Toronto Stock Exchange Gold recovers slightly, but investors still

An already nervous investment community was dealt a severe blow for the week ended March 27 when the gold price fell US$29 per oz. to a low of $362. While the yellow metal rebounded to US$372 on the second London fix today, March, 28, the sudden drop comes at a bad time for a whole list of companies that are attempting to finance their projects.

Sparked by the sale of about one million ounces by the Saudi government, the price fall had an immediate impact on major producers like American Barrick Resources, Placer Dome, LAC Minerals, Corona and Hemlo Gold.

It was accompanied by some lacklustre trading as the composite 300 index edged down 1.13 points to close at 3677.33. Although the gold and silver index regained some of its losses closing up 19.30 points at 6842.45, volumes were generally low.

According to Prudential-Bache mining analyst Barry Allan, golds are due for a short-term pause. “However, we’re still unanimously upbeat about the relative performance potential for gold stock’s over the long haul,” he said.

A $2.25 drop in the price of Barrick shares to $20.62 was followed by news that hourly wage employees at the company’s Holt- McDermott gold mine have formally organized and will be represented by the United Steelworkers of America. Later in the week, Barrick recovered some ground ending up at $21.13. LAC was steady at $13.75, while Placer Dome crossed the $20 threshold after falling to $19.75.

While a softer gold price has not been accompanied by a similar weakening in base metal prices — the metals and minerals index gained 4.26 points to close at 3174.91 — it means that progress on various exploration properties isn’t translating into rising share prices.

For instance, news that Inco’s gold wing is committing $4.6 million for exploration at the former Cochenour-Willans gold mine near Red Lake, Ont., has almost no impact on partners Wilanour Resources and Pronto Resources. While Pronto gained 2 cents before closing at 37 cents, Wilanour heading in the other direction and dropped 20 cents.

Shares of St. Genevieve Resources were stalled at $1.50 even though a high-grade gold zone at subsidiary Bay Resources’ Fontana property in northwestern Quebec is reported to be gaining momentum at depth. Bucking the current trend was Stikine Resources. Benefiting from speculation on the Eskay Creek gold discoveries in British Columbia, it gained $2.75 to close at $52.25.

A weaker gold price does nothing to help the cause of Belmoral Mines, which at presstime, was attempting to stave off bankruptcy by finding a partner willing to assume its $8-million debt load.

Having reported an annual loss of $35.4 million, Belmoral can’t be regarded as an attractive proposition for potential suitors. But a spokesman said he remains confident that a buyer can be found shortly. Belmoral fell to a low, for the year, of 40 cents.

A softer gold price is also bad news for affiliates Jonpol Exploration and T & H Resources which are seeking about $3 million to complete a prefeasibility study on their Garrison Twp., Ont., gold property. Concerned with the amount of refractory ore in the project’s mineralized zone, LAC recently dropped its option to earn a 50% project interest.

Meanwhile, the boards of Aur Resources and Societe Miniere Louvem appear to have shelved their differences momentarily to approve a $2-million drilling program at the Louvicourt Twp. project east of Val d’Or, Que. Drill crews will attempt to pick up a deposit which appears to be snaking out to the east.

Also, the proposed merger of Conwest Explorations with affiliates Mineral Resources International and Barons Oil has been given the green light by the boards of all three companies. MRI’s chief asset is the Nanisivik zinc-silver mine in the Northwest Territories. MRI gave up 13 cents before closing at $5.50 while Conwest was even at $13.75.

Finally, Ontario Hydro is attempting to negotiate more favorable price agreements with uranium producers in the Elliot Lake, Ont., region. Those efforts won’t be welcomed by Denison Mines, which is betting on future increases in the price of uranium to boost its sagging share price. Denison A shares were hovering at $1.80, 5 cents above the issue’s 52-week low.