STOCK MARKETS — Incredible shrinking dollar leaves TSE

Weakness in the Canadian dollar, combined with soaring interest rates, caused the TSE to post a loss over the 5-day report period ended Jan. 17. The composite 300 index dropped 44.31 points to close at 4,147.55.

The big news of the week was the sharp upward spike in interest rates, as the central bank tried to prop up the Canadian dollar on international currency markets. The Bank of Canada rate was set at 8.21%, up 97 basis points on the week (its largest single increase since late 1992). The bank rate increase triggered an immediate three-quarters-of-a-percentage-point jump in the prime lending rate to 9.25%.

Rising rates had little effect on the Canadian dollar, which closed the week at US70.49 cents, down 0.43 cents over the period.

Many market analysts are predicting continued weakness in the dollar, and double-digit prime rates, in the weeks ahead.

Despite gloomy news as per currencies and interest rates, gold made a strong comeback, with the London afternoon fix on Jan. 18 set at US$382.60, up US$7 from a week ago.

Senior gold producers were mixed on the week, with Echo Bay Mines gaining 50 cents to $14.25; Hemlo Gold Mines losing 38 cents to $13; and Placer Dome tacking on 75 cents to close at $29.

Reflecting the company’s new direction in the aftermath of its purchase of Lac Minerals, American Barrick Resources announced that it was changing its name to Barrick Gold. It also cancelled the sale of four gold mines previously owned by Lac. Barrick had received several offers, but none was deemed high enough.

Meanwhile, the major appointed a new vice-president of operations. John Carrington was plucked from the Noranda fold, where he had been president of the recently created entity known as Noranda Mining & Exploration. Barrick shares added $1.13 to end at $30.75, while Noranda lost 63 cents to $25.38. Base metal royalty holder Redstone Resources announced that it had increased its net smelter return royalty interest in the Robinson copper project to 0.6% from 0.225%, for US$2.5 million. The Robinson project, near Ely, Nev., is being readied for production by Magma Copper and is expected to be on-stream by the first quarter of 1996. Annual production is expected to be 135 million lb. copper, 110,000 oz. gold and 325,000 oz. silver over a lifespan of 16 years, with operating cash costs projected at less than 50 cents per lb. of copper. Redstone lost 25 cents to $5.25.

Other royalty companies were mixed, with Franco-Nevada Mining off 25 cents to $67.25, Euro-Nevada Mining adding 50 cents to $28.50, and Repadre Capital falling 10 cents to $3.05.

Failing to agree on a merger ratio, Aur Resources and Canada Tungsten announced they were terminating ongoing consolidation discussions. Plans for a merger surfaced last summer after Aur purchased a 48.3% interest in Canada Tungsten. The former finished the week at $4.25, up a nickel, while Canada Tungsten was unchanged at $1.85.

News from the Victoria Creek project in northeastern Ontario helped shares of Sudbury Contact gain ground. The company has outlined an inferred mineral resource of 4.7 million tons averaging 0.132 oz. gold per ton. Sudbury plans to complete additional drilling and a US$25-million underground exploration and development program on the property. Shares of Sudbury rose $1.75 to $16.50.

A shaft is being sunk by MSV Resources and Cache Explorations on the Inner Block property, under option from Corner Bay Minerals. MSV shares were off a nickel to close at $2.25; shares of Cache added a penny to end at 50 cents; and Corner Bay posted a 3 cents gain to end at 55 cents.

Vengold shares jumped 65 cents to $4.05 following the announcement that it had signed a deal with RTZ to acquire an indirect 10% interest in the Lihir gold project in Papua New Guinea. Reserves at the deposit are calculated at 98.4 million tons grading 0.139 oz. gold per ton.

At presstime Diamond Fields Resources announced that a recently completed hole on its Voisey Bay project in Labrador had intersected at least 90 metres of massive sulphide mineralization consisting of pyrrhotite, pentlandite and chalcopyrite. The stock closed at $11.63 on Jan. 18, up $2.25 on the day.