Toronto Stock Exchange (February 24, 1992)

In the absence of any real action on the gold or base metals front, investors focused their attention on developments at a select group of companies during the week ended Feb. 18.

As Arimetco International continued discussions with creditors of debt-ridden Breakwater Resources, shares of both companies emerged as the week’s most active stocks.

Arimetco, the volume leader, is planning to invest $5 million and take over management duties at Breakwater and its El Mochito zinc mine in Honduras, assuming that debt obligations can be reorganized to a manageable level. Trading over 1.7 million shares, Arimetco climbed to a new high of $5.13 before finishing at $4.75. Breakwater also retreated, from 43 cents to 40 cents.

Penny junior Joutel Resources also made the active list as investors prepared for a 5,000-ft. drill program financed by Aur Resources on Joutel’s northwestern, Ont., copper-zinc property. News that Aur will have the drill rigs up and running this week put Joutel among the volume leaders with 1.4 million shares changing hands. Trading 1.2 million shares today, Feb. 19, it closed up 1 cents at 18 cents. There are about 48 million shares out, 10 million of which are held by management. Joutel’s 21% owned affiliate Queenston Mining was quiet despite rumors of encouraging drill results from its Kirkland Lake, Ont., gold joint venture with Battle Mountain Gold. However, the project doesn’t look economic as long as gold is trading below US$400 per oz. according to Queenston Vice-President Charles Page. Today, the yellow metal closed at US$353.20 in London, after falling US$3.15 during the report period. Platinum also lost some of its recent gains to close at US$358.50 per oz., down US$9 on the week.

The dip in the gold price sparked a mass retreat among gold issues during the report period. However, Queenston eked out a 2 cents gain today to close at $1.02. American Barrick Resources and Pegasus Gold both advanced 13 cents to $32.75 and $16.50 respectively. Corona, Hemlo Gold and LAC Minerals were all unchanged. Placer Dome fell 13 cents to $12.35.

Franco-Nevada Mining was stalled at $27.75 after raising $28.75 million from an issue of one million special warrants each of which is convertible into one share and one warrant. Two warrants entitle shareholders to buy an additional share of Franco-Nevada for three years at $35 each. Shares of St. Genevieve Resources were halted earlier in the week to allow for the dissemination of drill results from a Rouyn-Noranda, Que., area gold property held by KWG Resources and 61.5% owned SEG Exploration. But St. Genevieve fell today to 65 cents after hitting 81 cents earlier this week. Over the broad market, investors appeared to be spooked by the prospect of higher interest rates in the U.S. and news of more bankruptcies in Canada. For the fifth straight session, Toronto’s 300 index was down today. It fell 7.91 points in moderate trading to 3543.27 after 25.7 million shares worth $256 million had changed hands.

In base metals sector, Inco (TSE) was unchanged today after advancing by $2.13 during the week. Inco was responding to a small US16 cents advance in the spot price of nickel to US$3.67 per lb. from US$3.51. Inco says it will contribute 1.4 million common shares, at market value, to a number of its North American defined benefit pension plans. Valued at US$44 million, the contribution represents about 45% of Inco’s 1992 pension funding requirements. Cominco and 64% owned Cominco Resources International will spend US$33 million at Coos Bay, Ore., to build facilities needed to import one million tons of high-grade nickel ore from New Caledonia. The ore is destined for a nickel smelter at Riddle. Cominco was down 25 cents today.

In other news, Wheaton River Minerals reached an agreement in principle to purchase Canamax Resources’ Ketza River gold mine and related Yukon properties. Unchanged at 51 cents, Wheaton River plans to use the Ketza mill to process ore from the Grew Creek deposit (773,100 tons of grade 0.26 oz.) 60 miles away. Canamax is trading at 40 cents following an inactive week. Belmoral Mines said its share of a writedown on the Aurbel joint venture in Val d’Or, Que., will add up to $2.1 million. Aurbel is a joint venture exploration program with Aur Resources, which gave up 7 cents to close at $2.38.

Belmoral was even at 14 cents.