STOCK MARKETS — A drab week on Toronto market

Another drab week for stocks on the Toronto exchange. The 300 Composite Index began our report week at 3,929.33 and ended at 3,971.77. The TSE gold and silver index, however, gained some ground, closing Sept. 14 at 7,883.81 points, up better than 200 points over the week. By the close on Sept. 15, it had risen just slightly above the 8,000 mark. This came despite the fact gold bullion lost US$7 per oz. over the week. By Sept. 15, the spot price was US$345.

Most of the senior gold equities were quiet. For example, American Barrick Resources closed at $29.12 on Sept. 15, virtually unchanged. Hemlo Gold was off about 50 cents closing at $11.36; Pegasus Gold, which announced it will join Goldbelt Resources in exploring ground in the Central Asian state of Kazakhstan, closed at $25.87, down 87 cents (again this was at the market close Sept. 15).

The story was much the same for most of the other majors. However, the two “Nevadas” — Franco and Euro — had a dismal week. Franco gave up almost $6, closing at $61.62; Euro almost $3, closing at $28.12.

The diamond stocks were equally moribund. The leader, Dia Met, dropped 75 cents to close at $44.75 (Sept. 15); SouthernEra lost $1 to close at $5.50. Moving away from the markets and into the field, out of northwestern Quebec comes news that all the surprises from the Beaufor project (Louvem and Aurizon Mines) are positive. Underground exploration to the tune of $1 million has so far confirmed the high-grade (0.35 oz.-per-tonne) continuity of the C1 Vein. As well, three individual parallel structures have been identified. All this could go a long way to reaching the 500,000-tonne reserve target for which the partners are aiming.

From the grapevine come other reports from northwestern Quebec saying drilling on the Main Street property (only a few kilometres away from the developing Louvicourt mine) has returned thick intersections of copper mineralization, in the order of 400 ft. grading 0.3% copper. Good zinc values were also reported.

Aur Resources is earning 60% of the property from Beaufield Consolidated Resources. Aur could not be reached for comment prior to presstime, but assays are in the works.

Beaufield moved from a low in August of about 30 cents to a high of 75 cents. Curiously, it has moved down and currently trades at 45 cents. In another play, Aur and its partners Thunderwood (unchanged at 74 cents) and Vancouver-listed Champion Resources (down 15 cents at 35 cents) received bad news from their Jones Hill property in New Mexico. What had seemed a very promising massive sulphide play turned sour when the drill hit nothing but barren rock. Aur and Thunderwood opted out of the play, but Champion said it will carry on. Aur was listless through the week, holding at about $4.35. On the front page this week, we report on Gold Standard (NASDAQ) and its court bid to wrest money from the vaults of Getty Oil. First, a jury awarded Gold Standard US$404 million and then the presiding judge overturned the verdict. Gold Standard will now appeal.

From a market point of view, a Gold Standard victory on appeal would mean a huge infusion of cash and, therefore, a quantum leap in per-share earnings. With about 14 million shares outstanding, Gold Standard would gain more than $20 per share (in one-time earnings) if the US$404 million verdict is upheld. FCMI, a Toronto-listed company, also offers exposure to the play — highly speculative, it should be noted, because this is strictly a gamble on the outcome of a court case — through its non-voting Class A shares. FCMI holds a million and a half Gold Standard shares and 1.75 million warrants. The public float of FCMI is very thin — 64% of the 5.2 million shares outstanding (and fully diluted) are held by management.

After the initial court ruling, FCMI shares bounced more than $1 to $2.90 and then traded off to $2 after the judge’s negative ruling.