MINING MARKETS & INVESTMENT NEWS — EASTERN MARKETS — UK gold sales scuttle month-long rally

Britain’s central bankers added to gold’s woes during the May 5-11 report period by announcing that they would sell 125 tonnes (4 million oz.) of the country’s 715-tonne gold stockpile during fiscal 1999-2000, with the first of five auctions scheduled for July. The British Treasury said it would sell another 290 tonnes of gold over the medium term.

The announcement surprised the market, which had been watching for signs of potential sales from the International Monetary Fund and the Swiss central bank.

In response to the news from the U.K., gold prices plunged $7.50 over the week to US$278.00 per oz. on the London morning fix of May 12, touching a low of US$276.20 per oz. on that day.

The drop in gold prices predictably hit Canada’s major gold producers, with the Toronto Stock Exchange’s gold and precious minerals index shedding a hefty 682 points, or 10.4%, in the first 15 minutes of the May 7 session. During the report period, the majors lost a significant portion of the gains they’d made over the past month: Barrick Gold was down $2.55 to $28; Placer Dome dropped $2.70 to $18; Kinross Gold was off 2 cents to $3.06; and TVX Gold was off 7 cents to $1.46. Only the more diversified metal producer Cambior bucked the trend, rising 30 cents to hit $5.70.

The rally in base metal stocks also took a breather, with most majors showing declines: Noranda lost 45 cents to fall to $19.10; Rio Algom dropped 45 cents to $19.05; Teck’s B shares slumped $2.10 to close at $12.20; and Cominco fell 55 cents to $23.35. Only Boliden advanced, gaining 44 cents to reach $3.65.

Though nickel prices were buoyant for another week, rising 7 cents to US$2.52 per lb., Inco lost $1.80, slipping to $27.10, while Falconbridge dropped 15 cents to $20.75.

Among the juniors, star performer Namibian Minerals rose 35 cents to $5, as the offshore diamond miner announced the tripling of its measured and indicated resources. In two portions of its Luderitz Bay licence there are now 836,00 carats and 319,000 carats in the measured and indicated categories, respectively.

Toronto-based Rex Diamond Mining was up 15 cents to $2.15. The company, which has two mines in South Africa and exploration ground in Mauritania, has been on a tear since January, when the stock traded near $1.

Sikaman Gold Resources sank 2 cents to 10 cents as 5.5 million shares changed hands. The stock has enjoyed several periods of heavy trading in response to the company’s potential switch to the high-tech and internet-related industries.

Birim Goldfields, also heavily traded, fell 5 cents to 25 cents on news that drilling has resumed at its wholly owned Dunkwa gold property in Ghana.