MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — Gold producers shine despite market doldrums

The Toronto Stock Exchange 300 index plummeted 261.67 points to 6,256.01 during the report period Aug. 19-25, effectively wiping out all that was gained in the previous period.

While the market started the period on a positive note, it was quickly pounded by lower-than-expected quarterly profits from one of Canada’s leading banks. Any chance for recovery was thwarted later in the week, when Russian President Boris Yeltsin sent world markets on a tailspin by firing his entire cabinet once again. Yeltsin’s action follows the ruble’s devaluation in the previous period and may exacerbate the country’s finanical situation.

The metals and minerals sub-group was down 117.54 points, or 5.9%, finishing the period at 2,835.69. As in the previous period, copper, lead and zinc remained virtually unchanged, though nickel edged ahead 2 cents to regain half of what it lost in the previous period.

Among base metal producers, Falconbridge lost $1.75 to land at $13.20, while rival Inco fell 40 cents to $15.10. Also down were Noranda, which declined 45 cents to $20.05, and Rio Algom, which plunged $1.65 to $20.

Gold prices were down $3.25 on the London Metal Exchange, closing at US$282.50 per oz. on the morning of Aug. 26. Silver slipped 13 cents to US$4.97 per oz., while platinum dropped $8 to US$361 per oz. Surprisingly, the precious metals sub-index managed to stay afloat at 5,117.06, a gain of 16.61 points.

Producers that increased in value during the period include: Barrick Gold, up 20 cents to $24.55; TVX Gold, up 17 cents to $2.62; and Kinross Gold, up 40 cents to $3.96. Placer Dome suffered a mild loss of 5 cents, ending at $15.45.

Euro-Nevada Mining was up 95 cents to $16.75. The royalty company recently announced lower quarterly earnings but predicted better times ahead when the low-cost Ken Snyder mine in Nevada enters production and higher royalties are received from increased output at Barrick’s Meikle mine, in the same state.

LionOre Mining rose 6 cents to 48 cents on trading of 3.3 million shares. The junior nickel and gold producer reported a strong second quarter in which profits were increased dramatically and debt was reduced. Of note, the company increased production at its Bounty gold mine in Australia by 18% to 34,083 oz., while decreasing its cash costs by 11% to US$235 per oz.

News of a temporary suspension at Breakwater Resources’ El Toqui zinc mine in Chile does not appear to be sitting well with market-watchers — the company was devalued 17 cents to $1.11. Production will be halted in early September for three months to allow the company to implement an optimization and development plan, which is expected to lower operating costs to 45 cents per lb. zinc (so far this year, operating costs have averaged 55 cents per lb.).