The Weekly Round Up: Jan. 31 to Feb. 4, 2005

TSX-listed exploration companies did well in weathering weak gold prices the past week, with a number of issues actually posting solid gains. At the big board, Q4 earnings were in the spotlight, as a host of base-metal miners reported profits.

On the junior front, shares of Trio Gold continued to trade at a furious pace. The company, typically thinly-traded, has been on a rollercoaster ride since last week when its stock shot up from C$0.07s to C$0.27 before trading was halted last Friday after 6.5 million shares changed hands. The reason for the price movement was somewhat of a mystery, with Trio’s only news coming on Monday – a report that one hole in the AP pit area of its Empire Mine project in Idaho returned 4.23% copper over 19 feet, including 13.5% copper in the bottom 5 feet. The market decided to take profits, driving shares of the junior down to C$0.16 before it recovered to a C$0.22 close. The company drilled nine reverse-circulation holes in the center of the AP pit in December and most of these results are still pending, which means the heavy trading could continue in the near future.

Grayd Resources and partner Gold Reach Resources sparked investor interest after reporting that hole 8 at its Seel property in central British Columbia cut a 102.1 meter intercept grading 0.44% copper and 0.46 g/t gold. The hole was drilled 100 meters north of the discovery hole, which returned 148 meters grading 0.29% copper and 0.27 g/t gold. A nine-hole drill program is now complete with results still pending for hole 7, which was collared 100 meters southeast of the discovery hole. Gold Reach surged to C$0.20 before settling to C$0.15 for a 50% gain on heavy volume. Grayd ended the week down a penny at C$0.20.

Uranium stocks continued to draw investors this week, with JNR Resources leading the pack, gaining C$0.20 to close out the week at $1.41. This Rick Kusmirski-led company holds a stake in the new Maverick uranium discovery in the Athabasca Basin – currently being worked by International Uranium – and recently signed a deal to earn up to 70% in Altius Minerals’ Rocky Brook uranium property located in western Newfoundland.

Embattled uranium player Southern Cross Resources showed signs of life after being hammered late last year following disappointing results from its Honeymoon ISL project in Australia. The company reported that it has signed an exclusive agreement to explore for unconformity-type uranium mineralization in South Australia. Shares in the company jumped C$0.18 to close at C$0.88 on heavy volume.

Moving to the majors, the base-metal miners had a busy week as earnings season hit high gear. Noranda, Canada’s largest metal miner, tripled its year-over-year fourth quarter profit but continued to get little respect as investors bid up shares ahead of the results and then took profits following news that higher energy and materials costs are eating into company profits. Noranda’s full-year earnings soared five-fold, to $551 million or $1.75 per diluted share from $23 million or nil per share in 2003. Annual revenue jumped to about $7 billion from $4.7 billion. The Toronto-based company also reported that an announcement about its sale may come “within the next few months.” Noranda shares climbed C$1.59 for the week to close at C$21.99.

Meanwhile, nickel producer Falconbridge saw 2004 profit jump 250% to a record US$672 million. Earnings for 2004 totaled an impressive US$3.69 per share, compared with a 2003 profit of $191 million or $1.02 per share. Full-year revenue was $3.07 billion, up from $2.08 billion in 2003. These gains came mainly on higher realized prices for the company’s metals: nickel was up 55%, copper 61%, cobalt 139%, and zinc 24%. Falconbridge ended the week at $33.34, up C$3.15.

Canada’s biggest gold miners had a mixed week, with Barrick Gold losing C$0.26 to close at C$27.27, while Placer Dome gained C$0.11 to close at C$21.27.

Next week, look for piece-meal announcements of any nasty earnings surprises waiting in the wings. Barrick Gold already came out with low-end figures on 2004 production: 4.96 million ounces gold at average total cash cost of US$212 an ounce, as compared to a predicted production range of 4.9 to 5 million ounces and predicted cash cost range of US$205 to US$215 an ounce. In other words – at the low end of the range on gold output, on the high end for expenses. The world’s third-largest gold producer expects to put out between 5.4 and 5.5 million ounces of gold in 2005 at a cash cost ranging from US$220 to US$230 an ounce. I wouldn’t be surprised to see more gold companies reporting higher cost expectations for 2005 prior to the release of their actual financials. On the junior front, drill results will continue to be the big story, despite the fact that many investors are waiting on the “rising tide lifts all boats” market to recoup some of last year’s paper losses.