Franco-Nevada rebounds as merger news sinks in

With the arrival of summer, gold decided to take a breather from its steady 2-month climb, easing up just US55 to reach a London morning fix at US$286.60 per oz. on June 21, after pulling back from the low US$290s.

Over the June 14-20 report period, the most active Canadian mining stock was Franco-Nevada Mining, which rebounded $1.80 to hit $17.80 after an initially negative response to the proposed mega-merger with South African mining house Gold Fields.

The remaining gold producers sagged during a quiet news week: Barrick Gold fell $1.60 to $26.55; Placer Dome was off 30 to $13.60; Kinross Gold edged down 7 to $1.40; and TVX Gold fell 9 to 88.

Cambior was down 1 to 78 after announcing it had taken out a minimum US$13-million, 4.5-year mortgage on its 50%-owned Niobec niobium mine in Quebec. The deal, along with a portion of Cambior’s available liquidities, will allow the company to meet a US$75 million repayment obligation on June 30.

Despite low LME-warehouse levels, nickel sank a further US18 to US$3.54 per lb., continuing a freefall that began after a strike failed to materialize at Inco‘s Sudbury operations. Canadian nickel miners were mixed: Inco was unchanged at $22.25; Falconbridge eased up 90 to $18.40; and Sherritt International dropped 35 to $4.20.

Teck‘s B shares were up 15 to $10.15 and Cominco shot up $1.40 to $21.50 as the former announced an offer buy up to 4 million Cominco at $25 apiece. Teck currently owns 38.6 million Cominco shares of Cominco, or 45.1%, and, upon completion of the bid, this will increase to 49.8%.

Among the remaining base metal majors, Noranda was up 40 to $14.65; Rio Algom rose 25 to $17.50; and Boliden declined 4 to $1.83, as president Anders Bulow announced he will be stepping down after three years at the helm.

Aur Resources was up 31 to $2.40 as striking miners at its 76.5%-owned Quebrada Blanca copper mine in Chile clashed with police during protests against the hiring of replacement workers. State-run copper processor Enami and Chile’s Sociedad Minera Pudahuel own 10% and 13.5% stakes, respectively.

Toronto-based junior Jascan Resources closed 10 lower at 85 in light trading, showing no sign that the market was anticipating a takeover bid from Breakwater Resources. The zinc miner was up 15 at $2.95. Breakwater is offering $1.15 per share of Jascan or a share swap for 0.424 of a Breakwater share to take over Jascan, whose major asset is its investment portfolio which includes equity stakes in gold, base metal and oil-and-gas companies. Jascan owned shares with a market value of about $28 million at the end of 1999, and also held about $7 million in debt instruments.

Dia Met Minerals‘ class B shares closed up 35 to $20.25. The company holds a 29% stake in the Ekati diamond mine.