Yellow metal battered by British auction

The Sept. 13-19 report period saw another 25 tonnes of gold pour into the market from the Bank of England. The anticipated auction was oversubscribed by a rate of 2.6 times; however, this had little affect on spot prices, which slipped $1.70 over the period to land at a London morning fix of US$271.10 per oz. on Sept. 20.

England’s latest sale is the third of six to occur in fiscal 2000. The next auction, scheduled for early November, will comprise 25 tonnes as well, as will those that follow.

In step with their product, Canada’s major gold producers showed losses: Barrick Gold sank $1.20 to $22.60; Placer Dome dropped $1 to $13.55; and Kinross Gold fell 4 to 93.

Cambior, which rose 23 to 76, announced plans to raise US$34 million by selling its La Granja copper deposit in Peru. The deal follows earlier asset sales, all of which are designed to help the Montreal-based company repay debt and change its focus to gold only.

With the exception of lead, which remainded unchanged, base metals were all down: nickel sank 19 to US$3.84 per lb.; zinc dropped 4 to US54 per lb.; and copper slipped 2 to US89 per lb. The devaluations combined to clip 135.11 points off the TSE’s metals and minerals sub-group, which ended the period at 3516.92.

By upping its bid, Noranda has been granted 10 days to review the books of takeover quarry Rio Algom. However, the revised offer of $27.50 per share is conditional on what is found. Meanwhile, Rio has mailed out a circular to shareholders endorsing and recommending the acceptance of Billiton‘s offer of $27 per share. Noranda was down 80 to $14.30, while Rio was off 20 at $28.50.

Inco settled back $1.65 to $27.75 as investors digested the company’s proposal to buy back its VBN shares for $195 million in cash and 11.7 million warrants. Meanwhile, crosstown rival Falconbridge eased back 20 to $17.75. The major announced that employees at its Nikkelverk refinery in Norway have threatened to stop processing Sudbury concentrates as a show of solidarity for their Canadian brethren, who have been on strike for seven weeks. Falconbridge notes that any such undertaking would take weeks to implement, given Norway’s lengthy labour procedures.

Of the remaining producers, Cominco ended the period with the best showing, falling only 5 to $21.80. In the previous period, the zinc miner announced it would reopen the past-producing Pend Oreille zinc-lead mine in Washington and truck the concentrates to its Trail refinery in British Columbia.

Among juniors, Minefinders jumped 10 to $1.25 on news that it had increased resources at its Dolores gold-silver project in Mexico’s Chihuahua state. Based on a cutoff grade of 0.3 gram gold-equivalent, resources now stand at 100 million tonnes grading 0.76 gram gold and 40.3 grams silver per tonne. This falls to 3.6 million tonnes grading 5.24 grams gold and 256.7 grams silver when the cutoff grade is increased to 5 grams gold-equivalent.