STOCK MARKETS — Yellow metal holds firm as resource index

The tug-of-war between gold sellers and buyers ended the week with the yellow metal holding firm above the US$380-per-oz. level, and even edging up a few dollars to US$384.

That helped push the Vancouver Stock Exchange resource index up almost 72 points to 1,794.18. The composite index also gained ground during period ended Feb. 1, tacking on 40 points to finish at 1,156.29.

Rumors that Spokane, Wash.-based Pegasus Gold would make a bid for the South Kemess copper-gold project in north-central British Columbia turned out to be partially true.

The major announced it will pay shareholders of El Condor Resources (the 60% owner of South Kemess) the equivalent of $7.50 in Pegasus common stock. El Condor traded as high as $6.75 on the news, before settling at $6.50 for a gain of 63 cents.

The offer was not, however, extended to shareholders of St. Philips Resources, which owns the remaining 40% stake in South Kemess. After trading as high as $4 prior to the announcement, the company took the news on the chin, dropping 30 cents to $3.35.

St. Philips says it is open to offers, but Pegasus remains mum on its plans for the remaining interest.

El Condor President Robert Dickinson is understandably pleased with the offer and plans to concentrate on selling two other copper-gold projects. He hopes first to arrange a buyer for the Fish Lake copper-gold porphyry deposit in British Columbia, and follow that with the sale of the Casino project in the Yukon.

Taseko Mines, owner of Fish Lake, added $1.12 to close at $14.38. Pacific Sentinel Gold, owner of Casino, slipped a dime to close at $3.85. The sale of El Condor gives the Dickinson promotional group room for another project and it appears Romulus Resources will be the vehicle. Romulus has announced a private placement of a million units at $1.50, and on a fully diluted basis the company will have about nine million shares outstanding and more than $4 million in working capital. The issue finished up 54 cents at $1.55.

Meanwhile, partners Great Western Gold and War Eagle Mining continued to gather steam with the intersection of a fourth kimberlite pipe at their Candle Lake project in Saskatchewan. The former finished up $1.53 at $5.13 while the latter jumped $1.98 to $5.13.

Analysts Andrew Muir and John Kaiser at Pacific International Securities are concerned that the $100-million market capitalization of the two companies may be somewhat inflated, given the limited amount of information available. Noting that no economic kimberlites have yet been found in Saskatchewan, the two analysts say they are waiting for the results of diamond analysis and recommend investors do the same before buying the issues.

Initial results from analysis of the core are not expected until the end of February.

A proposed amalgamation of Alberta-listed Tanqueray Resources and Fibre-Klad Industries left those two issues little-changed at $3.10 and $2.25, respectively.

Tanqueray will issue between 0.92 and 0.96 shares for each share of Fibre-Klad, and the surviving company will have about 21 million shares outstanding and a half interest in the Yamba Lake property in the Northwest Territories.

Positive results from the first drill hole on the Esperanza property in Panama helped Silverstone Resources gain 25 cents to $1.30. (The hole reportedly encountered silicified granodiorite containing finely disseminated pyrite and chalcopyrite.)

Silverstone has an option to earn a half interest in the property from Adrian Resources, which added 25 cents to close at $3.30.

A private placement of 1.2 million units at 75 cents each and exploration plans on several projects helped Minefinders jump $1.45 to $2.15. Plans to buy a 70% interest in a group of claims covering a copper-gold project in Peru gave Rio Amarillo Mining an 85 cents boost to $3.85.