TSX rides the consolidation wave

Consolidation continued to be the buzzword among the Toronto Stock Exchange’s miners during the Oct. 25-31 report period. Barrick Gold stole the show, launching a US$9.2-billion hostile takeover bid for rival Placer Dome. The deal would leapfrog Barrick past Newmont Mining to become the world’s largest bullion producer. Placer soared $4.35, or 23% to $23.33 on more than 26 million shares, while around 16.7 million Barrick shares fell $1.88 to $29.65. For its part, Newmont slipped $3.08 to $50.49.

Goldcorp tagged along, advancing 73, or 3.2%, to $23.76 on around 13.7 million shares. As part of Barrick’s bid, Goldcorp has agreed to buy several of Placer’s assets, including the Campbell mine, which is adjacent to Goldcorp’s Red Lake mine in northwestern Ontario. Goldcorp will pay US$1.35 billion in cash.

Canada’s other major gold producer, Kinross Gold, was in the thick of the action gaining 18 to $8.21 on almost 20 million shares. Kinross finally restated its 2003 earnings to reflect a US$400.1-million impairment related to its accounting treatment of the acquisition of TVX Gold and Echo Bay Mines in 2003. In the end, the review turned a US$19.7-million profit into a US$406-million loss.

Bema Gold finished among the big boys with 17.6 million shares trading their way 29 north to $2.97. Placer recently said it would sell its stake in the mothballed Cerro Casale copper-gold project in Chile to minority partners Bema and Venture exchange-listed Arizona Star Resources for around US$80 million in contingent payments.

All of the action among the gold miners was accompanied by a US$4.65-per-oz. rise in the price of gold to US$470.75 per oz. in London on the afternoon of Oct. 31. The yellow metal promptly dropped off the cliff, ending the Nov. 1 session US$11.25 cheaper at $459.50. The TSX’s gold index regained 7.81 points to 213.93.

Canada’s other proposed newlyweds Inco and Falconbridge went in separate directions: Inco lost 62 to $47.36 as Falco gained 59 to make $33.14. Inco is offering $34 in cash or 0.6713 of one of its own shares accompanied, fittingly, by a nickel for each of its cross-town rival’s outstanding shares. Inco’s recent third quarter net earnings were more than halved to US$62 million, while Falco saw its earnings jump 81% to US$214 million.

As a whole, the base metal miners regained 2.43 points to hit 348.57. The base metals themselves ended mixed; nickel regained its footing to end at US$11,950 per tonne.

Returning to the chapel, Guinor Gold managed to grab the final spot on the TSX’s most-traded miner list, with just under 9 million shares trading a penny higher to $1.39. Guinor is the subject of a friendly US$328-million takeover bid from Crew Gold. Crew finished 15 to the good at $1.61.

On the PGM watch, North American Palladium led all percentage gainers, jumping $1.79, or 30% to 7.65. The company recently agreed to take up to a 60% interest in South African-based Gold Fields’ Arctic Platinum project by spending US$57.5 million in all. Meanwhile, some high-grade values from the Akanani platinum project on the northern limb of South Africa’s Bushveld complex sent shares in AfriOre rocketing 44, or 29.3% higher to $1.94.