Miners help clear Nortel landslide

After being blindsided by an accounting scandal at Nortel Networks, the S&P-TSX composite index recovered to end the April 28-May 4 report period 221.05 points higher at 8,455.85.

The diversified miners chipped in a 12.44-point gain to the recovery effort, ending at 206.75 even as metal prices finished lower across the board. Period-ending news that the U.S. Federal Reserve left key short-term interest rates unchanged sent the greenback lower and the gold price US$4.10 higher to US$391.50 per oz. in New York on May 4. The gold index was swept 12.06 points higher to 195.90.

Heavy trading at period’s end saw shares in McWatters Mining halved to a penny. McWatters’ fire sale continued during the period with the company agreeing to sell its suspended Sigma-Lamaque complex in Val d’Or, Que. to Margaret Kent-led Century Mining for $25.9 million.

Also making news was Nevsun Resources, which slipped 36 to $3.70. The British Columbia Securities Commission has advised the company that all substantive mining technical disclosure issues, particularly those affecting its Tabakoto and Segala properties, have been resolved. The required revisions have not resulted in any changes to previously announced reserves or resources. Nevsun will be removed from the commission’s default issuer list once the revised technical reports are filed.

Manhattan Minerals dipped as much as 20% mid-period but recovered to finish off 2, or 10%, at 18. The company recently posted a net loss of US$60.7 million for 2003, owing to a US$59.2-million writedown of the stalled Tambogrande project in Peru. The company has begun arbitration aimed at reversing government-controlled Centromin Peru’s decision to axe Manhattan’s option to earn a 75% stake in the polymetallic project.

Shares in Western Silver got a late shot in the arm, thanks to encouraging drill results from the Penasco zone on its Penasquito polymetallic project in Mexico. The best interval from 13 holes on Penasco runs 8.4 grams gold over 160 metres. Penasco is about 1.5 km northwest of the Chile Colorado deposit, which an independent prefeasibility study recently concluded can be mined economically to generate an after-tax internal rate of return of 15.3% with payback in almost five years. The company’s issue ended 67 higher at $8 even.

Investors were also impressed with drill results from North Atlantic Nickel. The shares rose 24, or 15%, to $1.84. Highlights from an 11-hole drill program on the Kantela gold project in western Mali include 26 metres grading 5.1 grams gold per tonne and 2 metres of 5.1 grams gold.

Asia Pacific Resources managed to retain some of its late gains to end 1.5 richer at 12.5. Rapidly rising potash prices in South China have improved the economics of the company’s 90%-owned Udon South potash project in Thailand. Since last June, the estimated net present value for its share of cash flow from the project has nearly tripled.