Falling prices hurt big gold producers

The Toronto Stock Exchange recovered strongly over the report period Oct. 18-24, but the mining stocks were largely left in the dust. The TSE 300 composite index closed at 10,352.10 points, up 219.54 points, or 2.2%, as both the mining sub-groups slid.

The worst performance came from the golds, as the yellow metal was fixed at US$269.30 per oz. on the mmorning of Oct. 25, off US$3.70 for the five trading days. The gold and precious minerals sub-index fell 93.22 points to close at 3,505.70.

The big golds were down significantly: Barrick Gold fell $1.05 to close at $19.20, and Placer Dome, 85 to close at $11.40. Among the smaller producers, Kinross Gold slid 3 to close at 67, Agnico Eagle Mines was off 65 to finish at $7.55, and Pan American Silver closed at $4.40, down 25. Some of the mid-tier golds resisted the wave, with Echo Bay Mines adding 13 to close at $1.05 and TVX Gold up 32 to $2.47.

The diamond issues in the sub-group fared better, with Aber Diamond picking up 65 to finish at $13.25 and Namibian Minerals adding 45 to run up to $3. Only Dia Met Minerals fell; its A-series shares were down 50 at $21, while its Bs slipped 70 at $22.30. Dia Met had run up strongly, following the announcement that the company’s two major shareholders were ready to cash out, but there was no immediate sign of a takeover offer.

In the base metal markets, nickel took a US35 hit over the report period, finishing at a London official price of US$3.29 per lb. on the morning of Oct. 25. Copper was lower, too, sliding US3 to US85, and zinc was off US2 at US48.

The metals and minerals sub-index lost 45.96 points over the same stretch, finishing at 3,328.30 on Oct. 24. Alcan was the culprit, sliding $1.65 to finish at $45.35; most of the other big metal producers gained modestly. Inco was up 60 at $22.35 after releasing quarterly earnings figures of US37 per share, and Falconbridge was 45 higher at $16.30 as it announced quarterly earnings of 50 per share.

Cominco, though it announced earnings of 56 per share, was unchanged at $18, while parent Teck also reported higher earnings of 22 a share. Teck’s B-series issue added 50 to close at $10.30, and the A-series was up 25 at $11.

Sherritt International closed down 1 at $4.65 on news of having pocketed fewer profits in the third quarter than in the second. Revenue also dropped between quarters, to $110 million from $140 million.

Among juniors, Queenston Mining and Thundermin Resources announced preliminary results of an ongoing feasibility study at their Duck Pond copper-zinc project in Newfoundland. Consultants MRDI Canada predict the deposit could support annual production of 67,000 tonnes of copper concentrate and 50,000 tonnes of zinc concentrate over 10 years. The economic viability of producing a lead concentrate has not yet been determined. Queenston rose 2 to 40 while Thundermin jumped 9 to 27.

Globex Mining Enterprises was up 15 at 40. The company started drilling on its Lyndhurst property, north of Rouyn-Noranda, Que., in September. A November 1998 drill hole intersected two zones of massive sulphide mineralization.

Losing ground on the junior boards was Etruscan Resources, which fell 13 to close at 22. The company announced that it had agreed to a merger with CDNX-listed Mountain Lake Resources, which was off 3 at 19. Nord Pacific fell 35 to close at 30, but in light trading with a wide spread between bids and asks.