Toronto Stock Exchange Inco, Falconbridge reach highs as minerals

A summer rally which began last week, continued to roll along adding more than 87 pts to the composite index this week. Today, the TSE index advanced 33.98 pts to close at 3,366.53 pts on volume of 23.4 million shares.

Despite fears of future interest rate hikes, investors are scrambling to get positioned in what many still consider a trading market. Whereas senior golds made healthy advances over the past few weeks, today’s performance witnessed a sell-off as bullion reacted to the rate concerns. Gold on the second London fix dropped $4 to $457.85 (US) per oz. The decline was reflected in the gold and silver index which dipped to 6,998.91 pts — off 81.75 on the day.

The real engine behind the rally is the metals and minerals index, which broke the 3,000-pt mark to close at 3,046.77 pts — up 28.62 pts. Driven by surging commodity prices and the realization by many that these prices are indeed real and will remain with us for many months yet, senior base metal producers are reaching new highs daily.

Inco Ltd. failed to get through the $40-mark this week, closing at a new record of $39.38. The company is well on its way to earning more than $500 million this year which translates to more than $5 per share. Falconbridge Ltd., another major nickel and copper miner, raced to a new high of $26 on volume of 535,167 shares worth $13.8 million.

Cominco Ltd. was nearing new high territory with its advance to $21.63. McIntyre Mines, which stands to score big from parent Placer-Dome’s plans to sell a 25% stake in Falconbridge, made a smart $2 gain today to $53. Noranda Inc. was also better, adding 43 cents to $23.25. Over the week, the issue advanced $1.43.

Senior golds failed to keep up with the overall advance, slipping on weaker gold prices. American Barrick Resources was off 50 cents to $26.50. Agnico Eagle Mines was also easier at $18.38. Lac Minerals bucked the downtrend, remaining unchanged at $15.75. Lac is benefiting from serious allegations concerning the credibility of two prospectors who staked the original Hemlo discovery claims. Both are being sued by another company Scintilore Explorations. If the Scintilore suit succeeds, it could have positive implications for Lac on its Supreme Court of Canada appeal for control of the Page-Williams mine at Hemlo. Scintilore remained strong at $7.75.

On the exploration front, news of a mind-numbing hole from little known Huntington Resources on the VSE, sent that issue into space (see Vancouver Stock Exchange story). The partner is Lacana Mining Corp, which holds a 51% interest in the Vernon, B.C. property. The excitement failed to spill over to Lacana which dipped 38 cents to $12. Lacana geologists tell us that the hole, which cut 235 ft grading 2.03 oz gold per ton, was drilled down dip.

Joutel Resources was a two-day wonder, trading more than 700,000 shares to 50 cents before quickly tumbling back to 35 cents . The company holds some property in the busy Mishibishu camp west of Wawa, Ont., which has been optioned to Hemlo Gold Mines.

Granges Explorations, which was badly mauled by news of problems at its Tartan Lake gold mine in Manitoba, continued to recover. Today the issue advanced 13 cents to $5.63.

A turnaround story at Sherrgold Inc, has helped move that stock to $3.75. Last week the issue was trading at $3.05. The company’s MacLellan mine in Manitoba is expected to produce 56,000 oz this year and 65,000 oz next year. More importantly, costs have been reduced and the operation is making money.