Canadian miners suffer broad market decline

The tone for the Jan. 19-25 report period was set by gold, which sank US$3.85 over the week to US$284.90 per oz. on the London morning fix of Jan. 26.

On Jan. 25, the Bank of England held another gold auction, this time selling 804,400 oz., or 25 tonnes, for US$289.50 per oz. — up 80 on the morning fix of that day. The next auction will be held March 21, 2000.

The other precious metals fared better: silver was up 10 to US$5.10 per oz.; platinum rose US$7 to US$451 per oz.; and palladium soared US$39 to US$472 per oz. The two latter metals were buoyant on news of typical wintertime shipment delays from Russia’s Noril’sk complex.

Canada’s major gold producers all declined in sympathy with gold’s weakness: Barrick Gold dropped $1.50 to $23.85; Placer Dome fell $1.45 to $13.40; Franco-Nevada Mining shed $1.35 to hit $21.05; Kinross Gold lost 22 to $2.28; TVX Gold edged down 10 to $1.06; and Cambior fell 10 to $2.05.

Bucking the gloomy trend was gold junior Aurizon Mines, which rose 2 to 87 after reporting record production results. The company’s share of production from the Sleeping Giant and Beaufor mines in Quebec totalled 60,162 oz. gold in 1999, up from 56,291 oz. in 1998. However, total cash costs rose to US$217 per oz. in 1999, compared with US$204 per oz. a year earlier. Aurizon expects to produce 61,000 oz. gold in 2000 at a cost of US$220 per oz.

Rio Narcea Gold also reported record gold production. Its El Valle mine in Spain cranked out 103,785 oz. at a cash cost of US$185 per oz. in 1999, compared with 58,630 oz. at US$221 in the previous year. Senior gold producer Barrick signed a deal allowing it to earn a stake in Rio Narcea’s exploration holdings in Spain.

Stanley Bharti’s William Resources was the most active junior, popping up 4 to 7 after spending the earlier part of January wallowing at a record low of just 3. The former high-flyer has managed to eliminate close to US$100 million in debt over the past nine months. Of note, some US$60 million in debentures has been converted into shares. William’s only remaining notable assets are its Jacobina and Rustler’s Roost gold mines in Brazil and Australia, respectively.

Amid selling pressures, zinc prices sank almost 2 over the week to an 8-week low of US51.8 per lb. Copper held up better, remaining at US84 per lb., while nickel continued to flex its muscle, rising 18 to US$3.84 per lb.

The major Canadian zinc and copper producers had a particularly rotten week: Noranda fell 85 to $18.30; Rio Algom slipped $2.35 to $18.40; Teck‘s B shares were off $2.10 to $12.65; Cominco dropped $4.40 to $26.90; Boliden tumbled 45 to $4.35; and Breakwater fell 35 to $3.75.

Nickel’s strength still couldn’t prevent a similar decline in producers: Inco dropped $2.55 to $27.95; Falconbridge slipped $1.15 to $24.40; and Sherritt International dropped 34 to hit $2.96.

In the diamond world, Aber Resources and New York-listed partner Rio Tinto were walloped by the unexpected news that the Canadian government’s Department of Indian and Northern Affairs will not issue an interim land-use permit for the partners’ Diavik diamond project in the Northwest Territories. The permit would have allowed the companies to transport material to the project site to carry out development work. Instead, the project will likely be set back another year. Aber fell $1.05 to $7.95, while Rio Tinto dropped US$6.69 to US$80.75. Aber rival Dia Met Minerals saw its B shares slip 25 to $20.10.