Broad index rises as majors take a tumble on TSE

The Toronto Stock Exchange 300 index rose 131.63 points during the July 19-25 report period to end at 10,867.10.

With the exception of palladium, precious metals suffered losses in London trading: gold was fixed at US$279.70 per oz. on the morning of July 26, down $2.10 from a week ago; silver was at US$4.97 per oz., a loss of 2; and platinum was at US$566 per oz., a drop of $6. Palladium rose $53 over the week to trade at US$765 per oz.

The TSE gold and precious minerals sub-group plunged 323.72 points to 3,999.89.

Lackluster second-quarter earnings translated into a $2.45 loss for Barrick Gold. The major’s earnings were unchanged from the previous quarter, though they were significantly less than in the second quarter of 1999. Barrick ended the period at $23.30.

Similarly, Placer Dome slipped $1.50 to $12.30 on news that it had ended the recent quarter US$76 million in the red. The loss is attributed to a US$116-million writedown on the Las Cristinas property in Venezuela.

A new quarterly record pushed Meridian Gold 40 higher to $8.95. The mid-tier producer cranked out 122,474 oz. in the recent quarter, with the El Penon gold-silver mine, in northern Chile, accounting for nearly two-thirds of that. Moreover, El Penon’s cash costs averaged US$45 per oz., making it one of the lowest-cost producers of its kind. Recent drilling also returned encouraging results, including 54.2 grams gold and 317 grams silver per tonne over 1.6 metres.

Diamond explorer Winspear Diamonds climbed 6 to $4.56 after settling its differences with De Beers Consolidated Mines. The agreement calls for Winspear to waive its shareholder rights protection plan and for De Beers to extend its hostile takeover bid to mid-August.

Rex Diamond Mining reached a tentative agreement with De Beers to help develop its Akchar diamond permit in Mauritania, northwestern Africa. The major can earn a majority stake by spending US$24 million or by tabling a bankable feasibility study within five years. Rex shot up 30 on the news to $5.20.

Base metals had a mixed week on the LME, with copper advancing US$41.50 for a ring price of US$1,851 per tonne, zinc up US$21 to US$1,156.50, and lead US$17.50 higher at US$469. Nickel was US$160 lower at US$8,050 and aluminum was off US$19 at US$1,568 per tonne.

The metals and minerals sub-group fell 17.54 points to 3,385.02, despite an 85 rise by heavyweight Alcan to $48.80.

Inco was off 90 to close at $21.60, even as it announced earnings of US$148 million for the quarter ended June 30. Trading near its 52-week low with a price-earnings ratio near 11, it will likely be attracting some attention from bargain-hunters. Noranda rose 5 to finish at $15.45, though its second-quarter earnings came in at $84 million, slightly below projections.

Falconbridge‘s earnings were up as well, at $126 million, but the market bid Falco shares down to $16.65, for a loss of $1.35. Cominco got a similar reward for a good quarter, seeing its shares slide 15 to $18.55 on news that it had earned $41 million during the quarter.

Among Toronto juniors, Crown Resources fell 60 to close at 65, possibly on fears that a new tax regime in Peru may affect proceeds from the Yanacocha mine. Crown’s principal exploration play is the Bongara zinc project in northern Peru.

Partners Miramar Mining and Hope Bay Gold both suffered losses, despite having released more promising results from their Hope Bay gold project in Nunavut. Highlights from underground drilling in the B2 zone include 23.5 ft. (true width) grading 2.2 oz. gold per ton. Miramar slipped 8 to $1.22, while Hope Bay dropped 9 to 46.

On the Montreal board, Murgor Resources was up 8 at 23, though the company was unable to explain why. Its most recent exploration results, from the Red Horse Lake platinum project in northwestern Ontario, came out in 1999.