Toronto Stock Exchange Court news rally gives way to retreat

An Ontario Court of Appeal decision this week re-affirming an earlier court ruling to award International Corona Resources the Page Williams gold mine put into production by Lac Minerals in northern Ontario’s Hemlo area, sent the tse 300 index upwards 24.6 pt, with the metals and minerals, integrated mines and metal mines stock groups all setting new records and the gold and silver stock sub-index climbing 135.4 pt.

The new day, however, brought a sharp reversal with investors watching the 300 index plunge 56.2 pt. In New York the same day the Dow Jones average tumbled even further, down 91.6 pt in the worst one- day slide in the Dow’s history. Fears of rising interest rates and a warning by an influential analyst that the market was at an interim top were among the reasons given for the decline. In trading today on the tse, the fall continued, with the 300 index off 23.5 pt. to 3,838.36 pt. on a volume of 29.4 million shares.

Big winner in Hemlo court decision was, naturally, Corona, which on the day following release of the ruling climbed as high as $85 and closed at $79, up $31.50. Corona stock today closed at $72.88. Corona’s Hemlo partner, Teck Corp., which jumped more than $10 on the day after the ruling, slipped 25 cents today to $40.75. (Corona and Teck are 50/50 partners in the producing David Bell gold mine located next door to the Page Williams mine; the two companies have an agreement to share equally in all their Hemlo operations.) The original court decision by Justice R.E. Holland in 1986 awarded the Page Williams mine to Corona in return for a payment of $154 million plus interest to Lac.

Lac, which says it will seek leave to appeal to the Supreme Court of Canada, traded more than 5 million shares on the tse on the day following release of the appeal court’s decision, slipping $2.87 to $15.12. The stock has since gained a little, closing up 63 cents today to $16.25. Trading of Lac shares, in the millions, suggests a possible takeover bid of the Toronto-based gold producer is in the offing, insomuch as control of the company is on the streets. Campbell Red Lake Mines, for example, now part of Placer Dome, was one of the largest Lac shareholders.

Definitely in a takeover mood is Belmoral Mines, which is offering to purchase 58% (almost 6.4 million shares at $3.15 per share) of Louvem Inc. for $20 million (see front page story) and merge its own Quebec assets and the outstanding shares of Louvem into a new Quebec company. Belmoral closed up 38 cents to $5.88, while Louvem last traded at $3.05. Louvem was recently presented with an offer from the Montreal junior St. Genevieve Resources involving the purchase of 3.7 million shares of Louvem at $2.70 per share; a meeting of Louvem shareholders has already been called for Oct 20 to consider the St. Genevieve proposal.

Still with Belmoral, which has shuffled its top management following the resignation of President J. Malcolm Slack, Vancouver-listed Canreos Minerals (1980) has agreed to issue 2 million shares to Belmoral at 80 cents per share plus warrants which could net Canreos a total of $7.6 million upon exercise of all the warrants. Belmoral has also exercised its conversion rights on a $1.45 million convertible debenture at 55 cents per share, boosting its interest in Canroes from 14% to 39.6%

Out west, Bow Valley Industries, seeking a substantial interest in Getty Resources, says it has entered into share option agreements with four shareholders of Getty, including President R.C. Atkinson, to purchase more than 2.2 million shares of Getty at $14.09 per share. The $31.2-million deal would give Bow Valley a 15.2% interest, on a fully diluted basis, in Getty, which, among other projects, is involved in the Tundra gold project in the N.W.T. Getty closed up 12 cents to $11.50, while Bow Valley, which itself is the object of a takeover bid by British Gas PLC, dropped 12 cents to $19.25.

Announcing a production decision for a third zone at the copper- zinc-gold-silver Selbaie mine in northwestern Quebec were joint venture partners BP Canada, Esso Resources Canada and TransCanada Pipelines. Cost to bring the zone into production, during the last quarter of 1988, is estimated to be $9.5 million. BP Canada closed unchanged today at $24.

Battle Mountain Gold, which closed unchanged today at $29.75, is to undergo a three-for-two stock split by means of a stock dividend.