The Weekly Round Up: Feb. 7 to 11, 2005
This past week was all about the money – both the paper and the metal sort. First, speculation that the International Monetary Fund, which owns 2.1 percent of the world’s bullion, or some 3,217 tonnes, may sell part of its precious metal holdings drove gold futures to a 16-week low. Later in the week, however, the insatiable appetite of the U.S. consumer saved the day, as the U.S. trade deficit for 2004 rang in at a record $617.7 billion. Initially, the market went for the “head fake” news that the December gap fell 4.9% from the previous month, sending the US dollar higher. But the run quickly fizzled when investors realized the monthly total was still a staggering $56.4 billion.
Gold responded accordingly, climbing back above $420 per ounce.
On the TSX Exchange it was all about the Goldcorp, Wheaton River, Glamis Gold ménage à trois, which finally came to a resolution after two months of uncertainty. It looks like the last-minute bribe/cash dividend payment offered by Goldcorp to its shareholders in return for backing the purchase of Wheaton paid off. The Toronto-based gold miner promised its shareholders 50 cents a share if the $2 billion deal beat out Glamis’ unsolicited offer for Goldcorp. So, at the end of a long day, Glamis exited the scene quietly by allowing its bid to expire, as 65% of Goldcorp’s shareholders voted in favour of the Wheaton River deal. Investors applauded the conclusion, with Wheaton River ending the week up a penny to C$4.11. Goldcorp dropped C$0.32 to $17.07, while Glamis proved to be the big winner, jumping C$1.37 to $21.87.
Making a nice gain on the back of metallurgical results from its Maoling gold project in China was Mundoro Mining. The junior reported test results that show that the Zone 1 mineralization is amenable to conventional milling followed by a CIL gold recovery circuit with an average recovery of about 94%. Results from standard bottle roll tests indicate gold recoveries ranging from 94% to 97% after 72 hours from samples with a size range of 80% passing 0.032 mm to 0.177 mm. Shares in Mundoro ended the week at $2.85, up C$0.55.
Exploration companies listed on the TSX Venture Exchange hit what was likely a short-term bottom early in the week, with the majority marching higher by week’s end. A few examples:
Bell Coast Capital inked a deal with U.S. Energy Corp. and Crested Corp. to acquire a 50% stake in the Sheep Mountain uranium 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 $3 million in cash. The junior gained C$0.12 on the week to close at C$0.46 on very heavy volume.
Another uranium player, Northern Continental Resources, moved higher on the back of its Russell Lake project in Saskatchewan. The company commissioned an independent compilation of previous drilling and geophysical surveys with an eye on prioritizing targets. Previous work focused on the Grayling Zone where seven drill holes have intersected sub-economic uranium mineralization ranging up to 3.45% U3O8 over 0.3 meters and 0.4% U3O8 over 3.75 meters. The junior added C$0.14 to close at C$0.72.
Shares in American Bonanza Gold Mining, which have been on a prolonged slide, jumped higher on news that the underground drilling program at its 100%-owned, high-grade Copperstone gold project in Arizona returned 10.5 metres grading 36.4 grams gold per tonne. Underground core drilling continues at the D-Zone. American Bonanza ended the week at C$0.175, up C$0.03.
Continuing to attract traders is Tyler Resources. The company’s stock has been on fire since announcing drill results from its Bahuerachi Project located in Chihuahua State, Mexico. Hole 15 cut 143 meters grading 0.71% copper followed by 5.6 meters grading 2.15% copper, 0.24 grams gold and 31 grams silver per tonne. The junior closed out the week at C$1.88 for a nice C$0.38 gain on heavy volume.
Canada’s biggest miners managed to post solid gains with Barrick Gold tacking on C$0.99 to C$28.26 and Placer Dome adding C$0.83 to close at C$22.10.
Looking ahead to next week, investors will be watching for the price of bullion to break above the $420 per ounce mark, and waiting to hear what Barrick Gold has to say in its earnings results announcement.