STOCK MARKETS — Interest rate rise casts pall over TSE

The prospect of higher interest rates caused by a weakening dollar, coupled with the drop in the price of gold, continued to cast a gloomy shadow on the Toronto market.

The Bank of Canada increased the prime lending rate to 6.26% from 5.84%, although the dollar continued to fall, to US72.24 cents from US72.71 cents. Gold, like most of the other major metals, lost ground. It dropped US$6.80 to close the week at $US372.40. Silver was down a dime to $US5.24; platinum tumbled US$13 to end at US$385.75; and nickel lost US11 cents to close at US$2.41.

During our report period, the Toronto 300 composite index lost about 180 points to close near the 4100 level. The metals and minerals subgroup and gold and silver subgroup also lost ground, closing down 4% and just over 1%, respectively.

The senior golds were all off, following the price of the yellow metal. Placer Dome shed $3.75 to close at $27.38, while Echo Bay Mines lost $2.25 to close at $14.

Lac Minerals, having confirmed its interest in exploring the Fort MacKay region in northeastern Alberta, edged slightly downward to close at $11.63, off 25 cents. The major says it will form a joint venture with Tintina Mines to explore the 11,000-sq.-mile land package. Since the first week in April, Tintina has undergone a dramatic rise and fall. The stock started this period at $1.77, rising rapidly and consistently until last Friday when it gained $1.75 to reach a new high of $7.13. After this, the bottom appeared to drop out as the stock plunged to $3.25, off 25 cents on the week. At the annual meeting of Hemlo Gold Mines, management announced positive first-quarter results with earnings of 17 cents a share, compared with 13 cents a share in the previous year’s first quarter. Hemlo closed down 75 cents to $12.13.

In addition to earnings results, the company announced that custom milling arrangements for the Holloway joint venture had been completed and construction of the mine, scheduled to last two years, should begin immediately.

Although details of the arrangement were not available, one potential suitor is thought to be American Barrick, which has a mill at the Holt-McDermott operation across the road. Barrick also posted healthy gains in first-quarter earnings, up 31% from the previous year’s quarter. The stock closed down $2.75 to finish at $28.88.

Base Metal producers were hit hard this week. Inco’s shares lost $2 to close at $30.25 on reports that the company lost US$60 million, or US53 cents a share, for the first quarter of 1994.

The losses were primarily due to one-time aggregate charges totaling $US104 million, including a US$56-million charge associated with shutdowns and employment reductions.

Other losses were posted by Cominco, down 75 cents to $30.25; Teck, down $2 to $21.88; and Noranda, off $1.50 to $23.25.

In other news related to Noranda, Aur Resources approached its 52-week low hitting $3.88 before recovering to close at $4.25. This comes after the company released new reserve estimates from the Louvicourt Twp. polymetallic mine indicating a 40% drop from the original estimate. The mine is now expected to have a life of 12 years, instead of 17.

Uranium miner Denison Mines is still a going concern despite the passing of a deadline to repay almost $77 million to creditors and the threat of a lawsuit by federal and provincial bodies.

For the juniors, the general market condition of lower prices also prevailed. After recently posting a new 52-week-high, Sudbury Contact slipped $1 to close the week at $7.63.

Queenston Mining and affiliated company Joutel Resources each lost ground, shedding 12 cents and 10 cents to close at $1.01 and 67 cents, respectively. Kinross Gold, also a recent favorite, lost 88 cents to close at $5.50. Despite the gloomy trend, there were some bright spots on the Toronto market. Opawica wrapped up an agreement that will allow it to buy a private company with large land holdings in Ghana, West Africa. The shares closed at $3, up 30 cents.

Metalore also bucked the trend, by hitting a new 52-week high of $25 before ending the week at $24, up $1.13.