STOCK MARKETS — Surging gold sector fails to ignite TSE

Despite a strong performance in the gold sector, the Toronto Stock Exchange could manage only a meagre gain during the report period ended Sept. 6. The composite 300 index edged upwards by 13.46 points to end the period at 4,347.17.

Lingering fears about the outcome of the Quebec election drove the Bank of Canada rate up by one-third of a percentage point to 5.92%. This increase caused the Canadian dollar to move lower, closing Sept. 6 at US73.12 cents. Golds stood out among the TSE composite’s 14 industry groups, gaining 577.03 points during the period, to close at 10,295.04.

The price of gold also gained ground with the London afternoon gold fix on Sept. 7, set at US$389.70 per oz. — up US$3.10 from a week ago. With more than 80% of the outstanding shares of Lac Minerals being tendered to its offer, American Barrick Resources has won control of the large gold producer. Barrick, with the blessing of Lac’s management, outbid upstart Royal Oak Mines.

Barrick, which becomes the third-largest gold producer in the world, says it wants to acquire 100% of Lac’s outstanding shares and, accordingly, extended its offer until Sept. 19 to the Lac shareholders who have not tendered their shares. Barrick closed up $1.50 on the week to $32.13, Lac jumped 75 cents to $15.63 and Royal Oak, which may turn its sights on another corporate takeover target, was ahead 38 cents to $6.25.

Now that the dust has settled on the Lac takeover battle, it is rumored that a number of companies have expressed an interest in buying Lac’s North American assets from Barrick. One potential suitor might be Great Lakes Minerals; its vice-president of mining, Gerald Gauthier, was, at one time, senior vice-president of Lac’s North American operations. Great Lakes closed up a penny to $1.85.

Other senior gold producers were up on the week, with Placer Dome posting a 38 cents gain to $32.63, Echo Bay Mines adding $1.13 to $18.25, and Hemlo Gold Mines tacking on 63 cents to close at $14.25.

Many of the junior gold issues also surged, the best examples being Kinross and TVX Gold, both of which both traded in excess of 4 million shares each. Kinross and TVX each tacked on 63 cents to close at $6.88 and $8.88, respectively.

Gold royalty companies fared well, with Euro-Nevada Mining up $1.75 to $39.50 and Franco-Nevada Mining adding $3.50 to close at $82. Repadre Capital was unchanged at $3.25 despite news that it had closed a royalty deal on Fairmile Acquisitions’ 477 mining claims in the Battle Mountain gold belt of Nevada. Repadre has paid Fairmile $250,000 for a 3% net smelter return (NSR) royalty, and can buy an additional 2% NSR for $1.75 million. Repadre is also taking a $400,000 private placement in Fairmile.

On the Montreal Exchange, junior Tiomin says it has reached an agreement-in-principle to acquire a company that can earn a majority interest in the potentially large Cerro Colorado copper deposit in Panama. Tiomin jumped 60 cents to $2.35.

Redfern Resources, up 20 cents to $2.15, continues to explore the Tulsequah Chief project in northwestern British Columbia. More encouraging results, from stepout holes on the northern strike extensions of either the G or H lenses, have been reported.

Overseas diamond explorers were mixed on the week. SouthernEra Resources was up 25 cents to $2.25, United Reef tacked on a penny to 73 cents, Diamond Fields Resources lost 25 cents to $4.75 and Caledonia Mining dropped $1 to $5.50.

Redaurum was unchanged on the week at $2 despite the announcement that it was increasing production at its River Ranch diamond mine in Zimbabwe to more than 400,000 carats per year.