Gold stocks rise on prospect of strike in SA

Rocked by more dire warnings from the high-tech sector, the Toronto Stock Exchange 300 index tumbled 107.62 points during the July 18-24 report period to land at 7586.51.

Gold climbed $1.15 over the period to touch a London morning fix of US$269.25 per oz. on July 25. The increase helped push the gold and precious metals sub-index 189.78 points higher to 4,800.24.

Placer Dome catapulted $1.90 to $17.70 after announcing it had earned US$49 million in the first half of the year, versus just as much in losses a year ago. A healthy hedging program that saw the company earn an extra US$50 on every ounce sold spurred the turnaround.

On the New York board, Homestake Mining was up US26 at US$8.16, reporting a near-doubling of reserves at its Veladero project in Argentina. The new reserve figure, based on recent prefeasibility work, puts the size of the Amable and Filo Federico deposits at 168.6 million tonnes grading 1.48 grams gold and 24 grams silver per tonne. At the same time, the study estimated a capital cost of US$608 million to put the deposit into production, and calculated after-tax discounted rates of return near 7% for the project.

Also up on the Veladero news, Barrick Gold rose 70 to $24.10. Barrick owns a 40% stake in the project and is pursuing a merger with Homestake. The only major Canadian producer to lose ground over the period was Kinross Gold, which dipped 12 to $1.29.

Beset by sagging base metal prices, the metals and minerals sub-group flopped 148.28 points to 3,959.44. Nickel suffered the biggest devaluation, sinking 17 to US$2.59 per lb. on the morning of July 25, followed by copper, which slipped 4 to US66 per lb. Zinc was off a penny, with lead rising an equivalent amount.

Inco sank $1 to $25 as it announced lower earnings and revenue for the second quarter. However, earnings were actually up over a year ago when a non-cash, US$173-million tax benefit is taken into account. Coincidentally, Inco reported that its Goro operation in New Caledonia has been granted a 15-year tax holiday.

Keeping in line with its latest financial results, Inmet Mining remained unchanged at $2.50. The copper and gold producer’s second-quarter earnings remained essentially unchanged from a year ago as operating efficiencies offset lower metal prices.

Teck and Cominco each rose in market value as minority shareholders of the latter voted overwhelmingly in favor of the companies’ merger. Several steps have yet to be taken before the two can officially tie the knot. Teck’s B-series rose 38 to $12.23, while Cominco shares increased 56 to $27.91.

The remaining base metal producers were a mixed bag: Falconbridge climbed 18 to $16.50; Noranda fell 5 to $16.25; Aur Resources rose 25 to $2.75; Breakwater Resources slipped 3 to 97; Boliden remained at 31; and Sherritt International slipped 24 to $4.75.

Among juniors, Ivanhoe Mines dipped 10 to $1.55 after releasing more promising results from the Phuoc Son gold joint venture in Vietnam. Stepout drilling has expanded the high-grade shoot in the Bai Go portion of the high-grade core of mineralization.

Weda Bay Minerals saw its market value cut in half after announcing that American-listed OM Group had withdrawn its financial support for the company’s nickel and cobalt project in Indonesia. OM Group, which is Weda Bay’s largest shareholder, voiced concerns about political instability in the island nation and also said it would be difficult to raise third-party project financing in the current market. Weda Bay ended the report period at 25.

Positive developments at the Rapu Rapu polymetallic project in the Philippines pushed TVI Pacific 1 higher to 4. Owner Lafayette Mining of Australia has received an environmental permit, enabling construction to begin in the fourth quarter as scheduled. In 1998, TVI sold its interest in the project to Lafayette in exchange for equity and a small royalty.