STOCK MARKETS — Takeover talk kick-starts base metals on TSE

Golds still spiralling down in dull market; base metals hit also The Toronto Stock Exchange was a little higher over the trading period Nov.

26-Dec. 2, largely on the strength of hefty gains in the pipeline and base metal sectors. The TSE 300 composite index added 36.94 points to close 0.6% higher at 6,667.46 points, on moderate to low daily volumes.

The Canadian dollar clawed back up to US70.53cents during the same period, a gain of 34 basis points against the U.S. dollar. It was also stronger against other major foreign currencies, except for the British pound, which continues to rocket. There were no further moves on interest rates by the Bank of Canada, though it and other central banks were believed to be buying Loonies to support the exchange rate.

The London bullion markets saw gold slide even further, with the mid-morning fix price on Dec. 3 at US$291.10 per oz., $5.90 lower than a week before. By teatime, it had actually found some buying support, and rallied to US$293 per oz. The picture was vastly brighter for the other precious metals, with platinum soaring $7 to finish the reporting period at US$387 per oz. Silver added a respectable 8cents to reach US$5.32, and palladium was $1 better at US$208.

The TSE gold and precious minerals sub-index touched 5,559.77 points, another low, and closed at 5,644.06 on Dec. 2. Barrick Gold traded 5.2 million shares and closed 70cents lower at $23.50, and Placer Dome closed at $17.05, also 70cents lower. Among the mid-tier producers, Kinross Gold was 50cents lower at $4.15, Cambior was off $1.05 at $7.10, and Golden Star Resources slid 40cents to $4.15. Agnico-Eagle Mines was virtually alone among the mid-size golds, rising 30cents to close at $7.

Resistance to its Cassandra project in Greece is causing more problems for TVX Gold, which was off 45cents at $3.55 in heavy trading. Local protesters claim the project will cause environmental damage; some protesters have damaged equipment, and recently three police cars were fired on at the site.

The base metals were generally lower on the London Metal Exchange during the report period. Nickel was hit hardest, losing 14cents to finish at US$2.66 per lb. Copper also fell sharply, and was 3cents lower at US82cents per lb.

Zinc was 1cents lower at US50cents, and both lead and aluminum were fractionally lower.

Takeover talk fuelled the metals and minerals sub-group, lifting it 134.83 points to 4,005.47, a gain of 3.4% over the five trading days. Westmin Resources was the most active issue, with 12.5 million shares moving; it slid 15cents to $5.75. Boliden, up 10cents at $4.15, has bid $5.40 for the outstanding shares of Westmin, which sent the Vancouver-based company as high as $6.05 in the previous reporting period. No other bidders have yet emerged.

Boliden’s bid for Westmin has highlighted the attractiveness of some middle-sized base metal producers as takeover targets. Aur Resources, another base metal producer about the same size as Westmin, rose 30cents to $4.

Also the subject of takeover rumors, Inco added $2.30 to close at $27.20, having touched $29.05 during the trading period. Possible suitors include Rio Tinto, Billiton and Minorco; Noranda, which was up $1.20 at $25, has also been mentioned as a possible buyer, would have to bid past the high exchange rate between the Canadian and U.S. dollars. A bid from Noranda, which holds 46% of major nickel producer Falconbridge, could also provoke resistance from anti-combines regulators. Falco added 25cents to close at $18.25.