MINING MARKETS AND INVESTMENT NEWS – EASTERN MARKETS — TSE falls on possible rate increases south of border

Speculation that the U.S. Federal Reserve Board may soon increase interest rates sapped some life out of the Toronto Stock Exchange 300 index, which lost 197.85 points during the report period ended April 28. The TSE finished the week at 7,567.67.

Metal markets also suffered from the rumors, but were given a double jolt by falling precious and base metal prices. Gold bullion was fixed at US$307.55 per oz. on the morning of April 29, for a drop of $3.42 from the previous report period. Likewise, silver was 20cents cheaper to buy that morning, at US$6.11 per oz., while platinum was $13 cheaper, at US$404 per oz. Even palladium, which recently soared to record heights, was cut, by $18, resulting in a fix of US$362 per oz. All of the base metals lost a penny.

The TSE’s gold and precious metal sub-index plummeted 126.66 points, or 3%, to 4,165.89. Among mid-tier producers, Kinross Gold was hardest hit, suffering a 5cents drop in share value, which translated into $5.3-million loss in market capital. Over the past six months, Kinross has seen its share price vaccilate from more than $7 in October to less than $4 by year-end, and back to our report period’s closing value of $6.65. Much of the gain this year has occurred since February, when Kinross announced it was planning to merge with Amax Gold, a subsidiary of Cyprus Amax Minerals. That deal will be put to a shareholder vote at the end of May. If the merger is approved, current Kinross shareholders will find themselves holding 43% of the new company, with Cyprus retaining a 31% stake in Kinross, and other Amax shareholders, 13%. Meantime, the company has made its first foray into Australia by buying two gold properties, one of which hosts a drill-indicated resource of 1.2 million contained ounces gold.

Other intermediate gold producers that were down in the period included: Geomaque Resources, off 5cents to $2.55; Greenstone Resources, off 25cents to $9.25; and Bema Gold, off 30cents to $3.50. Bema announced it had raised $30 million in a private placement with RBC Dominion Securities.

The TSE’s metals and minerals sub-group fell 42.48 points, or 0.6%, to close at 7,539.44. Despite the sub-group’s performance, Noranda managed to rise 5cents to $29.15. The major leaguer recently posted strong first-quarter earnings on a one-time, $583-million gain from the sale of Norcen Energy Resources, one of two companies that constituted the miner’s oil and gas division. Headed in the opposite direction were: Inco, down $1.50 to $25.20; Rio Algom, down 75cents to $27.25; Teck B-series, off $1.05 to $20.15; and Falconbridge, off 75cents to 21.25.

Bolliden fell $1.80 to $10.40 per share on news that a tailings spill at its Los Frailes mine, about 30 km northwest of Sevilla, Spain, may require tens of millions in cleanup charges. By presstime, the company’s share value had dropped another 50cents, to $9.90 per share.