Placer Dome stumbles as Aussie takeover target hits back

In a repeat performance, the Toronto Stock Exchange S&P/TSX composite index plummetted 206.74 points over the June 19-26 report period to finish at 7,120.80. The index had lost 71.29 points in the previous period for a 2-week loss of 3.8% of value.

Across the Atlantic, gold rose US$2.75 to a London morning fix of US$324.60 per oz. on June 26. The increase trickled back into the TSE’s gold sub-group, which climbed 6.48 points to 206.13, recouping losses from the previous period.

Despite gold’s appreciation, Canadian heavyweights Barrick Gold and Placer Dome were mixed: the former rose 45 to $31.30 and the latter fell 25 to $19.10. Placer was rebuked by takeover prospect AurionGold of Australia, which called its offer too low. Not surprisingly, Aurion cited its rise in share price, versus Placer’s fall since the deal was announced, as proof of the undervaluation.

Kinross Gold and TVX Gold once again shared the limelight as the market’s two most highly traded resource stocks. Kinross climbed 38 to $3.70 on a volume of 34.9 million shares as TVX added 29 to finish at $2.38 on 34.4 million shares. TVX shareholders gave management the green light to reduce the company’s number of issued and outstanding shares to 43 million. The 10-for-1 consolidation took effect June 30. Also stronger was Echo Bay Mines, which rose 17 to $1.87. Kinross, TVX and Echo recently proposed a 3-way merger that would retain Kinross’s name, listings and corporate head office. The deal is expected to close in the fourth quarter, assuming regulators give the nod.

Rio Narcea Gold Mines was up 8, at $1.65. The company restructured its hedge book, closing out more than 58,000 oz. of gold calls it had written as part of a re-financing facility with Deutsche Bank two years ago. The calls had average strike prices of US$365 per oz. and would have matured between 2003 and 2006.

Base metal prices were generally weaker, and that spelt bad news for producers: Inco was down 38 to $33.14 as nickel slipped US$353 per tonne; Noranda, which inked a new 5-year deal with certain employees at Noranda Aluminum, fell 62 to $19.12; Falconbridge slipped 22 to $19.33; and Teck Cominco‘s B-series eased back 10 to $13.20. Noranda recently had to curtail production at its Horne smelter, in northern Quebec, after workers walked off the job.

Also down was First Quantum Minerals, which fell 20 to $4.05. The loss came as the miner closed a new, US$18-million credit facility for its Bwana Mkubwa solvent extraction-electrowinning plant in Zambia.

Overall, base metal issues slipped nearly 3%, with the metals and minerals sub-group ending the period at 141.35 points. Zinc was the only metal to perk up in London markets, moving ahead US$22 to US$771 per tonne on the morning of June 26.