MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — TSE rallies on lower interest rates, golds still sluggish

Falling U.S. and Canadian interest rates translated into significant gains for the Toronto Stock Exchange 300 index, with the broad market rising 5.9% over the report period Oct. 14-20 to end at 5,870.71 points.

Nearly all the gains occurred on the afternoon of Oct. 14, immediately following an unexpected 0.25% drop in U.S. interest rates. Responding to that move, the Bank of Canada cut its overnight lending rate by an equivalent amount on the following day, allowing the market to coast the remainder of the period.

The optimism, however, failed to spur the TSE’s gold and precious metals sub-index, which fell 208.30 points to 6,498.74. Gold, nonetheless, managed to gain 30 cents to trade at US$296.90 per oz. on the morning of Oct. 21., while silver rose a modest 9 cents to US$4.89 per oz. Platinum, on the other hand, dropped $1.50 to US$339 per oz.

With the exception of Barrick Gold, which climbed 20 cents to $31.90, Canada’s major gold producers repeated the previous period’s poor performance: Placer Dome dropped 30 cents to $21.90; Kinross Gold fell 77 cents to $3.88; Greenstone Resources slipped 20 cents to $1.88; and TVX Gold lost 68 cents to end at $3.17. TVX also earned top spot in volume traded, a reflection of its having lost a court case over certain aspects of its producing Kassandra polymetallic project in Greece. An Ontario Court granted the Alpha Group, which originally brought the property to TVX’s attention, a 12% carried interest and the right to acquire a further 12% working interest.

The TSE’s metals and minerals sub-group was up 129.04 points, ending the period at 3,194.25. Some of the impetus came from an 8 cents climb in the price of nickel, which was valued at US$1.49 per lb. on the morning of Oct. 21. Lead, zinc and copper all remained at par.

Inco shareholders were given an early Christmas gift from royalty company Franco-Nevada Mining, which invested $50 million into the Voisey’s Bay deposit by purchasing just over 25% of the nickel producer’s VBN shares. The vote of confidence, coupled with nickel’s gain, lifted Inco to $18.05 — an increase of $1.65. Ironically, investors chopped $2.60 from Franco-Nevada’s share price, which ended at $30.

Also posting gains in the period were: Rio Algom, which rose 95 cents to $21.05; Noranda, which rose 60 cents to $22.85; and Falconbridge, which edged ahead 20 cents to $16.70.

Montreal-listed Brex Exploration had the highest percentage increase among any listed company, climbing more than 200% to 10 cents. The opposite was true for Iriana Resources, which lost 70% of its value, ending the period at 3 cents.

Despite initiating a feasibility study at its Samira gold project in Niger, Etruscan Resources fell 15 cents to $1.25. Etruscan is attempting to lure Anglo American to that and other projects and is allowing the company to extend its due diligence review to Nov. 30.