Hoping to boost investor confidence, the Bank of Canada shed 75 basis points from its key lending rate on Oct. 23, bringing it to a 40-year low. But so far, the decision appears to have backfired: the Toronto Stock Exchange finished the Oct. 17-23 report period down 122.65 points at 6,904.24 points.
Gold, in free fall ever since the U.S. began attacking Afghanistan, sank another $5.50 over the five trading days to arrive at a London morning fix of US$276.15 per oz. on Oct. 24. Silver, platinum and palladium all lost ground too.
Canada’s gold majors followed suit: Barrick Gold sank $1.85 to $24.30 on a volume of 8.4 million shares; Placer Dome plummeted $2.05 to $16.85 as 9.7 million shares crossed the floor; Franco-Nevada Mining eased back 70 to $21.80; and Kinross Gold slipped a nickel to $1.38. The losses combined to erase 324.68 points, or 6.3% of value, off the gold and precious metals sub-group.
Goldcorp slipped 65 to $17.20 despite announcing stellar production results. The gold miner cranked out 134,907 oz. from its Red Lake and Wharf mines during the third quarter, bringing the 9-month production figure to 469,000 oz. Cash costs over the longer period averaged US$86 per oz., leaving plently of margin against current gold prices. In celebration, shareholders will receive a special dividend of 10 per share on Oct. 31 and quarterly dividends of 5 per share thereafter.
Iamgold, too, had good news: the partly owned Sadiola open-pit operation produced 390,227 oz. in the first nine months of the year at a total cash cost of US$144 per oz. Sadiola remains on target to meet its 2001 target of 522,000 oz. at a similar cost. However, like Goldcorp, Iamgold shares slipped in conjunction with gold prices, dropping 9 to $3.24.
Among the other mid-tier producers, Agnico-Eagle Mines fell 65 to finish at $14.85, Meridian Gold dropped 55 to end at $14.25, and Glamis Gold eased back 10 to $5.10.
Nickel prices may have shed another 28 per lb., but Inco staved off the market blues by rising 65 to $22.70. The nickel producer earned US$33 million on revenue of US$434 million in the third quarter, with a US$28-million gain on a shrinking Canadian dollar providing the driving force.
Noranda fell 17 to $14.33 as it announced a third-quarter loss of $60 million on revenue of $1.46 billion. Depressed metal prices were almost entirely to blame, with smaller production volumes in some metals playing a minor role.
Also down were: Falconbridge, off 20 at $14.70; Teck Cominco, falling 36 at $10.05; and Breakwater Resources, shy 4 at 19. Among the gainers were Boliden, up 3 to 25, and Sherritt International, which added a nickel to $4.04.
In U.S. trading, gold stocks had a uniformly bleak week in sympathy with declining gold prices: Newmont Mining fell US77 to US$21.14; AngloGold was down 92 to US$15.51; Gold Fields fell 9 to US$4.54; Homestake Mining dropped 66 to US$8.14; Ashanti Goldfields eased down 2 to US$3.28; and Compania de Minas Buenaventura fell 29 to US$19.61. Following the same downward trend was Stillwater Mining, the biggest platinum miner in America, which fell $1.49 to US$20.84.
After reporting a US$100.4-million third-quarter loss, Phelps Dodge announced plans to scale-back production, lay off 1,440 workers, and scrap its quarterly dividend. The company declined 31 on the week to US$28.99.
The rest of the U.S.-traded base metal miners also suffered: Freeport-McMoRan Copper & Gold‘s B shares fell 28 to US$10.50; BHP Billiton sank 75 to US$9.10; Rio Tinto slid $4.80 to US$65.50; Anglo American fell 24 to US$13.21; and Southern Peru Copper dropped 46 to US$8.84. The exception was WMC, which soared $3.25 to US$18.85 on speculation that the diversified nickel miner may soon be taken over.
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