Canadian Stocks Fall as Kinross Gold Plunges; Cenovus Rallies

Canadian stocks fell as Kinross Gold Corp. (K) plunged after saying it expects to record a goodwill writedown on its Tasiast mine in Africa and banks slipped as Citigroup Inc. reported a decline in profit.

Kinross, Canada’s third-largest gold producer by market value, dropped 21 percent. Cenovus Energy Inc. (CVE), the country’s fifth-biggest energy company by revenue, rose 4.4 percent after an analyst at Canaccord Financial Inc. raised his share-price estimate on the company. Research In Motion Ltd. gained 5.3 percent after a report that Samsung Electronics Co. may be interested in buying the company.

The Standard & Poor’s/TSX Composite Index slipped 25.77 points, or 0.2 percent, to 12,232.83 today.

“There was concern from day one as to this purchase of Tasiast,” Greg Eckel, a fund manager with Morgan Meighen & Associates Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($975 million). The acquisition “seemed a little excessive and now you’re seeing that they’re having to pull back and digest what they’ve done.”

The index gained 4.5 percent from Dec. 28 to yesterday as gold stocks rebounded from the lowest level since July 2010. Gold companies make up 11 percent of Canadian stocks by market value, and eight of the world’s 21 largest companies in the industry are Canadian, according to data compiled by Bloomberg.

Kinross plunged 21 percent, the most since its initial public offering in 1993, to C$10.40 after saying it will review development plans for three projects, including Tasiast. Kinross acquired the mine in Mauritania when it bought Red Back Mining Inc. for C$8 billion ($7.9 billion) in September 2010.

Barrick Downgrade

Barrick decreased 2.1 percent to C$48.75 after Steven Butler, an analyst at Canaccord Financial Inc., cut his rating on the shares to “hold” from “buy” in a note to clients dated yesterday. Butler cited Barrick’s higher share price relative to net assets than its peers and a “relatively flat production profile over the next few years” in the note.

Agnico-Eagle Mines Ltd. fell 5.4 percent to C$36.11 after at least three analysts, including Anita Soni of Credit Suisse Group AG, cut the stock’s price estimates.

S&P/TSX banks retreated for a third day after Citigroup, the third-largest U.S. bank by assets, missed analysts’ average earnings forecast in a Bloomberg survey by 26 percent. Royal Bank of Canada (RY), the country’s biggest lender by assets, dropped 0.5 percent to C$51.82. Toronto-Dominion Bank, its biggest rival, slipped 0.1 percent to C$77.71, ending a six-day streak of gains. Scotiabank fell 0.1 percent to C$51.81.

Cenovus rallied 4.4 percent to C$35.06 after Phil Skolnick, an analyst at Canaccord, boosted his 12-month price estimate on the shares to C$45 from C$42. Skolnick cited a higher forecast for oil prices.

Natural Gas Falls

Natural gas futures closed at the lowest price in almost 10 years as above-normal temperatures and rising production contributed to a growing surplus of the furnace and power-plant fuel.

Peyto Exploration & Development Corp., which produces oil and gas in Canada, fell 4.9 percent to C$19.97. Tourmaline Oil Corp. (TOU), a western Canadian natural gas and oil producer, tumbled 4.9 percent to C$22.44. Progress Energy Resources Corp. (PRQ), which produces natural gas and oil in Canada, slumped 1.3 percent to C$11.01, the lowest price since October 2010.

Petrominerales Ltd., an energy producer with operations in Colombia, climbed 6.4 percent to C$19.35, the biggest gain in the S&P/TSX.

REIT Moves

Whiterock Real Estate Investment Trust (WRK-U), which owns commercial properties in Canada and the U.S., soared 12 percent to a record C$16.08 after agreeing to be bought by Dundee Real Estate Investment Trust. (D-U) Dundee REIT slipped 3.3 percent to C$33.93.

Uranium producer Denison Mines Corp. (DML) slumped 10 percent to C$1.72 after Craig Miller, an analyst at TD, cut his rating on the shares to “reduce” from “hold.”

“The company continues to incur significant development expenditures, which we believe are not sustainable from operating cash flows alone,” Miller wrote in a note to clients. The shares jumped 19 percent yesterday after Uranium One Inc. reported a 45 percent production increase.

Chinese GDP

Chinese gross domestic product increased 8.9 percent in the fourth quarter from a year earlier, down from 9.1 percent in the previous three months, the National Bureau of Statistics said today in Beijing.

All major base metals traded on the London Metal Exchange gained, and copper futures advanced on the Comex in New York.

First Quantum Minerals Ltd. (FM), Canada’s second-biggest publicly traded copper producer, rallied 4.8 percent to C$23.91.

North American Palladium Ltd. (PDL) tumbled 13 percent to C$2.69 after forecasting “modest growth” for 2012 production and saying it is discontinuing production at its Sleeping Giant mine due to insufficient operating margin.

RIM (RIM) rose 5.3 percent to C$17.76, the highest level since Dec. 1. Samsung may be interested in buying the maker of the Blackberry smartphone, and no deal has been made because Waterloo, Ontario-based RIM is asking too much, the blog BGR reported today, without identifying its sources.

Celestica Inc. (CLS), the maker of electronic parts for companies including RIM, gained 3.5 percent to C$8.07.

Primero Mining Corp. (P), which owns a gold and silver mine in Mexico, tumbled 15 percent to C$3.18 after releasing a 2012 production forecast that trailed the estimates of David Haughton, an analyst at Bank of Montreal.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net Ksenia Galouchko in New York at kgalouchko1@bloomberg.net;

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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