MINING MARKETS & INVESTMENT NEWS – EASTERN MARKETS — Spot nickel soars as base metal miners rally

World markets were jittery during the Jan. 6-12 report period, owing to concern over the economic health of Brazil. Capital fled out the Latin American powerhouse — including US$1 billion on Jan. 12 alone — as international investors showed growing skepticism over the viability of recent economic reforms there. Speculation grew that Brazil would be forced to accelerate the rate at which the real depreciates versus the US dollar. The crisis was kicked off a week earlier when the Minas Gerais state governor announced a moratorium on debt payments to the central government.

Gold had a roller-coaster week, quickly gaining $4 to rise above US$291 per oz. before slipping back to US$288.20 on the London morning fix of Jan. 13, up $1.05 for the week.

With gold’s volatility, Canada’s major gold miners saw heavy trading through the week: Volume-leader Placer Dome rose $1.30 to $18.75; Barrick Gold was up $1.60 to $31.20; Kinross Gold eased up 4 cents to hit $3.60; TVX Gold gained 9 cents to reach $2.79; Franco-Nevada Mining lost 55 cents to drop to $29.75; and Euro-Nevada Mining shed 45 cents to reach $24.80.

Sutton Resources jumped 85 cents to $7.50 on news that development has resumed at its 45%-complete Bulyanhulu gold project in Tanzania. Standard Bank London will underwrite US$40 million of the remaining development costs and arrange for another US$90 million. A feasibility study concluded that Bulyanhulu could produce more than 300,000 oz. gold per year at a capital cost of US$211 million.

A proposed merger between Rayrock Resources and Viceroy Resources pushed the former up 65 cents to $6.65 while depressing the latter 15 cents to $2.30. The offer is valued at $146.8 million and is a 5.3% premium over a previous one made by Glamis Gold, which finished the period 34 cents higher, at $3.05. Glamis, which appears to have been left at the altar, will now refocus on its Central American projects.

Nickel prices gained a stunning 29 cents over the week, reaching US$2.09 per lb. on renewed hopes that the economies of Southeast Asia might once again be on the upswing. Nickel miners basked in the good news and recorded major gains in the price of their shares: Inco soared $1.80 to $19.10; Falconbridge rocketed $1.45 to $18.65; and Sherritt International rose 19 cents to $3.19.

Among the other base metal miners, Noranda rose 95 cents to $17.70; Teck’s B shares climbed $1.05 to $12.60; and Rio Algom gained $1 to hit $17.50.

Among the juniors, Messina Diamond fell ever closer to oblivion, dropping 3 cents to 2 cents, down from a peak of $1.20 nearly one year ago. This past week saw the junior fail to sell one of its South African diamond mines in order to keep another afloat and repay outstanding debts.