Toronto Stock Exchange Falling gold pries batter precious metals

Investors found little Christmas cheer in their stockings this week as gold prices decided to test the $400 mark, dipping to $406 on London’s second fix on Dec. 27, today. The sell-off in bullion clipped more than 214.8 points from the gold and silver index which plummeted 2.9% to close at 7201.32 points.

According to the Bank Credit Analyst’s The Outlook for 1990, gold prices are expected to reach the $450-500 range. However tests of $400 or even lower are possible, the forecasting group says.

The weakness in gold shares was reflected in general trading activity which saw the composite index five points easier to 3932.18 points. Metals and minerals were also lower, losing 17.69 points to end the day at 3308.57 points. Today’s volume was expectedly low at 18 million shares.

Although the bull market in the U.S. dollar appears over, gold investors remain cautious about short-term inflation forecasts. If the economy rebounds quickly after a short recession, then base metals issues could be the biggest beneficiaries. Most base metals issues have weakened during the past two months as commodity prices continue to retreat from record highs reached earlier in the year and in 1988.

Senior gold issues took a beating as bullion retreated. LAC Minerals slipped to $13.88 as did American Barrick Resources, which closed at $18.88. The gossip section in Pay Dirt, a U.S, mining magazine which covers the southwest U.S. mining scene, says that mining staff at Barrick’s immense Goldstrike open pit development in Nevada must be consuming large doses of antacids to combat nervousness over the lack of water pumping equipment at the site. Pay Dirt says the pit is nearing the water table and serious water inflows could begin shortly.

Corona Corp. was also weaker, dipping to $10. Placer Dome hopes to make about $400 million from the sale of its oil and gas assets in 1990. The company already has cash in excess of $800 million. Many feel the building of a huge cash pool after the oil sale could signal a big deal in the works or a special dividend to shareholders. Placer was off almost a dollar to $20.88.

Pamour continued to suffer from the severe financial difficulties of affiliate ERG Resources. ERG has debts owing to Pamour and to an Australian bank. The issue, which began trading again last week after a halt, quickly lost more than $2 to $5 when it reopened for trading. Another $1.10 was lost today as the issue closed at a new low of $3.90. Control of Pamour is on the auction block. Parent Giant Resources in Australia is selling its Canadian mining assets.

Aur Resources was firm at $13.38. The company’s president and founder, James Gill, was named The Northern Miner’s Mining Man of the Year for 1989. Gill’s team came up with one of the finds of the decade at its Louvicourt property in Quebec.

Good drill results from Black Hawk’s Minago nickel project in Manitoba helped the issue stem a long slide. The stock rebounded to $1.25 before closing at $1.20. Several sections averaged in excess of 50 ft in width and graded 1.2-1.5% nickel.

Timmins Nickel, another junior nickel play with production from the Redstone mine near Timmins, Ont., fell to a new low of $1.02 before recovering to close at $1.10. The original mine contractor has left the site and Timmins Nickel plans to continue operations with its own crews.

John Hansuld, former president and founder of Canamax Resources, is back in the saddle as president of International Platinum. The issue firmed to 72 cents on news of his appointment. He faces a big job as the company has a large property portfolio of platinum prospects which will be financed to advance to the development stage. Financing for juniors such as IPCO remains tough.

Trimin Resources was one of the few winners today, advancing to $2.45. The company says a new reserve figure is expected to be released shortly for the Hanson Lake zinc-copper deposit in Saskatchewan.

Senior base metals issues were either unchanged or weaker. Cominco Ltd. was firm at $27.13. Most analysts pick Cominco as the number one zinc play in the country. Inco Ltd. eased to $31.63 as nickel prices declined well below the $4-per-lb mark to around $3.80. Metall Mining was unchanged at $12.25. The company has a variety of zinc and copper investments in addition to ownership of the big Copper Range copper mine at White Pines, Mich.