STOCK MARKETS — Diamond sell-off continues as seniors keep

The Vancouver Stock Exchange was in the news again as James Matkin’s provincially appointed inquiry listened to more assaults on the exchange’s credibility during a recent public hearing.

William Pidruchney, the VSE’s former president of listings, said radical measures would have to be taken to clean up the “unethical and abusive” activities which, according to him, have become the norm in the Vancouver financial community. He suggested the VSE be transformed into a public utility managed by a government-appointed advisory council, rather than remain a self-regulating organization run by its member firms. That suggestion is almost certain to run into strong opposition, as few legislators understand or know much about the securities business. What is hoped, however, is that some meaningful and practical policy changes will be made to improve public confidence while preserving the VSE’s ability to be the foremost venture capital market.

The inquiry couldn’t have come at a worse time for junior companies active in diamond exploration. Concerns about the VSE’s credibility coupled with Paul Sarnoff’s warnings about the speculative nature of the diamond exploration business are adding to a general sell-off. The sell-off is also partly attributed to the “minimalist” disclosure policy of some senior companies involved in joint ventures with juniors.

The DHK group of companies, part of a joint venture with Kennecott, continued a downward slide over the week ended noon, Aug. 11. Alberta-listed Horsehoe Gold lost 25 cents at $1.35 while Dentonia Resources was off 63 cents at $5.12 and Kettle River lost 63 cents at $9.62.

The slowdown on western markets was reflected in the resource index, which lost 5.8 points from last week to settle at 1344.16. The composite index followed suit and was off 8.29 points to finish at the 989.21 level. Heritage Petroleums was up 11 cents at 50 cents. The company does have a mineral property in an exploration hot spot. The company’s Laura claims adjoin the Placer Dome-Kennecott Cortez mine in Nevada and are south of the Pipeline gold discovery made by Placer Dome. Heritage has been exploring this claim block since May.

Venezuelan Goldfields was the big newsmaker this week, signing an agreement to acquire 20% of the Lihir Island gold deposit in Papua New Guinea for US$60 million. Vengold was up $1.75 to $10.50.

Miramar Mining surprised many with the relative ease with which it was able to secure funding to buy the Con gold mine in the Northwest Territories. The company raised $45 million, well over the $25 million it needed to buy the mine. The company may need some of those funds for developing reserves deep in the mine, as rumors in Yellowknife are that Nerco had been falling behind on development work. And the autoclave put into place several years ago to process refractory near-surface reserves (the deeper ore is free-milling) is not yet considered free of operating problems.

Layfield Resources, off 16 cents to 59 cents over the week, announced at presstime that a “funding partner” is willing to earn a 45% interest in its 90%-owned 134,250 acres in the Lac de Gras region.

A change in management provided a small boost to Thumper Resources, up a further 3 cents at 80 cents. A name change has been proposed to Arequipa Resources, to reflect its new focus on South America. The company’s exploration will be guided by geologist David Lowell, who previously managed five exploration programs which resulted in major discoveries, the most noteworthy being the La Escondida copper deposit in Chile.

Colossal Resources shot up $1.05 to reach $3 after announcing a drill program was under way at its Ball Creek copper-gold deposit in the Iskut region of northwestern British Columbia. Previous drilling on this target returned 631 ft. of 0.22% copper and 0.02 oz. gold per ton from 100 ft. to 731 ft.