Noranda reworks Lomas Bayas deal with Falco

The biggest news among Canada’s base metal producers over the May 2-8 report period was the revelation by Noranda that it is shuffling off its stake in the proposed purchase of the Lomas Bayas open-pit copper mine in Chile to its subsidiary, Falconbridge. The original plan was to split the US$175-million purchase equally between the two companies, but Noranda now says the asset is more appropriate in Falco’s portfolio. Over the period, Noranda dropped 21 to $16.52, while Falco declined 60 to $17.55.

Lomas Bayas’s vendor, Sweden’s troubled Boliden, fell 6 to 48 over the period but was trading at around 60 at presstime. The company confirmed it is in discussions with lenders and potential investors regarding a possible restructuring, which might also include an equity offering.

Sherritt International fell 4 to $4.28 as its coal unit announced it had won its hard-fought battle to acquire Luscar Coal Income Fund, snapping up almost 90% of the outstanding units. The company also said it is extending its amended offer for Luscar units and debentures by 15 days to May 23, 2001, to provide time for Luscar unit- and debenture-holders who have not yet tendered to the offer.

Sherritt, which first offered $3.50 cash per unit, or $2.38 cash and 0.265 of a Sherritt share per unit in late February, had sweetened the offer to $4 cash per unit, or one restricted voting share of Sherritt for each Luscar unit, provided the aggregate number of Sherritt shares issuable is limited to 25 million shares. Sherritt’s offer for Luscar’s debentures remained unchanged at $1,050 in cash per $1,000 principal amount of debentures, plus accrued and unpaid interest.

The rest of the base metal majors followed the downward trend: Inco lost 63 to reach $27.40; Teck‘s B shares fell $1.10 to $15.14; Cominco was down $1.70 to $32.75; and Breakwater Resources declined 6 to $1.34.

Canada’s gold producers spent the week quietly shedding market capitalization: Barrick Gold fell 45 to $25.45; Placer Dome was off 2 to $15.95;

Kinross Gold dropped 8 to 82; and Cambior fell 2 to 48. TVX Gold bucked the trend in a big way, shooting up 54 to $1.40 on no news.

North American Palladium jumped $1.65 to $14.90, only to spring forward another 80 by presstime. In late April, the palladium miner announced it would let a long-term sales contract with a major automotive company expire in June 2005.

Junior Band-Ore Resources, which climbed 3 to 73, announced the discovery of the source of diamond-bearing boulders at its GQ property, near Wawa, Ont. Known as Area E, the showing will be bulk-sampled.

Orezone Resources slipped 4 to 8 despite luring Teck to its Kantela and Shea gold properties in Mali and Ghana, respectively. The major is funding initial exploration programs at both properties, after which it may earn 60% interests. Coincidentally, Orezone has drilled the last of a 20-hole program at the Intiedougou joint venture in Burkina Faso. Results are pending.

Bad news was in order for partners Cumberland Resources and Comaplex Minerals: WMC, the Australian mining giant that has been funding the Meliadine West project in Nunavut, has placed its 56% interest on the auction block as part of a general restructuring of its entire gold division. Since 1995, WMC has spent $41 million at Meliadine West, but it plans to spend only $350,000 in 2001 to complete a previously committed airborne geophysical survey.

SouthernEra Resources jumped 27 to $2.90 despite announcing another dismal year on the financial front. Losses in 2000 totalled $24 million, and both revenue and cash flow were down significantly. The poor results, which reflect writedowns and the end of mining of the M1 kimberlite pipe in South Africa, were partly offset by a management shakeup and the completion of positive feasibility studies for the Messina platinum project and for the Klipspringer and Camafuca diamond projects. The first two of these are near M1, whereas Camafuca is in Angola.