Golds and base metal miners down in slow market

The Toronto Stock Exchange fell slightly during the report period June 23-28, with the TSX Composite index giving up 48.79 points to finish at 8,468.87.

Both the mining sectors fell harder than the broad market, with the TSX gold index off 2.83 points to 198.63 and the metals and mining index falling 3.90 to 225.25.

Defiantly focused on silver, Vancouver-based Pan American Silver sold a package of gold-oriented surface properties and mineral rights in the vicinity of its aging Quiruvilca silver-zinc mine in Peru to Barrick Gold for US$3.6 million. Pan American will direct the proceeds toward reclamation costs at Quiruvilca, which is less than 15 km from Barrick’s extraordinary Alto Chicama gold discovery. Pan American closed the period down 11, to $17.48, while Barrick rose 8 to $26.83.

Spunky Bema Gold was unchanged at $3.71 even after releasing more stellar drill results from its Kupol gold projet in Russia’s Chukotka region. One hole, KP04-158, cut 13 true metres of 55.82 grams gold and 727.3 grams silver at a depth of 133 metres. The company has so far poked 49 holes totalling 9,000 metres into a key epithermal vein that has been traced for 3.5 km along strike and to a depth of 400 metres.

After the close on June 28, Golden Star Resources upped its hostile bid for Iamgold, offering either 1.25 Golden Star shares per Iamgold share, or 1.15 Golden Star shares plus 50 cash per Iamgold share (with a maximum cash outlay of US$56 million). Golden Star will pay a further 20 in cash per Iamgold share if no break fee is paid or payable to Wheaton River Minerals. The latest offer represents a 23% premium on Iamgold’s shares as they were valued on May 27, prior to Golden Star’s initial proposal. Over the period, Golden Star advanced 11 to $6.33, Iamgold slipped 17 to $7.46, and Wheaton fell 13 to $3.76.

After the June 28 market close, Inmet Mining and Aur Resources announced they had cancelled their May 4 merger deal by mutual consent. That deal, which would have created a new company named Aur Mining, owned 55% by Inmet shareholders, was to have been voted on at shareholder meetings on July 30. Inmet closed at $17.81, down 4, and Aur at $6.48, down 2.

Both companies said due diligence investigations had not unearthed any technical or financial surprises, and that the two companies remained on good terms. Neither was supposed to be looking at other deals during the period leading up to the merger votes, but there is ample evidence now that some assets in the copper business are in play.

Noranda was off 62 at $23.40. Carlos Lessa, president of Brazil’s state development bank, Banco Nacional de Desenvolvimento Economico e Social, said Brazilian mining giant Companhia Vale do Rio Doce, in which the bank is a major shareholder, would be neutral in a planned vote on whether to acquire some of Noranda’s copper-smelting assets.