Oversubscribed UK auction revitalizes gold miners

Despite pre-auction jitters, gold soared $8.60 over the Jan. 9-15 report period to land at a London morning fix of US$287.95 per oz. on Jan. 16.

On that day, the Bank of England sold another 20 tonnes of the yellow metal at an average of US$283.50 per oz. The auction, 1.4-times oversubscribed, is the sixth and second-last in a series that began in March 2001. Another 20 tonnes are to be sold in early March.

Canada’s major producers all rose with their product: Barrick Gold climbed $1.32 to $27.70; Placer Dome rose 84 to $19.35; and Kinross Gold ascended 16 to $1.40. Kinross announced it would spend some US$7 million this year exploring various projects in Russia, Alaska, Ontario, Nunavut and Australia.

Franco-Nevada Mining was once again the most active mining issue, jumping $2.95 on a volume of 27.6 million shares. The royalty king raised $105 million by dumping 5 million shares of Aber Diamond on the open market, thus reducing its stake in the company to 4.98%. Curiously, Aber climbed 96 over the period to finish at $21.26.

Normandy Mining was up a buck to $16.50 as the takeover battle for its control intensified between New York-listed contenders Newmont Mining and AngloGold. Newmont received regulatory approval to sway American and Canadian shareholders, while AngloGold added another week to its offer in hopes of grabbing more than 6.5%. Franco-Nevada has agreed to merge with Newmont so long as the company first acquires more than half of Normandy.

Inmet Mining rose 30 to $3.60, only to rise another 88 by presstime. At the period’s end, the producer announced it had won a legal battle with Homestake Mining over the latter’s failure to purchase its Troilus mine in Quebec. In 1997, Homestake agreed to buy the mine, only to reneg. The Superior Court of British Columbia awarded Inmet $88.2 million in damages.

The major base metal producers all lost ground: Inco closed down $1.05 to $26.85; Falconbridge, 40 to $16.40; Noranda, 50 to $15.25; and Teck Cominco‘s B-series, 45 to $13.15.

Orvana Minerals was the most active junior, springing 18, or 129%, to 32 on a volume of 6.8 million shares. Orvana closed a US$18-million equity and financing deal with Compania Minera del Sur to advance its Don Mario gold project in Bolivia. Compania Minera is now the company’s single-largest shareholder, with more than half of its outstanding shares.