STOCK MARKETS — Gold and diamonds add lustre to markets

Though not a good week for the base metal miners, our report week was far kinder to the gold and diamond stocks. For example, gold bullion posted a very solid move after drifting sideways for quite some time.

By Oct. 13, the spot price for the yellow metal had retraced its steps, climbing US$13.10 to US$366.60 per oz. Word on the street had it that mega-investor George Soros was again buying gold or its derivatives, such as options. It seems, however, that the street had it wrong. Analysts were saying investment funds were the big buyers.

Of course, the producers wouldn’t care if it were Soros or Tinker Bell or lunar cycles moving the market — just as long as it moves . . . up. So, companies like Agnico Eagle (up $2.38 to $19), American Barrick (up $3.63 to $33.25), Euro Nevada ($1.12 to $31.63), Franco Nevada ($1.86 to $71.50), Placer Dome ($2.86 to $29.75) and Royal Oak (75 cents to $6.25) all benefited from gold’s renewed strength.

Lower-tier types such as Richmont Mines gained 45 cents to $4.40, while Montreal-listed Western Quebec (see front page) actually shed nearly a quarter of its value to $1.60.

Another, more glaring exception to the otherwise rallying gold equities was Lac Minerals. Investors were unimpressed with its deal to buy a huge Chilean copper project (see our report on page 6). Lac and partner Cyprus Minerals are paying $404 million up front plus another $151 million in venture equity plus about $700 million in development costs.

One analyst said it ranks as the costliest Chilean acquisition in recent memory. He estimated Lac and Cyprus paid 10 cents for each pound of copper in reserves. That’s about three times the per-pound price Placer Dome paid for Zeldivar. Lac’s shares were off 63 cents on the week, closing at $10.38. Arimetco International finally regained lost territory, now that all the bad news about cost-cutting, and so on, is behind it. The stock rose 17 cents to close at $1.68.

Another major decliner a few weeks ago has also recovered. Azco Mining gained another 30 cents, closing at $3.75. This is at about the level it was when Magma, a few weeks back, first spooked investors by pulling out of Azco’s Sanchez copper project in Arizona.

Last week, as readers may recall, we reported layoff rumors were making the rounds in the Nickel City. This week, Inco went public (see front page) with its plans to halt production at Sudbury for about two months, beginning this December. In Thompson (Nickel City II), a 4-week shutdown is planned. While this is not the news investors and Inco employees might welcome, it does signal relief for an oversupplied nickel market. Now, of course, the other big players must follow Inco’s lead. If they don’t, look for Inco to change its mind suddenly.

On the lead and zinc side, we’ve got wind of a shutdown planned for Brunswick Mining & Smelting. It would cover the Christmas period, we are told, from late November to early January. We were waiting for confirmation from Brunswick at presstime.

Following last week’s confirmatory check assays of Consolidated Nevada Goldfields’ Nixon Fork high-grade intersections, it seems most of the skeptics have been persuaded otherwise. The stock climbed 60 cents to close at $2.60. It had posted a record 12-month high of $2.95 before profit-takers stepped in.

Finally, on the diamond front, there was very little news, and this seems to have been favorable. For Dia Met, the market leader, jumped $3.87 to $51.25. SouthernEra gained 63 cents to $6.50, while Aber rose a quarter to $3.20.