Resource stocks continued to run higher this week as the Chinese economy kept chugging along and the US dollar renewed its fall against most major currencies following reports that South Korea may diversify its currency reserves. This was good news for Canadian stocks and the TSX Ventures Exchange, home to many junior explorationists, which hit another new 52-week high.
The multi-year highs struck by zinc and copper this week helped propel EuroZinc Mining to a new high of its own. The 2004 year-end operating results for its wholly-owned Neves-Corvo mine in Portugal showed 1.9 million tonnes mined with an average mill-feed head grade of 5.71 percent copper with recoveries at 88.4 percent. Total production of contained copper in concentrate was 95,687 tonnes or approximately 211 million pounds of copper. Shares in the junior added C$0.07 to close at C$0.92 on heavy volume.
Linear Gold tabled further eye-popping results from the Campamento target zone of its 100-percent-owned Ixhuatan project, located in Chiapas, Mexico. Hole 37 cut 132 meters grading 5.8 grams gold per tonne, while hole 39 returned 81.6 meters containing 7.1 g/t. Both holes bottomed in mineralization, but more importantly, the easternmost intersection cut 94 meters at 3.1 g/t, including 20 meters of 11.1 g/t. Despite the big grades, investors are still concerned about the overall tonnage potential, given the company’s high market capitalization. Shares in Linear ended at C$8.60, up C$0.83.
After doubling in value last week, Palladon Ventures continued to gain ground, up C$0.17 to C$1.07 on very heavy volume. Investors appear to like its plans to team up with Western Utah Copper Company on the iron mineral properties and interests in southwestern Utah. The JV Property hosts two large iron deposits, the Comstock/Mountain Lion and Rex deposits, and several large, low-grade iron stockpiles. The measured iron resources total 126.6 million tonnes grading 40.9 percent iron. The price tag for the deal is US$10 million.
The uranium frenzy also continued this week. Leading the pack was Energy Metals Corp, which gained C$0.93 to close at C$3.48. The company announced the staking of twelve uranium properties containing more than 30.5 million pounds of U3O8 in the Great Divide Basin in Wyoming. The company now controls over 60 percent of the Basin’s known resources thought to be amenable to the ISL process. Energy Metals’ overall portfolio hosts some 68 million pounds of U308.
Bell Coast Capital continued to attract investors on reports that it plans to reopen the Sheep Mountain uranium mine. Late last year, the company teamed up with U.S. Energy Corp. and Crested Corp. by acquiring a 50 percent stake in the Sheep Mountain mines and properties in Wyoming. The deal isn’t cheap, calling for payments of $4,050,000 and the issuance of 4 million shares payable in stages up to the end of 2007. And in the event that uranium prices rise above $30 per pound for a period of 30 days, Bell Coast needs to pony up US$3 million in cash. The junior gained $0.30 on the week to close at $0.83.
On the diamond front, shares in Shore Gold continued to race higher following the results from a 3,050 carat diamond parcel from its Star kimberlite in Saskatchewan, which returned a value of $110 per carat and a modeled value of $135 per carat. Shore closed the week at C$5.01, up C$0.68.
It was a mixed week for gold producers, most notably Placer Dome whose quarterly profit fell due to sluggish sales. The world’s fifth-biggest gold producer posted earnings of $39 million, or 9 cents a share, in the fourth quarter, compared with $81 million, or 20 cents a share, a year earlier. Revenue came in at $460 million in the fourth quarter from its 17 mines in seven countries, a marked drop from the $492 million reported last year. The company produced 927,000 ounces of gold in the quarter, down from 1.04 million ounces in the same period in 2003. Placer ended the week at C$21.35, down C$1.20.
Meanwhile, mid-tier miner Meridian Gold faired better, reporting earnings of $7.5 million, or $0.08 per share on 77,200 ounces of production at an enviable cash cost of $56 per ounce. The sole owner of the high-grade El Peñón gold mine in northern Chile showed operating cash flows of $16 million for the quarter and ended up with $232 million in cash and short-term securities. More importantly, proven and probable reserves at El Peñón increased to 2 million ounces of gold and 54.5 million ounces of silver. Meridian ended the week at C$24.58, up C$0.13.
Barrick Gold, which reported good earnings last week, continued its recent strong run, ending the week at C$30.90, up C$1.30.
With the bullion price holding above $430 per ounce, it’s looking increasingly likely that new investors are waiting for a break above the $450 mark before committing additional funds. Should that be the case, news on individual stocks will likely continue to drive the market.