STOCK MARKETS — Seniors seem indifferent to gold’s strength

Gold bullion closed strongly again this week, rising to US$377.15 per oz. Most of the senior gold shares, however, responded weakly. The exception was Franco Nevada. It gained $4.25 to close at $93 by the end of our report week. American Barrick gained only 50 cents to close at $35.63. Placer Dome lost a few cents to close at $30.50.

Skeptics, in the form of short sellers who hope to make money when a stock’s price falls, seem to be growing in number for a couple of major gold companies. For example, Cambior short positions rose substantially in the past month to 420,700 shares sold short, an increase of 302,800. Euro Nevada also attracted the attention of short sellers. In total, 665,838 shares were sold short, a rise of 626,841 shares. (For a more comprehensive list of short sales see Page 10.)

Cambior closed the week up 75 cents to $19.88, while Euro Nevada also gave the short sellers indigestion, by rising more than $2 to close at $46.38. Lac Minerals rose a few cents to $10.88. (See front page report on the plight of the trapped miners at Lac’s Macassa mine.)

In the junior category, new lows were hit on Dec. 6 by Baja Gold (closed at $1.01), Dakota Mining ($1.90, off 35 cents), International Skyline ($1), Orofino (7 cents) and Redfern ($1.78 before recovering to $2). Baja Gold, formerly Tymar Resources, holds a proven and probable resource of 5.3 million tonnes of 1.9 grams gold in Mexico. But Baja is apparently a publicity-shy junior, for nary a word has been heard about the project for months. International Skyline is trying to revive the Johnny Mountain mine in British Columbia. It also has a piece of an Idaho limestone deposit. Judging by share prices, neither project has caught the imagination of investors. Orofino investors presumably did not appreciate news (reported in these pages last week) that Orofino was to be amalgamated into a new company called CanGold. As for Dakota, it has been drifting since its reorganization. Redfern, meanwhile, has concluded drilling — for this year at least — on its Tulsequah Chief property in northwestern British Columbia (see page 11). Inco hit a new 52-week high on Dec. 6, closing at $32.25. In fact, other base metal miners hit highs as well. Cominco closed up $1.63 to $20.50; Noranda was up $1.50 to $25.38; and Rio Algom rose $2 to $21.25. Reflecting the rising share prices, the Toronto Stock Exchange Metals and Minerals Index has been on an uninterrupted rise, touching bottom at about 2,800 points early in October and finishing this week at 3,434.12.

Metall Mining fought the upward trend, losing 13 cents to close at $10.63. Arimetco, a small copper producer, rose 40 cents to close at $2.13. On the exploration front, Sudbury Contact, a company in the Agnico Eagle fold, posted a remarkable rise this week. Trading around the $2.50 mark as the report week began, Sudbury Contact gained $1 on a single day of trading to close the report week at $3.50. As we went to press the following day, the stock had climbed another 30 cents.

Sudbury Contact has hit gold mineralization while drilling a diamond prospect just north of the Larder Lake Break. The best hole intersected 0.17 oz. gold over 46 ft. While warning it was too early to assess its significance, Sudbury Contact President Paul Penna said, “we have all the indications of a new find.”

Mentor Explorations, which holds a 44% interest in Sudbury Contact, rose more than $1 to $6.25. Agnico gained 63 cents to close at $18.50. Strike Minerals, a CDN-listed stock (see page 10), traded 560,000 shares, posting a high of 70 cents and a low of 55 cents. Still no word from the company on its Shining Tree area gold play. The rumors, reported in this column last week, of a rich intersection, quieted down during our report period. Alberta-listed Goldhunter, also involved in the play, lost 3 cents to close at 35 cents. Volume was heavy.

Dia Met rose $4 to close at $47, probably in anticipation of a rumored news release.