Broad market rebounds, resource stocks soar

Bolstered by an reinvigorated resource sector, the Toronto Stock Exchange 300 index gained a healthy 132.54 points over the five trading days ended Aug. 21, finishing at 7,472.98.

The yellow metal had a London morning fix of US$277.25 per oz. on Aug. 22, for a gain of 90 on the week. Gold’s appreciation spilled over into the equity market, pushing the golds 150.46 points higher to 4,932.40. As a result, Barrick Gold rose $1.17 to $25.78, Placer Dome climbed 76 to $17.50, and Kinross Gold jumped 6 to $1.43.

Franco-Nevada Mining, the third-largest gold issue after Barrick and Placer Dome, spiked 4 to $20.44 as it released rosy quarterly results. Revenue rose by 6% and earnings by 60% in the three months ended June 30, compared with the second quarter of 2000. Moreover, Franco-Nevada’s working capital, plus the market value of its investments, soared to a remarkable $1.5 billion.

Also up was Agnico-Eagle Mines, which celebrated the inauguration of the Penna shaft at its newly expanded LaRonde gold operation in Quebec. Representing the deepest single-lift shaft on the continent, the shaft should enable a further expansion to 7,000 tons daily, thereby increasing annual output to just under 400,000 oz. by 2004. The gold miner closed up 66 at $14.70.

Junior producer Geomaque Explorations shed 2 to 23, only to plummet another 11.5 by presstime. On Aug. 22, Geomaque announced it had lost $1.5 million in the three months ended June 30, versus earnings of US$561,000 a year earlier.

Nickel producers received a boost in the form of an 8 rise in their product’s price, with nickel fixed at US$2.58 per lb. on the morning of Aug. 22. In step, Inco soared $1.34 to $26.24, Falconbridge jumped 95 to $16.70, and Sherritt International edged ahead 8 to $4.97.

In stark contrast, zinc is showing no sign of a rebound from recent lows; it retreated a penny to US37 per lb. Producer Breakwater Resources crashed 15 to 55 as it released quarterly results showing a $9.3-million loss for the first six months of the year, owing entirely to depressed metal prices, particularly zinc.

Ivanhoe Mines, which recently raised US$5.25 million in a special warrants offer, was 18 higher at $1.40. A portion of the proceeds are earmarked for an ongoing 16,000-metre drilling campaign on the 238-sq.-km Turquoise Hill copper-gold project in southern Mongolia, which the company can acquire from BHP-Billiton.

Among the other base metal miners, Teck B-series vaulted $1.19 to $12.49; Noranda jumped 70 to $15.94; First Quantum Minerals climbed 20 to $3.25; Inmet Mining rose 5 to $2.55; and Boliden edged ahead 2 to 32. Heading in the opposite direction was Aur Resources, down 13 at $2.48.