STOCK MARKETS — TSE shows small gain, gold price rises

A flurry of buying in the domestic bill and bond markets helped the Toronto Stock Exchange post a modest gain for the 5-day report period ended Aug. 23 The composite 300 index edged upwards by 8.89 points to end the period at 4,211.68.

The equity market rally also paved the way for a 21-basis-point drop in the Bank of Canada rate to 5.72%. This week’s drop almost wipes out last week’s 23-point rise, which came in anticipation of the recent one-half-percent increase in the U.S. Federal Reserve Board rate.

The Canadian dollar ended the week at US72.61 cents, up a twentieth of a cent from the previous week.

The yellow metal also gained ground, with the London afternoon gold fix on Aug. 24 set at US$383.90 per oz., up US$6.70 from a week ago. Interest in the battle for control of Lac Minerals came to a head during the week as main rivals made changes to their respective bids. Royal Oak Mines announced it would extend its bid until Sept. 6, just as its second deadline passed.

At presstime, Aug. 24, American Barrick announced it had signed an agreement with Lac whereby it would increase and extend its bid until Sept. 6. Lac’s board of directors said it will recommend that shareholders accept Barrick’s bid and that it will co-operate with Barrick to implement the transaction. Barrick’s offer now stands at either $5 in cash and 0.325 Barrick shares or 0.487 shares, worth about $14.80. Royal Oak’s offer of either $5 in cash and 2 Royal Oak shares or 2.87 shares is worth about $15.50.

At presstime, Barrick shares were trading at $29.75, Lac shares were at $14.25 and Royal Oak’s were at $5.75.

Two other potential candidates for control of Lac, TVX Gold and Kinross Gold, remained quiet. Last week, TVX announced it was no longer interested in pursuing discussions of a business combination with Lac. TVX was unchanged, closing at $7.50, while Kinross gained 38 cents to end at $5.75. Other senior gold producers were up on the week, with Placer Dome gaining 75 cents to $27.88, Echo Bay Mines adding 38 cents to $15.50 and Hemlo Gold Mines tacking on 38 cents to close at $13.25.

News that the Quebrada Blanca copper mine in northern Chile is completing its startup phase did nothing to help the share prices of mine owners Teck and Cominco. Teck B shares lost 13 cents to $22.25, while Cominco lost 50 cents to close at $21.50. At full production, the mine is expected to produce 75,000 tonnes of high-grade cathode copper annually, using bacterial heap leaching and solvent extraction-electrowinning.

The state government of Sinaloa, Mexico, has agreed to provide the required infrastructure to support Exall Resources’ Santo Tomas copper-gold-silver project. Estimates are that the value added could exceed US$25 million and significantly enhance the economics of the proposed 120,000-tonne-per-day mine. Exall lost a dime to close at $1.20.

The selloff of North American diamond stocks continued for the third consecutive week. Aber Resources was the big loser, plunging $1.50 to $7.50, while the A and B shares of Dia Met Minerals dropped 75 cents to $17 and 25 cents to $18.25, respectively. Ashton Mining Canada lost 15 cents to close at $1.55 and shares of SouthernEra Resources fell to a new 52-week low of $1.80 before closing at $2.05, off 85 cents on the week.

The erosion in SouthernEra’s share price comes after the announcement that it, together with partners Beckleigh Investments and VSE-listed Leicester Diamond Mines, had decided not to exercise its option on the Leicester kimberlite pipe in Kimberley, South Africa.

Diamond Fields’ shareholders reacted favorably to news that BHP Minerals and Benguela Concessions had signed a deal to earn a 50.1% interest in the company’s Luderitz concession off the west coast of Namibia.