STOCK MARKETS — Soaring gold index continues to defy

While gold has barely budged from the US$330-per-oz. level since the beginning of 1993, The Toronto Stock Exchange’s gold and silver index has soared by 15%.

The index continued that rally during the week ended Feb. 23, adding 170 points to 5969 and helping to push the TSE 300 index up 35 points. Gold dropped more than US$3 per oz. to US$329.75 in New York.

In the wake of Prime Minister Brian Mulroney’s resignation announcement today, Feb. 24, the TSE 300 added another 13 points on strong volume. The gold index’s climb to new heights is closely tied to the strong performances of its heavyweights, Placer Dome and American Barrick Resources. Those issues added 88 cents to $21.27 and 13 cents to $17.75 respectively during our report period.

But some other gold producers have also managed to counteract lower gold prices by cutting costs, stepping up production, or improving hedging practices.

Among the latest to release details of a major turnaround in 1992 is Agnico-Eagle Mines. Agnico shed 25 cents to $5.63 before reporting a net profit of $6.2 million, compared to a loss of $81.9 million, including a non-cash writedown, in 1991. The issue remained steady at $5.63 today. Still riding high on reports of successful exploration and encouraging year-end results, Lac Minerals added 25 cents to $7.75 on a volume of 2.2 million. Royal Oak Mines was also active, picking up 33 cents to $2.90. Meanwhile, reporting a loss of $4.4 million compared with a $13.9-million profit in 1992, Cambior closed unchanged at $12.75.

The bull market for gold stocks has led many to speculate that a higher gold price is just around the corner. “Informed arguments, cogent observations and circumstantial evidence are music to the ears of many gold bugs,” Gold Mining Stock Report editor Bob Bishop warns, “but they don’t necessarily mean that the gold price is going to rise. Only a rising gold price means that.” Dogged determination in the face of the weak gold market has paid off for Freewest Resources, which intersected 20.3 ft. grading 0.29 oz. gold per ton at its Verneuil Twp. property in northwestern Quebec. The high-grade mineralization was intersected in wide stepout hole and has company officials excited about the possibility of outlining a significant reserve at Verneuil. Freewest added 20 cents to $2.75 after jumping 80 cents the previous week. Freewest’s success has attracted a number of other juniors to the area. Shedding a penny to 15 cents, Montreal-listed Orient Resources is about to resume drilling at its nearby property, where sulphide mineralization was intersected earlier this year.

Announcing plans to spend $1.5 million looking for diamonds in the Northwest Territories this year, Aur Resources added 15 cents to $3.20. With an interest in a property northwest of Yellowknife for four years, the company has outlined several geophysical targets with indicator mineral associations. Along with partners Thunderwood Resources and ME-listed Consolidated Abitibi Resources, which are earning a 25% interest each in the McConnell diamond property, Aur is acquiring more ground in the area and plans to begin drilling in March.

Thunderwood picked up 11 cents to 60 cents, while Abitibi tacked on 7 cents to 38 cents.

Reported to have resumed drilling on its Lac de Gras claims, Dia Met Minerals added 75 cents to $40.50. It tacked on another 50 cents to $41 today. Up 6 cents to 47 cents, Ego Resources plans to buy a private company that says it has developed a low-cost process to recover cobalt from high-grade feedstock.

Down 13 cents to $8.75, Brunswick Mining and Smelting reported a net income of $16.2 million in 1992 compared with a loss of $20.8 million in 1991. The 1992 results included a loss of $6.1 million in the fourth quarter. In the midst of fears about a weaker Japanese economy and a potential slowdown of car sales in the U.S., platinum plummeted to US$346.75 per oz., its lowest level in months.