Toronto Stock Exchange Gold issues gain despite pressure from U.S.

While the mining community was taking a look into the future at this year’s Prospectors and Developers Association Convention in Toronto, the U.S. dollar continued to exert downward pressure on the price of gold. While the dollar rose to a 3-year high against the Japanese yen, gold hovered at just below the US$400- per-oz. mark, closing at US$398.75 today, March 14, on the second London fix.

Under a “no shock” scenario and constant dollar value, the gold price would be expected to average around US$400-20 per oz. this year,” said Tim Petterson, a mining analyst with Metals and Minerals Research Services Ltd., based in London, England.

By no shock scenario, Petterson was excluding the possibility of political and economic upheavals in Eastern Europe and South Africa.

“There is, therefore, considerable scope for upside price potential in the medium term, if fears in any of these areas materialize,” said Petterson, who spoke at the PDAC Convention.

That widely held view may explain why the gold and silver index rose by 0.46% to close at 7173.97 on a day when some of the major gold issues reported significant gains.

American Barrick Resources and Placer Dome both added 13 cents to their share prices closing at $22.63 and $21.36 respectively. Corona A shares also gained 13 cents before closing at $9.88.

However, the current price of the yellow metal will be cause for concern in the executive suites at Northgate Exploration, which is about to begin tuning up its 50% owned Colomac gold mine in the Northwest Territories.

Operated by Northgate affiliate ABM Gold, the planned 200,000- oz.-per-year target needs a gold price of about US$410 per oz. in order to break even. Northgate gave up 25 cents, closing at $7.25.

This week Westmin Resources said it is preparing for a $30-million writedown on the value of its $304-million worth of mining assets. While Westmin hasn’t provided details of what is being written off, the company’s 50.5% owned Premier Gold mine in northern British Columbia is expected to be included.

Developed by Westmin and partners Pioneer Metals and Canacord Resources, the Premier project has proved more expensive than anticipated and it has yet to produce any positive cash flow. The Westmin and Canacord issues were both even today, closing at $7.50 and 42 cents respectively while Pioneer gained 2 cents at 23 cents.

Agnico-Eagle Mines also took a $11.3 writedown on the value of its Cobalt, Ont., silver operations which are uneconomic at current silver prices. A total writeoff of $17.7 million brought Agnico’s annual losses to $13.9 million, and shares of the company dropped by 25 cents before closing at $11.

On a more positive note, Euro- Nevada Mining has been conspicuously active this week which may mean that President Pierre Lassonde is about to make an announcement relating to one of the company’s royalty properties.

They include the North claim block , one mile north of American Barrick’s 207,000-oz.-per-year Goldstrike mine in Nevada’s Carlin gold trend. Recent drilling results on the block included 120 ft. of grade 0.406 oz. gold per ton.

Aur Resources continued to keep itself in the news by announcing it would not be going ahead with a plan to purchase control of Belmoral Mines. Up 25 cents to close at $9.88, the Aur issue is well below its yearly high of $14.63.

With Aur now out of the picture, Belmoral is still saddled with an $8.6-million debt load, most of which comes due within the next two months. While Aur President Jim Gill has offered no particular reason for backing out, shareholders of Glencairn Explorations, for example, already know that Gill doesn’t like to take chances.

By contrast, Audrey Resources President Guy Hebert predicts he will be in a position next week to table an offer for the U.S. and Canadian Mineral assets of Asamera Minerals.

Valued at slightly more than $100 million, they have already proved prohibitively expensive for the likes of Corona which backed out of a similar arrangement last month.

However, Hebert indicated at the PDAC convention that his valuation of the Asamera assets is much lower than $100 million. He is hoping that the acquisition of Asamera’s 51% interest in the Cannon gold mine in Washington State will put Audrey among the 100,000-oz- per-year producers and attract institutional investment.

Shares of Audrey and Asamera both gained 5 cents, but Breakwater Resources, which owns 49% of Cannon, remained steady at $1.86. A 38 cents increase in Inco issue was accompanied by news that drilling is about to resume at the Societe d’Exploration Vior gold property in Casa Berardi, Que.

Two weeks ago, Inco tabled results from two more holes which paled in comparison with the 59-ft. intersection (averaging 0.23 oz. gold) which has attracted investor interest.