Toronto Stock Exchange Inflation fears boost golds during market

For the past two months, buyers drove up share prices in the face of steadly rising interest rates. With no rate declines in sight, the rally which began late last year, has ground to a halt. Just two weeks ago, the composite was on the verge of breaching the 3700-pt mark.

Gold bullion managed a small but critical recovery to $386.75(US) per oz on the second London fix. Earlier in the week, bullion prices dipped to a low of $379(US) per oz. The move in gold was sparked by growing evidence that inflation could become a problem later in the year. Despite reassurances by central bankers that the fight against inflation remains a priority, goldbugs found little comfort in Federal Reserve Board Chairman Alan Geenspan’s comments to the U.S. senate’s banking committee last week. He added little of substance to his already known anti-inflation views.

The gold and silver index reflected the rebound in bullion, adding 33.57 pts to close at 5928.36 pts. Metals and minerals continued to lose ground, dipping to 3426.94 — off 29.32 pts today.

The base metals selloff is considered healthy by John Lydall, mining analyst at First Marathon Securities. He feels that if investors still don’t believe the base metals commodity boom is not real, then it will likley continue for much longer than most expect. In other words, most commodity rallies come to an end when confirmed by a booming equity rally. A heated bull phase, reflecting record high commodity prices, has yet to develop.

One base metal issue managing a gain was Audrey Resources which advanced to $3.95 — up 25 cents for the week. Audrey is building a mill at its Mobrun zinc-copper-gold project in Quebec.

Major zinc miner Cominco Ltd. was weaker at $26.88 whereas Mineral Resources International finally got back over the $6 mark to close at $6.25. First Marathon’s Lydall forecasts earnings in excess of $2 per share for MRI this year.

Falconbridge Inc. announced a $1 dividend which was quickly added to its share price. Falconbridge closed up at $28.13. Inco Ltd. dipped back to $35.88 on volume of more than 100,000 shares.

Canamax Resources fell to a new low of $4.15 this week before managing to recover to $4.25 at the close. On the takeover front, the directors of Dickenson Mines and affiliate Kam-Kotia Mines have rejected the takeover bid made by Corona Corp. Dickenson’s B shares advanced to $8 whereas Kam-Kotia’s shares gave up 4 cents to $2.55.

Dickenson is shopping its company around and several majors have received technical packages. Street talk is focusing on Falconbridge Gold and Placer Dome Inc. as possible bidders. The latter company owns the rich Campbell mine next door to Dickenson’s Arthur White mine near Red Lake, Ont. Corona’s A share was better at $9.

American Barrick Resources was stronger at $25.25. Placer Dome was also firm at $16.50. Newfields Minerals has seen better times. Once a $3 stock, the issue was beaten down to a low of 38 cents a couple of weeks ago. Today the issue managed a partial recovery to 45 cents . Newfields is a big land owner in the Kirkland Lake camp in joint venture with Teck Corp.

Cominco Resources, which is controlled by Cominco Ltd. is being noticed by investors. The company has an enviable asset base including gold and copper projects on the verge of development in addition to cash flow from the Buckhorn gold mine in Nevada. The issue was firm at $3.10.

Equity Silver Mines, controlled by Placer Dome, is taking a big leap into Newfoundland. The company has acquired an option to earn a 50% interest in the Nugget Pond gold discovery held by ASE-listed Bitech Energy (see front page story). Equity was easier at $4.25.

Control of Westfield Minerals is passing to a company held by Pagurian Corp, the Toronto-based merchant bank. Westfield was steady at $1.90. The company also has an excellent asset base consisting of polymetallic projects, cash flow and strong exploration upside. The selling shareholder was Whim Creek, an Australian gold mining company.

]]>