Gold miners eye construction costs

Gold’s ascent levelled off during the March 24-30 report period, with the yellow metal adding US$4.75 per oz. to end at US$420 per oz.

Platinum, US$27 lower at US$890 per oz., led the remaining precious metals in a southerly direction. The Toronto Stock Exchange’s gold index finished five points higher at 226.79. The diversified crowd managed an 8.03-point gain to 221.69, as the rising copper price helped offset the effects of sinking nickel. In the end, the S&P-TSX Composite Index was 201.44 points, or 2.4%, higher at 8,622.24.

Barrick Gold gained steam toward the end of the period, fuelled by renewed rumours of an impending takeover bid by Newmont Mining. Barrick grabbed $1.22 to reach a year-high of $30.88. Canada’s remaining major gold producers followed suit: Placer Dome gained 58 to $23.38, while Kinross Gold ended 34 richer at $9.40.

Mid-tier hopeful Eldorado Gold fell steadily over the report period to finish 30 lower at $3.57. The company has warned that construction and operating costs at its Kisladag gold project in Turkey will climb as a result of changes in that country’s tax regime. An updated feasibility study is due in May.

Miramar Mining says construction costs at its Hope Bay gold project in Nunavut are unlikely to suffer a similar fate since the Doris North deposit is shielded from increased commodity and labour costs, owing to its shallow, high-grade nature. Elsewhere in Nunavut, Cumberland Resources reports that estimated capital costs at its Meadowbank project have soared on higher costs. Miramar lost three pennies to $2.35, while Cumberland regained 18 to hit $2.48.

Vancouver-listed Vannessa Ventures tried to throw a monkey wrench into Crystallex International‘s construction schedule at Las Cristinas in Venezuela by applying for an injunction to prevent the gold project from being “further encumbered financially or contractually.” Crystallex recently awarded the mine construction contract to SNC-Lavalin. Crystallex dropped 27 to $3.83.

Worse still was news of another fatality at Agnico-Eagle Mines‘ LaRonde gold mine in Quebec. The shares survived a late-period hit to finish $1.01 better at $19.57. It is the second fatality at LaRonde in as many months.

Bema Gold finished 22 poorer at $4.65 after posting a fourth-quarter loss of US$21.5 million. Higher-than-expected costs at the Petrex mines in South Africa are partly to blame.

After a slow start, NovaGold added 46 to reach $6.41. The company plans to acquire the 44% of SpectrumGold it does not already own, offering shareholders one of its own shares for every 1.35 SpectrumGold shares tendered. SpectrumGold was formed last year to hold all of NovaGold’s Yukon exploration properties, along with Quest Capital’s mineral assets in the Yukon and British Columbia. Shares in SpectrumGold jumped $1.24, or 38%, to an all-time high of $4.54.