STOCK MARKETS — Noranda hammered by selloff of Edper

Shaken by a selloff of the Edper Bronfman stocks, including Noranda, The Toronto Stock Exchange’s 300 composite index managed a gain of only 10 points during the week ended Feb. 2.

Even though Noranda escaped a debt downgrading imposed on many of its affiliates in the group, spooked traders pushed the resource company down $2.50 to a new 52-week low of $15.

As one analyst put it, “When they beat up on one stock, they beat up on them all.”

Investors fear the Edper group, a collection of real estate, financial services and resource companies, is on shaky financial ground. Noranda is expected to release fourth-quarter results in the second week of February. The company reported net earnings of $26 million in the third quarter, but a subsequent decline in base metal prices is sure to have taken its toll. Other base metal producers touching new 52-week lows during the report period included Cominco, down $1.75 to $16, and Minnova, down 75 cents to $13.35. Inco, which reported a 1992 loss of $17.6 million, finished the week up 50 cents to $28.38.

Preparing to slash zinc production in the face of rising inventories and falling prices, Cominco says it will temporarily lay off 2,680 employees at its Trail complex and Sullivan mine. Cominco lost more than $30 million last year.

Up 10 cents to $2.25, subsidiary Cominco Resources International has arranged a private placement with its parent for proceeds of $12.1 million. The cash will be used to finance exploration and development of projects in Turkey and Chile.

Shedding 25 cents to $1.55 was lead-zinc producer Curragh, which may have to close its Faro mine if it does not secure a $29-million loan from the Yukon government for development of the Grum deposit. Without production from the Grum, Faro will close in the second quarter, Curragh says.

The decline in base metal issues shaved 31 points off the TSE’s metals and minerals index.

One of the few bright spots on the TSE during our report period was the gold market. Despite a 50 cents drop in the gold price to US$329.75 per oz. in Toronto, the precious metals index added 136 points.

Reporting fourth-quarter earnings of $5.7 million compared with $2 million for the same period last year, Lac Minerals picked up 88 cents to $6.50. The company has reduced its average cash cost to US$213 per oz. from US$245 last year.

Announcing its best year-end results since 1988, Hemlo Gold Mines added 38 cents to $7.63.

Other advancing bullion producers included Placer Dome, up 13 cents to $16.50; American Barrick Resources, up $1.13 to $38; Pegasus Gold, up $1.25 to $18.38; and Royal Oak Mines, up 27 cents to $2.25.

Royal Oak will begin drilling at the Mirage gold project on the southern portion of the Yellowknife greenstone belt shortly.

Partially as a result of heavy trading in the diamond stocks, the TSE recorded a 34% increase in market activity last month compared with January, 1992. The volume of shares traded reached almost one billion. Shares of the diamond explorers continued to creep upward during our report period as the beginning of the winter drill season at Lac de Gras approached. Dia Met Minerals added $4.25 to $38 and SouthernEra Resources picked up 60 cents to $3.90. Lytton Minerals addded 20 cents to a new 52-week high of $2.48. With an option to purchase part of a producing mine in Zimbabwe, Redaurum Red Lake Mines jumped 78 cents to 88 cents on a volume of 3.3 million shares.

As the TSE 300 surged ahead by 22 points today, Feb. 3, on a strong volume of 51.8 million, SouthernEra added another 25 cents to $4.15.

But the Kirkland Lake diamond play has failed to garner the same market excitement. Announcing the recovery of five diamonds from its Bucke kimberlite pipe, ME-listed KWG Resources edged up 5 cents to $3, but lost a dime today.