Toronto Stock Exchange Freewest hits new high as golds join market

Despite compelling evidence from Statistics Canada that the Canadian economy is still weakening, bargain hunters were out in force during the week ended Feb. 5. Drawn back into the market by lower interests rates which have fallen to 11.50%, investors sparked a week-long rally that drove the composite 300 index to its highest level since September, 1990.

Today, Feb. 6, the composite 300, which represents a wide measure of Canadian share values, advanced 58.21 points to 3424.03 as a volume of 37.1 million shares changed hands.

Among the biggest beneficiaries of this investor euphoria were Inco and Noranda. Shares of the Inco, the western world’s largest nickel producer, shot up $4.25 to close at $35.25. Noranda was also a winner. Over the week Noranda advanced by $2.50 to close at $18.75. Other base metal stocks posting significant gains this week were Sherritt Gordon, up $1.25, Rio Algom, ahead by $1.38 and Cominco, up $2.

Scotiabank’s Industry andCommodity Markets Division expects metal prices to move lower in 1991-92 because of a drop in car production and the growth in the number of smelters around the world.

Nevertheless, as investors scrambled to get out of cash and into equities, the marketrally spread to the precious metals sector, where share prices have been pressured by the soft gold price. While the price of the yellow metal dropped by US$9 per oz. this week to close at US$360.75 in London, advances in the gold sector sparked a 229.05 point increase in the gold-silver index.

Leading the way with today’s 55 cents price increase were the A shares of Corona. After bottoming recently at $3.60, they ended the week at $4.40.

Boosted by yet another year of record profits, shares of American Barrick Resources posted an impressive $1.13 increase to close at $23.13. Among the other gold issues, Placer Dome gained $1 while LAC Minerals moved up by 25 cents.

Gold’s weak performance is attributed to an easing of political tensions in Russia and evidence that United Nations forces are winning the war in the Persian Gulf. Some analysts feel that the inevitable ground war will be good for gold which has lost much of its appeal as a haven in times of uncertainty.

That would be something of a Godsend for Bema Gold President Clive Johnson, who is attempting to raise more than $100 million to finance development of Bema’s Refugio gold property in Chile and other projects.

A group of roughly 150 brokers and analysts, who were wined and dined by Bema in Toronto recently, heard that Refugio could be financed by way of a $75-million gold loan. After dropping to $2.20 earlier in the reporting period, Bema ended the week up 21 cents at $2.41.

A talking point at the Bema luncheon was the progress ofCentral Crude’s Eagle River joint venture with Hemlo Gold. At least one analyst wondered if the length of time it is taking Noranda (on behalf of 50.8% owned Hemlo) to produce a feasibility study means that the project may turn out to be uneconomic. Hemlo and Central Crude were ahead today by 25 cents and 10 cents, respectively.

Meanwhile a new gold discovery at Freewest Resources’ wholly owned Benoist Twp. property near Miquelon, Que., drove the Freewest issue to a new high for the year of $3.35.

Freewest, better known for its Holloway Twp., Ont., joint venture with Noranda and Teddy Bear Valley Mines, says it intersected 53.3 ft. of grade 0.18 oz. gold per ton on the Benoist property.

New tha Beaufiel Resource i negotiatin t acquir propert i th vicinit o th Freewes discover pu Beaufiel amon th volum leader thi week Wit ove 1. millio share changing hands, the Beaufield issued ended the week at 10 cents.

I othe news Minnova whic toda reporte $1.0 pe shar profi fo 1990 wa dow 2 cent t clos a $15.25 Th 50 owned Kerr Addison Mines affiliate is still mulling over a Mobrun polymetallic mine feasibility study tabled by partner Audrey Resources. After earning a 50% stake in the new 1100 lens at Mobrun, Minnova must decide whether future net smelter returns are attractive enough to justify development costs that could add up to $90 million. Following a 10 cents gain, Audrey ended the week at $3.60.

Finally, because of sales from Russia, platinum prices fell by US$6.75 per oz. this week to their lowest level in five years. After platinum ended the week at US$379.75, some analysts believe the metal could trade at a discount to gold this year. However, shares of Madeleine Mines, which is developing a palladium-platinum mine on a property near Thunder Bay, Ont., advanced by 20 cents this week to close at $4.20.