Franco-Nevada, Gold Fields merger falls on deaf ears

Stronger showings by the utilities and high-tech sectors and a lessening of inflationary fears south of the border combined to push the Toronto Stock Exchange 300 index 226.56 points higher during the June 7-13 report period. The broad market ended the period at 9,836.50.

Hard-pressed by lower gold prices, the TSE’s gold and precious metals subindex fell 140.48 points to 4,544.25. The yellow metal was fixed on the London Metals Exchange at US$286.05 per oz. on the morning of June 14, off 90 from a week ago.

Canada’s major producers were mixed, with Barrick Gold falling 60 to $28.15 and Placer Dome rising 10 to $13.90. Also down was Kinross Gold, which slipped 11 to $1.47.

Franco-Nevada Mining, which plunged $2.30 to $16, announced its intention to merge with South African major Gold Fields to create the world’s third largest and lowest-cost gold producer. The new company, to be called Gold Fields International, would have a primary listing on the TSE and will apply for additional listings on the New York, Johannesburg, Paris, Brussels and Swiss exchanges. Its reserves would stand at 50 million oz. and its resources at 150 million oz.

The TSE’s metals and minerals subgroup plunged 6% to a new 52-week low of 3,214.40. Fueling the flames was an 11%-decline in 3-month nickel prices, which ended the period at their lowest level in months. Accordingly, Inco fell $2.05 to $22.25 and Falconbridge dropped $3 to $17.50.

Noranda announced the discovery of two nearby zinc-copper zones in the Matagami mining camp of northwestern Quebec. Both are in the vicinity of the Perseverance zone, where preliminary results indicate an inferred resource of 947,000 tonnes grading 19.12% zinc, 1.37% copper, 32 grams silver per tonne and 0.4 gram gold. Noranda ended the period at $14.25, for a loss of 40.

Cominco, off $1.05 at $20.10, announced it is seeking regulatory approval to reopen the Pend Oreille base-metal mine in Washington state. Ore would be trucked to the company’s Trail smelter to replace feed from the Sullivan mine, which is scheduled to close in 2002.

Platinum explorer Platexco shot up $1.20 to $9.50 on news it had become a takeover target of South African-based Impala Platinum Holdings, the world’s second largest platinum producer. Implats has already tied up 64% of the company’s 20.1 million shares and requires just over 2% more, plus various other approvals, to complete the deal.

Gammon Lake Resources jumped $1.35, or 30%, to $6.25 on a volume of 539,100 shares. On June 14, the junior released more results from an ongoing drill program at its Ocampo gold-silver project in Mexico. Though generally lacklustre, the results did include a 3.05-metre intersection that averaged 51.56 grams gold and 1,681 grams silver.