STOCK MARKETS — Budget buzz triggers rally on the TSE

A positive response to the recent federal budget led the Toronto Stock Exchange to post a moderate gain over the 5-day reporting period ended Feb. 28. The composite 300 index jumped 22.96 points to close at 4,124.81.

Market-watchers were generally pleased with Finance Minister Paul Martin’s assault on the federal deficit. Martin’s strategy involved taxing large corporations, administering a gasoline tax of 1.5 cents per litre, and outlining a major downsizing of the federal civil service.

Favorable response to the budget helped the Canadian dollar jump to US71.95 cents, a gain of nearly two-thirds of a cent on the week.

A stronger dollar and the easing of tension on the financial markets, following the budget, allowed the Bank of Canada to lower the bank rate by 36 basis points to 8.02%. This, in turn, triggered a drop in the prime rate to 9.25% from 9.5%. As a result, mortgage rates are expected to drop across the board in the coming weeks.

Gold bullion fell on the week, with the London afternoon fix on March 1 set at US$375.70 per oz., down US$3.50.

Senior gold producers were mixed on the week, with Barrick Gold off 13 cents to $30.25, Placer Dome adding 63 cents to close at $28.50, and Hemlo Gold Mines tacking on 25 cents to $12.

Alberta-listed TVI Pacific has agreed, in principle, to form a joint venture with Echo Bay Mines. The partners will explore and develop the Kingking gold-copper porphyry project which hosts geological reserves of about 300 million tonnes containing 2.9 billion lb. of copper and 5.5 million oz. gold. Shares of Echo Bay rose 25 cents to end at $12.75.

Despite lower revenue, Agnico-Eagle Mines reported increased earnings and cash flows for 1994. While revenue dropped to $76.6 million in 1994 from $77.5 million in the previous year, earnings jumped to 38 cents from 23 cents a share and cash flow increased to 84 cents from 52 cents a share. The company, which is carrying out expansion programs on its three properties in northwestern Quebec, saw its shares edge upwards by 13 cents to close at $13.50.

Another company that posted positive financial results was Wharf Resources. Between 1993 and 1994, revenue and earnings increased by 25% and 100%, respectively. Gold production also rose, by 11% to 137,000 oz. Wharf shares closed at $10.50, up 25 cents.

Investors seemed unimpressed with assay results from the first drill hole on Murgor Resources’ gold property in northwestern Quebec. Area players Freewest Resources Canada and Orient Resources both tumbled, with the former losing 40 cents to close at 80 cents and the latter shedding a dime to 23 cents on a volume of more than 5.8 million shares.

Market-watchers continue to favor Diamond Fields Resources (TSE), which is exploring the Voisey Bay nickel-copper project in northern Labrador. The stock hit a 52-week high of $21.88 before closing at $19.63, up $2 on the week. The company, which recently resumed drilling on the property, has proposed that a review committee be established to enhance communication and co-operation between the company and concerned aboriginal groups. Shares of International Musto Explorations were big movers on the week, gaining $2.38 to close at $9.13 on a volume of more than 1.9 million shares. Musto revealed that it is being courted by several majors interested in acquiring the company. Although several of the majors are conducting due diligence reviews, Musto has yet to receive any firm proposals. Meanwhile, rumors are circulating that the Quebec Crown corporation Soquem has intersected significant gold and copper values on Montreal-listed Consolidated Oasis Resources’ property in Fancamp Twp., near Chibougamau. Oasis, which is also a player in the Murgor discovery area, lost 16 cents to close at 27 cents.