STOCK MARKETS — Silver still in favor; Placer out of Musto race

Gold traded sideways, but silver continued to find favor with speculators during the report period ended May 2. At the Commodity Exchange of New York, the cash price for silver approached US$6 per oz. and the September contract was quoted at US$6.02. In London, the afternoon fix for gold on May 3 was US$388.70 per oz., off a dime from last week.

In Toronto, the TSE 300 composite index closed up 15.01 points on the week at 4,297.93; the exchange’s gold and precious metals sub-group roared ahead by 87.9 points to 10,086.46. The Dow Jones Industrial Average in New York surged to yet another record, closing on May 2 at 4,328.88 points.

Any thoughts of a bidding war for International Musto Explorations appeared to evaporate when Placer Dome said it will not be sweetening its offer of $12.50 per share for the junior, which owns a 50% interest in the Bajo de la Alumbrera copper-gold porphyry project in Argentina.

Placer was outbid by Rio Algom and North Ltd. of Australia, who made a joint offer of $14.99 per share (worth about $510 million in total) for Musto. The deadline for acceptance of the Rio-North offer is May 19. Should the Rio-North offer be accepted, the two companies will be developing the large project with 50% owner MIM Holdings of Australia. Musto gained $1.88 on the week to $14.75, Rio slipped 13 cents to $24.88 and Placer was off 75 cents to $33.50.

The potentially rich Voisey Bay nickel-copper-cobalt discovery of Diamond Fields Resources in Labrador has drawn international attention from suitors, as well as a contingent of juniors wishing to stake ground as near to the find as possible. Diamond Fields management is reported to have talked with nickel producers Inco and Falconbridge, while RTZ, the world’s largest mining company, is believed to have expressed an interest. Shares of Diamond Fields, which hit a high of $53, closed at $47.75, up $11 on the week. Teck, which recently struck a deal with Diamond Fields to acquire a 10.4% interest in the junior based on $36 per share, saw its B shares climb 38 cents on the week to $24.

A proposed merger between Great Lakes Minerals and Geomaque Explorations may be off, but the issue is not yet dead. Great Lakes, off a nickel to $1.56, is pursuing legal action. The board of directors of Geomaque, which decided to reject the merger, passed a motion removing Donald Empey as chairman and chief financial officer of the company. The Geomaque board says its actions avoid a potential conflict of interest arising from Empey’s support for the merger proposal. Geomaque rose 7 cents to $1.42.

Kinross Gold struck a deal with Barrick Gold to acquire the Macassa gold mine at Kirkland Lake, Ont., for US$42.5 million and 2.5 million warrants. The long-producing Macassa mine, with workings to a depth of 7,000 ft., is scheduled to turn out 70,000 oz. this year. Kinross, active north of Kirkland Lake in the Timmins, Ont., area, gained 13 cents to $8.50. Barrick dropped 75 cents to $33.38.

Higher metals prices, among other reasons, helped Brunswick Mining & Smelting and its parent, Noranda, record improved first-quarter earnings. Zinc-lead producer Brunswick jumped 25 cents to $10.25, while resources giant Noranda gained 13 cents to $24.

The operator of the new Louvicourt base metal mine near Val d’Or, Que., Aur Resources, said the project is operating at or better than the original 1995 mine plan with respect to production levels, mined grades, metal recoveries and payable metal content of the concentrates produced. Aur closed unchanged at $4.85, while project partner Novicourt, a Noranda subsidiary, slipped 10 cents to $4.15. The third partner in the project is Teck.

Black Hawk Mining reports encouraging results from a drilling program at its Hoyle Twp. gold property near Timmins. The focus of the program is the western end of the property along a strike length of 650 ft. and to a vertical depth of 490 ft. The company says all zones contain ore-grade values and are open along strike and at depth. Black Hawk jumped 33 cents to 94 cents.

In Brazil, Inco, which dropped $2.75 on the week to $33, has joined forces with Korea Zinc Co. to conduct a US$6-million engineering study aimed at developing a nickel project in the state of Goias.