MINING MARKETS & INVESTMENT NEWS – EASTERN MARKETS — TSE cushioned by merger mania, producers take cover

Gold producers, base-metal companies edge downward in lacklustre week The Toronto Stock Exchange 300 index fell 113.13 points during the report period Nov. 25-Dec. 1, ending the week at 6,457.14. Trading was initially light but picked up steam in the second half of the period on news of gigantic merger in the petroleum industry.

Gold stocks took a turn for the worse, with investors reaming nearly every company associated with the yellow metal. The gold and precious metals sub-group was deflated by a phenomenal 472.1 points, or 7%, to end the period at 6,263.1.

Gold was trading at US$293.90 per oz. on the morning of Dec. 2., showing a loss of $2.30 per oz. from the previous report period. Silver slipped 4 cents to US$4.88 per oz., while platinum rose $3.50 to US$349 per oz.

Among producers, Barrick Gold plummeted $2.50 to $30.50. Also suffering sharp declines were: Agnico-Eagle Mines, off 75 cents to $6.85; TVX Gold, which slipped 21 cents to $2.93; and Kinross Gold, down 39 cents to $3.86.

Placer Dome was unable to steer clear of a selling frenzy: 8.4 million of its shares passed hands, making it the highest volume traded. The company announced a colossal deal with Western Areas that would see its reserves double and place its firmly in the lucrative Witswatersrand Basin. Also falling on high volumes was Euro-Nevada Mining, down 80 cents to $24, and sister company Franco-Nevada Mining, down 75 cents to $29.

Unlike their peers, junior producers High River Gold and River Gold each managed to rise during the period. Both were among the few companies to have posted third-quarter profits, reflecting higher production and lower costs at their respective mines. High River edged ahead 3 cents to 65 cents, while River Gold climbed an impressive 15 cents to $4.05.

The metals and minerals index was off 216.67 points to 3,214.81, a slump of 6.3%, as copper slid 2 cents and nickel 1 cents per lb. on the London Metal Exchange. Inco, the most active of the base metals, was 85 cents lower at $18.25 on a volume of 2.4 million shares, and nickel rival Falconbridge was $1 lower, having closed at $17.60. Almost as active was Noranda, which lost $2.60 to close at $21.30.

New York-listed copper producers had a bad week, as Phelps Dodge fell 81 cents at US$56.38, Cyprus Amax slipped $1 at US$11.19, and Freeport-McMoRan B shares tumbled 82 cents to US$13.06.

Aur Resources fell 35 cents to $2.75, despite reaching a deal with Finnish miner Outokumpu Base Metals to acquire a half-interest in that company’s Zaldivar open-pit copper mine in Chile. The acquisition increases five-fold Aur’s copper reserves, while boosting by 300% its production of the red metal.

Springing up out of nowhere, Kookaburra Resources doubled in value to $1.20 on 5.7 million shares traded — the second-highest volume next to Placer. The company has arranged a private placement of 1 million units, to be sold at 71 cents per unit. A unit consists of one share and one non-transferable warrant, with each warrant entitling the holder to buy an additional share at 71 cents. Kookaburra is exploring for copper and gold in Peru, as well as oil and gas in Western Canada.