Toronto Stock Exchange Investors take cover as gold falls, NDP

The newly elected NDP government in Ontario combined with Persian Gulf tensions and a falling gold price gave investors more reasons to feel nervous during the week ended Sept. 11. While developments the Middle East are already causing jitters in the market, a majority NDP government in “conservative Ontario” has taken the province by surprise. Business in general and mining in particular is wondering what’s in store now that a party with strong ties to organzied labour and environmentalists is in control.

As they waited for more indications from Premier-elect Bob Rae, the price of gold fell to its lowest level in five weeks. Apparently bludgeoned by dipping oil prices, which eventually recovered, gold dipped to US$382.05 today Sept. 12 on the second London price fix.

The gold and silver index responded today, Sept 12, by giving up 25.39 points to close at 6057.07 and several gold issues including American Barrick Resources down 13 cents, and Placer Dome, down 25 cents, lost ground. Although Platinum has fallen by US$29 per oz. over the past week, shares of Madeleine Mines gained 13 cents today before closing at $6.13.

Over the broad market, volumes continued to drift as investors await more signals from the Middle East. Today, the composite 300 index fell into negative territory for the third successive session to close down 0.52 points at 3271.72.

Gold stocks, which have rallied in recent months are expected to be hit as more than US$1 billion worth of shares are sold onto the market by, among others Coeur D’Alene Mines, Newmont Mining and Amax Gold.

Hanson Industries plans to cut its 49% stake in Newmont to 26%, while Amax is expected to drop its stake in Amax Gold from 87% to 54%. The outcome of all this is that fund managers appear to be trading out of junior companies, like Minven Gold, to obtain the liquidity needed to purchase the senior stocks when they become available. It explains why Minven hit a low for the year of 70 cents after trading over half a million shares this week.

On the base metal front, Inco gained $1.12 before closing at $32.75 while Noranda was ahead 38 cents, closing at $17.38.

Meanwhile, shares of the companies involved in the Louvicourt Twp. massive sulphide discovery east of Val d’Or, Que., were quiet despite news that the litigation hovering over the discovery has been removed. While a new agreement paves the way for Aur and partner Societe Miniere Louvem to get on with the business of exploration, shares of Louvem and parent St. Genevieve lost ground, closing down 38 cents and 10 cents respectively. The Aur issue didn’t fare much better. It closed up 5 cents after trading resumed.

Granges Exploration was on the most active list this week after settling litigation with Abermin Corp. over the former Tartan Lake gold mine in Manitoba. As a result, Granges stake in the mine property and surrounding claims will increase to 100% from 64%. Predictions that the sale of Amax Gold’s 44% interest in Canamax Resources to parent Amax Inc. for roughly 70 cents a share would drive the price Canamax stocks downward has proved prophetic. The Canamax issue, that once traded at $14.75, became a penny stock this week trading at a new low of 80 cents. Canamax recovered slightly to end the week at 83 cents.

The Audrey Resources issue gave up 5 cents today after Montreal businessman Jacques Forget announced that his investment firm Invesfor has acquired a 5% stake in the polymetallic producer.

Forget, who failed in a recent bid to remove Agnico-Eagle Mines President Paul Penna from his position, said Invesfor has acquired 850,000 shares of Audrey for an average of $3.70.

Other issues to hit new lows this week were Cheni Gold $2.50, Geddes Resources $1.05, Newhawk Gold 90 cents, Northgate Exploration $4.90, Rea Gold $1.30, United Keno Hill Mining $1.25.