Mixed earnings polarize resource sectors

Erasing some of the gains made in the previous week, the Toronto Stock Exchange 300 index slipped 46.96 points over the Jan. 31-Feb. 6 report period to finish the week at 9,301.40.

A flurry of mixed news from major producers saw the gold and precious metals sub-group tank 107.88 points, or 2.6%, to 3,969.31 and the mines-and-minerals sub-group soar 183.82 points, or 4.8%, to end at 4,006.34.

Gold stocks were rocked by Barrick Gold‘s announcement that it had taken a US$1.1-billion writedown in the fourth quarter. Although the adjustment was expected, and is a reflection of current gold prices, its sheer size dragged the major down 81 to $22.14 on a volume of 5.5 million shares. Also suffering losses, but on lighter volumes, were Placer Dome, off 20 at $12.85, and Kinross Gold, off 5 at 67.

Physical gold traded down, landing at a London market morning fix of US$262.90 per oz. on Feb. 7 for a loss of US$3.30 over the five trading days.

A report of higher revenue in 2000, spurred by higher platinum and palladium prices, helped Inco weather a 14 drop in the price of nickel. Inco, which had total sales of US$2.1 billion last year, climbed $1.60 to $25.30. Another 27 had been gained by presstime, when complete financials were released.

Teck‘s B-series rose 50 to $14 on news of having doubled its earnings and cash flow in 2000. A strong contributor was Cominco, in which Teck owns a 50.1% interest, plus higher copper sales and prices. Cominco also rose over the period, to $24.24 for a gain of 38.

Falconbridge climed $1.13 to $16.90 on news that it had posted record earnings in 2000. The jubilation carried over to parent company Noranda, which also climbed, $1.13 to $16.35. On Feb. 7, Noranda jumped another 49 after releasing its own impressive financials.

Among other producers: Falconbridge, in which Noranda owns a 55% interest, rose $1.13 to $16.90; Boliden rose 18 to $1.33; and Sherritt International fell 21 to $4.24.

Junior Semafo edged ahead a penny to 37 on news that it had outlined more gold at the Mana property in Burkina Faso. Results from 15 of 18 holes drilled in the Wona zone yielded up to 6.3 grams gold per tonne over 9 metres.

Virginia Gold Mines slipped 10 to 70, despite having announced promissing results from the Gayot polymetallic project in Quebec’s Caniapiscau Reservoir area, northwest of Schefferville. One of the better intersections from recent drilling was 9.5 metres grading 1.67% nickel and 0.77% copper, plus 1.6 grams combined platinum and palladium per tonne. London-based Billiton can earn a half-stake in the project by spending $4.5 million over 3.5 years.