Base metals show gains in week of volatile trading

The Toronto Stock Exchange was quiet over the report period June 21-27, with the TSE 300 composite index sliding 74.37 points to close at 10,165.51, a modest loss of 0.7% of value. Still, the mining stocks were more volatile than the broader market, with the base metals making gains while the golds dropped.

Precious metal prices were little-changed over the period, except for a US$36 fall in the price of palladium to US$650 per oz. Gold was fixed at US$286.35 on the morning of June 28, down only 25 from the previous week, but a price rally later in the day saw the yellow metal move past US$292 in New York trading, spurred by an announcement that the U.S. Federal Reserve Board would be maintaining its current interest rate.

The rally came too late to affect TSE gold issues, which closed June 27 at 4,374.50, down 64.34 points or 1.4% of value. Placer Dome, the subject of merger rumours for two weeks, was the most active gold on the board over the five trading days. The gold miner saw 4.6 million shares move, and clawed up 15 to close at $13.75. Barrick Gold was almost as heavily traded, though it slipped 50 to close at $26.05, perhaps on speculation that it would be the buyer, not the seller, in any new move in the gold industry’s consolidation dance.

Two other golds saw good volume, but both were weaker: Kinross Gold was 8 lower at $1.32 and Franco-Nevada Mining was down $1.15 at $16.65. Several of the mid-tier producers saw strong gains, with Agnico-Eagle Mines up 30 at $9.20 and Meridian Gold up by the same amount to $8.90.

Base metal prices firmed modestly over the report period, with nickel recovering from the previous week’s bear selling to finish 9 higher at US$3.60 per lb. Copper, which benefited from more warehouse clearing over the same period, was up 1 to US81, and zinc was also a penny higher, at US52.

The TSE base metals responded to the stronger outlook by rising 58.34 points to 3,381.26 — a gain of 1.8% on the period. Alcan was the most active of the issues, with 3.4 million shares traded; it rose $1 to finish at $46.50. All three nickel producers were up, with Inco adding $1.35 to close at $23.60, Falconbridge tacking on 60 to close at $19, and Sherritt International up 40 at $4.60. The two big losers were Noranda, which fell 25 to close at $14.40, and Cominco, which was off $1.10 at $20.40.

In the junior market, partners Miramar Mining and Cambiex Exploration announced that drilling has confirmed a third zone of gold mineralization at their Hope Bay project in Nunavut. Known as Doris Central, the zone returned between 5 and 110 grams per tonne over true widths of 0.5-8.4 metres. Some of the better intersections rang in at 64 grams over 7.3 metres and 47.6 grams over 2.8 metres. Cambiex rose 2 to 42, whereas Miramar closed down 5 at 88.