Toronto Stock Exchange Freewest up as market considers economic

With little else to focus on apart from weak gold prices and a flurry of mixed economic signals, confused investors elected to stay out of the market during the week ended March 19. Although Finance Minister Michael Wilson told a Montreal audience this week that the economy is headed upwards, inflationary pressure in the U.S. could delay any further reductions in interest rates.

Those confusing messages explain this week’s drop in Canadian share values which continued today, March 20, with a 14.12-point decline in Toronto’s composite 300 index. With only 22 million shares changing hands, the composite 300 ended the week at 3481.33.

Pressured by this week’s US$1-per-oz. decline in the London gold price, the precious metals index also hit negative ground. As the yellow metal closed at US$364, the gold-silver index dropped 41.33 points to close at 5257.37.

Some profit-taking in the metals sector also spelt a 16.76-point decrease in the metals and minerals index. Although nickel rose US8 cents per lb. on the spot market this week, shares of Inco dropped 63 cents today to end the week at $35.75. By contrast, the Cominco issue was up 38 cents, while Noranda added 25 cents to close at $17.25.

In its 1990 annual report this week, Noranda said it would focus on cash conservation in a bid to stem the tide of debt which has risen to $4.4 billion from $3.8 billion a year ago. However, the resource company says it will spend $140 million this year on exploration, the same amount as in 1990.

Shares of VSM Exploration were similarly unaffected by the price of zinc which remained at a low of US54 cents per lb. VSM remained at its 52-week high point of $1.25 on low volumes.

Among gold stocks, Central Crude hit a new low of $1.65, down from its 52-week high of $6, while today’s close of $2.75 was also a new low for the A shares of Dickenson Mines. One of Toronto’s longest serving gold miners, Dickenson is reeling after taking a $45-million writedown on its Arthur White gold mine near Red Lake, Ont., where production costs have risen to $515 from $436 per oz.

Northgate Exploration, which also wrote down on its Colomac gold mine in the Northwest Territories, remained even today at $1.60. Now running on borrowed time, Colomac depends on the outcome of discussions between Northgate representatives and the company’s lead bankers.

Over 300,000 shares of Freewest Resources changed hands this week as investors prepared for new drill results from the Harker Holloway, Ont., gold joint venture with Noranda (TSE). Freewest President Mackenzie Watson says results from Holloway won’t be available for another couple of weeks. Meanwhile, Freewest shares closed up 20 cents today at $3.80.

Shareholders of Dayton Developments, TVX Gold and Bema Gold are also awaiting buy or sell signals from travelling analysts who are touring their projects in Chile and Brazil. The analysts are visiting South American as guests of Placer Dome (TSE).

Stop-off points include Bema’s 50% owned Refugio property where drill crews are working on what may be another multimillion-ounce gold deposit. While preliminary reserves in the new Pancho zone stand at 102 million tons of 0.025 oz. gold per ton, Bema was down 5 cents today to $2.25.

Shares of Minera Rayrock were also active this week on news that a final feasibility study on the Antofagasta copper project in Chile should be completed by August. Production is estimated to average 20 million lb. copper annually over 10 years at an average price of US63 cents per lb. The Minera issue dipped slightly $1.20 from last week’s $1.25 level.

Meanwhile, Denison Mines’ Elliot Lake, Ont., uranium mines continue to hang in the balance now that the company has failed to agree on a new pricing formula relating to long-term contracts with Ontario Hydro.

Denison President Bill James said he will reject a new offer sent by registered mail to his company’s office in Toronto and unless further negotiations bear fruit the mine may shut down Jan. 1, 1993. Denison A shares were even today at 80 cents.

Cambior reached an agreement this week to purchase an additional 26% stake in the Valdez Creek placer gold prospect in Alaska from a subsidiary of Valdez Gold for US$6 million. Once completed, the purchase will increase Cambior’s stake in the project to 75% with the remaining 25% being held by Valdez Gold. Production there is expected to be 80,000 oz. this year. Shares of Cambior were down 13 cents today to $10.

In other news, the Ontario Municipal Employees Retirement Board (OMERS) has raised its stake in Sherritt Gordon to 11.6% by purchasing 1.3 million common shares Feb. 28. The Sherritt issue was unchanged at $7.38.