MINING MARKETS AND INVESTMENT NEWS — EASTERN MARKETS — Producers suffer falling metal prices, but TSE manages to hang on

The Toronto Stock Exchange 300 index sustained a minor loss during the report period May 6-12, dropping just 2.42 points to end at 7,717.70. The index, however, fared better than the gold and precious metal subgroups, both of which bore the brunt of depressed metal prices.

On the morning of May 13, gold was fixed at US$295.60 per oz. on the London Metals Exchange, down $7.90 on the week. Similarly, silver was down 62cents to US$5.46 per oz. and platinum and palladium each fell US$14 to US$385 and US$340 per oz., respectively.

Accordingly, the TSE’s gold and precious metals sub-index sunk 206.74 points to 7,136.03. Among senior gold producers, Placer Dome lost 55cents to close at $20.30, followed closely by Barrick Gold, down 50cents at $31.20. Joining them in the loser column were Kinross Gold, off 15cents at $6.60; Greenstone Resources, off 80cents at $7.55; Franco-Nevada Mining, down $1 to $33.50; and Euro-Nevada Mining, down 75cents to $24.85.

Bucking the trend was Cameco, which rose 75cents to $48.25. The gold and uranium producer recently entered into an agreement-in-principle to purchase Uranerz Exploration & Mining of Saskatoon, Sask., and Uranerz USA of Denver, Colo. from German-based Uranerzbergbau. If ratified, the deal will substantially increase Cameco’s North American uranium reserves and production.

The London Metals Exchange slashed base-metal prices right across the board.

Nickel was chopped 21cents to a morning fix of US$2.24 per lb. on May 13, while copper was deflated 6cents to US78cents per lb. Zinc was down 2cents at US42cents per lb. and lead lost 1cents, dropping to US24cents per lb.

The TSE’s metals and minerals subgroup was off 50.18 points from the previous report period, finishing at 4,102.91. Inco lost 95cents to close at $23.75, while rival Falconbridge depreciated by $1.30, dropping to $19.70.

Inmet Mining lost some zest as investors devalued its share price by 50cents to $4.05 on heavy trading of 8.6 million shares. It was the second consecutive week in which Inmet dipped to a 52-week low. On May 11, Inmet announced that it was selling its 50% interest in the Antamina copper-zinc-molybdenum-silver project in northwestern Peru to Noranda and Teck, which can also earn into a piece of half-owner Rio Algom’s interest.

Ultimately, the deal will see Noranda, Teck and Rio become equal partners in the project. Of the three firms, only Teck appeared to benefit from the news, rising 15cents to $19.50.

Boliden, which held its first annual meeting as a Canadian-based miner during the report period, dropped 65cents to $9.55. Although down, the company has risen somewhat from record lows it hit after a tailings dam failed at its Los Frailes mine in Spain. The company reassured shareholders at the meeting that the breach was not due to negligence and that it had sufficient insurance to cover the costs associated with the spill. At presstime, the issue was up a nickel at $9.60.

Potash Corporation of Saskatchewan took a hard punch to the chin, falling $4.15 to $125. Oddly, the loss follows the company’s recent announcement of a 12% increase in earnings and a 26% increase in revenue in the first quarter of 1998, compared with the corresponding period of 1997.

In the diamond sector, Aber Resources dipped 20cents to $15.15, despite arranging a $102.9-million financing with a syndicate of brokerage houses.

The deal, which has not yet been ratified, will see the firms purchase 7 million Aber shares at $14.70 each.

Santa Cruz Gold, which rose 4cents to 23cents, was the most heavily-traded junior in the eastern markets, with over 2.5 million shares changing hands.

However, the company has not reported any news to the public since Nov. 28, 1997, when it released financial results for the nine months ending Sep. 30, 1997.