Broad market crawls ahead, gold rallies

The Toronto Stock Exchange composite index began the holiday-shortened May 26-June 1 report period on an uptick, then moved sideways. By the period’s end, it had risen 29.2 points to settle at 6,732.11.

The recent weakening of the U.S. dollar continues to bode well for gold. The yellow metal jumped U$16 over the five trading days to land a London morning fix of US$364.90 per oz. on May 21.

Canada’s major producers all saw heavy activity in their stock, led by Kinross Gold, which climbed 73 on a volume of about 11 million shares. Next came Placer Dome, up 32 on a volume of 8.3 million shares, followed closely by Barrick Gold, up $1.30 on 8.2 million shares.

The rest of the gold sub-group also fared well: Gabriel Resources, which announced the resignation of another director, Frank Timis, jumped 58 to $3.20; Goldcorp and Iamgold each ascended 36 to $15.79 and $7.50, respectively; Agnico-Eagle Mines climbed 34 to $14.74; Meridian Gold rose 19 to $15.40; and Bema Gold edged ahead 2 to $1.53. The exceptions were Glamis Gold, which remained at $15.75, and Eldorado Gold, which slipped 20 to $2.06 as 8.8 million shares changed hands. On May 20, Eldorado revised downwards its 2003 production and cost forecasts at the Sao Bento mine in Brazil, causing a selling frenzy.

Overall, the gold index climbed 5.89 points, or 3.7%, to finish the period at 165.16. By presstime, it had jumped another 4.4% as investors gobbled up gold shares.

The recent mass exodus from junior Southwestern Resources continued, with the issue nosediving $2.10 on a volume of 10.7 million shares. That brings to $7.30 the amount by which the stock has fallen since the May 8 release of drill results from the Boka gold project in China. By May 21, the junior had recouped $1.10, following an early morning release in which president John Paterson said recent soil surveying clearly showed the existence of a 5-km-long continous gold zone at Boka 1. Paterson was unavailable for comment about this unusual interpretation of a soil survey.

Junior General Minerals was the highest percentage gainer, jumping 50% to 15 as 5.4 million shares changed hands. The company won approval to issue 25 million units priced at 11 apiece. A unit will consist of a share and a redeemable warrant that matures in five years and is exercisable at $1.40 in the first year, rising to $2.05 in the final year.

Inco was the most active base metal issue, sinking 63 on a volume of 5.4 million shares despite cobalt’s hitting a new 22-month high and despite the fact that spot nickel prices gained ground. A newswire report raised questions about the nickel miner’s ability to strike an easy deal with unionized workers at its Sudbury mining and milling complex.

Except for Sherritt International, the other producers in the sub-group fell. Sherritt climbed 4 to $4.09 on news it had closed a $100-million equity financing.