MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — Gold rally takes a breather as base metal miners gain ground

The shine was off the precious metals this past week, with gold dropping $2.25 to US$296.60 per oz., platinum slumping $5.50 to US$340.50 per oz., palladium slipping $5 to US$276 per oz. and silver sliding 33 cents to US$4.80 per oz.

During the Oct. 7-13 report period, the TSE’s gold and precious metals sub-index sunk 3.2% to 6,707.04 points, while the TSE 300 composite index rebounded 2.7% to 5,544.93 points.

Canada’s major gold miners all showed declines through the week: Barrick was down 80 cents to $31.70; Placer Dome dropped $1.25 to $22.20; Kinross Gold slid 19 cents to hit $4.65; Prime Resources Group was down $1 to $13.75; TVX Gold slipped 15 cents to $3.85; and Cambior dropped $1.02 to $8.13.

One bright spot in the precious metal sector was a high-grade silver discovery made at the El Salvador project of Teck and Western Copper in Mexico’s Zacatecas state. For the week, Teck B shares advanced 10 cents to $13.10, while Western Copper soared 50 cents to $3.30.

Another Zacatecas player, Pan American Silver, dropped 15 cents to $8.50 despite the company’s announcement that its La Colorada silver project is now expected to produce 4.5 million oz. annually, up from 3 million oz., as a result of recent drilling that encountered increased silver grades and vein thicknesses.

Continued weakness in base metal prices did not weigh upon the majors, which benefitted from market optimism that the Japanese government is finally coming to grips with its weakened banking system.

For the week, significant gains were seen across the board: Inco gained $1.60 to reach $16.40; Falconbridge rose $1.75 to $16.50; Noranda was up $1.80 to $22.25; Rio Algom was up 85 cents to $20.10; and Cameco rose 50 cents to $27.

Oct. 14 was a watershed day in the diamond world, as Canada officially joined the ranks of diamond-producing nations. Broken Hill Proprietary subsidiary BHP Diamonds and Dia Met Minerals kicked off commercial production at the Ekati mine in the Northwest Territories, though the market didn’t seem to be paying attention: BHP remained unchanged at US$15 1/8 on the New York exchange while TSE-listed Dia Met B shares actually dropped a dime to $22.10.

DiamondWorks continued its slow decline, slipping 13 cents to 47 cents as the company suffered the results of civil unrest in Sierra Leone and Angola. Major shareholder Tony Buckingham announced his departure from the DiamondWorks board, though he will continue to assist the company in acquiring African properties.

Among the juniors, Montreal-based Ressources Orleans remains on life-support following its recent share collapse. The issue, which was trading at more than $2 less than a year ago, ended the week at 12 cents, down 8 cents. The company, which was forced to cease wollastonite production shortly after startup owing to a lack of customers, had a working capital deficiency of $3.6 million as of June 30. Orleans Vice-President Normand Laplante has been put in charge of the restructuring program, with Chairman Jean-Guy Masse taking a back seat.