Toronto Stock Exchange Crumbling gold prices pummel gold index

The gold and silver index played its part in the overall market decline which saw another 19.83 pts lost. The composite index closed at 3609.85. Last week, the index was within four points of breaking above the 3700-pt mark — a move which would have been deemed extremely positive for the rally which began just before the New Year.

High interest rates, and the threat of even further hikes by the central banks, have spooked investors. The metals and minerals index was also a loser, slipping 22.29 pts to 3397.44 pts. Profit-taking is primarily to blame. Issues which comprise the metals index have generally traded at or near record highs. Importantly, commodity prices remain firm and their outlook for 1989 is positive.

Issues hurt by the gold selloff included Agnico-Eagle Mines, which dipped to $12.13. Echo Bay Mines saw 75 cents clipped from its share price which closed at $17.75. Despite increased production last year and improved earnings, investors sold on news of the decline in the price of gold.

American Barrick Resources bucked the downtrend, advancing to $24.50 on volume of more than 230,000 shares. Aur Resources, which is in the start-up mode at several projects in Quebec, was weaker at $3.45. At current prices, most of its projects would be marginal money makers.

Granges Exploration was also easier, giving up 15 cents to $3.15. MIM Holdings of Australia is considering a $50 million equity placement in Granges following a due diligence examination. Neptune Resources was unchanged for the day at $2.09. Along with declining gold prices, the company was also bruised by the federal government’s decision not to provide a $15 million loan. The government says the money can be raised from the capital markets. Neptune is building an ambitious $130 million gold mine in the arctic.

Stan West was at a new low of $1.20. Its gold mine in Arizona ran into operating trouble almost immediately upon starting and has not recovered The company’s chairman is looking for a deal. Other juniors dipping to new lows include Windarra Minerals, easier at 90 cents and Midas Minerals which hit bottom at 25 cents .

Street talk of an out of court settlement between the Hemlo combatants helped LAC Minerals advance to $13.75 before settling back to $13.50. A 40%-40%-20% split has been bandied about for Teck Corp., Corona Corp. and LAC respectively. Cororna’s A shares closed lower at $8.75 whereas the B share was off 25 cents to $9.

Zinc prices continued their record-breaking climb to more than 90 cents (US) per lb. A break above $1 appears imminent — as predicted late last year by mining analyst Ray Goldie of Richardson Greenshields.

Cominco Ltd. was easier at $26.13. The company is one of the world’s leading zinc producers. The Red Dog mine, set to start production in 1991, will be the world’s largest. Other base metal miners suffered from profit taking. Noranda Inc. was lower at $25.25 as was Metall Mining, which took a 75 cents dip to $13.50. Metall received investor approval earlier in the week for an $85- million (US) purchase of the Copper Range mine facility in Michigan. News of the transaction propelled Metall shares to a high of $14.63.

Nickel giants Inco Ltd. and Falconbridge Ltd. both lost ground. Inco closed at $25.63 whereas Falconbridge was softer at $27.38. Some analysts are already thinking aloud of another special dividend from Inco if nickel prices remain high for the rest of 1989. Last year, the company paid $1 billion (US) in the form of a special dividend.

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