Toronto Stock Exchange Renewed interest in gold sparks rally in

While a US$3.45-per-oz. increase in the price of gold is nothing to get excited about, according to precious metals analysts, it was enough to get gold stocks moving during the week ended July 2.

Several issues including Equinox Resources, the Pamour and Echo Bay Mines group saw their share prices headed upward as the yellow metal advanced to US$369.25 in London from around US$366.

Barry Allan, a gold analyst at Deacon Barclays De Zoete Wedd Ltd. in Toronto, attributed the increase to renewed interest among technical analysts and to an end to what he called the metal’s declining peaks.

This week’s US$5.35-per-oz. advance in the price of platinum has also helped to drag gold bullion up through its technical resistance level, says Allan, who expects producers to begin selling into the market if gold rises to US$375. It is for that reason that he isn’t getting too carried away by this week’s rally.

Nevertheless, as the gold-silver index shot up by 123.23 points today, July 3, as most of the larger gold producers posted some healthy increases in the price of their shares. Leading the way was American Barrick Resources, which added 50 cents today before closing at $26.75. Cambior also added 50 cents and LAC Minerals moved up 38 cents to $10.25.

While Hemlo Gold moved up smartly by 38 cents to $11.38, analysts attribute the activity to Noranda’s decision to transfer its gold assets to Hemlo Gold and to appoint Ian Bayer as successor to former president John Harvey.

By moving Bayer from its previous post as president of Kerr Addison Mines and Minnova, analysts believe Noranda is removing any objections regulatory authorities might have to any future amalgamation of the two affiliates. Analysts say it makes no sense for Kerr Addison and 51.2% owned Minnova to operate separately.

Echo Bay is also benefiting from its recent decision to “open up the closet” and allows gold analysts to have a look at its operations, according to Allan. A recommendation from U.S. money manager Martin Zweig put Echo Bay among this week’s most active stocks. It added 25 cents today to close at $11.50

Meanwhile, as officials from Billiton Minerals were taking a guided tour of Audrey Resources’ Mobrun polymetallic mine near Rouyn-Noranda, Que., the U.S. and Canadian economies were showing signs of recovery. As optimistic investors moved into the market, the composite 300 index moved up sharply to 3493.62, the day after the long weekend. However, today, the composite 300 closed down 14.55 points at 3479.07 as 24.2 million shares worth $283.7 million changed hands.

Sources close to Audrey believe the length of time it is taking to sell its stake in Mobrun is primarily due to the bureaucracy behind Billiton and parent company The Royal Dutch/Shell Group. They are still optimistic that the two sides can come to an agreement. But as investors waited for a definite statement, the Audrey issue was unchanged at $2.88.

In other news, a first strike at Chile Copper Corp., the world’s largest copper mine, sent copper prices to US$1.04 per lb., their highest level in several weeks. “Mine accidents and strikes, which have already reduced production marginally, could worsen over the next few months,” said Victor Lazarovici, an analyst with BBN James Capel in Toronto. He has added shares of Princeton Mining and Minnova to his buy list. However, he says the overall outlook for metals this year remains poor and supply/demand fundamentals support a weak rebound in metal prices in 1992.

Pamour group companies including Akaitcho Yellowknife were active this week as dissident shareholders gave the green light to an amalgamation with Royal Oak Resources. Akaitcho hit a new high of 40 cents, while Pamour advanced by 30 cents during the reporting period to 50 cents. Equinox Resources said it has no explanation for activity that drove its stock price to a high for the year of $3.20. However, as profit takers moved in, the issue was down 15 cents today.

The first public offering of Saskatchewan uranium giant Cameco was fully subscribed for by midday, July 2, as investors paid out $12.50 each for the available 10.4 million shares. The offering puts 20% of the company in public hands while 49.2% is held by the Saskatchewan government and 30.8% by the federal government. When the offering closes July 11, Cameco’s long-term debt will drop to $170 million from $300 million.