Mining stocks slumber through Christmas period

While the world’s stock markets were generally red hot in the last few weeks of 1999, most mining stocks on the Toronto and Montreal exchanges showed little movement over the holiday-shortened period of Dec. 22-28.

With gold rising US$3.65 over the week to hit US$290.65 per oz. on the London morning fix of Dec. 29, much of the week’s activities centred around corporate changes in the precious metals sector.

Rio Narcea Gold Mines and Barrick Gold announced they are teaming up to explore some of Rio Narcea’s properties in northwestern Spain (excluding the El Valle and Carles project areas). Under the agreement, Rio Narcea and Barrick will create a 40-60 joint-venture company that will buy a 100% interest in the properties from Rio Narcea for US$750,000. As well, Barrick will buy 1.3 million Rio Narcea shares priced at $2.25 per share and may subscribe for another US$3.5 million worth of shares. Rio Narcea was up 11 to end the week at $1.81, whereas Barrick dropped 25 to $26.65.

Denver-based Metallica Resources issued 2.2 million shares to Franco-Nevada Mining in return for the major’s help in dealing with an outstanding US$1.1-million liability at the junior’s Mara Rosa property in Brazil. Following the share issuance, Metallica’s issued and outstanding common shares will total 26,809,877. Metallica was up 2 to 47 on the news; Franco fell 50 to $23.

Goldcorp‘s A shares fell 50 to $8.30 as it announced it was raising the last $30 million required for its Red Lake gold project in Ontario by selling its Havelock Lime division in New Brunswick to a private Canadian company. In 1998, Havelock had an operating profit of US$2.1 million on revenue of US$8.6 million.

Cambior climbed 16 to $1.70 as the major finally signed a definitive restructuring agreement with its financial creditors. Cambior’s US$212 million in loans will now be extended to mature at the end of 2000 and interest will be set at the London Inter-Bank Offer Rate plus 0.75% until June.

Among the remaining majors: Kinross Gold climbed 16 to $2.80 as it completed its US$5-million purchase of Royal Oak Mines the Timmins assets; volume leader Placer Dome rose 25 to $16.10; and TVX Gold was off 10 to close at $1.12.

Pan American Silver was unchanged at $8.10 as Reuters reported that Moscow-based machinery and aircraft builder Kaskol Group is planning to win Pan American’s licence to develop the Dukat silver deposit in far eastern Russia. In November, Kaskol surprised Pan American and its partners by acquiring Dukat’s fixed assets after submitting a bid of US$12 million — a sum that Kaskol’s president said had now been paid in full. Pan American has stated it would defend its right to develop Dukat.