MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — SouthernEra gets boost from diamond deal

A weakened dollar and continued instability in Asian markets contributed to the Toronto Stock Exchange 300 index’s loss of 391.72 points in the report period June 10-16. The index ended the period at 7,143.71, down 5.1% from the previous period.

Metal prices tumbled over the report period, led by gold, which fell $5.75 to a London mid-morning fix on June 27 of US$288.40 per oz. Silver dropped 8 cents to US$5.28 per oz., while platinum lost $1.25, ending the period at US$355 per oz. While lead and zinc remained unchanged, nickel was devalued 3 cents to US$2.02 per lb. and copper was down a penny at 75 cents per lb.

Crystallex International saw its share value plummet $4.45 to $1.55 upon news of a Venezuelan court rejecting the company’s claim to the Las Cristinas gold deposit in Venezuela. The ruling cannot be appealed and thus, allows legal owner Placer Dome to develop the multi-million-ounce gold deposit unimpeded. Nevertheless, Placer lost $1.55 during the report period, falling to $16.35.

Other gold producers down during the period include: Barrick Gold, off $1.95 at $25.40; Kinross Gold, off 55 cents at $5.10; and William Resources, off 4 cents at 22 cents. Among the base-metal producers, Rio Algom fell $1.60 to $19.60, while Falconbridge shed $1.20 to end at $15.80. Suffering mild losses were Noranda, down 40 cents to $24.45, and Inco, down 80 cents to $20.20.

Denying fault in mining-related accidents appears to have no effect on investors: Cameco, recently blamed for a cyanide spill near its partly owned Kumtor gold mine in Kyrgyzstan, was devalued $3.85 to $37.40. Several local villagers have blamed the spill for recent illnesses, prompting the government to seek compensation. Cameco has flatly refuted the claims, but rumor has it that some factions in the government are using the incident to undermine the company’s management of the project.

SouthernEra Resources was one of the few companies to rise in value over the period, edging ahead 5 cents to $4.80. The company has settled its months-long dispute with De Beers Consolidated Mines over the ownership of the high-grade M1 kimberlite pipe, formerly a part of the Klipspringer project. The deal gives SouthernEra and its partner, Randgold and Exploration, a 40% interest in the pipe, though the former can buy out the latter’s interest; the remaining interest is held by De Beers, which will also act as operator. As part of the deal, SouthernEra will process the diamonds at its dense media plant on the nearby Modderfontein farm, but will market all the diamonds it mines from Klipspringer through De Beers’ Central Selling Organisation. Mining at M1 could begin in weeks, which would provide SouthernEra with much-needed capital to further develop Klipspringer.