STOCK MARKETS — Russian turmoil zaps gold bugs into action

Thanks to Russian President Boris Yeltsin, who this past week, in effect fired the Russian Parliament, and appointed himself sole (though interim) chief, gold bugs were prodded off the sidelines and into the gold market.

His actions and a counter-stroke by his political foes to install their own acting president moved spot gold up US$9.75 to US$355 at the end of our report period on Sept. 21.

It came as no surprise that a parallel move occurred in the gold equities. American Barrick Resources rose $2 to $30.62. Agnico Eagle gained a shade over $2 to $16.37. And Hemlo Gold gained more than 50 cents to close at $11.87.

Franco Nevada, a heavy loser last week, gained most of the ground lost, moving up $6 to close at $67.50. (That’s a little closer to a recent share offering it made at $75, but investors who bought the deal must still feel a mite queasy.) Sister company Euro Nevada claimed a $4 advance, closing at $31.75.

The shares of Placer Dome, meanwhile, were aided not merely by the Russian turmoil, but also by good results from its Venezuelan property. It has reported a “gold resource” of some 4.8 million oz. Placer gained better than 10%, climbing $3.62 to $26.25.

Pegasus (TSE), up $1.25 to $$26.12, was also in the news for something other than a price rise related to Russian developments. Apparently, its Zortman-Landusky gold mine in Montana contravenes some state environmental laws.

Investors can expect some environmentalists to “spin” this out as another Summitville mine fiasco (for details see below). “This is not another Summitville,” a Pegasus spokesman stressed.

For Venezuelan Goldfields (TSE), it was mostly a good-news week. Placer Dome (TSE) reports very positive results from its Venezuelan ground (see page 1). This is all to the good for VenGold because it holds properties in the same general area.

But on the negative side, one might have expected spillover when the public image of VenGold creator Robert Friedland was tarnished by a controversial documentary on CBC Television linking him to the environmental problems besetting the former Summitville mine in Colorado. Up until a few years ago, Friedland had controlled Galactic Resources, the Summitville operator. Through legal manoeuvres, Friedland tried blocking the telecast. He was unsuccessful. The news that caught the imagination of investors, however, was the Placer results. VenGold closed up $2.50 to $5.75.

Juniors, such as Chesbar Resources (ME), with ground in the South American country, probably were aided by the Placer results. It moved up 15 cents to 54 cents.

On the diamond front, the leader, Dia Met, rose $2.50 over our report week to close at $47.25. However, at presstime, just after the most recent Dia Met-BHP results came out (also featured on page 1), the stock popped another $5 to $52.75. Another diamond stock, SouthernEra, gained nearly $1 on the news to close at $6.50.

In the base-metal sector, the majors suffered through another week of woeful price drops. Nickel fell to US$1.90 per lb. — off 10 cents, a significant fall at that level. Copper shed 7 cents to trade at 80 cents. The sagging nickel and copper prices represented a double whammy for the Sudbury, Ont., producers — Inco and Falconbridge (50-50-owned by Noranda and Trelleborg). Both are big producers of not just nickel, but copper as well. Inco took it on the nose, losing nearly $2 to end our report week (Sept. 21) at a shade under $24.50 a share. Noranda lost nearly $1.50 closing at $20.87. Cominco and Metall also lost a bit of ground, Cominco closing down 75 cents at $15.25 and Metall down 37 cents at $10.87.

Finally, Azco suffered a debilitating blow when Magma Copper announced it was dropping out of the development of the Sanchez copper play in Arizona. Azco shares dropped like a stone, losing 90 cents to close at $2.70.