Nickel springs back as Inco strike nears

The May 10-16 report ended with a shadow being cast over the nickel market after workers at Inco‘s Sudbury workers voted overwhelmingly in favour of a strike mandate.

On May 16, union members handed their union the mandate. The union, in turn, demanded management table its final offer four days prior to the expiry of the current contract on May 31. Inco, which closed up $1.95 to $26.55, remains confident a deal can be reached before the deadline.

Neverthess, the potential supply disruptions, combined with already low warehouse stocks, pushed nickel 15 higher on the London Metal Exchange to a May 17 morning fix of US$4.69 per lb. Riding the wave were Falconbridge, up $1 to $24.15, and Sheritt International, up 50 to $4.45.

Aur Resources climbed 12 to $2.62, despite having announced a first-quarter loss. Writedowns and equity losses are attributed to the poor financial showing.

Other base metal producers were a mixed bag: Noranda rose $1.35 to $16.10; Cominco fell 70 to $23.05; Rio Algom edged ahead 10 to $18.55; and Boliden slipped 7 to $2.10. Overall, the TSE’s metals and minerals sub-group climbed a respectable 169.69 points to 3,840.56.

The TSE’s gold and precious metals sub-group climbed 62.17 points to 4,612.50. Gold eased back US$2.95 over the report period to trade at a London morning fix of US$274.85 per oz. on May 17.

Despite the yellow metal’s devaluation, Barrick Gold rose 25 to $27.50 and Placer Dome climbed 30 to $13.10. Barrick unveiled plans at its annual meeting to boost production to 5 million oz. by 2003 from its current 3.7 million oz. This will be achieved by developing three new mines: Rodeo in Nevada; Pascua-Lama in Chile and Argentina; and Bulyanhulu in Tanzania.

Going the opposite way was Kinross Gold, which slipped 9 to $1.80. Having only a small portion of its production hedged, Kinross is susceptible to spot prices.

TVX Gold rose 4 to $1.01 on strong quarterly results. The mid-tier producer earned US$4 million on revenue of US$42.1 million in the three months ended March 31, similar to the corresponding period of 1998. A shortfall in gold output arising from an alliance with Normandy Mining was balanced by new production from the Stratoni lead-zinc-silver mine in Greece. TVX also plans to consolidate its shares on a 5-for-1 basis to help push its U.S. share value above US$1, as required by the New York Stock Exchange.

Diamond miner Namibian Minerals plunged 40 to $5.30 on mixed quarterly results. Earnings were less than half those of the corresponding period of 1998, as was production; however, revenue increased as a result of higher realized diamond prices.

Montreal-based junior Niocan granted Teck an option to acquire 25% of its Oka niobium project, west of Montreal, Que. Teck, which is already co-owner with Cambior of the Niobec niobium mine in Chicoutimi, Que., will pay $1 million, half of which is due following due diligence, with the remaining half due after permitting. Teck ended the week down 30 to $11, whereas Niocan fell 5 to 80 (though it had rebounded to 99 at presstime).

Cambiex Exploration and Miramar Mining (mae-t) reported that ongoing infill drilling at their joint-ventured Hope Bay gold project in northwestern Nunavut has doubled to 300 metres the strike length of the Hinge zone, a newly discovered structure at the Doris North deposit. Cambiex rose 2 to 44 while Miramar fell 7 to 74.

Pangea Goldfields rose 5 to $3.95 as the junior announced it had encountered significant gold mineralization in a recently completed drill program at its Bulyanhulu South project in Tanzania, a joint-venture with New York-listed Ashanti Goldfields can earn a 60% interest. In the 14300N zone, the best holes cut 4 metres of 12.97 grams gold per tonne and 6 metres of 3.22 grams gold in a sheared intermediate-to-felsic volcanic contact.