STOCK MARKETS — Interest rate fears drag down TSE

Recent increases in bond yields have kept stock investors on the defensive and worried that interest-bearing investments will draw money out of equity markets. This lack of investor confidence helped drive down the Toronto Stock Exchange over the 5-day report period ended Nov. 8. The composite 300 index dropped 55.36 points to end the week at 4,209.09.

Many market analysts believe the U.S. Federal Reserve Board will raise the rate of federal funds, helping make stocks less attractive compared with interest-bearing investments.

The Canadian dollar ended the week virtually unchanged at US73.73 cents. Speculation over a possible rise in U.S. interest rates led to a 16-point rise in the Bank of Canada rate to 5.81%.

Gold bullion appears to have stabilized, with the London afternoon fix on Nov. 9 set at US$383.60 per oz., down only US25 cents from a week ago. Most of the senior gold producers lost ground, with Hemlo Gold Mines off 50 cents to $13.88; Placer Dome down 38 cents to $28.75 on a volume of just over 2.8 million shares; and Echo Bay Mines off 25 cents to $16.

Echo Bay received bad news this week when the U.S. Environmental Protection Agency rejected plans for a tailings impoundment at its Kensington gold project in Alaska. Apparently, the proposed impoundment was viewed as inadequate to protect salmon runs and commercial fish harvests in a nearby river.

American Barrick Resources has become one of the first Canadian-based mining companies to sign letters of intent with a Chinese government agency. The letters will allow Barrick Power Corp. (a joint venture between Barrick and Power Corp.) to enter joint ventures with the agency on two gold properties in the Liaoning and Guangdong provinces of China. Almost 2 million shares of Barrick changed hands as the stock gained 63 cents to close at $32.75. Inco continues to make news, having recently announced yet another major capital expenditure in the Sudbury Basin of Ontario. The company plans to spend about $116 million on the first phase of development at the McCreedy East deposit. The deposit is expected to produce its first ore in 1996, and to be in full production by 1999 at a rate of 3,000 tons per day. At this rate, the mine will produce 22.5 million lb. of nickel and 77.5 million lb. of copper annually. Despite the good news, Inco shares lost $1.75 to close at $38.38.

The Northern Miner recently learned that a reorganization is under way at Noranda Minerals, a unit of Noranda. Under the proposed plan, Noranda Minerals will be replaced by two companies: Noranda Mining and Exploration, headed by John Carrington; and Noranda Metallurgy, headed by David Goldman. Noranda Minerals President Alex Balogh will become vice-chairman of Noranda. The current president of Noranda Exploration, John Harvey, will be taking early retirement at the end of November.

Noranda lost $1.25 to $24.63.

The big gainer on the week was Caledonia Mining, which tacked on $2.50 to hit a new 52-week high of $12.13. The company has retained Toronto-based engineering firm Kilborn Ltd. to manage the mine expansion at its 83%-owned Filon Sur heap-leach gold mine in Spain.

Adrian Resources and Teck have reached an agreement regarding Teck’s participation in the Petaquilla copper project in Panama. Teck will fund a final feasibility study on several deposits at Petaquilla, as well as exploration costs on several other copper-gold deposits on the property. As a result, Teck will acquire an aggregate 26% interest in the project. Teck Class B shares shed 63 cents to end at $24.88, while Adrian’s stock vaulted to $4.40, up 65 cents.

New projects and higher metal prices helped Metall Mining post third-quarter earnings this year, compared with a loss over the same period in 1993. In addition to having a 48% interest in the Petaquilla project, the company has started production at two mines, in Turkey and Tunisia. Here in Canada, Metall has received environmental permits for the construction and development of the Troilus gold-copper mine north of Chibougamau, Que. Metall shares edged down by 25 cents to close at $12.75.

News of a nickel, copper and cobalt discovery by Diamond Fields Resources in Labrador drove the company’s stock to a high of $4.80 over the week before profit-taking ensued. The issue settled at $4.05, off 15 cents on the week.