Toronto Stock Exchange Massive Inco trades boost market volumes

More than 8.7 million shares of Inco Ltd. were traded today in a blizzard of action valued at more than $300 million. The immense volume, about 8.7% of the company’s issued and outstanding shares, comes as the ex-dividend date of Dec 16th fast approachs. Inco sweetened its controversial recapitalization program with a special dividend of $10 (US) per share.

Investors, who for various reasons don’t want the dividend, are unloading whereas buyers looking for such a dividend deal, are buying all they can get. The bottom line of today’s unusual trading was an unchanged price of $39. For perspective, the Inco trades represented about 34% of today’s volume of 25.5 million shares.

Apart from the Inco action, the markets continued dull. The composite index slipped 0.18 pts to 3289.98 points. Both metals and minerals and the gold and silver indices were also marginally weaker at 2979.05 pts and 5444.69 pts respectively. During our review week, the composite was off more than 34 points.

Although most sectors remain weak, the base metal producers are holding on to earlier gains. Cominco Ltd. was firm at $23, down 38 for the day. Falconbridge Ltd., which is being slowly swallowed whole by Noranda Inc., was also steady at $23.63. Nickel prices, which both Inco and Falconbridge are highly sensitive to, are back over the $6 (US) per lb mark. Just two months ago, several analysts were predicting nickel’s demise.

Another beneficiary of record high zinc prices is Mineral Resources International. MRI controls the Nanisivik zinc-lead mine in the high Arctic. The issue was a winner at $4.80. Redstone Resources was an active trader all week, as more than a million shares were traded. A new board is in place which plans to reactivate the company — especially its Coates copper deposit in the Yukon. Although hosting 37 million tons of rock grading 3.92% copper per ton, the deposit is confined to a narrow bed averaging 3.3 ft in thickness. Redstone was easier at 68 *

The euphoria in the base metals sector unfortunately is not spilling over into the gold arena. Although bullion prices were firm at $420 on the second London fix, gold equities continue to suffer from selling. Numerous issues litter the new low list each day — an unsettling testimony to just how bad the situation is for golds. On a positive note, the current state of affairs must be a contrarians delight.

Echo Bay Mines was one of the issues floundering in the new low column, dipping to $16.88 today. Corona Corp. A shares were also testing a new low of $7.25 on volume of 187,903 shares.

LAC Minerals was unchanged at $12.13 whereas Placer Dome Inc. was marginally easier at $16. Winners included Agnico Eagle Mines which managed a small advance to $12.38. American Barrick Resources also added a few pennies to close at $19.63.

Nuinsco Resources is under new management after control was sold by Echo Bay to Deak International Resources. Deal installed Malcolm Slack as chairman of Nuinsco. Slack will try to succeed where Echo Bay failed. The company’s main asset is a 100% interest in the Cameron Lake gold deposit, deemed uneconomic by a feasibility study.

Cash-rich Cambior Inc. has increased its bid for the shares of junior Nova-Cogesco. Cambior is offering $1.80 per share for control of the company. Nova’s main asset is a 20% interest in the big Silidor gold deposit in Quebec. Cambior added 25 to close at $13.25.

Wharf Resources was also firm, closing at $5.50. Talk is that another mining company is planning a takeover of the U.S.-based gold miner. Just last month, Dickenson Mines tried and failed to merge both companies. Dickenson remains Wharf’s largest shareholder.

Two issues which are hurting are Noramco Mining and Windarra Minerals. Noramco dipped to a new low of 80 before recovering to 90 today. All the company’s main projects, which were touted as future gold mines by the early 1990s, have been relegated back to the exploration stage by new management.

Windarra has a 25% interest in the Magnacon gold property — one of the best projects in Ontario. Despite the excellent asset, the company is burdened by an excessive amount of issued shares and a gold loan which takes up to 80% of future cash flows for servicing during the first few years of mine life.