Toronto Stock Exchange Dull trading takes its toll on composite

A bout of dull trading hammered the market today, clipping 35.13 pts of the index which closed at 3,209.82 pts. For the week, the index is off more than 50 pts. U.S. dollar woes, free trade concerns and rising interest rates brought the sellers out. Volume was 20 million shares.

The gold and silver index was also weaker, slipping 37.45 pts to close at 5,734.37 pts — not far off its year low of 5,432.14 pts. The sell- off of gold equities has not been supported by falling gold prices, which have been resilient in the $420(US)-range. Today’s second London fix was $423.85. Sellers of gold equities still feel that shares are generally overpriced, trading at excessive PE multiples.

Base metals also fell back after copper took a beating following a sell-off on futures exchanges. The metals and minerals index declined 25 pts to 2,778.78 pts. Traders reacted to technical signals and not to fundamentals. A strike in Peru, the sixth-largest producer of the red metal, is still unsettled and supply-demand figures remain strongly in favour of producers.

The copper sell-off affected Cassiar Mining which tumbled 40 to $4.60. The company has a very profitable copper mine in B.C., purchased from Newmont earlier in the year.

American Barrick Resources sparked some buying after announcing a normal course issuer bid to buy back shares. The company plans to buy up to 10% of its issued shares for a maximum value of $52 million over the next year. Barrick closed up at $21.75.

Echo Bay Mines dipped to $19. The company is planning a new gold mine in Washington for 1990. Placer Dome Gold was modestly better at $16.00.

Mid-sized producers, Pegasus Gold and Pioneer Metals, which have become associated through a debt deal, were both stronger. Pioneer advanced to $3.90 before closing back at $3.80. Pioneer’s largest gold development is the Premier in B.C. Pegasus was up at $16.13. Pegasus operates several heap leach mines in the U.S.

Inco Ltd. remains in the news. The current thinking on the street is that, although Inco’s recapitalization plans are opposed by many, the deal will get shareholder approval in early December. Inco slipped to $34.88. The deal includes a healthy $10(US) per share dividend. Falconbridge Ltd., which is Canada’s second largest nickel miner, was slightly better at $21.75 — up 25 for the day.

Shareholders of Associated Porcupine Mines got a nice surprise. The company’s partner at its property near Timmins, Ont., has offered $4.50 per share of all Porcupine’s outstanding shares. The issue reacted with as $1.70 gain to $4.10. Porcupine controls the former producing Paymaster mine, which is old, very deep and a long shot for future production. Not only do reserves have to be proven up, exploration and development at depth is very costly.

Add Pacific Trans-Ocean to the growing list of troubled juniors. The issue dived to a new low of 49 on news that reserves at its 50%-owned Ketza River mine will be cut significantly. The company is burdened by a debt repayment schedule which will be hard to meet with lower reserves. Canamax Resources, which is the project operator, remained steady at $6.13.

Skyline Exploration, the first producer in the Iskut gold camp in B.C., was also in new low territory, trading at $8 earlier in the week before firming up to $9. Again, operating troubles at its new mine are to blame.

Another new producer, Stan West Mining, also tested new low waters, closing at $2.25. The company has a gold mine in the U.S.