STOCK MARKETS — Gold and Silver Index adds to TSE’s

The Toronto Stock Exchange just keeps galloping along. January was the most active month ever, with 1.6 billion shares worth $19.8 billion changing hands. For six days, the daily value topped $1 billion. All this activity has pushed the TSE 300 Composite Index to 4,591.28, surpassing the previous high, set only days earlier, of 4,574.32.

The Gold and Silver Index has been a prime contributor to the overall market strength. It began our report week at just under 11,000 and finished (on Feb. 1) at 11,218.70.

The gold price, meanwhile, strengthened over the week, closing up US$3.95 at US$384.95. But that had little effect on most of the seniors other than American Barrick, up $1.50 to $38; Lac, up $1.25 to $12.63; and Placer Dome, up $1.75 to $35.63.

TVX Gold and High River Gold have agreed, in principle, to form a 50-50 joint venture to mine the Snow Lake project in Manitoba. TVX must transfer back to High River 5.9 million High River shares (along with some warrants) held by the senior. It must also arrange financing to carry out development leading to commercial production before Dec. 31, 1995. The targeted annual rate of production is 100,000 oz. TVX closed up 50 cents to $8.75.

The amalgamation of several Hughes-Lang Group companies will be completed by mid-February, when the new entity, CanGold Resources, is listed for trading on the Toronto, Montreal and Vancouver stock exchanges. The amalgamating companies are Hughes Lang, Orofino, Nova Cogesco and Equity Reserve. With working capital of more than $3 million and a portfolio of marketable securities worth at least $2 million, CanGold will be well-financed to tackle projects. Not as well-known is CanGold’s stake in Atlas, a New York-listed stock which was recently recommended by First Marathon analyst John Lydall as a potential turnaround gold producer. Since the recommendation, the stock has moved up several dollars.

CanGold holds a US$3.5-million debenture, convertible into 875,000 Atlas common shares at an exercise price of US$4 per share. When last we looked, Atlas was trading at about US$8. A Hughes Lang document notes the Atlas holding would be worth $9 million at current valuations.

Eden Roc moved up strongly, gaining $1.50 to close at $7.75. This came in spite of a devaluation of the Ivorian currency to half its former value against the French franc. Eden operates a mine in Ivory Coast and holds an enviable land position with promising gold targets.

International Musto posted a $3.63 gain to $15.25. It’s being courted by MIM Holdings, the big Australian outfit that wants to joint-venture Musto’s Argentine property (see front page). However, an unwanted suitor has also appeared, Metall Mining, which is bidding for a direct stake in Musto. The latter says it will sue Metall, which closed the week up slightly at $13. Cathedral Gold, a volatile trader, rose 70 cents to close at $3.75. United Reef says its recent rights offering was oversubscribed. The offering brought roughly $1.8 million into the company’s coffers. The money will fund continuing development and exploration of the Bamingui-Bangoran diamond project in the Central African Republic. Company Chairman Dr. Mousseau Tremblay, a former De Beers subsidiary explorationist who headed up a diamond search in Canada for De Beers in the 1960s, will visit the African country soon. United Reef closed up 13 cents to 80 cents.

On the base metal front, Rio Algom initially went to the market with a $157.5-million offering of common shares and warrants. However, demand was so strong that the company added $22.5 million worth of shares. This makes the total financing of the 8-million units worth $180 milion. The company will plow the money into its Cerro Colorado copper project in Chile and replace funds used for a redemption of preferred shares. Rio closed the week up 38 cents to $22.63.