Toronto Stock Exchange (September 09, 1991)

Leading economic indicators released during the week ended Sept. 3 continued to demonstrate that the recession in Canada has ended. But judging by activity before and after the Labour Day weekend, investors are refusing to believe them. Part of the reason is the slump in metal prices, particularly gold which dropped on Aug. 30 to a 14-month low of US$347 per oz. The strong U.S. dollar and fears that the Soviet republics may attempt to pay for their newly won independence by selling gold are also deterring investors from entering the market.

Today, Sept. 4, as the banks moved in to provide technical support, the yellow metal firmed slightly to close at US$348.70 an oz. in London. But analysts aren’t ruling out a big sell-off in Russia, which, they say would put more pressure on shares of North American producers like Placer Dome. The Vancouver company bottomed this week at $12.63 before recovering slightly today to $13. A number of other gold issues including Echo Bay and Corona are trading uncomfortably close to their 52-week low points. Echo Bay was even today at $9.38 compared with its low of $8.13. Unchanged at $8.25, Corona is trading in a range of $10.50 and $7.88.

Nevertheless, you can make money in the stock market as American Barrick Resources Chairman Peter Munk clearly demonstrated this week, when he announced plans to sell two million shares acquired under options at $7 each. The prospect of such a large block of shares hitting the market at once shaved 87 cents of Barrick on the day the announcement was made. The issue also closed down 38 cents today at $25.75 in sympathy with a 51.78-point drop in the gold-silver index.

For the second day in succession, Toronto’s composite 300 index lost ground as the market continued to ignore the bullish economic indicators. The index closed off 18.02 points at 3486.84 after 22.2 million shares worth $271.7 million changed hands.

However, little WisCan Resources proved you can still raise money in a weak market by closing an $856,000 offering designed to finance exploration on Wisconsin properties optioned from Noranda. WisCan is earning a 50% stake in 46,000 acres covering the Rhinelander-Ladysmith greenstone belt. The issue closed down two cents today at 22 cents just below the financing price of 25 cents.

Shares of LAC Minerals topped the active list this week as the Toronto gold miner secured the 35% stake in Bond International Gold which it didn’t already hold. With Bond’s assets in hand, LAC now ranks as North America’s third largest producer behind Placer Dome and Newmont Gold with planned output of 1.36 million oz. this year. After almost 1.4 million shares changed hands this week, LAC was down 13 cents today to $9.25.

News that Newmont was dropping its option to earn 51% of Atlanta Gold’s Elmore gold project in Idaho sent the Atlanta issue spinning down to 80 cents from a high of $3.10. But the issue recovered to end the week at $1.18 after Atlanta promised to continue exploration at Elmore.

Shares of Platinova Resources bottomed this week at 70 cents after drilling at the Kap Edvard Holm gold-platinum project in Greenland failed to duplicate values reported in last year’s discovery holes.

A subsidiary of British company RTZ is earning a 51% stake in Kap Edvard which is eight miles from Platinova’s Skaergaard project.