MINING MARKETS & INVESTMENT NEWS — Eastern Marktes — Miners relieved as gold breaks US$260 barrier

The Aug. 11-17 report period saw continuing strength from gold, with spot prices shooting up US$4.60 to US$261.50 per oz. on the London morning fix of Aug. 18.

Over the week, the World Gold Council announced that demand in the 27 countries it monitors rose 16% to a record high of 810 tonnes (26 million oz.) during the second quarter. Of note was record demand in India, the U.S., the Arabian Gulf states and Mexico, reflecting changes in the worldwide jewelry and investment sectors.

As well, the Gold Institute released a study forecasting that world gold mine production would flatten out after many years of growth. The prediction, made when gold was priced at US$285 per oz., estimated that production would rise to 83 million oz. by 2002, an increase of just 1 million from 1998.

Driving the TSE gold-and-precious-minerals index up 2.7% to 5,402.99 points, most of the gold majors posted gains: Placer Dome rose 40 cents to $16.05; Kinross Gold was up 42 cents to $3.78; Cambior jumped 24 cents to hit $4.44; TVX Gold rose 17 cents to close at $1.39; Franco-Nevada Mining was up $2.75 to $25.25; and Euro-Nevada Mining gained $2 to hit $19.35.

Uncharacteristically, only Barrick Gold went against the grain, closing down 25 cents to $29.30 after a month of steady gains.

Among the gold juniors, Cumberland Resources jumped 34 cents to $2.05, following the release of positive results from infill drilling at the Meliadine West gold project in Nunavut. The junior holds a 22% carried interest in the project, as does Comaplex Minerals, which failed to move on the news and remained at $1.25. WMC International, a unit of Australian-listed Western Mining Corp., holds the remainder and acts as operator.

Volume-leader Dayton Mining closed up a penny to 11 cents after reaching a high of 15 cents on Aug. 11. Dayton announced second-quarter losses of US$433,000 (nil per share) using “fresh start” accounting that could not include US$1.2 million realized on gold hedges.

In base metals, nickel led the pack for another week, rising 5 cents to US$2.96 per lb. In sympathy, Inco advanced $1.05 to $30 and Falconbridge gained 40 cents to reach $23.50.

Though copper, zinc and lead prices remained static, the rest of Canada’s base metal majors also posted hefty gains: Noranda climbed 45 cents to $21.05; Rio Algom gained $1.45 to $23.60; Teck’s B shares surged $1.05 to close at $12.50; Cominco rose 35 cents to $26; and Boliden was up 20 cents to $3.65;

The darling of the marine-diamond miners, Namibian Minerals Corp., gained 60 cents to reach $5.60. The U.K.-based company announced a further resource increase at its Hottentot Bay grant in Namibia. During a bulk-sampling program on the concession, Namco recovered 9,083 diamonds weighing 2,548 carats for a grade of 0.1-1.81 carats per square metre. Some 95% of the diamonds were of gem quality.