Equity Strategy July 6, 2007:

It has been an interesting week again in the Canadian merger and acquisition area. The big deal this week was the friendly bid by Teck Cominco (TCK.B) to acquire Aur Resources (AUR). Teck is offering a combination of stock and cash that is valued at $41.00 for each AUR share. The deal is valued at $4.1 billion and Teck will pay $3.1 billion in cash and issue 22 million shares to complete the takeover, $30.75 cash and 0.2187 of a Teck Cominco share for each Aur resources share tendered. The offer is a 28% premium to the closing price of AUR shares before the offer.

It seems that Teck wants AUR as the bid is quite rich and should keep competing bids from derailing the Teck Cominco bid. Aur Resources has been a long term holding in the Growth Portfolio originally purchased at $8.45 per share in October of 2005. I would sell the shares at the current market price, the portfolio also holds Teck Cominco shares and tendering would increase that position.

Jeff Reuben, Chief Strategist, at CIBC Global Markets has increased his target for the S&P/TSX index and is now predicting that the TSX will reach the 15,000 level before the end of this year. He feels that higher commodity prices mainly in the energy sector will power the index to new all time highs.

With oil moving higher and now trading over $72.00 a barrel he may not be that far off. The only thing that may derail the move higher is if the Bank of Canada aggressively increases interest rates over the next few months.

HudBay Mining (HBM) announced an update to the reserve calculations on their Yukon project, the company now shows an indicated resource of 6.43 million tonnes of ore grading 6.33% zinc, 5.5% lead and 56.55 grams per tonne silver the new total inferred resources in a whopping 24.55 million tonnes grading 6.71% zinc, 3.485 lead and 33.85 grams per tonne silver.

These updated results add substantially to the over all reserve position for HudBay, the company’s other properties have a combined total resource of 27 million tonnes in the indicated and inferred categories.

The shares have surged on the news moving to a new 52 week high of $27.45 per share. I am increasing the target price to $30.00 from $26.00 on this encouraging news.