Toronto Stock Exchange Gold equities weaken as bullion price slumps

Trading activity remained in a sluggish trend during the week ended June 12 as falling gold prices and a shaky economy continued to put a damper on investor enthusiasm. The gold and silver index took a beating, falling below the 6,000- point mark to 5767.20 points. Gold bullion fell to an uninspiring US$350.50 on the second London fix — a price that’s sure to spell more red ink for high-cost mines across Canada. Continuing to suffer from the bullion price slump is Hope Brook Gold which hit a new low of 60 cents during the session.

The TSE composite index moved 2% lower to 3605.07 points, while the metals and minerals index saw only a modest improvement, gaining 0.29% to end the session at 3250.72.

Senior miner American Barrick Resources, a leading favorite among gold bugs, slipped 87 cents to $19.63, while Echo Bay shed $1.50 to close at $14. Echo Bay is anticipating lower than expected gold output this year, mainly because of production problems at its Cove-McCoy mine in Nevada, and writedowns on its investment in the Muscocho group of companies.

Corona dipped 35 cents to $7.38 on heavy volume of more than five million shares. The drop came after the company announced a complex restructuring plan as part of its bid to gain control of Stikine Resources and the high-grade Eskay Creek gold deposit in northwestern British Columbia.

Cash-rich Placer Dome has confirmed its intention to purchase any shares of Stikine that are tendered to it by June 19 under a takeover bid made on May 28. The senior gold miner is offering a cash price of $67.50 per Stikine share. Placer Dome traded 1.8 million shares to close at $16.88, while Stikine was up $4 to $67.50. Tony Petrina, president of Placer Dome, says the market has recognized that his company’s offer is “superior” to the takeover proposal made by Corona.

A recent shuffle of senior management at Galactic Resources (TSE) had little effect on that company’s share price. Galactic was steady at $3.35. Former president, Robert Friedland, has stepped aside to be replaced by Peter Guest, a seasoned mining professional with experience at the company’s Ridgeway gold project.

A few junior gold issues bucked the downtrend during the session in anticipation of drill results from summer exploration programs on their properties. Queenston Mining was better by 18 cents to close at $1.85, after the company announced drill programs are set for five of its properties in northern Ontario. With a gold project in Greenland, Platinova Resources gained 18 cents to close at $1.80. A major drilling campaign is planned this summer on Platinova’s joint venture with Corona in East Greenland. Sikaman Gold traded 92,700 shares to post a gain of 50 cents and closed the week at $1.25. Another gainer was Central Crude which moved ahead 22 cents to $5.13.

With uranium prices at record lows, Denison Mines remains in the doldrums. But, some analysts say Denison may be an attractive speculative investment for bottom fishers. Nuclear power may become the only solution to the “greenhouse effect” problem, they say, and perhaps it is now worth considering a few investments in the uranium mining sector. Denison B shares gained 14 cents to close at $1.24 on volume of 149,400.

In the junior base metals area lacklustre trading prevailed with most issued unchanged. Geddes Resources was up 15 cents to $1.50. The company owns the big Windy Craggy copper project in northern British Columbia. Moneta Porcupine traded 196,300 shares and moved up 7 cents to 53 cents. This summer, Moneta is exploring the Lik zinc deposit in Alaska. The property, which hosts preliminary reserves of 18.2 million tons grading 10.2% zinc, was recently optioned by Moneta from GCO Minerals of Houston, Tex.