STOCK MARKETS — Diamond stocks hit new highs amid broad

While most issues on The Toronto Stock Exchange continued to slump during the week ended Nov. 17, shares of many of the diamond explorers headed to new highs on heavy trading.

Although the search for diamonds in Canada is still in its infancy, millions of international dollars are pouring into the coffers of juniors involved in the play. Recent evidence of the broadening investor base is First Marathon’s commitment to raise about $9.7 million from European investors for two juniors exploring near Lac de Gras, N.W.T. That financing announcement, coupled with the discovery of three “canary yellow” microdiamonds in a kimberlite held by Aber Resources, SouthernEra Resources and VSE-listed Commonwealth Gold near Lac de Gras dazzled investors during the report period.

They went on a buying rampage, pushing SouthernEra to a high of $4.25 before profit-takers stepped in. SouthernEra ended the week at $3.40 for a gain of $1.20. Aber, which received a commitment from First Marathon for the purchase of two million shares at $2.35, added 16 cents to $2.29.

Both companies surged again today, Nov. 18, with SouthernEra tacking on 60 cents to $4 and Aber adding 16 cents to $2.45.

Colored diamonds, partly because of their rarity and partly as a result of effective marketing, command high premiums. Some sell for hundreds of thousands of dollars per carat.

But the joint venture cautions that the 8-kg samples taken from the pipes are “far too small” to draw any conclusions about economics.

Also touching new highs during the report period were Lac de Gras players Dia Met Minerals, Lytton Minerals and Tyler Resources.

Lytton, which closed at $1.18 for a gain of 28 cents, has received a commitment from First Marathon to purchase four million units at $1.25 per unit. But some analysts worry that with a market capitalization of about $80 million and little to show for it but a few pyrope garnets, Lytton’s bubble could burst.

Lytton lost a penny today on heavy trading.

Observers are expecting more drill results to emerge from both SouthernEra’s Tenby claims and Dia Met’s property before month-end. Dia Met, up $2.62 on the week, added another $2 to $28.50 today.

Diamond stocks were about the only winners to emerge on the recession-weary TSE. Responding to higher interest rates, a declining dollar and weak corporate earnings, the TSE 300 index posted three consecutive losing sessions.

By the end of the report period, the index had lost 68 points, recovering 13 points today. Continuing its steady decline in sympathy with base metal prices, the metals and minerals index shed 132 points.

After rumors of higher than expected nickel exports from Cuba hit the streets, nickel dropped another 10 cents to US$2.40 per lb. and Inco finished the week down 75 cents at a new 52-week low of $24.75. Shares of the world’s largest nickel producer were trading as high as $39.50 earlier this year. Zinc producers Curragh and Cominco also took it on the chin as the metal failed to budge beyond 47 cents per lb. Curragh shed 30 cents to close at a 52-week low of $2.30. After touching a new low of $17.25, Cominco closed down $2.38 at $17.50.

According to reports emanating from Val d’Or, Que., the two shafts at the Louvicourt Twp. development project have reached a depth of 1,600 ft. and 600 ft. respectively. Aur Resources was unchanged at $2.85. Teck, which may soon buy the ailing Balmer coal mine in British Columbia, lost 13 cents to $17.62. Another base metal development project is scheduled to get under way in Quebec after Audrey Resources received approval to launch a $7.3-million program on the Mobrun property. Audrey will deepen the existing shaft to 2,500 ft. from 1,200 ft. and complete 23,000 ft. of drilling. Audrey lost 5 cents to 55 cents on the Montreal Exchange. Project partner Minnova, which has agreed to sink $1.4 million in the project, lost 50 cents to $15.50.