STOCK MARKETS — Debt-related fears unsettle TSE

Tough deficit talk by Finance Minister Paul Martin failed to inspire investors, the result being that the Toronto Stock Exchange remained flat over the 5-day report period ended Oct. 18. The composite 300 index closed up 0.6 points to end the period at 4,315.96.

Martin called for deficit cuts of $3.1 billion in 1995-96 and $6.3 billion in 1996-97, while continuing to project an economic growth forecast of 3.8% for 1995-96. Nervousness over Martin’s statements caused the Canadian dollar to lose ground, falling more than half a cent to US$73.87. The decline led to a slight rise in the Bank of Canada rate, which edged up 0.09% to 5.71%. Gold bullion advanced, with the London afternoon fix on Oct. 19 set at US$391.10, up US$3.20 from a week ago.

The rising price of the yellow metal nevertheless failed to stimulate the precious metals sector, which closed down 83.44 points to 10,541.28. Senior gold producers all lost ground, with Echo Bay Mines down 25 cents to $17.50; Hemlo Gold Mines off 25 cents to $14.75; and Placer Dome, the big loser, down 50 cents to $31.75 on a volume of 4.4 million shares. American Barrick Resources has acquired all the remaining outstanding shares of takeover target Lac Minerals. Lac shareholders submitted their shares for the compulsory acquisition on Oct. 17.

In other news, Barrick created an international advisory board and appointed director and former prime minister Brian Mulroney as chairman. Barrick is searching for gold mines in Chile, Peru, Mexico, Bolivia, Brazil, China and Indonesia. Shares of the senior producer closed at $34.38, down 13 cents. Royal Oak Mines, Barrick’s former competitor in the takeover of Lac, is also expanding operations. It recently created an exploration subsidiary which will operate in the western U.S. As well, Royal Oak is transferring some of it’s staff members to Kirkland, Washington. Shares of the company were unchanged at $6.

Other intermediate gold producers also moved lower on the week. TVX Gold and Agnico-Eagle both lost 38 cents to close at $9.75 and $18.75, respectively, and Cambior dropped 38 cents to $21. The only company to buck the trend was Kinross Gold, which added 50 cents to close at $7.88.

Despite news that it had just acquired, for US$2.25 million, a 5% net profits interest royalty on Rustenburg Platinum’s Pandora property in South Africa, Franco-Nevada Mining fell 75 cents to $85. The 17,193-acre property, reported to be the last major undeveloped platinum deposit in the Western Bushveld, contains about 31 million oz. platinum group metal reserves. Other royalty companies were mixed, with Euro-Nevada Mining off $1.63 to $39 and Repadre Capital down 20 cents to $3.25. Redstone Resources, on the other hand, gained 38 cents to $5.50.

Base metal miners had a good showing on the week, with Metall Mining, the top performer, gaining 50 cents to $13.13 on a volume of more than 6.5 million shares. Much of Metall’s trading activity was due to reports that the company is considering closing its Michigan copper smelter. Company executives told analysts in Toronto that they are considering a shutdown in order to save money prior to spending $200 million to build a new smelter at its Copper Range mine. Originally, Metall had planned to build the new smelter while operating the old one.

Falconbridge hit a new 52-week high of $22.75 before closing at $22.13, up 63 cents on the week. The share price was driven higher by better-than-expected third-quarter results and encouraging news from the Kidd Creek mine in northern Ontario. Falconbridge posted a profit of $55.5 million for the 3-month period ended Sept. 30 on revenue of $526.7 million. This compares with a loss of $11.4 million on revenues of $371.1 million for the same period a year ago.

News of a nickel discovery near Thompson, Man., sparked investor interest in shares of Inco. The nickel giant added 63 cents to $39.25. The new deposit, known as Pipe Deep, contains 4 million tons grading 2.32% nickel.