MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — Producers suffer as gold sinks further

Anyone who thought things could not get any worse should think again. The yellow metal dropped another $1.15 during the report period May 19-25, to land at US$271.20 per oz. on the morning of May 26.

Gold’s latest decline began in early May, when Britain’s central bankers announced they would sell 125 tonnes of the country’s 715-tonne stockpile during fiscal 1999-2000. The metal’s latest devaluation resulted in the Toronto Stock Exchange’s gold and precious metals sub-index falling a whopping 298.54 points, to finish the period at 4,961.26.

Canada’s major producers are taking it on the chin: Barrick Gold dropped $1.35 to $24.65; Placer Dome slipped $1 to $16.20; and Kinross Gold fell 21 cents to $2.71. Hit even harder were Euro-Nevada Mining, which plunged $2.15 to $19.75, and sister company Franco-Nevada Mining, which plummeted $1.90 to $23.60.

Activity among smaller producers was mixed, with Geomaque Explorations falling 18 cents to 97 cents and Glamis Gold rising 20 cents to $2.90. The former recently announced positive first-quarter earnings, whereas the latter revealed a quarterly loss. Both, however, preceded their fiscal results with good exploration results from their respective gold projects in Honduras.

Goldcorp was off 55 cents to $7.55, despite having recently closed a $60-million financing. Funds are earmarked for the Red Lake gold mine in northern Ontario, where commercial production is slated to begin in late 2000.

The metals and minerals sub-group lost 164.88 points, ending the period at 3,548.72. Nickel was off 2 cents at US$2.45 per lb., as was copper at US66 cents per lb. Zinc shed a penny, but lead managed to stay the course.

Nickel magnates Inco and Falconbridge both suffered declines, with the former slipping $1.30 to $23.65, and the latter, $1 to $19.40. Also down were Cominco, which fell $2.35 to $19.90 on news it was postponing the expansion of its Cajamarquilla zinc refinery in Peru till next year, and Teck’s B-series, off $1.60 to $10.55.

Santa Cruz Gold was a lively target among eastern juniors, with 8.17 million shares changing hands. The company, which fell 1 cents to 7 cents, has agreed to merge with Queenstake Resources, which, at 20 cents, remained unchanged on the news.

Meanwhile, Indochina Goldfields edged ahead 20 cents to $1.40 on news that it had acquired 2.83 million shares in Australian-listed Emperor Mines. Emperor owns and operates the mine of the same name in Fiji.

Diamond companies added some sparkle to a rather depressing period: SouthernEra Resources jumped 70 cents to $5.50 and Diamond Fields International climbed 60 cents to $1.30. Posting a smaller gain was Rex Diamond, which edged ahead 5 cents to $3.05.