Golds clobbered

The Toronto Stock Exchange rose steadily through the report period Feb. 2-8, but the gold stocks lagged behind. Although the TSX composite index was up 122.58 points to 9,392.68, the TSX golds fell 3.32 points to 193.11.

Much of the action could be pinned on renewed strength in the U.S. dollar, which got an oxygen hit from an increase in central bank interest rates to 2.5%. Although widely expected (and thus innocuous on the stock markets), the increase boosted the greenback in the currency markets, and affected commodity prices. The Canadian dollar fell below US80 for the first time in more than three months, though it finished the period at US80.12.

The golds were almost uniformly sour, most of all among the mid-tiers. Centerra Gold, which reported a significant increase in earnings, thanks to consolidation of its ownership of the Kumtor gold mine in Kyrgyzstan, fell $1.30 to $19.20. Agnico-Eagle Mines was off 87 at $15.09 and Meridian Gold, 76 at $21.84.

Goldcorp fell 64 to $16.86; its takeover bid for Wheaton River Minerals is subject to a shareholder vote on Feb. 10, and mangement tried to entice shareholders with a special dividend of US50 (63), subject to approval of the merger. That was in response to an increase in the hostile bid for Goldcorp from Glamis Gold, which is now offering 0.92 Glamis shares for one Goldcorp. Glamis was down 37 at $20; Wheaton fell 17 to $3.88.

SouthernEra Diamonds was 6 better at 49, which pulled its warrants up fully 50% to 18. SouthernEra closed a private placement of 1.25 million shares at 47 for proceeds of $587,500. About a fifth of the shares were flow-through.

The metals and mining index was 6.87 points better at 277.48, led by Teck Cominco‘s B-series shares, which were up $1 at $40.50, and by Cameco, which rose $3.80 to $47.80, and First Quantum Minerals, which shot up $1.03 to $19.88.

Among the nickel producers, Inco was off 12 at $42.48, but Falconbridge rose 79 to $32.73 and LionOre Mining International added 12 to finish at $6.47. Sherritt International was unchanged at $10. Inmet Mining saw a sharp decline, falling $1.81 to close at $16.50. Disappointing production results at the Cayeli copper-zinc mine in Turkey have dampened Inmet’s stock for the past two weeks.

Off-index, Northern Orion Resources was the most active of the base metal stocks, with 14.2 million shares moving, but no change at $3.41. The company arranged a 27.4-million-unit financing with four investment houses at $3.65 per unit, which will gross $100 million for development work on the Agua Rica copper project in Argentina.

Shore Gold gained 95 to close at $4.20 as it reported that samples from workings on its Star kimberlite in Saskatchewan had returned 405 carats of diamonds from bulk samples of a total of 2,554 tonnes, for a grade of 15.87 carats per 100 tonnes. The diamonds were mainly white, and the four largest were all of 4-carat weight or larger. Shore is awaiting a valuation on a 3,000-carat parcel sent to diamond valuators in Antwerp, and expects to have a final value figure for the bulk-sampled diamonds this month. The company plans to start a prefeasibility study on production from Star this spring.