Resource stocks fail to ride broad market wave

The March 22-28 report period proved to be a volatile one, with the Toronto Stock Exchange 300 index passing the 10,000 mark for the first time ever on March 23 — only to slip to 9,922.85 by the week’s end as profit-takers grabbed hold of the reins. Nevertheless, the broad market gained 271.45 points, or 2.8%, over the five trading days.

The gold and precious minerals sub-index plunged a whopping 308.14 points to 4,039.50, partly fueled by rumours that France’s central bank may begin selling some of its reserves. Though French government officials quickly quashed the speculation, gold was unable to recover from the psychological blow, falling $10.30 to a London fix of US$279.10 per oz. on the morning of March 29.

Canada’s major producers paralleled the yellow metal’s performance: Barrick Gold dropped $1.60 to $23.60 and Placer Dome fell $1.15 to $12. Kinross Gold, which slipped 19 to $2.28, is set to begin a 9,000-metre drill program aimed at expanding one of six gold deposits making up the George Lake project of Wheaton River Minerals. Wheaton River closed down 6 at 48.

Diamond producer Namibian Minerals lost 60 to end the week at $7.40. Ironically, the ocean miner’s decline followed its announcement that subsidiary Ocean Diamond Mining produced 30% more diamonds in the last two months of 1999 than in the final two months of 1998. The company also stated it had realized US$169 per carat for its aggregate output in the first two months of this year, 8.3% more than in the last quarter of 1999.

The TSE’s metals and minerals sub-index sank 215.99 points to 3,499.67. On the London Metal Exchange this week, nickel eased off 10 to US$4.58 per lb.; copper, 2 to US79 per lb.; and zinc, 1 to US50.

Inco dropped 85 to $25.75, while Falconbridge slipped $1.35 to $20. Faring even worse was Sherritt International, which fell 14 to $3.51, wiping out the gains the issue had made in the previous period.

Rio Algom climbed 10 to $17.85 on unusually large volumes spurred by more speculation about a possible takeover bid. The copper producer called the rumours baseless, after which trading returned to normal levels.

Montreal-listed Freewest Resources sprang out of the penny stock range, jumping 71 to $1.03 to become the highest percentage gainer in eastern markets. The junior has optioned a half-interest in the Bulldozer property, which adjoins the Tyko Lake property in which it can also earn a half-interest. Both are considered highly prospective for base metals plus platinum and palladium, as suggested by high-grade showings of such metals.

Dianor Resources, also listed on the Montreal Exchange, reported encouraging gold intersections from the first three holes drilled at its 1404 project in Quebec’s James Bay region. More results are pending and the company is about to launch a second phase of drilling. Dianor shares have more than doubled since the start of the year; they ended the week up 4 at 45.