STOCK MARKETS — Lower gold price helps drag down TSE

A sagging gold price helped drag the TSE lower over the 5-day report period ended Dec. 6. The composite 300 index dropped 24.28 points to close at 4,079.44.

The gold and precious metals sub-group lost 399.2 points over the week to close at 8598.26. The fall was precipitated by a plunge in the gold price, with the London afternoon fix on Dec. 7 set at US$377 per oz., down US$6.10 from a week ago.

While the gold sector was losing ground, investors took a shine to base metals, driving up the mining sub-group 79.36 points to close at 2034.22. As anticipated, the prime rate jumped to 7.5% following last week’s jump in the bank rate. A further rise is expected following this week’s decision by the Bank of Canada to raise the bank rate by 28 basis points to 6.32%. The higher bank rate helped steady the Canadian dollar, which closed up more than a quarter of a cent to US72.81 cents.

Declining bullion prices helped drive senior gold producers lower, with American Barrick Resources down $1.25 to $28.38 and Hemlo Gold Mines off $1 to $12.13.

Echo Bay Mines plans to start mining a fifth deposit at its Kettle River gold project near Republic, Wash. The Lamefoot deposit has an ore reserve of 640,000 tons averaging 0.19 oz. gold per ton and is expected to be in production this month. Shares of the gold producer were off 88 cents and ended at $13.88.

Junior Breakwater Resources has just inked a deal with senior gold producer Placer Dome concerning the former’s East Amphi property, found near Malartic, Que. Placer can earn a 51% interest in the property, which hosts a drill-indicated mineral inventory of more than 866,000 tonnes averaging 10.38 grams. It may do so by spending $4.5 million on exploration and development and by paying $500,000 cash over four years. Placer shares were off 75 cents and closed at $25.88 whereas those of Breakwater were unchanged at 11 cents. Speculation is mounting that Placer plans to make a bid for TVX Gold’s interest in the past-producing Cochenour-Willans gold mine near Red Lake, Ont. Proven and probable reserves are estimated at 173,000 tons grading 0.51 oz. gold per ton, and possible reserves are calculated at 274,000 tons averaging 0.59 oz. gold.

TVX lost 25 cents to close at $8.63.

Bullish forecasts for the price of uranium, offered by several analysts and by Cameco’s president and chief executive officer, caused shares of the Saskatoon-based company to reach a new 52-week high. Cameco hit a high of $30.25 before rolling back to $28.75, up $1.50 on the week.

Strong fundamentals have also helped Canada’s two largest nickel producers either to approach or surpass 52-week highs. Increased world demand and uncertainty about production from the former Soviet Union have caused the price of nickel to surge above the $4-per-lb. mark. Accordingly, Inco, which plans to increase output by about 85 million lb. to 430 million lb., saw its stock jump $2.25 to end at $39.13. Falconbridge shares also rose, to hit a new high of $24.63 before easing back to $23.88, up $1.75.

Nickel refiner Sherritt gained $1 to close at $13.38 following news that it had concluded a deal with Cuban state-owned General Nickel Co. to mine, refine and market cobalt and nickel. Under the deal, the Cubans will supply the ore and Sherritt will contribute its refinery in Fort Saskatchewan, Alta. Failure of the price of gold to reach US$400 per oz., combined with profit-taking by European investors and lack of support for the junior gold market, contributed to a drop in the share price of African explorer Eden Roc Mineral. The junior hit a new 52-week low of $2.50 before recovering to end the week at $3.75, down 65 cents. Eden Roc’s parent company, Marshall Minerals, also lost ground, shedding 85 cents to finish at $3.30. Newly listed Anvil Range began trading on the Toronto Stock Exchange this week. The company has acquired the Faro mine from bankrupt Curragh Resources. A total of 8,000 shares changed hands and the stock ended the week at $6.25.