Christmas Cheer absent amongst market traders

There was little seasonal cheer for the majority of the resource issues on The Toronto Stock Exchange this week. Sloppy, directionless trading and continuing nervousness following the Oct 19th debacle, are taking their toll especially on brokers who are seeing daily volumes dwindle. The majority of investors, except institutions, are waiting patiently on the sidelines, still licking their wounds. As a result, the tse composite remained essentially unchanged during our holiday-shortened review week. Today the index gave up 13.45 pts to close at 3,156.58. Golds, which took a dive last week, following the tumble in oil prices, popped back again to $483.60 (US) per oz at the second London fix today. The gold and silver index gained 30 pts to 7,526.52 pts.

Base metal miners, which translates into majors, continue to enjoy a near-crisis situation in the nickel and copper markets. Driven by record low inventories, brisk demand and little shutdown capacity being readied for production, management at companies such as Inco and Falconbridge probably have to pinch themselves to make sure they are not dreaming.

Inco, which is the world’s largest producer of nickel, was stronger at $28. Falconbridge was also active, trading 452,495 shares today to close at $24.25. The rights, which expire at month-end, rocketed to $5.25 yesterday, before settling back to $4.40 today.

Major gold and base metal miners are about the only active issues these days. Most juniors however, continue to languish at yearly lows unresponsive to surging gold prices and generally shunned by investors.

Only the gold proxies are reacting to fluctuating bullion prices. American Barrick Resources was better at $27.50. Lac Minerals, which gets another kick at the can by getting to appeal International Corona’s victory at Hemlo, in the Supreme Court of Canada, piqued investor interest by moving to $13.38. Corona, however, was easier at $45.50. The case, which could take another two years to resolve, led one market watcher to quip, “too bad we can’t buy shares in the law firms.”

Christmas came early to several Canadian companies this year in the form of Western Mining Corporation the Australian-based giant with very deep pockets. The `Aussie Claus’ is paying a big premium to buy control of Seabright Resources and the Chibougamau copper-gold mines held by Northgate Exploration (see front page story). Naturally, both Seabright and Northgate reacted positively trading at $8 each. Before the deal, Seabright was steady at $5.50. Most Canadian observers of our mining scene think the Australians must have fallen from a koolabar tree and smack into a bilabong for paying such high prices. But without a doubt, the purchases are a solid vote of confidence for mining investment in Canada.

Good news in the corporate finance department. Muscocho Explorations has completed the first big post-Oct 19 equity financing albeit at a much lower price than originally intended. The company will net $17.5 million which will finance development work at the company’s two future gold mines at Magnacon and Magino in Ontario. Both could be producing next year. Muscocho was unchanged at $3.45.

Some exciting exploration results are being released by partners Fal conbridge and Beaufield Resources from their Lac Rouleau property in Quebec. Based on initial drill results, possibilities for building tonnage look very real here. Beaufield, one of the few juniors to show much life, added a dime to $1.95. Claude Resources, which is known for cutting tough deals with majors has done its again, bringing in big Newmont Mining into its Ithingo Lake gold property in Saskatchewan. Claude was up 5 to $4.40 today.