Merger mania fuels trading

The report period Dec. 1-7 saw the price of gold fall US$1.60 to close at US$451.80 per oz. in the afternoon in London. All mining-related indices lost ground. The gold index fell 13.2 points, or 5.9%, to close at 209.30, and the diversified metals and mining index was down by 14.75 points, or 5.6%, at 247.50 points. The S&P TSX composite index fell 39 points to end the week at 8,990.95 points.

Wheaton River Minerals led the way in volume, trading 80 million shares. The company unveiled plans to join forces with Goldcorp on a 4-to-1 basis. Wheaton CEO Ian Telfer would retain his seat in the enlarged company, and Goldcorp chairman Robert McEwen would be chairman of the board. Wheaton ended 21 richer at $4.09, while Goldcorp lost $1.02 to make $17.08.

Suffering its second failed merger this year, Iamgold dropped 73 to $8.42 when shareholders of Gold Fields nixed the deal. For its part, Gold Fields finished 77 lighter at US$13.35.

Kinross Gold traded second in volume among the mining stocks, with 15.8 million shares changing hands. The company consolidated its shares on Dec. 5 at the rate of 100-to-1 and followed with a de-consolidation of 1-to-100 the next day. This enabled Kinross’s shares to begin trading under a new CUSIP number. Shareholders holding less than 100 pre-consolidation shares were bought-out at $9.71 per share. The transaction was designed to eliminate the large number of shareholders who held less than 100 shares (about 0.5% of the total outstanding common shares) while saving these minor shareholders the cost of commission. Kinross closed down 52 at $8.82.

Aber Diamond dropped $3.51 to $42.17. The company released third-quarter results that showed diluted earnings of US10 per share. Aber will pay its first dividend (US15 per share) beginning in January. In other news, jewelry retailer Tiffany & Co. sold its 13.9% stake in the diamond producer in a private offering worth $268 million. The diamond sales arrangements between the two remain, though Tiffany will no longer buy Aber’s diamonds at a discount. Tiffany’s 10-year sourcing arrangement with Aber calls for the retailer to buy at least US$50 million worth of stones annually. Aber owns 40% of the Diavik diamond mine in N.W.T.; mining giant Rio Tinto owns the rest.

Hillsborough Resources traded 10.7 million shares and fell 18 to close at 88 after reporting drill results on its Bingay Creek coal property, north of Elkford, B.C. About 7.6 million tonnes of measured and indicated resources of metallurgical coal have been identified in three seams.

Intrepid Minerals shot up 7, or 12%, to 65 after reporting some impressive drill results from the proposed Kamila pit at the Casposo project in Argentina. A 12-metre interval graded 18.6 grams gold and 266 grams silver per tonne.

Canadian Royalties rose 10, to $2, after reporting it had found some high-grade mineralization in and near the Mesamax nickel/copper/platinum-group-element deposit in Quebec. Drilling near the centre of the deposit is highlighted by a 57-metre section, beginning 4.5 metres below surface, grading 2.25% nickel, 5.7% copper and 0.1% cobalt, plus 0.75 gram gold, 2.3 grams platinum, and 7.7 grams palladium per tonne.