Gold companies show signs of life after auction

Gold staged a bit of a rally during the May 9-15 report period, as the yellow metal climbed US$3.90 to trade at US$269.10 per oz. in London on the morning of May 16.

Amid the price rise, the Bank of England carried another auction, of 643,200 oz. of its gold reserves priced at US$268 per oz. Gold bugs drew some relief from the relative improvement in the oversubscription rate to 3.7 times. In all, the British Treasury is selling 415 tonnes of its 715-tonne reserve, representing about 10% of its total financial holdings.

Most of Canada’s gold majors were lifted by gold’s rise: Barrick Gold advanced $1.05 to $26.50; Placer Dome was up $1.30 to $17.25; Franco-Nevada Mining gained 70 to reach $19; Kinross Gold rose 13 to 95; and Cambior was up 15 to 63 as it reported a first-quarter net loss of US$900,000, or US1 per share.

Only TVX Gold went against the trend, giving back 41 of the previous week’s strong rally to settle at 99 as the TVX board gave the thumbs-up to conversion of US$250 million of debt into shares.

Canada’s base metal producers were mixed on little news: Noranda rose 28 to $16.80; Teck‘s B shares eased back 6 to $15.08; Cominco was up 19 to $32.94; Breakwater Resources declined 4 to $1.30; Boliden shot up 39 to 87; Inco roared ahead $1.75 to reach $29.15; Falconbridge rose 55 to $18.10; and Sherritt International shed 12 to $4.40.

Among the juniors, Metallica Resources rose another 8 to 78 as Franco-Nevada annouced it had bought 1.3 million more shares of Metallica on the open market, thereby boosting its stake to 12.76%. More assay results are expected to be released soon from Noranda’s drilling campaign at Metallica’s El Morro copper-gold project in Chile.

Robert Friedland’s Ivanhoe Mines rose 7 to $1.70 as it reported hitting more high-grade gold at its Modi Taung project in central Myanmar.

Montreal-listed Mirabel Resources was the highest-percentage gainer in eastern markets, rising 107% to 31. In the previous period, the junior announced that South Malartic Exploration would no longer be its promoter and that it had ceased negotiating for the remaining half of a 1% net smelter return royalty on three chromium-platinum claims in Quebec’s Thetford Mines region.

Marine miner Namibian Minerals raised another US$15 million, enabling it to discharge its Namibian subsidiaries from provisional liquidation. The company issued 37.7 million shares to the Leviev group of companies, making the group its largest shareholder and sole marketing agent. Namibian, which is readying to resume commercial diamond production off the coast of Namibia, rose 5 to 80, only to slip back 6 by presstime.

Rio Tinto announced its intention to sell its 66% stake in diamond explorer Ashton Mining of Canada but says it is unsure whether a suitable buyer can be found. The junior closed down 16 to 74.