Blow to TVX in Greece casts pall over market

The final day of the Feb. 27-March 5 report period saw the Bank of England dump another 643,200 oz. gold on the open market. The bank’s latest auction fetched US$296.50 for every ounce sold and was 3.7 times oversubscribed.

London metal traders reacted enthusiastically, pushing the yellow metal up $1.30 by the afternoon fix; the mood changed overnight, however, as gold was revalued at US$294.35 per oz. for a loss of $4.95 over the period.

Canada’s major producers all fell with their product: Barrick Gold tumbled $1.84 to $28.15; Placer Dome sank $2.24 to $17.34; and Kinross Gold slipped 4 to $1.71.

TVX Gold delivered some bad news during the period: its Olympias construction permit was annulled by the Conseil d’Etat, Greece’s highest administrative court. The annulment wipes 235,000 oz. from the company’s future production profile and effectively ends its chances of becoming a major gold producer there.

TVX has since decided to write down the project’s carrying value and consolidate its shares. The latter move is meant to maintain its listing on the New York Exchange and increase its chances of being included in the proposed Standard & Poor’s/TSE composite index. So far, TVX is off to a bad start, having lost 20 over the recent period to finish at 95. It was the most actively traded mining issue, with 41.8 million shares changing hands.

Gabriel Resources rose 15 to $3.65 as the company unveiled an optimization study by SNC Lavalin for the Rosia Montana gold project in Romania. The new plan draws upon two feasibility studies compeleted last autumn; it calls for mining of 13 million tonnes per year over 16 years and the annual production of half a million ounces at a total production cost of US$157 per oz. The initial capital cost of the mine would be US$253 million.

As the golds were falling, the metals-and-minerals sub-index moved higher, closing at 4,700.13, up 83.61 points over the five trading days. Inco, with 5.6 million shares moving, was the most active of the base metal stocks, rising 58 to close at $29.70.

Falconbridge, which traded 5.2 million shares, was up 12 at $17.45 despite uncertainty over its future (or, perhaps, the certainty of its future as a Noranda subsidiary). Noranda, meanwhile, added 49 to close at $17.34, nearly making it to $18 in trading on March 4. Speculation about the departure of Falco chief executive Oyvind Hushovd centres on the possibility of an imminent bid for the company by its parent, which now owns 56.6%.

Cameco up $1.64 at $46.01, Aur Resources rising 51 to $4.30, and Sherritt International picking up 23 to close at $4.43. Only Teck Cominco was down, its B-series shares falling 6 to finish at $14.26.