Broad market flops as gold surges

The S&P-TSX composite index continued its downward spiral over the Feb. 19-25 report period, slipping 89.45 points to 6,503.10.

Not even a surge in spot gold could save producers: Placer Dome plummeted $2.03 to $13.89, bringing its losses in the past four report periods to $3.91; Barrick Gold sank 87 to $23.48, bringing its losses over the past three periods to $2.09; and Kinross Gold slipped 42 to $10.87, bringing its losses in the past three periods to $1.13. Physical gold surpassed the US$350-per-oz. barrier to land at US$352.55 per oz. on the morning of Feb. 26, for a gain of US$5.35 in overseas markets.

Agnico-Eagle Mines, which also fell, by 20 to $19.98, announced the discovery of more mineralization at the Lapa property, 11 km east of its LaRonde mine in northwestern Quebec. Hole 118-03-04A, the deepest drilled on the property to date, cut 30.2 metres at 8.9 uncut grams gold per tonne. More than 16 holes have been completed in the current campaign, and the Contact zone now has a strike length of 400 metres and a vertical extent of 610 metres. Agnico is earning a 60% stake in Lapa from Breakwater Resources.

Iamgold was among the few gainers, rising 27 on news of having boosted reserves at its operating Sadiola Hill and Yatela mines in Mali. At Sadiola, reserves now stand at 31.8 million tonnes grading 3 grams gold per tonne; at Yatela, they are pegged at 11.2 million tonnes grading 3.5 grams. Iamgold ended the period at $7.85.

Also up was McWatters Mining, which announced its intention to buy out Soquem’s 40% stake in the Sigma-Lamaque mine and mill complex, bringing its own holdings to 100%, and purchase the mothballed East Malartic mill and surrounding properties from Barrick. The transactions give McWatters a strong foothold in the Val d’Or region of Quebec, and shareholders expressed their approval by pushing shares up 3 to 26.

The base metal sector gained newfound strength: nickel lept US28 to a London morning fix of US$4.13 per lb. on Feb. 26, and copper jumped US4 to US78 per lb. Even zinc rose to the occasion, edging ahead of penny, but heavy-handed lead remained unchanged.

Ivanhoe Mines was the most active producer, rising 29 on a volume of 1 million shares as edgy investors speculated on an impending resource update from Turquoise Hill, in Mongolia. On Feb. 26, Ivanhoe delivered 1.6 billion tonnes grading 0.63% copper and 0.17 gram gold per tonne, equivalent to an astonishing 10 million tonnes copper and 9 million oz. gold.

The remaining producers were a mixed bag: Inco rose 65 to $32.45; Noranda slipped 14 to $13.76; Falconbridge rose 55 to $17.35; Cameco dropped $1.16 to $35.34; Aur Resources climbed 10 to $3.70; Teck Cominco‘s B-series fell 22 to $11.75; Fording slipped 20 to $33.29; and Sherritt International edged up a penny to $4.62.