STOCK MARKETS — TSE drifts lower despite a rosy outlook

Despite cautious optimism regarding the sovereignty debate, the Toronto market ended lower, led by declines in the metals and precious metals sectors. For the 5-day report period ended Sept. 26, the TSE 300 composite shed 18.6 points to close at 4519.90.

The Canadian dollar, buoyed by polls indicating the federalists were holding the lead in the upcoming referendum debate, soared almost three-quarters of a cent above last week’s close to finish at US74.31 cents.

The rising dollar gave the Bank of Canada additional flexibility as it lowered its trend-setting rate to 6.71%. The drop of 20 basis points was the largest decline observed over the past 12 weeks.

As noted, the Toronto stock market did not ride the wave of optimism that engulfed both the dollar and the interest rate. The two resource sector sub-indexes seemed to sputter and drifted moderately lower.

The metals and minerals sub-index was lower, having lost 2.2% despite the strong performance of the underlying commodities. Nickel posted a solid gain with the London Metal Exchange settlement price per pound rising by US10 cents to US$3.86. Copper and zinc were also up, closing at US$1.33 (up US4 cents) and US46 cents (up US2 cents), respectively.

The gold and precious metals sub-index lost 0.9%, closing at 10,570.57 — this, despite more dramatic drops in underlying commodity prices.

Platinum was the biggest loser, shedding US$16.60 from the previous week, thereby setting the London morning platinum fix for Sept. 27 at US$420.25 per oz. Gold and silver followed suit, as the yellow metal lost US$1.80 to end at US$383.20, while silver dropped US2 cents to finish at US$5.46.

Senior and junior gold producers alike took it on the chin, closing lower. Placer Dome posted the largest loss, shedding 50 cents to close at $35, while Barrick Gold was off by 25 cents to finish at $34.38. Other producers ending the week on a lacklustre note included: Echo Bay Mines, which dropped 25 cents to $14.50; Hemlo Gold Mines, which lost 13 cents to $13.50; TVX Gold, which shed 25 cents to close at $9.38; Goldcorp, which fell 38 cents to wind up at $13.50; and Kinross Gold, which closed at $11.38, off 13 cents.

Investors who have been watching the strong performance of royalty sisters Franco-Nevada Mining and Euro-Nevada Mining over the past few weeks decided to take some profits. The companies released exploration results from 45 widely spaced holes drilled on their Midas joint venture in Nevada, indicating the Rex Grande zone has a geological resource of 13 million tons averaging 0.13 oz. gold and 2.7 oz. silver per ton. Both issues dropped, with Franco closing down $4.39 to $82.50 and Euro ending at $51.50, off $3.

Investors began to take notice of Cumberland Resources and Comaplex Minerals after the joint-venture partners released results from exploration programs completed in the Northwest Territories this summer. Comaplex shares surged ahead by 12 cents to close at 82 cents, while Cumberland jumped to a new 52-week high of $2.90 before rolling back to $2.75, up 77 cents on the week.

Meanwhile, investors expressed their approval of Bresea Resources. After it announced plans to split its shares on a 5-for-1 basis, the company announced it had come to terms with affiliated Bre-X Minerals concerning exploration plans for a second Indonesian gold project, known as the Sangihe. Shares of Bresea tacked on $1.75 to hit a new 52-week high of $18.25.

Junior explorer Nuinsco Resources continues to trade large volumes following news that it intersected nickel and copper mineralization at its Rainy River property in Ontario. More than 3.7 million shares changed hands as the stock added 10 cents to close at $1.37.

Plans to complete additional drilling at the Cabre polymetallic property near Matagami, Que., helped Southern Africa Minerals end on an upbeat note. BHP Minerals Canada has started drilling a 5-hole, 2,000-metre program designed to test geophysical anomalies found north of the Caber deposit. Southern Africa Minerals rose by 45 cents to end at $1.65.

Drilling by Pangea Goldfields at its Fenn-Gib property has increased reserves by 74% to 40.6 million tonnes averaging 1.33 grams gold per tonne. Despite this, the shares lost ground, closing down 7 cents to $2.18.