Toronto Stock Exchange (January 20, 1992)

Vancouver resource giants Cominco and Teck teamed up with Aur Resources during the week ended Jan. 14 to provide financing for the $326-million copper-zinc project at Louvicourt Twp., Que.

The agreement guarantees that Aur can obtain its share of funding for the Louvicourt project and puts the onus on Societe Miniere Louvem and controlling shareholder Noranda to come up with their share of financing. However, while a winter storm was preventing Aur President Jim Gill and Vice-President Howard Stockford from flying out from Toronto for talks with Teck, market response to the deal was only lukewarm.

After gaining 40 cents to $3 on the day of the announcement, Aur had given up all of its gains by week’s end to close at $2.60. Buoyed by a recommendation from Dominion Securities base metals analyst Ernie Nutter, Louvem advanced by 25 cents to $3.20. St. Genevieve Resources was largely unchanged. The stock hit 44 cents on the news and retreated to 42 cents.

This confidence booster for the mining industry occurred in a week when Toronto’s composite 300 index played catchup with the record-breaking Dow Jones Industrial Average in New York. After posting the largest single-day gain since Dec. 14, 1987, the 300 continued its winning streak with a 21.74-point advance today, Jan. 15. The index closed at 3656.72 points after 41.1 million shares worth $471.9 million had changed hands.

Active stocks included Inco, which was up $1.13 today to $37.63. Cominco added 75 cents to its share price while Noranda and LAC each gave up 13 cents to close at 19.13 and $8.88 respectively.

Driven by forecasts of record jewelry buying in the Middle East, gold advanced by US$5.20 per oz. during the report period to close at US$355.50 today in London. Several issues in the gold sector responded to the rally with significant gains. Battle Mountain Gold, for example, gained $1.38 in the report period to close at $9.13. As analysts wait for news on development of the Purple Vein gold deposit in Nevada, American Barrick Resources added 50 cents today to finish at $31.78, just shy of its $32.13 high point. Franco-Nevada Mining, which holds royalties on Barrick’s Goldstrike mine, was also impressive. Franco surged ahead by $1.63 to $23.13. Placer Dome, the volume leader during the report period, was unchanged today at $11.38. Investors are waiting for news on Placer’s Mt. Milligan copper-gold play in British Columbia where $240 million has been invested.

Sparked by the advancing gold price and results from the Upper Beaver gold property near Kirkland Lake, Ont., shares of Royal Oak Mines hit a 52-week high of $1.94 today. Highlights from the Queenston Mining property include 62 ft. of 0.157 oz. gold per ton and 1.01% copper in a new zone. While Royal Oak says results enhance the value of the property, Queenston was down 7 cents today to 90 cents.

The Hemlo Gold Mines issue bounced around this week on news of a $26-million fourth-quarter writedown on a number of investments including Viceroy Resources and 44% owned Central Crude. After climbing to $11.13, Hemlo slipped back to $11 today. Hemlo President Ian Bayer says he would prefer to postpone development of the Eagle River gold deposit, owned 60% by Hemlo and 40% by Crude, until gold prices improve.

But Central Crude President Richard Nemis is impatient and has vowed to raise $11 million for mine development without Hemlo’s help. However, as Central Crude trades at $1.20 after adding 20 cents today, analysts believe the task will be difficult unless Nemis can find a new partner.

Audrey Resources President Guy Hebert also hit the financing trail this week after shutting down Audrey’s Mobrun polymetallic mine near Rouyn-Noranda, Que., and laying off 115 employees. Hebert is attempting to raise $45 million for development of Mobrun’s new 1100 massive sulphide lens deposit, and pay off $12.1 million owed to Elders Finance Inc.

As Audrey hit a new low of 72 cents today, an analyst who preferred to remain anonymous says equity financing is clearly out. But the same analyst says a Canadian Bank is waiting in the wings to assume the debt from Elders and kick in additional debt financing. Finally, Redstone Resources fell back to $3.15 after posting a high of $3.40 this week. Redstone’s assets include a royalty interest in the Falconbridge Falcondo nickel operation in the Dominican Republic.