Mining equities fall to earth

The mining sector took a beating over the report period Oct. 13-19, even as the broader market settled only slightly. The TSX composite index fell 65.33 points to 8,720.53.

Falling base metals prices propelled the mining and metals index downward to a close of 233.80 points, down 11.79 points or nearly 5% of value. Nickel was off US$1.09 at US$6.03 per lb. on the London Metal Exchange, while copper slid US14 to US$1.31 per lb.

Inco was down $3.85 at $47, including a $1.15 drop on Oct. 19 when the major announced it was going ahead with the Goro nickel laterite project in New Caledonia. Goro’s estimated capital cost has increased by another US$28 million since the last estimate, in late May, but Inco now regards the costing as “reliable and acceptable.”

Inco also received its main operating permit from the government of New Caledonia’s South Province, and it has memoranda of understanding with Japanese conglomerates Sumitomo Metal Mining and Mitsui to take up a 21% interest in Goro, to be bought from Inco and, through transactions with New Caledonian provincial governments, from the French Bureau de rcherches gologiques et minires, which owns about 15% of the project.

LionOre Mining International announced a friendly takeover bid for Australian nickel producer MPI Mines. MPI, which owns an 80% interest in the producing Black Swan nickel mine near Kalgoorlie, Western Australia, would carry a price tag of A$285 million, with LionOre offering A$1 plus 0.1675 of a share for one MPI share. LionOre was down 43 at $6.37, while MPI rose A33 over the first two days of trading after the offer, to A$2.38. The other nickel producers also were caught in the downdraft of the falling nickel price. Falconbridge was off $1.50 at $31, while Sherritt International fell 38 to $7.86 and FNX Mining slid 50 to $6.25.

Montreal-based junior Yorbeau Resource was the top percentager gainer, adding 10, or 29%, to close at 45. The company discovered visible gold during trenching at its Astoria II property, in the Cadillac-Larder Lake break, a few kilometres south of Rouyn-Noranda, Que. The company has taken a 750-tonne sample of carbonate material to determine the potential for open-pit mining. Assay results are expected in November.

Greystar Resources took second spot among the percentage gainers, shooting up 65, to $3.20, and hitting a new 4-year high of $3.55 along the way. The trading excitement came from strong exploration drilling results at its multi-million-ounce Angostura gold project in Colombia. One hole drilled into the intersection of veins 28 and 52 in the deposit’s Peresoza area returned 60.7 grams gold per tonne over 5.4 metres. In the Diamante area, another hole cut sheeted veins within Vein 23 running 0.97 gram gold over 20.2 metres.

Slipping 10 to $5.50, Perth, Australia-based Anvil Mining had a brief scare when an armed rebel group appeared in the town of Kilwa, Congo, where Anvil has port facilities. As a precaution, Anvil evacuated personnel and temporarily suspended mining for several days at its Dikulushi copper-silver mine, 54 km north Kilwa. At presstime, workers were returning to the mine to resume full operations.