MINING MARKETS & INVESTMENT NEWS – EASTERN MARKETS — Pessimisim haunts producers, spooks market

The Toronto Stock Exchange 300 index lost a modest 57.37 points in the report period ended Dec. 7, to end the week at 6,399.77.

The precious metals and minerals sub-group suffered another dismal period, dropping 244.68 points to 6,018.42. Gold was trading at US$293.50 per oz. on the morning of Dec. 9 — a loss of 40 cents. Silver fell 6 cents to US$4.82 per oz., whereas platinum rose $1 to US$350 per oz.

Accordingly, producers of the yellow metal slipped in value: Barrick Gold was off $1.45 to $29.05; Placer Dome was off 85 cents to $21.65; and TVX Gold was down 15 cents to $2.78. The first of those three has tendered a $142-million bid for Vancouver-listed Argentina Gold in an effort to consolidate its land position near their jointly owned Veladero property in northwestern Argentina.

The announcement of US$216 million in writedowns caused a 7 cents decline in the value of Kinross Gold’s shares. Nearly half of the writedown is attributed to the company’s merger with Amax Gold earlier this year. Kinross was off 13 cents for the period, ending at $3.73.

The minerals and metals sub-index finished the period at 3,122.78 — 92.03 points less than a week ago. Copper hit an 11-year low, trading at US67 cents per lb. on the morning of Dec. 9. Nickel was also down, falling 13 cents to US$1.71 per lb., while zinc lost a penny and lead gained two.

Boliden dropped 65 cents to $3.60 on news of a class action suit being filed against it in the British Columbia Supreme Court. Two shareholders are blaming the company for a decline in the value of its shares, ever since a dam broke last April at the Los Frailes mine in Spain. They are seeking between $50 million and $100 million in damages on the grounds that Boliden knew that the dam posed a risk in 1996 and should have disclosed this knowledge in its prospectus.

Inmet dropped 25 cents to $2.75 over the week as the miner announced the closure of its Winston Lake zinc mine on the shores of Lake Superior. From Inmet’s Turkish operations there is mixed news: at the Cayeli copper mine, a 2-month strike by workers has been resolved, while at the stalled Ovacik gold project, Inmet and partner Normandy have been stymied by the Turkish courts and their upholding of a ban on the use of cyanide.

Also suffering declines were: Inco, down $1.10 to $17.15; Falconbridge, down 80 cents to $16.80; and Rio Algom, down $2.65 to $7.60.

Tenke Mining dropped 8 cents to a new low of just 26 cents. The company’s prime base metal assets in the Democratic Republic of Congo remain in limbo due to the seemingly never-ending civil war in that country. The issue traded as high as $3 in May and $6 two years ago.