STOCK MARKETS — Gold’s rise offsets jitters over VSE

The Vancouver Stock Exchange was back in the news again as provincial government officials ordered an independent review of the Exchange and the securities commission. The government believes the VSE is having problems shaking its reputation as “a haven for fraudulent and abusive practices” and hopes the new commission will recommend policy that will result in a better-regulated marketplace. The VSE has had some outstanding successes — the Hemlo and Eskay Creek gold discoveries and the Dia Met diamond discovery were all financed by seed money raised in Vancouver — as well as some damaging scandals. The task will be to preserve all the positive features but fully expose and put an end to the abusive practices that have corroded public confidence in the VSE.

Brokers say the government announcement and subsequent media coverage questioning some aspects of the diamond exploration boom taking place on “caribou pasture” in the North prompted a few nervous investors to move out of diamond issues. But a soaring gold price was the main reason investors pulled out of the diamond play and into gold stocks which were languishing on the vine just months ago.

At presstime, noon May 19, the VSE resource index reached 1119.16, a gain of 51.64 points from a week ago. The composite index, at 934.26, reflects a modest gain of 12.38 points from last week.

Chutine Resources, trading at the 5 cents level, was the most active issue over our report period. Princeton Mining had planned to merge one of its subsidiaries with Chutine but backed off after a drilling program failed to confirm tonnage on a Mexican copper property held 49% by Chutine. Diamond explorer Calco Resources was also active, off 19 cents at $1.06. Drilling is planned this year for the company’s Amad claims in the Northwest Territories. Companies involved in the promising diamond discovery on the WO claims either held steady or lost ground this past week. Dentonia Resources was off 75 cents at $6.75 while Kettle River Resources slipped 87 cents at $13.50. Alberta-listed Horseshoe Gold Mining held even at $6.87. Fairfield Minerals was one of several juniors to benefit from the upswing in gold prices. The company is well-managed and has a promising high-grade gold deposit near Merritt, in southern British Columbia, which generated healthy revenues from last year’s bulk-sampling program. An expanded program is planned for this summer on the Siwash North deposit. Fairfield gained 50 cents to reach $3.

Prime Resources also got a boost, ahead 35 cents at $3.95. The company is making a good profit from its 40% interest in the Snip gold mine in B.C. and is moving ahead with plans to build a mine at its 50%-owned Eskay Creek deposit. This successful junior (now controlled by Homestake Mining) has applied for a listing on the Toronto Stock Exchange.

Higher gold prices were also a welcome tonic for Bema Gold, active on a relatively low-grade gold project in Chile with partner Amax Gold. The issue shot up 44 cents at $1.82. Active on a gold mining project in Venezuela’s Kilometre 88 district, partners Eurus Resource and Crystallex International attracted renewed investor interest. Eurus was up a modest 21 cents at $1.45 while Crystallex gained 92 cents at $5.62. Canarc Resources was trading at $2.70 after a trading halt was lifted, pending clarification of an option to acquire a gold concession in Venezuela. The halt was related to allegations that another company was attempting to acquire the same concession. Canarc says the allegations turned out to be “entirely without merit.” Formation Capital was up 85 cents at $4.85 because of interest in its Black Pine copper project in Idaho. Drill results are expected shortly. Formation also has properties in Saskatchewan but isn’t planning to go into the diamond exploration business. Instead, it will let other interested companies earn an interest in return for funding exploration.

Consolidated Pine Channel was one of the few diamond exploration issues to gain ground this week. Its share price rose 87 cents to reach $7.62. The company has identified and plans to drill-test bull’s-eye targets which may or may not turn out to be kimberlite bodies. The properties are in the Melanosa Arch of Saskatchewan, where overburden is considered less dense than in the Fort a la Corne region.

Britannia Gold was ahead 45 cents at $1.45. A recent private placement netted funds that will be used to explore a property near Greenwood, B.C.