Market unimpressed with US rate cut

In the wake of another cut in U.S. interest rates, investors north of the border knocked 3% off the Toronto broad market during the March 14-20 report period. The sell-off, which suggests that many were expecting more than the 50 basis points offered, left the index 203 points lighter, at 7,756.46.

Gold fell back US$6.21 per oz. to settle at a London morning fix of US$261.50 on March 21. Coupled with the equity selloff, the gold issues lost 282.49 points, to end the period at 4,275.17.

Canada’s major producers of the yellow metal all settled lower: Barrick Gold dropped $1.77 to $23.33; Placer Dome sank $1.57 to $14.19; and Kinross Gold fell 7 to 83. Also down was Franco-Nevada Mining, at $18.40 for a loss of 7.

Mid-tier producers generally fared as poorly as the majors, except Wheaton River Minerals, which rose 4 to 61. Wheaton intends to reduce its board to five members, pending the completion of a private placement of 11 million special warrants priced at 55 apiece. Kerry Knoll and Ian McDonald will retain their seats, and outgoing members Peter Tredger and John Kalmet will retain their management positions.

Eldorado Gold reported a small profit for 2000 but nonetheless fell 4 to 40. The miner cranked out 152,436 oz. gold last year at a total cash cost of US$223 per oz., considerably off from 1999.

Echoing the golds, base metal issues sank 171.21 points to 4,086.22, for a loss of 4% over the report period. Alcan Aluminium took the biggest hit, falling $2.15 on a volume of 5.4 million shares. The issue closed the week at $57.50.

Despite a 9 rise in spot nickel, Inco fell $1.20 to $26.90, Falconbridge dropped $1 to $16.70, and Sheritt International slipped 15 to $4.45. Similarly (despite the fact that zinc rose a penny), Cominco plunged $1.58 to $24.25.

Also suffering losses were: Teck‘s B-series, off 40 at $14.60; Boliden, off 17 at 65; and Noranda off 30 at $16.50. Bucking the trend were mid-tier producers First Quantum Minerals, up 14 to $3.60, and Breakwater Resources, up 2 to $1.22.

Band-Ore Resources was among the few bright spots in eastern junior markets, rising 7 to 64. The company announced the recovery of 5,000 microdiamonds and 65 macros from diatreme breccia boulders at its GQ property, in the Wawa area of northern Ontario.

Another anomaly was Eden Roc Mineral, which rose 28 to 70 after announcing its intention to switch to the meat-packing business. The new strategy will see the junior take over a private Washington company, pending such factors as the raising of US$3 million for working capital.

On the Montreal Exchange, Freewest Resources slipped 3 to 25 despite having reported encouraging drill results from its Clarence Stream gold property in New Brunswick. The shallow program outlined five quartz vein systems carrying up to 23 grams per tonne.