STOCK MARKETS — Speculation pushes volatile TSE gold index

The Toronto Stock Exchange’s gold and silver index took off during the week ended July 27 as bargain-hunters moved in to shore up the sector.

After sliding more than 1,000 points from a 1993 high of 9,962, set in early July, the index recovered to close the week up 514 points at 9,340 and added another 105 points today (July 28). The record to beat is 10,410, set on Sept. 25, 1987.

In contrast to the stock market volatility, gold remained virtually unchanged at US$392.25 per oz. in New York, suggesting that most of the buying was speculative.

Some observers say the currency turmoil brewing in Europe is prompting investors to switch into gold and gold stocks, which are perceived to be safer investments.

The broad market also recovered somewhat from a brief correction, with the TSE 300 composite index adding 44 points to 3,911, and another 11 points today.

Taking top spot on our most active list was TVX Gold (TSE), which has been sold by parent Inco to a group of underwriters. Almost 9.5 million shares of TVX changed hands as the stock added 88 cents to $6.25. It closed up 25 cents to $6.50 today.

Proceeds of US$289 million should help Inco (which lost $2.2 million in the second quarter) temper further losses at its nickel mines. Inco picked up 63 cents to close the week at $26.63 and nickel added US2 cents per lb. to US$2.24.

Other winners in the gold sector included Placer Dome, up 50 cents to $26.13; American Barrick Resources, up $2.50 to $33.38; and Lac Minerals, up 63 cents to $12.

Wheaton River Minerals, which has completed a $5-million private placement of special warrants and optioned its Ketza River property to Hemlo Gold Mines, added 28 cents to $1.59, and another 5 cents today. Hemlo was unchanged at $14.25.

Having just signed an agreement with South Africa-based Anglo American to sell part of its interest in the Lomas de Hierro laterite nickel deposit in Venezuela, Jordex Resources (TSE) slipped to a new 52-week low of 55 cents for a loss of 7 cents on the week. The deposit, valued at US$43.5 million, contains reserves of 25 million tons grading 1.8% nickel.

Also down was Curragh, which is facing fresh criminal negligence and manslaughter charges stemming from the fatal explosion at the Westray coal mine in May, 1992. Curragh slipped 17 cents to 43 cents even as President Clifford Frame told shareholders he would have the Faro zinc mine up and running again by January.

Fellow base metal miner Noranda lost 13 cents to $20.63 after reporting substantially lower second-quarter earnings. For the three months ended June 30, Noranda managed to eke out a profit of only $1 million, down from $32 million in the second quarter of 1992. The company’s metals and minerals group made $22 million, down from $55 million last year.

But although most of the base metal producers are singing the blues, investors are dancing to another tune. Reflecting increases in the share prices of heavyweights Alcan and Inco, the TSE’s metals and minerals index added 77 points to 2,925.

Planning to venture into the software development field, Davidson-Tisdale Mines picked up 29 cents to 90 cents. The junior plans to issue 42.5 million shares in order to buy U.S.-based I-NET Intelligent Systems. The diamond sector remained in limbo, awaiting further results from the DHK property at Lac de Gras. Kennecott Canada recently completed an extensive reconnaissance and definition drilling program on the property. Dia Met Minerals added $1.50 to $43, Aber Resources added 45 cents to $3.85, and SouthernEra Resources added 63 cents to $6.88. Sudbury Contact Mines, which is searching for diamonds in Ontario, said it knows of no reason why its stock is advancing. It picked up 65 cents to $2.50 on a volume of 43,900.