Benchmark sinks deeper but gold remains buoyant

Market pessimism is quickly changing from bad to worse, with sellers once again outpacing buyers on both sides of the border. The Toronto Stock Exchange 300 index lost 142.49 points over the Sept. 19-25 period, finishing at 6,702.01, for a 2.1% loss in value.

Gold, on the other hand, appears to be staging a comeback in these troubled times, having risen $19.90 over the past three weeks. This gain includes $2.25 added during the 5-day report period, resulting in a London fix of US$291.60 on the morning of Sept. 26.

Canada’s major gold producers were mixed, with Barrick Gold falling 44 to $25.77 and Placer Dome rising $1.15 to $19.90. Also off was Kinross Gold, which slipped 4 to $1.53 as it inked a deal to buy Wheaton River Minerals‘ George Lake project in Nunavut for 4 million shares. The major was already involved in the project through an option agreement that allowed it to earn a 70% interest. The project looks promising from a geological point of view, but gaining access to the remote property remains a hurdle. As it announced the sale, Wheaton also made public a wholesale changeover of its management team. The junior closed down a hefty 12 to 51.

Namibian Minerals, which mines diamonds off the coast of the southwest African nation, took another step toward financial recovery after its brush with near-bankruptcy earlier this year. The junior expects to receive US$9 million in insurance claims, though a portion is secured against a US$6-million line of credit with the company’s largest shareholder, the Leviev Group. Namibian rose 2 to 39.

Reflecting another poor showing by base metals issues, the metals and minerals sub-group shed 201.91 points, or 5.5% of value, to finish the report period at 3,454.39. Copper producers received a break in the form of a 1 increase in the London price of their product, but nickel, zinc and lead miners were not so lucky.

Taking the heaviest blow was Inco, which slumped $3.05 to $19.55 on a volume of 8 million shares. Noranda closed down 48 at $14.98, Sherritt International slipped 48 at $3.80, Falconbridge fell 40 to $15, and Teck Cominco lost 39 to finish at $10.59.

First Quantum Minerals sank 45 to $2.55, only to slip another penny by presstime. On Sept. 26, the copper miner announced it had begun mining the Lonshi copper oxide deposit in the Democratic Republic of Congo. About 500,000 tonnes grading 5% are expected to be trucked across the Zambian border to the company’s Bwana Mkubwa solvent extraction-electrowinning plant. The stockpile will add six years of cathode production to the 10,000-tonne-per-year operation, and possibly more if recent stepout drilling along strike of the deposit pans out.

Among juniors, Metallica Resources slipped 10 to $1.25 on a volume of 283,600 shares. At the El Morro copper joint venture, in Chile, partner Noranda has pegged the La Fortuna zone with an inferred resource of 410 million tonnes grading 0.76% copper and 0.27 gram gold per tonne. Drilling is to resume in mid-November.