STOCK MARKETS — Toronto market slides but penny stocks boost

The average daily trading volume on The Toronto Stock Exchange surged to about 50 million shares during the week ended Jan. 12, compared with 30-35 million shares on any given day last year.

Market watchers say the increase in activity is partially the result of a new wave of penny stock trading as investors add junior oil and gas and diamond stocks to their portfolios.

On Jan. 7, for instance, 58.1 million shares with a total value of $457.6 million changed hands. Stocks trading at 50 cents or less represented about $13 million of that value.

But despite the increased activity on the broad market, the TSE 300 composite index lost 40 points over the period.

Today, Jan. 13, as the U.S. and its allies began showering Iraq with bombs, volume dropped to 45 million and the TSE 300 continued its losing streak, shedding 16 points to 3298. Gold lost US$2.25 to close at US$328 per oz. in New York.

Among the most active junior mining stocks during our report period were Joutel Resources, up 9 cents to 27 cents; United Reef Petroleums, up 42 cents to $3.10; Lytton Minerals, down 20 cents to $1.90; and Queenstake Resources, up 85 cents to $2.10.

Joutel has its hand in several exploration properties in North America and abroad, while United Reef and Lytton have become active diamond explorers in Africa and the Northwest Territories, respectively. Queenstake is exploring for gold in Venezuela.

Lytton added 15 cents to $2.05 today as it announced the delineation of six drill targets on its Lac de Gras property.

Juniors hitting new highs on the week included Corner Bay Minerals, up 17 cents to 47 cents, and Scintilore Explorations, up 7 cents to 87 cents. “People have made some money on the junior market and it’s starting to get fun again,” remarked Corner Bay’s Terry Flanagan, who says he cannot explain the sudden upswing in his company’s shares. “It’s just a feeling, but there seems to be a lot of interest out there,” he said.

Prompted by a technical analysis of market and commodity price behavior during a typical economic cycle, Richardson Greenshields’ Ray Goldie believes the metals and minerals group may be on the verge of an extended bull market. “The recent strength in mining exploration plays — and not just the diamond stocks — lends encouragement to this interpretation,” he says. But if the metals group’s performance during our report period is any gauge, the bull market for mining stocks has yet to arrive.

Over the week, the metals and minerals index fell 73 points to 2800. Among the losing heavyweights were nickel producer Inco, down $1.50 to $28.13; Noranda, down 75 cents to $18; and Cominco, down 25 cents to $18. The carnage continued today as metals and minerals plunged another 53 points. Alcan registered one of the largest price swings, losing 87 cents to $21.87. Dropped from the TSE 300 list recently were precious metal funds BGR Precious Metals, Goldcorp as well as Granges, Northgate Exploration and Princeton Mining.

BGR and Goldcorp lost 50 cents and 23 cents to $5.63 and $2.37, respectively. Granges, which recently announced record gold and base metal production, closed unchanged at $1.85. Northgate shed 6 cents to 58 cents while Princeton lost 15 cents to $1.30.

Recent additions to the TSE 300 are copper producer Arimetco and gold producer Golden Star Resources.

Arimetco lost a dime to $3.55 as copper shed 5 cents to US$1.01 per lb. on reports of sales out of China.

Despite a weak gold price, Golden Star added $1 to finish the period at a new 52-week high of $7.50.

In other developments, Minnova announced that it may have to close the Winston Lake zinc mine temporarily if it cannot find a smelter to buy second-half production from the mine. The company says there is a world oversupply of zinc concentrate in relation to smelter capacity. Minnova lost 25 cents to $16.50, while zinc was unchanged at 48 cents per lb. Results from initial exploration at Minera Rayrock’s Sierra Venezuela property in Chile indicate widespread mineralization and significant copper grades in the first two holes, the company says.

Minera, up a nickel to $1.25, has sold 3.7 million special warrants priced at $1 per warrant to Goepel Shields & Partners. Proceeds of the issue will be used to finance predevelopment costs at Minera’s Ivan copper project in Chile.