Gold price slump continues as gold fails to consolidate

Hopes that gold would be able to sustain a rally after it surged to US$341.10 on the futures market were quickly dashed today, April 22, as the spot price in London closed down 20 cents to US$338.10.

Gold shares continued to respond to the price weakness. During the report period, American Barrick Resources lost $1.25 to $28.13 while LAC Minerals shed 13 cents to $7.63.

Despite announcing a 20% increase in reserves at the LaRonde gold mine in northwestern Quebec, Agnico-Eagle Mines (TSE) was also a loser, shedding 20 cents to $4.35.

Bucking the trend was Hemlo Gold Mines (TSE), which edged up 25 cents to $8.75 after purchasing an additional 268,516 common shares of Freewest Resources. The purchase gives Hemlo a 13.4% interest in Freewest and boosts the gold producer’s stake in the Lightning zone east of Timmins, Ont., where shaft sinking is scheduled to begin in early May.

Freewest lost 15 cents to close at $2.50.

Announcing earnings of only one cent per share (US$2.2 million) for the first quarter, Inco shed 13 cents to close at $33.63. Today, nickel closed at US$3.39 compared with Inco’s average realized price of US$3.94 during the first quarter of 1991, when the company earned US$53.6 million. Fellow resource giant Noranda reached a new 52-week low of $16.38 before recovering slightly to $16.75 today.

A letter of intent to purchase the Gays River lead-zinc mine in Nova Scotia for $5 million plus royalties added 4 cents to Dundee-Palliser Resources. Today, the junior picked up another 3 cents to close at 14 cents. The assets include port facilities, a 1,500-tonne-per-day concentrator, mining equipment, and a shop and administration building.

Rumors of an imminent joint venture between Aber Resources and Kennecott pushed Aber to $1.20 for a gain of 15 cents. Aber holds a substantial area of ground in the Lac de Gras diamond area of the Northwest Territories. Meanwhile a spokesman at Dia Met Minerals said this company’s 200-ton bulk sample will be introduced to the recovery plant in Colorado “within a matter of days.”

Southernera, another player in the Northwest Territories’ diamond rush, picked up 31 cents to close the week at 80 cents on a quarter of a million shares. Diamond expert Chris Jennings is using the company, previously only a shell on the TSE, as a vehicle for claims he personally staked in the Lac de Gras area.

Arimetco International investors have purchased 5.2 million special warrants of the company at $4.75 per warrant for proceeds of $24.9 million. Arimetco, which shed 13 cents to close at $5.25, says it plans to use the proceeds to fund current projects and possibly acquisitions.

New Golden Sceptre Minerals has been suspended from trading on the TSE for failing to live up to the exchange’s listing requirements. The company was planning to begin exploration in Guyana shortly.