UK gold auction gives producers a lift

Hammered by poor showings in the industrial products sector, the Toronto Stock Exchange 300 index tumbled 189.63 points over the five trading days to end the July 4-10 period at 7,558.69.

Gold dropped $1.05 to a London morning fix of US$266.55 per oz. on July 11; however, by the afternoon session, the yellow metal had recouped most of the loss in reaction to the Bank of England’s latest auction of 20 tonnes. The sale, the second of six planned for fiscal 2001, fetched US$267.25 per oz. and was 4.1 times oversubscribed. The next auction is scheduled for Sept. 12.

Canada’s major producers were mixed, with Barrick Gold falling 40 to $22.20 and Placer Dome rising 40 to $15.20. Kinross Gold was also up, ahead 5 at $1.30. News of the U.K. auction had sent all three higher by presstime.

With the exception of Agnico-Eagle Mines, which climbed 56 to $13.51, mid-tier producers were down across the board: Meridian Gold dipped 58 to $10.85; Goldcorp slipped 21 to $15.90; and Cambior eased back 1 to 79. By presstime, all three had more than recouped their losses, and Agnico-Eagle had risen another 38.

The announced closure of the Edwards gold mine in north-central Ontario pushed junior producer River Gold Mines down 10 to $1. River cited low gold prices and dwindling reserves for the decision. The shutdown does not affect the nearby Eagle River mine, nor the decision to begin mining the Mishi surface deposit, 2 km to the west, once permits are in hand.

Eldorado Gold, which slipped a penny to 28, revised its 2001 production forecast at the Sao Bento mine in Brazil. The operation is now expected to crank out 94,000 oz. instead of 117,000 oz. However, proceeds from the closing of related hedging contracts, combined with an insurance settlement regarding the mine’s autoclave, are expected to reduce the company’s debt.

The base metals were quiet, except nickel, which rose 2 to US$2.76 per lb. on July 11. Accordingly, Inco rose 68 to $26.33, Falconbridge climbed 13 to $16.40 and Sherritt International edged up 2 to $5.03.

Also on July 11, Noranda, Teck and partners announced that the Antamina mine in Peru is preparing to export concentrate to Canada. The initial shipment, consisting of 16,200 tonnes, is destined for Noranda’s copper smelter in Quebec. Noranda fell 25 over the preceeding five trading days to $10.60, while Teck’s B-series sank 38 to $12.60.

Gammon Lake Resources jumped 10 to $1.50 on news it had intersected more high-grade silver at its Ocampo project in Mexico.

Diamond Fields International fell 28 to $1.22 despite positive results from its offshore diamond concession in Namibia. Partner Trans Hex Group has liberated 3,100 carats in the first five weeks of operations. A second vessal is being readied.