Benchmark’s woes cast shadow over resource sectors

The Oct. 14-20 report period saw the Toronto Stock Exchange plunge to levels not seen in four years as the proposed U.S.-led war on Iraq gained steam and the banking and high-tech sectors issued more profit warnings. The benchmark ended the week at 5,830.57 for a loss of 388.03 points, or 6.2%.

Gold climbed steadily over the period before dipping sharply on the final day to slip US$1.60 overall. London fixed the yellow metal at US$318.80 per oz. on the morning of Oct. 9.

The gold sector reacted accordingly, falling 15.77 points to 165.54. Canada’s major producers, Barrick Gold and Placer Dome, were down $1.33 and 90, respectively, at $23.33 and $13.37.

Even the mid-tier darlings failed to persevere: Kinross Gold slipped 41 to $2.77; Agnico-Eagle Mines tanked $2.44 to $21.94; Goldcorp sank $2.10 to $15.25; and Meridian Gold fell $2.86 to $24.79.

The diamond sector sparkled somewhat, with Namibian Minerals edging ahead 3 to 16. The marine miner set a new quarterly production record in the 3-month period ended Sept. 30, hauling up 117,050 carats — 490 carats more than the previous record, set in the first quarter of 1999.

The Diversified Metals and Mining Index lost 4.26 points, or 3.8% of its value, to close the period at 107.89. Both nickel and copper lost ground in London, whereas lead and zinc stayed put.

The sector’s biggest newsmaker was Inco, which announced the signing of definitive agreements with Newfoundland and Labrador for the development of its Voisey’s Bay deposit. However, no details were released, and most of the terms do not become effective until March 2003, assuming the major has tabled a bankable feasibility study and secured project financing by then. Inco ended the period at $25.40, off $1.40.

Junior NovaGold Resources eased back 6 to $4.43 as it released new drill results from its Donlin Creek gold deposit in Alaska. Several stepout holes sunk directly south of the main Acma deposit returned the highest grades ever found on the property, and several follow-up holes, drilled in the Akivik discovery, about 1 km farther south, returned high-grade values as well.

Gabriel Resources fell a dime, to $4.50, despite announcing it had acquired 71 properties under its resettlement plan for the town of Rosia Montana in Romania. The town overlies the company’s similarly named gold deposit, and another 429 properties must be bought before construction of a proposed open-pit operation can begin.

Black Hawk Mining was off as well, slipping just over a penny to 11.5. U.S.-listed Newmont Mining walked away from an option agreement that would have seen it earn 55% interests in several of the junior’s properties in Nicaragua.