Producers mixed as gold takes a tumble

Gold took the spotlight in the May 17-23 report period, slipping 95 to a London morning fix of US$273.90 per oz. on May 24. This marks the second consecutive week in which the yellow metal has tumbled.

Canada’s major producers were mixed: Placer Dome rose 5 to $13.15, whereas Barrick Gold eased back 40 to $27.20, followed by Kinross Gold, which slipped 14 to $1.66.

Platinum prices surpassed palladium for the first time since early February, rising $58 to US$563 per oz. South African heavyweights Anglo American Platinum and Impala Platinum reported production setbacks in the first half of the year, owing to heavy rains in February. Rhodium prices similarly prospered, with the spread between bid and ask prices widening considerably.

Meanwhile, North American Palladium, producing more palladium than platinum, dropped 75 to $6. The company is Canada’s only primary producer of platinum group metals, operating the Lac des les mine, near Thunder Bay, Ont.

Activity among base metals was generally quiet, except for nickel, which rose 6 on the London Metals Exchange to US$4.75 per lb. The union representing workers at Inco‘s Sudbury operations flatly rejected management’s latest offer, bringing itself closer to a strike when the current contract expires on May 31. Inco ended the period at $25.70, for a loss of 85.

Breakwater Resources, which rose 23 to $3.63, completed the purchase from Cambior of the Bouchard-Hebert and Langlois zinc-copper mines in northwestern Quebec. The company paid US$48 million for the mines and assumed their related hedging obligations. Cambior, which plans to use some of the proceeds to reduce its debt, fell 16 to 82. Following the partial repayment, it will be left with US$10 million in cash.

In junior markets, NovaGold Resources jumped 10 to 75 on news that it had received unexpectedly good results at its Rock Creek property in Alaska. Gold values in the first six holes of an ongoing 30-hole infill drill program ran up to 8.4 grams per tonne over 7.6 metres; the widest interval was 30.5 metres, which averaged 2.7 grams. Combined resources in the Rock Creek and Saddle deposits stand at 11.8 million tonnes grading 2.55 grams gold.

Queenstake Resources slipped 1 to 14, despite having tabled a positive feasibility study at its Magistral gold project in Mexico’s Sinaloa state. At life-of-mine capital costs of US$17.1 million, the study says, the projected open-pit, heap-leach operation is capable of producing 268,500 oz. gold in each of seven years.

Summo Minerals edged ahead 3 to 21, regaining losses taken in the previous period. Stepout drilling has extended to 2,200 ft. the strike length of the SE Extension copper oxide zone at its Lisbon Valley project in southeastern Utah. The zone, which has yielded up to 1.38% copper over 13.72 metres, extends southeast from the Centennial deposit, the largest of three on the property. Reserves in that deposit are pegged at 42.18 million tonnes grading 0.43% copper.