STOCK MARKETS — Disappointing earnings cause slide in gold

Most gold equities — those that released earnings, anyway — fell during the report week ended Nov. 2. Investors, perhaps fooled by the rise in the price of gold, had been anticipating stronger earnings. Clearly, some were disappointed. As well, the price of gold was off another US$5 to US$363. That might account for the decline in some of the other gold issues.

American Barrick was down $2.38 to $34.13; Agnico Eagle, down 75 cents to $18.63; Lac, down 25 cents to $9.50; and Placer Dome, off $2.50 to $30.38. Bucking the trend were Euro Nevada, showing strength again by rising $2.88 to $39.38 and sister company Franco Nevada, up another $2 to $77. (Just before going to press on Nov. 3, many of the gold equities had regained some of the lost ground. Franco Nevada was particularly strong, closing up another $2.50.) Also demonstrating strength among the senior golds was Hemlo, up nearly 50 cents to $13.38. TVX Gold was among the most active traders this week, but its shares held firm at $7.38.

Meanwhile, some of the big base metals outshone the gold equities. For example, Inco, after reporting a profit only because of an asset sale (that of TVX), rose nearly $2 to $28.63. Noranda gained $1.63 to close at $22.50, which isn’t far off its 52-week high of $23.25. Rio Algom also posted a gain, rising nearly 50 cents to $18.

Orvana Minerals, presumably on the strength of its Butte Highlands property (T.N.M., Oct. 25/93), rose nearly $1 to $8.13, just a a dime shy of its 52-week high. (For those who keep score of such things, please note the 52-week low for this stock was 25.)

Denison common shares held firm at about 28 cents despite news that a federal-provincial panel advised against proceeding with the Midwest joint venture and delaying for at least five years its McClean Lake project. Both are uranium properties in northern Saskatchewan. The panel weighed the environmental impact of the projects against their socio-economic benefits and found the latter wanting.

Denison’s preferred shares, the holders of which are praying the company will win its arbitration case against Ontario Hydro (nothing new to report on this front), shed 25 cents (the 9.5% preferreds) and 15 cents (9.75% preferreds). Cameco, though its Cigar Lake and McArthur River deposits were not affected by the panel ruling over Midwest and McClean, watched its shares fall, nonetheless. The company closed the week at $24, down 50. Until this ruling, Cameco shares had been steadily rising. Over the past three months, they had climbed 13%. The panel will be deliberating soon over Cameco’s two projects. Consolidated Nevada Goldfields fell precipitously, losing 85 cents over the report week to close at $1.70. A phone call to recently installed Chief Executive Geoff Hoyl in Denver elicited the admission that Consolidated Nevada’s “market has been chaotic.” But he said it doesn’t relate to “any fundamental change” within the company or its premier exploration play, Nixon Forks.

Rather, he blamed it on a rights issue being exercised by shareholders. This has cut demand for the common shares traded on exchanges. (“The market is going down on very light volume,” he noted.) There’s also considerable arbitrage occurring between the rights and shares.

Whatever the explanation, this stock has been a volatile trader ever since its first incredibly high-grade intersections were reported (T.N.M., Sept. 6/93).

Equinox lost 20 cents during our report week in spite of an announcement that Hecla Mining, an NYSE stock, had signed an agreement in principle to acquire the company. Equinox shareholders are to receive 0.3 Hecla shares for each of their Equinox shares. The junior’s primary asset is the Rosebud property in Nevada.

Great Lakes Minerals shot up 48 cents during the week to close at $1.98. (At presstime, the shares had closed up another 17, probably on the strength of its co-venture with Hecla on the Grouse Creek gold development.)