Benchmark slips as domestic turmoil erupts

Despite an eventful week domestically, the TSE/S&P index slipped just 92.56 points over the May 29-June 4 report period to finish 1.2% lower, at 7,568.02.

On June 2, Finance Minister Paul Martin was relegated to the backbenches after years of infighting with the boss. The Feds moved quickly to dissipate any fallout by assuring markets that economic prudence would remain the norm.

Subsequently, at the period’s end, the Bank of Canada increased its overnight lending rate by 25 basis points to prompt the major chartered banks to follow suit. An unexpectedly strong economic recovery and inflationary fears were the driving factors.

Gold slipped US70 over the holiday-shortened London trading session, stopping at a morning fix of US$324.50 on June 5. Palladium was down as well, but silver and platinum both marched forward.

With gold tarnished, the Toronto gold issues saw 2.54 points stripped from their group. The TSX gold index finished the period at 226.47 points. Kinross Gold was the most voluminous of the bunch, rising a penny to $4.18 as 27.9 million shares changed hands.

Barrick Gold slipped $1.63 to $33.80 and Placer Dome dropped 72 to $21.01.

The ever-fashionable mid-tier producers were luckier, with Goldcorp rising 17 to $17.87 and Meridian Gold jumping 37 to $29.63. Agnico-Eagle Mines was the anomaly, easing back 22 to $26.47.

Most of the base metal complex saw higher prices over the period. Often vulnerable and always volatile, nickel rose US12 to finish at US$3.18 per lb., copper was US2 higher at US76, and zinc added US1 for a price of US35. Only lead was down a penny, at US20.

The Toronto base metal stocks reacted to the brightening price picture by surging 3.7% over the same period. The TSX Mining and Metals index finished at 151.91 points, up 5.36 points over the five trading days. The volume champion was Inco, which traded 5.6 million shares, rising $1.20 to $35.85. Speculation about a breakthrough in talks over the Voisey’s Bay nickel project in Labrador continues, as do leaks about possible Canadian government research and development aid to build a hydrometallurgical plant in Newfoundland, but there is still no report of progress from either Inco or the government of Newfoundland.

Teck Cominco‘s B series shares were also active, adding 75 to finish at $14.75 on a volume of 5.2 million shares. Although Goldman Sachs recently increased its rating on Teck, there was no news driving the trading volume.

LionOre Mining picked up a dime to close at $4.40 on a volume of nearly 2 million shares. The company closed a financing for $100 million, under which just over 27 million special warrants were issued, and also converted a $1.9-million debenture to 7.8 million shares (at $2.40 per share).

On the junior board, TVI Pacific was down 1 at 15 on a volume of 16.3 million shares. The stock doubled when it was announced that the Rapu Rapu base metal project in the Philippines may go into production. TVI owns 3.3 million options in the operator, Australian-listed Lafayette Mining, and retains a 2.5% net smelter return on the property.