Toronto Stock Exchange Shares react to fears of `double dip’

Growing concern that a “double dip” recession could force share prices below their current trading levels kept investors on the sidelines during the period ended May 7.

A leading Toronto analyst, who asked not to be identified, says that unless U.S. interest rates decline soon, share values will remain stuck in their recent trading range for the foreseeable future.

Toronto’s composite 300 index edged up 3.19 points today, May 8, after three successive losing sessions to close at 3482.01 on a weak volume of 19.1 million shares traded.

Although gold was stalled at US$356.90 per oz. in London today, the gold-silver index gave up 58.52 points before ending the week at 4829.46. “The outlook isn’t good and share prices could be headed for the lower end of their trading range,” said the analyst who believes that a second recession starting this summer is not out of the question.

Among the most active stocks this week, Placer Dome is struggling to cut costs after reporting earnings of $17.6 million in the first quarter, down from $35.1 million a year ago. The company is concerned that some of its mines are operating above the spot gold price. However, the fact that the US$350-per-oz. support level remained intact throughout the reporting period is a good sign, according to analysts. Placer Dome was unchanged today at $14.75.

Hemlo Gold Mines added 88 cents this week in response to its recent offer to buy the gold assets of Noranda in exchange for 8.6 million common shares of Hemlo, or roughly 10%. While the deal would make Hemlo Noranda’s principal gold vehicle, McLean McCarthy analyst Ron Coll says it “may not be the salvation that Hemlo Gold needs.” Gold miners American Barrick Resources and Echo Bay Mines both gave up 38 cents today.

Atlanta Gold moved to deny rumors which surfaced in Germany that it is being investigated by the Ontario Securities Commission. Although active this week, profit-takers have driven the stock to $2.25 today from around $3 two weeks ago.

Results from the Scott Lake base metal joint venture failed to have much impact on either Greenstone Resources or partner Thunderwood Resource. However, investor interest is still strong as indicated by the 648,000 Thunderwood shares that changed hands this week. As another 67,000 shares crossed the floor today, the issue gained 5 cents. Greenstone was also a winner, gaining 20 cents.

Meanwhile, shares of Brunswick Mining & Smelting added 13 cents as employees at the company’s New Brunswick mine and smelter agreed to end a strike that has gone on since last summer. Brunswick Mining is a 64.6% owned Noranda subsidiary.

Shares of Hudson Bay Mining & Smelting were also active this week following a move by Luxembourg-based Minorco to secure financing for a $187-million modernization program at the company’s Flin Flon metallurgical complex. Minorco, through its U.S. subsidiary, has offered to pay 56% owned Inspiration Resources $100 million for all the shares of HudBay. The issue dropped 30 cents today.

Still on the financing front WisCan Resources has filed a prospectus for an offering designed to raise up to $2 million to finance its gold and base metals joint venture with Noranda in Wisconsin.

WisCan says the offering price will be at or above the closing price for its common shares on the last day prior to the offering date. They traded at 38 cents this week, up 6 cents from last week.