Gold bugs caught a chill in the first week of October: by the morning of Oct. 7, an ounce of the yellow metal was fetching US$376.20 in London markets, or US$8.30 less than a week earlier. Silver fared even worse, having lost 5.5% of its value, though both platinum and palladium gained ground.
Placer Dome, Canada’s second-largest gold producer, partly offset the thrashing by announcing its intention to sell $500 million worth of unsecured debentures. Although the final terms have not been decided, three-fifths of the notes will definitely not carry a convertible option and will mature in 32 years; the rest will mature in 20 years, and early takers will have the option of buying an additional $30 million worth of similar-type notes. Net proceeds are earmarked for re-financing purposes, though a portion will go toward funding budgeted capital expenditures and development costs. Placer finished the period at $17.98, down 58 on the week.
Canada’s other major producers, Barrick Gold and Kinross Gold, also fell back, with the former falling 59 to $24.48 and the latter slipping 14 to $10.07.
Off-index issue McWatters Mining withered to 4 from 10 on news it had suspended mining at its Sigma-Lamaque open-pit operation in Quebec. The mill continues to operate, but unless an ongoing independent review of the operation finds some breathing room, it too will be shut down.
Base metal producers were generally quiet, except for Falconbridge, which resumed zinc production at the Kidd Creek refinery in Timmins, Ont. The wing was shut a month longer than planned, owing to low prices. Falco rose 53 to finish the period at $23.
Among other big producers: Cameco soared $3.98 to $51; Noranda jumped $1.20 to $15.10; Teck Cominco B-series leapt $1.29 to $15.70; and Inco ascended $1.12 to $38.60. Overall, the diversified metals and mining group climbed 9.66 points, to 170.97, for an increase of 5.66 in value.
Off-index copper miner First Quantum Minerals rose 41 on news it had found more copper in the Democratic Republic of Congo. The zone, known as Lufua, returned 17.5-164.7 metres of oxidized and fresh mineralization carrying up to 3.49% copper. First Quantum ended the period at $8.53.
Junior explorer Southwestern Resources shot up $3.70 to $20.25 after Newmont Mining indirectly purchased 450,000 treasury shares at $15 apiece. The investment gives the major the right to earn a 70% interest in Southwestern’s 35-sq.-km Liam project in Peru and establishes a joint venture between the two for the surrounding region.
Canico Resource slipped 2 to $12.30 as Inco exercised 915,877 warrants at $1.70 apiece to keep its equity stake in the junior at 18%. Earlier this year, Canico issued roughly 4.7 million treasury shares and 1 million warrants to the major in order to complete its acquisition of the Ona-Puma nickel laterite project in Brazil.
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