Fission Uranium FCUUF announced that Canada’s Minister of Innovation, Science and Industry extended the national security review related to its pending merger with Paladin Energy Limited until Dec. 30, 2024. FCUUF has cautioned that there is no guarantee that the clearance, per the Investment Canada Act (ICA), will be obtained in time and failure to do so could make the deal fall apart.

FCUUF received the original notice from the minister on Oct. 1, 2024. It was sent as per section 25.3 of the ICA. The merger, if it goes through, is expected to create a world-class uranium producer with a diversified presence across leading uranium mining jurisdictions of Canada, Namibia and Australia.

Advancement on Fission Uranium-Paladin Merger

Fission Uranium inked the deal with the Australian miner Paladin in June 2024. FCUUF shareholders voted in favor of the acquisition at the special meeting held on Sept. 9, 2024.

On Sept. 26, Fission Uranium completed the hearing before the supreme court of British Columbia regarding the approval of the final order for its acquisition by Paladin. It was approved by the court on Oct. 8.

Fission Uranium’s acquisition by Paladin, however, remains opposed by CGN Mining Company Limited, which holds an 11.26% stake in FCUUF. CGN is a subsidiary of China General Nuclear Power Corp.

The closure of the acquisition remains subject to the receipt of clearance under the ICA and other customary conditions.

FCUUF-Paladin Merger to Create Leading Uranium Producer

Per the agreement, Paladin would acquire FCUUF’s outstanding shares for an implied total equity value of C$1.14 billion ($0.846 billion).

Paladin is an independent uranium producer with 75% ownership of the world-class long-life Langer Heinrich Mine located in Namibia. It also owns a portfolio of uranium exploration and development assets in Canada and Australia. Through its Langer Heinrich Mine, it delivers uranium to major nuclear utilities across the world. It has a 17-year estimated mine life and a nameplate annual capacity of 6 million pounds of uranium.

The acquisition of Fission Uranium will make Paladin the 100% owner of the Patterson Lake South uranium property. It is a proposed high-grade uranium mine and mill in Canada’s Athabasca Basin region. The feasibility study for the property projects a 10-year mine life with an annual production of 9.1 million pounds of uranium.

Fission Uranium recently staked four new properties in the Athabasca Basin region of northern Saskatchewan — Typhoon, Corsair, Merlin and Seahawk. Per the company, all of these have the potential for hosting high-grade uranium.

The acquisition, if successful, will create a company with a pro-forma market capitalization of $3.5 billion. It will be placed among the largest pure-play global uranium companies with a combined mineral resource of 544 million pounds of uranium and ore reserves of 157 million. It will have a solid portfolio of exploration, development and production assets, and a substantially increased international capital markets exposure.

This move will help the combined company to capitalize on the growing demand for uranium, which is surging due to factors like increasing electricity needs, decarbonization efforts and data center expansion.

Fission Uranium Stock’s Price Performance

Shares of Fission Uranium have fallen 21.7% in the past year against the industry's 27.9% growth.

Piedmont Lithium PLL and Sayona Mining Limited have entered into an all-stock merger agreement to form a unified company, MergeCo, which will be focused on hard rock lithium production.

The deal combines Piedmont Lithium and Sayona Mining’s complementary businesses and is expected to position the new entity as a leader in North American lithium production. MergeCo will have three high-quality development projects and the potential for brownfield expansion at North American Lithium (“NAL”).

The PLL-Sayona merger has been unanimously approved by the board of directors of both companies. However, the completion of the transaction is subject to shareholder approval of both companies, as well as regulatory approvals. It is expected to close in the first half of 2025.

The transaction will result in an approximate 50%-50% equity holding of shareholders of Piedmont and Sayona in the combined company. MergeCo will be domiciled in Australia but will maintain a listing on Nasdaq.

PLL-Sayona Merger Offers Solid Synergies & Growth Potential

NAL is the largest lithium operation in North America and one of the world’s few active hard rock spodumene operations supplying the market. It is jointly owned by Piedmont (25%) and Sayona Mining Limited (75%). NAL finished ramping up in June 2024 and is targeting 226,000 metric tons a year of spodumene concentrate production.

