Vancouver Stock Exchange — Placer news has ripple effect

Although the perception of local market direction appeared decidedly positive during the recent Cordilleran Roundup in Vancouver, the resource index managed to slip below the 500 level, off by 12.6 points to 499.76. The composite index fared better during the week ended Feb. 4, finishing up by 11.57 points at 632.37.

Gold continued to show no sign of breaking its trading range, remaining stuck at the US$350-per-oz. level.

The announcement by Placer Dome on the writedown of the Mount Milligan copper-gold porphyry deposit proved damaging for other developing copper-gold projects. Placer noted that the project would produce a positive return based on an estimated cash cost of US$195 per oz. gold (including copper credits), for yearly gold output of about 250,000 oz. However, Placer stated that the return did not justify the estimated $500-600 million capital cost. Taseko Mines, which is managed by the same group which sold the Mount Milligan project to Placer, was hammered by the news. The issue dropped $3.50 a share before rebounding to close at $9.75 for a loss of $2.25 on the week. Taseko has outlined a preliminary reserve of about 600 million tons grading 0.32% copper and 0.016 oz. gold per ton on its Fish Lake project southwest of Williams Lake, B.C. This compares with Placer’s preliminary estimates of minable reserve at Mount Milligan of 313 million tons grading 0.22% copper and 0.013 oz. gold (revised from the pre-purchase estimate of 313 million tons grading 0.20% copper and 0.017 oz. gold).

Taseko is planning further work on the property this year and hopes to sell the project to a major mining company. Proceeds of any sale would be split with part-owner Cominco Ltd., which has the right to receive a maximum of $48 million.

El Condor Resources and St. Philips Resources, 60-40 partners in the South Kemess project in north-central British Columbia, also faced selloffs on the news.

El Condor touched a low of $3.25 before finishing at $3.75 for a loss of 45 cents, while St. Philips closed down 22 cents at $1.85 after trading as low as $1.50. Preliminary reserves at the South Kemess property were recently estimated at 252 million tons grading 0.23% copper and 0.019 oz. gold. Placer also announced its new discovery on the Cortez joint venture in Nevada contains an estimated 11.3 million tons grading 0.24 oz. gold and remains open to the south.

According to recently released maps by Placer, the discovery lies more than a mile to the south-southeast of ground held by Coral Gold and under option to Amax Gold.

Trading in Coral Gold has been active in recent weeks on speculation that the deposit trends on to Coral ground or that other deposits will be found in the area. Coral gained 4 cents to finish at 68 cents.