STOCK MARKETS — Precious metals lack lustre; Diamond Fields near $60

The gold price continued to trade sideways and the silver price tumbled during the report period ended May 9. On more upbeat news, the Dow Jones Industrial Average (DJIA) in New York continued to astound observers and appeared poised to crack the 4,400-point level.

Silver, the May contract of which was trading above US$6 per oz. on the floor of the Commodity Exchange of New York, dropped almost US55 cents on May 9 as commodity funds found themselves in a selling mood. Gold slipped US$5.50 on the week, with the afternoon fix in London on May 10 coming in at US$383.20 per oz.

Onwards and upwards seems to be the DJIA cry, which closed May 9 at a record 4,390.78 points. In Toronto, the TSE 300 composite index was off 15.32 points on the week, closing at 4,282.61. The TSE’s gold and precious metals sub-group also faltered, declining 432.9 points to 9,653.56.

Shares of Diamond Fields Resources shot to a 12-month high of $59.25 on the strength of results from its ongoing drilling program at the Voisey Bay copper-nickel-cobalt project in Labrador, but closed at $54.63 on profit-taking. Rumors continue to circulate that a major (Inco is one of the companies mentioned) is about to take a significant position in the junior. Teck, which recently acquired a 10.4% interest in Diamond Fields, saw its B shares rise 38 cents to $24.38.

A takeover bid of International Musto Explorations (TSE) by Rio Algom (TSE) and North Ltd. of Australia has won the backing of Musto’s board of directors. RN Galaxy, a company formed by Rio and North, offered to purchase all of Musto’s outstanding shares for $14.99 each. Rio, which slipped $1 to $23.88, and North outbid Placer Dome for Musto, which owns a 50% interest in the developing Bajo de la Alumbrera copper-gold project in Argentina. Musto closed unchanged at $14.75.

At the Placer annual meeting in Vancouver, President John Willson said his company expects to increase its gold reserves by 25% (the equivalent of about 5 million oz.) this year from a number of projects. Off $1.88 on the week, Placer closed at $31.63.

Unable to negotiate a deal with the government of British Columbia, Royal Oak Mines and affiliated Geddes Resources withdrew their proposals to acquire control of the Kemess copper-gold properties in the province’s north-central region. In particular, the issue of compensation related to Geddes’ Windy Craggy project could not be resolved. Royal Oak slipped 20 cents to $4.40 and Geddes dropped 63 cents to 75 cents.

Adex Mining, up a penny to 40 cents, has an agreement to acquire the Mount Pleasant property in New Brunswick which hosts a variety of minerals, including copper, zinc, bismuth, molybdenum, tungsten and tin. The current owner of the property is Piskahegan Resources.

Taking on a partner to help in the exploration of its NICO group of claims in the Mazenod Lake area of the Northwest Territories is CDN-listed Fortune Minerals, which last traded at a high of $1.72. The partner, a private company, is earning a 20% interest in the NICO property.

Diamond miner Redaurum is considering a takeover bid for Auridiam Consolidated of Australia, its joint-venture partner in the River Ranch mine in Zimbabwe. No decision had been announced by presstime. Redaurum was off 13 cents to $1.72.

Cambior has been drilling at the Douay West gold project of Societe d’exploration miniere Vior in northwestern Quebec in order to confirm reserves and to help in deciding whether to bore a ramp in the zone. Cambior, down 38 cents to $15.38, can earn a 50% interest in the project by financing development to production startup. Vior closed unchanged at 18 cents.

The LaRonde mine division of Agnico-Eagle Mines in northwestern Quebec has been adding to its mineral resource through exploration; drilling of the 20 North massive sulphide zone increased the overall resource estimate by 330,000 oz. Agnico was off 13 cents to $16.