MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — Gold sub-index gains despite metal’s retreat

The Oct. 21-27 report period saw a cooling-off in the autumn rally in gold and gold stocks, with the yellow metal sliding back $3.15 to US$293.75 per oz. on the London morning fix of Oct. 28. Nonetheless, the TSE’s gold and precious minerals sub-index rose 0.3% to 6,518.69 points while the TSE 300 composite advanced further, moving up 2.1% to 5,996.78 points.

Canada’s major gold miners were a mixed bag. On the back of strong quarterly results, Barrick was up 25 cents to $32.15, while Placer Dome rose 60 cents to $22.50. Going the other way were: Kinross Gold, sliding 2 cents to hit $3.86; Prime Resources Group, dropping 75 cents to $12.85; and Cambior, losing 42 cents to close at $7.23. Franco-Nevada Mining gained 35 cents to reach $30.35, while sister company Euro-Nevada Mining slipped 20 cents to $24.05.

Still reeling from its recent courtroom loss of 12% of its Kassandra gold project in Greece, TVX Gold suffered another blow, from the surprise resignation of President Davis Murray, who will stay on for another six months in a consultancy role. On the positive side, TVX has released bankable feasibility studies at Kassandra, showing internal rates-of-return of 8.3% for Olympias and 13.6% for Skouries using recent metal prices. For the week, TVX slipped 24 cents to $2.93.

All the base metal producers suffered. Inco lost $1.70 to $16.35; Falconbridge dropped 70 cents to $16; Noranda was off 30 cents to $22.55; Teck’s B shares retreated 60 cents to $11.80; and Rio Algom was down 70 cents to $20.10.

With weak prices for precious and base metals dominating the news, there has been little attention directed towards the sorry state of the uranium market. While most producers are partially protected from price swings by long-term contracts with power-generating companies, the uranium spot price remains a bell-wether statistic for the industry. The current spot price of just US$9.25 per lb. U3O8 represents a US$7 drop since early 1996 and is the lowest spot price seen since 1994. The newly elected leftist government of Germany has only exacerbated the situation by proposing to phase out the country’s 20 nuclear reactors.

The world’s largest publicly traded uranium miner, Canada’s Cameco, dropped $1.65 over the week to close at $26.75, down from a 52-week high of $55. Cameco still had reason to celebrate, having produced the one-millionth ounce of gold from its Kumtor mine in Kyrgyzstan.

Among the juniors, Aurado Exploration jumped 6 cents over the week to end at 19 cents on heavy trading as the junior reported on geophysical work carried out at its copper properties in Mexico’s Zacatecas and San Luis Potosi states. Aurado has entered into an option agreement on the property with a Cominco subsidiary, which is serving as operator.