STOCK MARKETS — Tumbling gold price depresses TSE

Over the report period ended March 18, the Toronto Stock Exchange reversed the gains it had made during the previous week, and then some.

The TSE Composite 300 index dropped 176.18 points (or 2.8%), closing at 6,129.28. Trading volumes were considerably lower than in the previous week, with only two of the five trading days topping 100 million shares.

The Canadian dollar dropped to US72.79 cents on March 18, losing 54 points since noon on March 12. It also lost ground to all other major currencies, notably the Deutschmark, against which it was down 2 cents.

Gold once again dropped below the symbolic US$350-per-oz. mark after enjoying several weeks above it, losing $4.20 over the period to fall to US$348.95 per oz. Platinum followed suit, dropping $5.25 to close at US$377.25 per oz., while silver lost just 6 cents, hitting US$5.17 per oz.

As is usual, the TSE’s gold and precious metals sub-group reflected the drop in the gold price, shedding 221.39 points (2%) to hit 10,897.45.

Bre-X Minerals was off a dime at $17.65 over our report period and appears to be settling down after its roller-coaster ride since the Busang agreement-in-principle was signed last month. The company is weighing its post-Busang options and may consider selling its 45% interest in the Indonesian gold project, though analysts say this will be easier once the formal joint venture is signed and all lawsuits are dismissed or settled.

Gold producer Placer Dome was down $1.15 at $27.15. The company’s rights to explore a promising gold project in Costa Rica were recently revoked by that country’s government owing to environmental concerns. The announcement came on the heels of a recent challenge to the company’s rights to the Venezuelan gold project known as Las Cristinas. Crystallex Resources, a junior with ground next to Las Cristinas, alleges it has legal rights to a good portion of this property. Placer Dome denies this is the case, and its position is being backed by the Venezuelan government. Crystallex was ahead 50 cents at $3.40.

Among the highest-percentage gainers was Great Lakes Minerals, which climbed from 10 cents to 17 cents over the week as two of its affiliates worked out a “business combination” plan.

Adex Mining saw the biggest percentage drop of the week. Its shares lost 53% of their value, dropping to 28 cents from 60 cents after a feasibility study rejected the company’s plan to construct a 2,500-tonne-per-day mill at its Mt. Pleasant polymetallic project in New Brunswick. The capital cost of such an operation, $102 million, was deemed too high, and the mine life too short.

Bema Gold, which is responsible for several gold and copper-gold discoveries in Chile’s Maricunga district, was off 40 cents at $11.50. The company has been recommended by numerous mining analysts, all of whom cite the junior’s considerable exploration successes. Despite a somewhat rocky road to production, Bema and partner Amax Gold recently celebrated the official opening of their Refugio gold mine, a high-altitude, heap-leach operation in the Maricunga district.

The base metal scene was as bleak as the gold market, as the TSE’s metals and minerals sub-index lost 125.22 points (2.1%), falling to 5,766.18.

Base metal producers Cominco and Westmin Resources each posted gains over our report period. The former was ahead $1.10 at $41.25, while the latter inched up 45 cents to $7.55. Westmin recently closed a $120-million offering that will be used to finance the Lomas Bayas copper project in Chile. The proposed operation is expected to produce 125 million lb. cathode copper annually over a mine life of at least 12 years.

Rio Algom and Falconbridge went the same direction, with the former shedding $1.45 to rest at $32.15 while the latter lost 85 cents at $32.15. Inmet Mining also lost ground, slipping $1.35 to close at $8.25.