Grab Samples (July 04, 1988)

In an embarrasing move to Banque IndoSuez, the convertible debenture kings of Canadian mining finance, the Swiss National Bank has killed IndoSuez’s latest bond deal. Client Galactic Resources, via Galactic Holdings, a wholly-owned affiliate, was planning to float a 75-million Swiss franc ($62 million) issue which was convertible into cash or gold bullion.

According to the Swiss National Bank, the conversion option into physical gold contravenes Article 65 of the National Bank Act which states that only the central bank has the right to issue legal tender. In Switzerland, which is one of the few countries to have a gold-backed currency, issuing gold is similar to issuing legal tender.

Although the deal will be restructured and relaunched shortly, IndoSuez was chastised by banking authorities for not doing its homework.

When Kitcat & Aitken divulges its means of rating gold companies in various parts of the world, investors are bound to be interested. After all, Kitcat, a subsidiary of the Royal Bank of Canada, is a major London brokerage firm and supposedly knows its stuff. It spent two years setting up its ranking system and only now made it public.

Kitcat’s Global gold Ranking weighs 10 factors including political climate, local tax regimes, exchange rates, management, exploration potential and market liquidity. That is intended to put gold stocks in South Africa, Australia, the United States and Canada on an equal footing.

Top-ranked by a wide margin among larger companies is Placer Dome. South Africans have five of the top 10 in the group including second-ranked Hartebeestfontain. The top Australian is BHP Gold in fourth spot while the top U.S. company is Freeport Gold. The second and only other Canadian in the top 10 is International Corona at ninth spot.

When it comes to large and small companies combined, however, there are some surprises. Placer Dome drops to second place behind Australia’s Hill Minerals. The top U.S. stock is FirstMiss Gold at fourth spot while the top South African is Kinross at fifth.

After Placer Dome, Canadian companies rank as follows:

18 — Cambior

25 — International Corona

26 — Galactic Resources

27 — Belmoral Mines

32 — American Barrick Resources

34 — Breakwater Resources

44 — Lac Minerals

53 — Agnico-Eagle Mines

55 — Hemlo Gold Mines

57 — Echo Bay Mines

61 — Pegasus Gold

72 — Dickenson Mines

73 — Giant Yellowknife Mines

74 — Sonora Gold Corp.

All are listed on TSE.

Phoenix Canada Oil was anxious to give its shareholders some good news in its 1987 annual report, but reluctant to let competitors know too much about its activities. It decided to take the “openly secretive” approach to keeping shareholders informed on one of its mining prospects.

The company had, said President Donald Moore in the report, entered a joint venture with another Canadian company covering the exploration and development of a prospective foreign mining property. Shareholders may be curious to know where that is, but the company is too shrewd to divulge that sensitive information.

“Presently, for competitive reasons, we cannot divulge geographic details which can affect plans to acquire prospective extensions to the property and to deal on other regional prospects,” says Moore.

Trust us, he seems to be saying.

The company must be doing something right judging by its balance sheet that shows current assets alone of $4.6 million compared with total liabilities of only $155,000.