Miners wither during earnings season (August 02, 2004)

A sagging gold price pushed the Toronto Stock Exchange’s gold index 9.28 points, or 4.8%, lower to a 2.5-month low of 183.89 during the July 21-27 report period.

The yellow metal retreated US$8.65, to US$389.85 per oz., in the afternoon in London on July 27. The remaining precious metals followed suit, as did most of the base metals. Accordingly, the diversified miners had a sombre week, losing 4.5% to settle at 213.48. Overall, the S&P-TSX composite index shrank by 1.9% to 8,294.37.

Wheaton River Minerals watched nearly 30 million shares make their way 26 lower to $3.23. Shareholders were told to hang on to their shares until the board makes a recommendation on Coeur d’Alene Mines’ takeover bid. Wheaton River says it will not do so until Coeur’s offer is mailed to shareholders in Canada; the offer has so far been sent only to investors south of the border.

Meanwhile, the other half of the ongoing 4-way takeover battle experienced something of a truce, with Iamgold agreeing to let Golden Star Resources have a look at its confidential information — something it had been loath to do. Iamgold says several other interested parties have perused the data. Shares in Iamgold sank 60, to $7.64, while Golden Star lost 48, finishing at $5.25.

Barrick Gold dropped 89, to 25.30. The company’s second-quarter net income slipped 42% to US$34 million on lower gold sales and higher total cash costs. The results take into account a US$26-million charge owing to the delivery of 850,000 oz. of hedged gold at prices below spot. Barrick also approved the US$1.5-billion Pascua-Lama project in Chile and Argentina. The mine is expected to churn out up to 775,000 oz. gold and 30 million oz. silver annually over its first decade; total cash costs are pegged at US$130-140 per oz. The first pour is slated for 2009.

Canada’s remaining gold majors put in similar performances, with Placer Dome losing 94, to $20.50, and Kinross Gold finishing down 35, at $6.96.

Goldcorp‘s second-quarter earnings were nearly halved to US$9.2 million, owing to lower sales. The issue dropped a quarter to $14.85.

Despite a late recovery, QGX ended the period half a buck, or 18.5%, lower at $2.20. QGX says it is unaware of any adverse information to account for its recent drop. The company has agreed to regain an 80% stake in the Shuteen gold-copper prospect from equal partners Ivanhoe Mines and Vancouver-listed Jinshan Gold Mines. QGX must chip in two adjoining properties, spend US$710,000 within two years, and pay Jinshan US$100,000. Shuteen, 120 km northeast of Ivanhoe’s Oyu Tolgoi project in southern Mongolia, is centred on a large hydrothermal system. Limited drilling has failed to cut any significant mineralization. Ivanhoe ended at $5.83, off 87 from its previous close.

Sale rumours kept Noranda‘s shares on investors’ radar screens: more than 6 million shares fell $1.30 lower to $22.68. The latest reports have China Minmetals Non-Ferrous Metals Co. outbidding Brazil’s CVRD.