STOCK MARKETS — Mining shares add strength to TSE’s year

The Toronto Stock Exchange enjoyed a fabulous year. With only about a week to go before 1993 fades into history, the 300 Composite Index gained nearly 1,000 points year over year. On Dec. 22 last year, it was at 3,313.52. A year later, the composite hit 4,214.73.

Mining company shares had a lot to do with the TSE’s stellar year. The Metals and Minerals Index will close out 1993 at about the 3,400 level. It began the year around 2,700 points. Last year at this time, gold was trading around US$332 per oz. It is now at US$386. This, naturally, boosted the Gold and Silver Index considerably. It started out at 5,123.6 and more than doubled to 10,877.43.

During our report week, gold was sluggish, gaining only 50 cents overall to close at US$386.40. Franco Nevada was off $2 to $91; Euro Nevada off $1.63 to $45.63; Agnico Eagle off $1.63 to $17.50; and Placer Dome off 63 cents to $32.88.

American Barrick managed to post a gain of $1.13 to close at $38.25. Barrick, as you can see from our front-page coverage, is the mining story of the decade. And among investors, it is the darling of the gold equities. It sports the best earnings-per-share record. For the nine months ended Sept. 30, Barrick earned 39 cents (all figures are in U.S. currency). Cambior and Hemlo Gold are the next closest at 24 cents and 25 cents respectively. From the point of view of total production costs per ounce (a measure used by First Marathon analyst John Lydall in his November report), Barrick comes in the winner. Its total production cost per ounce (calculated by subtracting third-quarter, or Q3, earnings per ounce from Q3 revenue per ounce) is US$276. The next best is Hemlo at US$307 and Placer Dome at US$346. Incidentally, Lac ranks last with a 9-month loss of 4 cents per share and total costs above the average Q3 gold price of US$375 per oz. Among the diamond stocks, Aber has surged over the past few weeks. From a low of about $2.10 in late November, the stock has gained more than 50%, closing recently at $3.40. SouthernEra is also up from a low of about $5 a few weeks back to a high now of $6.25.

Dia Met bulled ahead this week, gaining $5.25 to close at $50.25. Obviously, investors are rather pleased that a stock split (announced last week) is on the way.

Cominco is reportedly bullish over prospects for the coming year. In published reports, CEO Robert Hallbauer said he expects zinc production to rise and costs to fall. Nevertheless, he was cautious about financial results. He hopes to break even in 1994, he said.

In other news, Cominco, together with Teck, a major Cominco shareholder, was acquiring Curragh’s Sa Dena Hes lead-zinc mine and its Stronsay (now Cirque) deposit. Both deposits make a nice fit because Cominco might take concentrate feed to its Trail, B.C., smelter — that is, if the other partner in the deal, Korea Zinc, doesn’t need it for its smelter. Cominco shares held steady at $18.75, while Teck’s were off 75 cents to $22.50.

Metall Mining’s parent, Metallgesellschaft AG of Germany, went through a shakeup this past week. Its chairman, Heinz Schimmelbusch, and CFO Meinhard Forster were both fired. However, press reports quoted the Toronto-based subsidiary’s CFO Doug Scharf as saying the ills of Metallgesellschaft should not affect Metall itself. The parent firm holds a 50.1% interest in Metall (down from 64.5% after a recent sale of 11.6 million shares). It also holds, through Metall Mining, a significant position in Teck.

Metall closed down 38 cents to $11.25.

Among the juniors, Waddy Lake gained 25 cents closing at $1.05, probably on news that the ramp-driving on its La Ronge, Sask., property is proceeding. United Keno Hill has been volatile lately, dropping 60 cents one week, regaining much of the loss the following week. Recently, United Keno sold $33 million in preferred shares to Banister Inc.

Kookaburra has climbed over the past few weeks. Its claim to fame is the acquisition of the Tacaza copper property in southwestern Peru (T.N.M., Dec. 6/93).