STOCK MARKETS — Speculative money pours into N.W.T. diamond

Diamonds added a distinctive sparkle to the Toronto Stock Exchange during the week ended April 20, as investors rushed to take part in speculation associated with a new diamond find in the Northwest Territories.

Following an announcement that an 86.4-kg sample taken from DHK’s Tli Kwi Cho kimberlite, south of Lac de Gas, yielded 54 diamonds, including 15 macrodiamonds, trading in diamond shares helped propel the TSE to new daily trading records.

On Friday, April 16, volume topped 83 million shares, breaking a previous record set in April, 1986. The frenzy continued on Monday, boosting volume to 90.2 million. The TSE 300 posted a 34-point gain over the week. Today (April 21), volume remained at an unusually high level of 73 million shares as the TSE 300 crept up by 0.49 points.

Aber Resources and SouthernEra Resources, which each have a 10% stake in DHK’s properties, both jumped to new highs in heavy trading. Aber finished the week up $1.25 to $3.70 while SouthernEra added $1.13 to $6.13. Aber closed today at $4.

“The attraction to the speculator is that any company might hit the jackpot, and you can put a number on that jackpot by looking at the value of Dia Met,” said Canaccord Capital’s John Hainey about the widespread market reaction. “We’ll get a good idea about Dia Met’s bulk sample results in June. Unless there is a disappointment there, the market will be very active all year and perhaps into next year.”

Ironically, it was a diamond play in Australia, not the Northwest Territories, that made the biggest impact on market volumes during our report period. More than doubling to 45 cents, Cliff Resources jumped to the top of the most active issue list as more than 14.2 million shares changed hands. The company has more than 100 million shares issued and outstanding. Cliff recently raised just over $1 million to begin exercising an option to earn a 30% interest in the Philips Range project in Western Australia, where diamonds weighing a total of 1,280 carats have been recovered to date. Other heavily traded diamond issues included: Westfort Petroleums, up 4 cents to 13 cents on 12.4 million; Pure Gold Resources, up 18 cents to 75 cents on 10 million; and Adex Mining, up 11 cents to 63 cents on 8.7 million. All three hold land positions in the Lac de Gras area.

With a small increase in the gold price to US$340.00 per oz. and growing optimism about the potential for future gains, gold issues also performed well during our report period. The TSE gold and silver index added 115 points to 6588.

“A decisive breakout above US$340 on strong momentum is necessary to signal that the technical trend is up,” says the Bank Credit Analyst in a recent and uncharacteristically bullish commentary on gold. “If the fundamental conditions improve in the coming months, as seems probable, then a significant bear market should unfold.”

Gold stocks hitting new highs during our report period included: Golden Star Resources, up 88 cents to $12.13; Euro-Nevada Mining, up 88 cents to $23.50; and Glamis Gold, up 88 cents to $7.88.

Also active were Franco-Nevada Mining and American Barrick, which both doubled their first-quarter profits this year. Franco added $2.50 to $45 while Barrick added 88 cents to $23.50.

Placer Dome, up $1.13 to $19.13, has filed a prospectus for debt securities offerings totaling up to $250 million and may buy USMX’s assets in the Alligator Ridge area of Nevada.

But a 6 cents drop in the copper price to 84 cents per lb., following news of a sharp decline in housing starts in the U.S. last month, put a damper on copper-related issues.

Westmin Resources, owner of the Myra Falls copper-zinc-lead mine in British Columbia, slipped 25 cents to $5.63. The company has laid off 73 people at the operation.

Rio Algom, reporting first-quarter earnings of $7 million, lost 25 cents to $18.

Charged with manslaughter in connection with last year’s explosion at the Westray coal mine in Nova Scotia, Curragh slipped 10 cents to 17 cents, before recovering to 29 cents today.