STOCK MARKETS — Copper crisis ripples through TSE

It’s not unusual to see the resource stocks outperform a rising market. But this week, market watchers got to see a bear market that didn’t find its tastiest dinner in the resource sectors.

The Toronto Stock Exchange composite index fell 45.67 points to 5,060.65 over the report period ended June 18, for a loss of 0.9% on the week. The market had been on a steady 10-session slide until June 17, when it staged a 2-day rally.

The Canadian dollar was lower against all the major foreign currencies over the report period, reaching US73.05 cents on June 18. The Loony lost 19 basis points against the greenback on the week. Both North American currencies fell against the major European currencies and the increasingly firm Japanese yen.

Gold traded in a narrow range of around US$384.50 on London bullion markets, tripping only on the morning of June 14 as the base metal market crumbled. It jumped on the June 19 morning fix, reaching US$386 per oz. for a gain of $1.50 on the week. Platinum put on a reassuring show, adding $2.40 for a price of $393.40 per oz. Silver took a beating on June 14, falling below US$5, but closed the report period up 9 cents to US$5.21 per oz.

The TSE golds were fractionally lower, with the gold and precious metals subindex falling 44.52 points to 11,551.97, a loss of 0.4%.

Bre-X Minerals was the most actively traded gold stock in Toronto, although its trading volume of 11.49 million shares was smaller, by half, than in the previous week. Bre-X also led the TSE golds in value of shares traded, at $265.1 million.

Bema Gold, one of the partners in the Aldebaran gold-copper project in northern Chile, rose $1.20 to close at $6.15, with 9.2 million shares changing hands after the release of impressive assay results.

After losing a good portion of their value of late, shares of Arequipa Resources rebounded somewhat, closing up $2.85 at $22.65, with nearly 8.5 million shares traded over the period. The company is exploring a gold project in Peru, where it has a large land package.

The London Metals Exchange was a scene of carnage as the copper price collapsed following news of a scandal at the mammoth Sumitomo trading house.

Copper fell below US90 cents per lb. in some trades on June 17, and Comex futures were whipsawed as low as US84 cents. The red metal finished the week 12 cents lower at US94 cents per lb.

The other base metals were dragged down as well, but in all they resisted copper’s plunge. Nickel wound down 2 cents on the week, at US$3.50 per lb., with lead unchanged at US36 cents, and zinc off 1 cents to US45 cents.

Base metal stocks on the TSE didn’t take substantial losses, with the metals and minerals subindex falling only 27.91 points to 5,169.64, a loss of 0.5% for the report period. The market had already seen potential weakness in the copper price and discounted most of the copper-sensitive companies. Base metal producer Noranda was up 15 cents, closing at $28.35. Inco also posted a slight gain, up 65 cents at $44.20.

Rio Algom, a diversified producer with substantial exposure to copper, lost 75 cents, closing at $26.25. In addition to its sizable stake in the huge Highland Valley Copper mine in British Columbia, the company is expanding its Cerro Colorado copper mine in Chile, and has a interest in the huge Bajo de la Alumbrera gold-copper project under construction in Argentina.

Also slapped by the copper selloff was Aur Resources, which lost 15 cents to close at an even $10. The company operates the Louvicourt copper-zinc mine near Val d’Or, Que., and is helping subsidiary Canada Tungsten build the Andacollo copper mine in Chile.

Aber Resources, which is pushing hard to advance its diamond projects in the Northwest Territories, was up $1.30 at $18.35. Partner Kennecott is well into a bulk-sampling program to test several promising kimberlites on Aber’s ground.