Gold stocks shine as yellow metal rallies

The holiday-shortened report period of May 15-21 clipped 28.6 points off the S&P/TSX composite index, leaving it with a finish of 7,688.31.

Gold led the precious metals in a rally not seen in some time, rising US$10.75 to a London morning fix of US$318.25 on May 22. Silver edged ahead US22 to US$4.82 per oz.; platinum, $4 to US$541 per oz.; and palladium, $6 to US$364 per oz.

In step with the yellow metal, the gold index tacked on 23.5 points to end the period at 219.18. Once again, Kinross Gold was the most active among Canada’s major producers, rising 79 to $3.83 on a volume of 20.8 million shares. Barrick Gold rose $2.33 to $34.90 and Placer Dome climbed $1.71 to $20.81.

Among the mid-tier producers, Meridian Gold soared $3.34 to $27.90, Goldcorp leapt $2.71 to $16.89, and Agnico-Eagle Mines jumped $2.41 to $25.37. On May 17, Goldcorp shares began trading on a split basis.

Eldorado Gold Mines was the most active among the junior producers, ascending 24 to $1.31 on a volume of 12.8 million shares. Next came Echo Bay Mines, which climbed 35 to $1.40 on 11.1 million shares, and then TVX Gold, which rose 23 to $1.66 on 10.9 million shares.

An unlikely bet as most-active trader among the base metals was LionOre Mining, which added 21 to finish at $4.08 on a volume of 2.7 million shares. It recently completed a warrant offering that netted $100 million to cover the acquisition of Anglo American’s 43% share in Botswana-based nickel miner Tati Nickel.

Rumours were swirling (again) about a deal between Inco and the Newfoundland government that would allow construction to start on the stalled Voisey’s Bay nickel project in Labrador. Both parties are still tight-lipped, which, given their volubility at times when no progress was being made, could be a sign of something brewing. Inco, which fell 80 to close at $32.40, was the subject of a more substantial rumour than the Voisey’s noise: Japanese industrial conglomerate Sumitomo told financial newspaper Nihon Keizai Shimbun that it was in talks to take up a 25% interest in Inco’s Goro nickel laterite project in New Caledonia. Presumably, that interest would include the 15% held by French state agency Bureau de rcherches gologiques et minires, which has been looking to turn its minority share into cash.

It was generally the smaller base-metal companies that gained ground, with Sherritt International up 21 to close at $5.06, Aur Resources 2 higher at $4.22, and Cameco adding 70 to finish at $44.05. Noranda was down 90 at $18.65 and stablemate Falconbridge slid 93 to close at $18.72.

Among juniors, Corner Bay Silver jumped $1.97 to $6 on news of a takeover offer from Pan American Silver, which also jumped on the news, hitting $11.33 to set a new 52-week high.