Trading Summary (February 02, 2004)

Toronto equities were generally higher on Monday, as the TSX Composite index climbed 118.50 points to 8,639.89, a gain of 1.4%. Many of the gains came in interest-sensitive stocks that had been battered on the Friday before, including the real estate stocks and telecommunications utilities.

The base metal equities were the biggest loser among the market sectors on Monday, as the TSX Mining and Metals index backed up 2.81 points to 211.67. Shares in Ivanhoe Mines were the most actively traded, with 7.5 million changing hands; they plunged $2.34 to $7.40 after Ivanhoe announced results of preliminary feasibility work on the Oyu Tolgoi copper-gold project in Mongolia.

The study estimated capital costs of US$500 million for the initial construction of a 60,000-tonne-per-day operation, or US$1.2 billion for full-scale construction of a 120,000-tonne-per-day mine and mill. Internal rates of return on the project varied according to the mine scenario and projected metal prices, but ranged from 17.5% on a single-stage construction of a 120,000-tonne-per-day mine, to 33% on a two-stage project development, starting with 60,000 tonnes per day and doubling capacity by the fifth year of operation.

A strike shut down the Sudbury operations of Falconbridge, so the big nickel producer’s shares fell 40 to $30.95. Possibly in response, nickel mid-tiers Sherritt International and LionOre Mining International both rose, Sherritt tacking on 18 to close at $7.22 and LionOre picking up 28 to finish at $7.43.

Gold slid below US$400 again, in a jittery market that was looking for signs of weakness in the United States dollar. The London morning gold fix was US$401.85 per oz., up about US$2 from the previous Friday afternoon, but prices slid in afternoon trading, forcing a fix at US$398.35.

That translated to weakness in the gold equities, although the TSX Gold index was up a fraction of a point at 203.30. The rise came despite an 11-to-6 margin of declines over advances among the index constituents. The strength was from index heavyweight Barrick Gold, which was up 45 at $26.69, and from mid-tiers Glamis Gold (up 22 at $20.07) and Iamgold (up 26 at $8.92).

Golden Star Resources, despite announcing a significant increase in reserves at its operating mines in Ghana, was down 7 at $7.18. Golden Star said reserves — after including the amounts mined out during 2003 — had increased by 61%.

The day’s biggest sack was thrown on Southwestern Resources, which fell back $2.05 (or 6.8% of value) to $28.20.