MINING MARKETS & INVESTMENT NEWS — Eastern Markets — Golds weaken, base metals regain some strength

The Toronto Stock Exchange made solid gains during the trading period Aug.

18-24, with the TSE 300 composite index up 116.79 points to close at 7,169.80 — a gain of 1.7% over the five trading days.

The trading period saw the rug pulled from under the gold market’s feet, with gold plunging a stunning US$8.30 to land at a London morning fix of US$253.20 per oz. on the morning of Aug. 25.

The yellow metal’s demise clipped nearly 5% off the Toronto Stock Exchange gold and precious minerals sub-group, erasing the previous period’s gain of 2.7% in the gold price. The sub-index landed at 5,135.27, a loss of 267.72 points from the previous period.

Falling in step were Canada’s major producers: Barrick Gold lost $1.20 to end at $28.10; Placer Dome fell 65 cents to $15.40; and Kinross Gold slipped 62 cents to $3.16. Also off were Franco-Nevada Mining, down $2.05 to $23.20; Euro-Nevada Mining, down $1.65 to $17.70; and TVX Gold, down 12 cents to $1.27.

The diamond sector had a tough week: Aber Resources helped to drag down the sub-index as its shares lost $4.75 to close at $9.75. A much-anticipated feasibility study on Aber’s Diavik diamond project, delivered by joint-venture partner Rio Tinto’s Diavik Diamond Mines unit, estimated the initial capital expenditure at $1.3 billion, up from a previous estimate of $875 million, and also estimated operating costs at $85 per tonne, up from $72. The regulatory process is now expected to delay production at Diavik until 2003, a year later than had been scheduled in earlier feasibility work.

The recently battered SouthernEra Resources recovered some value during the trading period, adding 25 cents to finish at $3.20. The company announced an issuer bid under which it will buy up to 5% of its own shares on the open market.

Small producer Namibian Minerals jumped $1.15 to $6.75, after announcing a 33%-increase in diamond content at its Hottentot Bay marine concession off the coast of Namibia. Including the nearby Luderitz Bay concession, the company’s total resources now stand at 2.96 million carats.

In an eventful week in the base metal business — one marked by merger mania in the aluminum and copper markets, and by almost daily shifts in the supply picture — prices stayed rangebound, with only a 7 cents rise in the price of nickel (to US$3.03 per lb.) to show for it. Still, the base metal stocks showed a quick response to bullish indicators in the commodity markets.

The metals and minerals sub-group outpaced the broader market, rising 90.9 points to finish at 4,245.65. Inco topped the period’s most-active list. The nickel and copper producer rose $2.15 to finish at $32.15, with 14.9 million shares riding the tape. Falconbridge moved 45 cents higher to finish at $24.35, with parent Noranda up 95 cents at $22.