The Piedmont-Sayona merger will create a simpler and stronger lithium business, positioning it well to grow through cycles. It will have low capital intensity with a lower cost base. Shared benefits of synergies, in the form of optimized logistics and procurement, will help lower operating costs. Marketing synergies are expected through expanded customer relationships. A strengthened balance sheet will also help MergeCo to fund and accelerate growth plans.

There has been a downtrend in lithium prices due to slowing demand growth for EVs, inventory glut and increased supply. Despite short-term market pressures, the long-term prospects for lithium remain robust. Demand for lithium, a core component of EV batteries, is expected to accelerate on the back of significant global EV adoption, driven by government mandates and consumer preference for greener alternatives. The increasing adoption of lithium-ion batteries in energy storage systems also contributes to this demand surge.

Piedmont’s Shares Underperform Industry

PLL’s shares have lost 58.2% in the past year compared with the industry’s 9.7% decline.

For those looking to find strong Basic Materials stocks, it is prudent to search for companies in the group that are outperforming their peers. Has New Gold (NGD) been one of those stocks this year? A quick glance at the company's year-to-date performance in comparison to the rest of the Basic Materials sector should help us answer this question.

New Gold is a member of our Basic Materials group, which includes 235 different companies and currently sits at #13 in the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.

The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. New Gold is currently sporting a Zacks Rank of #1 (Strong Buy).

The Zacks Consensus Estimate for NGD's full-year earnings has moved 7.8% higher within the past quarter. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Our latest available data shows that NGD has returned about 73.3% since the start of the calendar year. In comparison, Basic Materials companies have returned an average of -5.1%. This shows that New Gold is outperforming its peers so far this year.

NexGen Energy (NXE) is another Basic Materials stock that has outperformed the sector so far this year. Since the beginning of the year, the stock has returned 5.4%.

Over the past three months, NexGen Energy's consensus EPS estimate for the current year has increased 43.2%. The stock currently has a Zacks Rank #2 (Buy).

Breaking things down more, New Gold is a member of the Mining - Gold industry, which includes 38 individual companies and currently sits at #35 in the Zacks Industry Rank. This group has gained an average of 10.4% so far this year, so NGD is performing better in this area.

On the other hand, NexGen Energy belongs to the Mining - Miscellaneous industry. This 60-stock industry is currently ranked #175. The industry has moved -17.2% year to date.

Investors with an interest in Basic Materials stocks should continue to track New Gold and NexGen Energy. These stocks will be looking to continue their solid performance.

Zacks Investment Research

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, November 12:

Grupo Financiero Galicia S.A. GGAL: This financial service holding company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 8.4% over the last 60 days.

Grupo Financiero Galicia S.A. Price and Consensus

Grupo Financiero Galicia S.A. price-consensus-chart | Grupo Financiero Galicia S.A. Quote

Grupo Financiero Galicia's shares gained 59.7% over the last three months compared with the S&P 500’s advanced of 10.4%. The company possesses a Momentum Score of A.

Grupo Financiero Galicia S.A. Price

Grupo Financiero Galicia S.A. price | Grupo Financiero Galicia S.A. Quote

New Gold Inc. NGD: This gold mining company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 30.8% over the last 60 days.

New Gold Inc. Price and Consensus

New Gold Inc. price-consensus-chart | New Gold Inc. Quote

New Gold's shares gained 36.0% over the last six months compared with the S&P 500’s advanced of 14.9%. The company possesses a Momentum Score of A.

New Gold Inc. Price

New Gold Inc. price | New Gold Inc. Quote

Bowhead Specialty Holdings Inc. BOW: This specialty property and casualty insurance products provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 1.5% over the last 60 days.

Bowhead Specialty Holdings Inc. Price and Consensus

Bowhead Specialty Holdings Inc. price-consensus-chart | Bowhead Specialty Holdings Inc. Quote

Bowhead Specialty's shares gained 23.6% over the last three months compared with the S&P 500’s advanced of 10.4%. The company possesses a Momentum Score of A.

Bowhead Specialty Holdings Inc. Price

Bowhead Specialty Holdings Inc. price | Bowhead Specialty Holdings Inc. Quote

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Zacks Investment Research