Toronto Stock Exchange LAC leads the way in renewed gold rally

A surge in gold bullion prices combined with another wave of buying in the shares of LAC Minerals — everyone’s favorite takeover target — catapulted the gold and silver index by more than 263.99 points to 7,740.81 points; up 3.5% today, Jan. 10.

The buying in LAC closed at more than two million shares to move the stock to $14 5/8. Importantly, the massive purchases have sparked another round of takeover talk, just a little more than a month after similar volumes rocked the TSE and the street. That time, Minorco was the rumored buyer. Some analysts still feel that the December binge left a mysterious suitor with about 5% of LAC’s shares.

Overall trading today saw the composite index decline by 10.79 points to 3,941.57 points. Metals and minerals also weakened to 3,325.17 points; off 19.23 points for the day.

American Barrick Resources advanced to $20.25 as did Corona, which saw its A shares firm to $10 5/8. Just last week, bullion prices declined below the important US$400 mark after rallying earlier to a high of $418. The retreat was widely viewed as a natural downward correction in a longer-term rally. Today’s action appears to confirm that assessment. Bullion on the second London fix picked up to $409.10.

Hemlo Gold Mines was also active closing higher at $18 3/8. Even smaller outfits such as Bema Gold gained ground to close at $2.98. Bema has a potentia lly very large open pit oxide gold deposit in Chile. News that more than three million ounces may be contained in the deposit couldn’t have come at a better time, with renewed investor interest in gold.

Although most base metals issues were weaker today, American Pacific Mining made a healthy advance to $6.75. Breakwater Resources is making a takeover bid for 100% of American. The latter company owns and operates an extremely profitable zinc mine in Central America which is spinning out more than $10 million annually to American Pacific in cash flow. Breakwater, like most larger mining companies, is obviously bullish on zinc.

Despite the industry outlook for base metals, most investors see weakness in the short term and are easing up on their positions. Inco was near its low at $29.63. Noranda was unchanged at $23.88. Noranda’s exploration company has its teeth into what appears to be a major gold discovery in the Harker- Holloway area, north of Kirkland Lake, Ont. Potential reserves exceed two million tons with grades in excess of 0.2 oz. gold per ton. ME-listed Freewest Resources has a 40% interest in the find.

American buying of Madeleine Mines shares boosted that issue to $5.25. Madeleine has a platinum group metals prospect north of Thunder Bay, Ont.

Aur Resources slipped to $13 7/8 after soaring to a new high of $14 5/8 earlier this week. Negative publicity over a legal action with Louvem Mines is attributed to the decline. Surprisingly, Louvem also declined to $8.75.

Companies in the Muscocho group remained depressed. Muscocho Explorations dipped to a new low of $1.40 whereas sister company Flanagan, McAdam Resources closed at $1.30, also a new low. Like many juniors, both companies have had great success in finding gold but little in actually mining it.

Some of the best drill results ever at the Minago nickel property of Black Hawk did little to initiate buying. The market has little appetite for nickel today and the issue languished at $1. Timmins Nickel, which operates a small but profitable mine near Timmins, Ont., also slipped to a new low of 80 cents .

Major company Metall Mining declined to $12 5/8. Cominco, one of the world’s largest zinc producers, found buying support to close up at $27.13. Operations are under way at the company’s Red Dog zinc mine in Alaska.