Bull run continues in gold stocks

Gold settled into a new, higher trading range of US$278-280 per oz. during the Oct. 31-Nov. 6 trading period, as the U.S. dollar showed some weakness in the face of widespread layoffs and slowing industrial production.

Canada’s senior gold producers mostly enjoyed another week of gains, pushing the Toronto Stock Exchange’s gold and precious minerals sub-index up 1.2% to 5,103.27 points: Barrick Gold rose 12 to $25.07; Placer Dome advanced 25 to $18.50; Franco-Nevada Mining rose 49 to $23; Kinross Gold eased up 2 to hit $1.35; TVX Gold was off a penny to 65; and Cambior traded down 6 to 75.

The most-widely followed mid-tier producers were even stronger: Agnico-Eagle Mines jumped another $1.10 to $16.60; Goldcorp rocketed $1.63 to $18.73; and Meridian Gold soared 75 to $17.75.

Falling 41 to $5.18, Glamis Gold reported third-quarter earnings of US$600,000 (or US1 per share) on revenue of US$15.9 million, compared with a loss of US$7 million (US10 per share) on revenue of US$14.1 million a year earlier. Glamis also closed an equity offering that raised gross proceeds of $57.5 million, a sum that was higher than anticipated, owing to an over-allotment.

Gabriel Resources unveiled a second feasibility study of its Rosia Montana gold deposit in Romania. The study considered a smaller-scale operation that would still be capable of pouring an average of 329,000 oz. gold annually over 25 years. The internal rate of return is estimated at 20.1%, while the net present value is pegged at US$332 million, based on a 5% discount rate. Gabriel closed down 10 to $3.75.

In northern Quebec, Campbell Resources announced it’s beginning exploration and development work at its Joe Mann mine, which has been in suspension since last November. Campbell hopes to resume commercial-scale mining operations in the first quarter of 2002 at a daily production rate of 1,040 tonnes, based on a 5-day work week. Yearly production will reach 260,000 tonnes yielding 65,000 oz. gold, 22,000 oz. silver and 1.2 million lbs. copper. Some 150 layed-off Joe Mann employees will be gradually recalled. Campbell traded down a penny to 42.

Shooting up 30 to $2.39, Ivanhoe Mines celebrated the restart of production at its Bakyrchik mine in northeastern Kazakstan. Initially, the mine is expected to produce about 20,000 oz. gold per year, beginning with stockpiled oxide ore.

The scene was gloomier in the base metals sector, with most metals prices continuing to decline: Spot copper fell 2 to US60 per lb.; zinc and lead each dropped a penny to US33 and US22 per lb., respectively; and nickel remained mired just above the US$2-per-lb. mark.

Overall, the Canadian base metal majors were mixed: Noranda dropped 50 to $14; Teck Cominco‘s B shares rose 44 to $10.85; Inco advanced 61 to $22.35; Falconbridge rose 44 to $14.70; Breakwater Resources traded sideways at 18; Boliden was up a penny to 26; and Sherritt International was up 3 to $4.22.