Toronto Stock Exchange (January 09, 1988)

If the first week of the New Year is a precursor of things to come, then hold on for a ride because base metal prices continue to head in one direction — up. During the week, prices for copper, nickel, zinc and aluminum made healthy advances. These metals, and the companies which mine them, were the stars in 1988 and early indications are that this catagory will continue to impress. Many of these issues were found in the new high column today.

The robust activity was reflected in the TSE composite index which closed 28.62 pts higher at 3381.75 pts. The advance was fueled by a strong 89.77-pt rise in the metals and minerals index which closed at 3297.47 pts — a 12-month high.

Starting of the year with a bang was Inco Ltd, up almost $2 to $32 on good volume. Falconbridge Ltd, which is trying to stall a creeping takeover by Noranda Inc., traded a whopping 1.3 million shares to close the day at a new high of $28.50.

Cominco Ltd., one of the world’s largest zinc producers, also reflected the strength in that commodity, moving smartly to $25.38. You guessed it, another new high. Mineral Resources International, another zinc mining company, albeit on a smaller scale than Cominco, was also active, closing at a new high of $5. MRI operates the Nanisivik zinc-lead mine in the Arctic.

Another major player, Metall Mining was also keenly traded as the issue made a strong gain of 75 to a new high of $11.75.

The bottom line of this rash of new highs is that investors are beginning to view the upsurge in commodities as an event with long- term possibilites. More importantly, the current strength in prices is not merely due to speculative excess, as was the case with many rallies in the past, but rather with good, strong supply-demand fundamentals. In other words, booming demand and tight supplies — a situation which shows little signs of changing during the short-term.

The situation with precious metals is at the other end of the investor interest spectrum. Gold opened at $409.35(US) on the second London fix. The listless price combined with the equity bear market continues to take its toll on gold mining equities. Today, however, the gold and silver index added 26.06 pts to 5407.60 pts.

Major gold mining companies have weathered the downturn best and continue to make good money from low cost mining operations. Placer Dome Inc. was steady at $15.50 as was LAC Minerals which remained unchanged at $12.13. A decision with respect to LAC’s appeal filed with the Supreme Court of Canada over the Page- Williams gold mine at Hemlo is expected sometime this year. All indications suggest that Corona Corp. will end up the winner in this long and expensive legal battle.

American Barrick Resources was firm at $19.63. At presstime the company announced that a major press conference will be held concerning its Goldstrike gold deposit in Nevada. Indications are that plans for a massive open pit mining operation will be announced.

Apart from the relative stability of the majors this week, many juniors found their ground weakening. St. Genevieve Resources, once a $10 highflyer last year, tumbled to new lows closing at 70 today. The company took many European investors for a rollercoaster ride after they put up more than $20 million in a convertible debenture.

Queenston Gold was quiet at $2.05, off 5 * Initial results from an exploration program being conducted by LAC Minerals on Queenston’s Kirkland West property are poor. More than five months have already elapsed since LAC drifted across the boundary and it now appears that considerably more effort will be required before an economic gold deposit is found.

Other issues dipping to new lows include Neptune Resources closing at $2.45 and Northgate Exploration which settled at $6.25 Longtime favorite Golden Knight Resources was firm at $8.38. The company has a 40% interest in the Golden Pond gold mine in Quebec.