Producers jump with Metal Prices

Higher metal prices and a slew of earnings results pushed resources stocks generally higher over the July 23-29 report period. The gold and precious metals group finished the week 4.79 points ahead, at 178.34, while the diversified mining and metals group ended 5.03 points ahead, at 140.38.

Gold was up US$6.90 in overseas trading, landing at a London morning fix of US$359.10 per oz. on July 30. Following suit were: Kinross Gold, up 12 to $9 on a volume of roughly 22 million shares; Bema Gold, up 19 to $2.28 on 17.2 million shares; Placer Dome, up 51 to $17.45 on 16.9 million shares; and Eldorado Gold, up 6 to $2.83 on 14 million shares. Both Placer and Eldorado also released positive second-quarter earnings results, and the latter continued the celebration by subsequently releasing rosier operating and financial projections at its proposed Kisladag open-pit, heap-leach mine in Turkey.

Meridian Gold, which climbed $1.51 to $18.10, for a gain of 9.1%, was the highest percentage gainer of the group. In early July, the mid-tier producer sold its stake in the Jerritt Canyon mine in Nevada and concurrently announced positive exploration results at its El Peon mine in Chile.

Barrick Gold and producer-hopeful Gabriel Resources were the only losers of the bunch, with the former slipping 47 and the latter, 15. Although the major announced considerable, and unchanged, second-quarter income, comparable cash flow was off 55% at US$66 million. Gabriel has been mute ever since it was forced to cancel a $28-million equity offering after the Romanian Prime Minister reiterated his misgivings about the company’s proposed Rosia Montana open-pit, gold project.

A US24 gain in London spot nickel pushed Inco, the Western World’s largest producer of the metal, up $2.63 to $32.72. Similarly, Falconbridge climbed $1.15 to $19.25 and Sherritt International rose 30 to $4.85.

Teck Cominco, bolstered partly by the stronger metal prices, saw its B-series climb 49 over the period after announcing a 50% increase in second-quarter earnings. The improvement reflects a reduction in the company’s future income tax liability, though counteracting that was the appreciation of the Canadian dollar against the U.S. greenback.

Noranda and Cameco were the only ones in the sub-group to fall in value. The former sank $1.39 on news of having lost $15 million in the recent quarter and of having begun a restructuring program aimed at cleaning up its balance sheet. Among other things, the major will issue $500 million worth of new equity and reduce future quarterly dividend payments to 12 per share. Cameco, which slipped 9, said its 31.6%-stake in the Bruce Power Limited Partnership will contribute $11 million to second-quarter earnings.