STOCK MARKETS — Markets drift lower as mines and golds weaken

Despite the strong dollar and falling interest rates, the Toronto Stock Exchange posted a fractional loss for the report period ended Oct. 3. The TSE 300 composite index was off 20.41 points to close Tuesday at 4499.49.

The Canadian dollar broke the US75 cents barrier, finishing Tuesday at US75.27 cents, its highest value against the American greenback in 21 months. The Bank of Canada replied in kind, chopping the bank rate 21 basis points to 6.5%. This led three major chartered banks to announce rate cuts as well. Polls showing the federalist side leading in the Quebec referendum campaign were credited with the strength in the currency.

The TSE gold and precious metals subindex fell 234.06 points to finish the report period at 10276.51, a loss of 2.8% on the week. The gold price continued to decline, with the London fix at US$382.60 per oz. on Wednesday morning, down US60 cents from a week before. The other precious metals were also lower this week, with silver down US12 cents for a Wednesday fix at US$5.34 per oz., and platinum fixed at US$416.25 per oz., down US$4.

Royalty sisters Euro-Nevada Mining and Franco-Nevada Mining were the big losers among the gold stocks last week. The former slipped $4.25 to $50.25, while the latter lost $6.88 to close Tuesday at $80. Among gold mining issues, Placer Dome was down $1.50 to $33.50, Goldcorp was off 63 cents to $12.87 and Kinross fell 38 cents to $11. The heaviest trading was in Barrick Gold, which lost 38 cents to finish the week at $34.

The metals and minerals subindex declined 130.17 points, or 2.7%, to close Tuesday at 4671.69. Nickel prices continued to soften, with a London Metals Exchange spot price of US$3.59 per lb. Inco finished the report period at $43.63, off $1.25, and Falconbridge was down 88 cents to $28, both on heavy trading. Refiner Sherritt gained 75 cents to $17.63. Speculation persists that the company is a potential takeover target. Diamond Fields Resources, meanwhile, lost 12 cents to close Tuesday at $22.63.

Copper fell 3 cents to US$1.30 and zinc was down 1 cents to US45 cents, while lead was unchanged on the week at US27 cents. Noranda lost $1.12 to close Tuesday at $26.50 and Rio Algom fell 88 cents to $26.12. Inmet traded actively and was also down, losing 25 cents to close at $9.63.

Cominco announced it was investigating the feasibility of an expansion at the Red Dog mine in Alaska. Picking up 38 cents Tuesday to close at $26.50, it was still down 75 cents on the week. Parent Teck’s B-series shares were also down, falling 63 cents during the report period to $26.

One of the star performers this week was Diadem Resources. Shares of the company more than doubled, surging by $2.15 to close at $3.25. When contacted, company management did not have an explanation for the stock’s performance. However, the company announced it had acquired the Pelkan River base metal prospect in Quebec, 60 km south of Wabush, Nfld.

Montreal-listed Bresea Resources and its 24%-owned affiliate, Bre-X Minerals, reported encouraging developments on two Indonesian projects. Bresea shares hit a new 52-week high of $19.25 before edging back to $19.13, up 87 cents.

An increase in resources at the Bellavista gold project and improved copper cathode production at the Ivan mine helped Minera Rayrock add value. Shares moved up by 25 cents to end at $1.70.

Reports that two new gold zones had been found by WMC International on the Meliadine West project helped Comaplex Minerals advance. More than 1.5 million shares changed hands as the stock hit a new 52-week high of $1.48 before rolling back to $1.20, up 38 cents.