STOCK MARKETS — TSE market sell-off continues to smart

A host of negative factors — continued downward pressure on the Canadian dollar, threats of inflation, higher interest rates and weaker markets in New York and Tokyo — took its toll on the Toronto Stock Exchange this week, perpetuating the 2-week-old downward trend.

For the period ended Jan. 24, the Toronto 300 composite index posted a loss of almost 67 points, closing at 4080.63.

The week started off on a sour note as the Canadian dollar continued its apparent free-fall, flirting with the US70 cents level. The situation was exacerbated by a selloff in the Tokyo and New York markets, resulting from concerns about the Japanese economy in the wake of the devastating earthquake in Kobe. During the final two days of our report period, however, the composite rose, largely due to the halting of the decline in the currency. The dollar ended the week at US70.69 cents, up a fifth of a cent. The dollar was helped by a slight gain in the trend-setting Bank of Canada rate, which was set at 8.38%, up 17 basis points.

The two key subgroups — namely metals and minerals, and gold and precious metals –were also affected by the market turmoil, dropping by 3.5% and 1.9%, respectively.

The price of gold mimicked the gold and precious metals index, with the London afternoon fix on Jan. 25 pegged at US$381.45, down US$1.15 from a week ago.

All the senior gold producers followed suit, with Placer Dome posting the largest loss. Placer was off 88 cents to $28.13, while Hemlo Gold Mines lost 38 cents to $12.62. Meanwhile, Echo Bay Mines dropped 25 cents to $14, and Barrick Gold shed 50 cents to $30.75.

Barrick recently announced it would sell its Mexican exploration unit to Vancouver-based International Northair Mines. The exploration unit holds interests in several small gold and copper deposits in Mexico and was formerly owned by Lac Minerals.

With the price of nickel topping $10,000 per tonne on the London Metal Exchange, it is no wonder that nickel producers Inco and Falconbridge hit new 52-week highs. Falconbridge hit $25.63 before ending at $24.38, off 88 cents, while Inco hit $43.75 before closing at $41.63, down 75 cents on the week. As well, an Inco subsidiary has signed an agreement with the Chilean state-owned enterprise, Codelco, to proceed with the second phase of exploration on the 10,000-hectare Mamina copper project, 90 km east of Iquique, Chile.

Royalty-holding company Redstone Resources has increased its net smelter return royalty stake in the Robinson copper project near Ely, Nev., to 0.6%. The project, to be operated by Tuscon-based Magma Copper, is scheduled to begin producing at an annual rate of 135 million lb. copper, 110,000 oz. gold and 325,000 oz. silver in the first quarter of 1996. Redstone shares closed at $5.13, down 12 cents.

Other royalty companies were up on the week, with Euro-Nevada Mining rising 63 cents to $29.12 and Franco-Nevada Mining gaining 88 cents to end at $68.12. Junior gold producer Royal Oak Mines announced that it had yielded 318,236 oz. in 1994 — a new record, surpassing by 15% the previous record, set in 1993. Despite the news, shares dropped 15 cents to close at $4.30. Meanwhile in Quebec, Cambior has given the go-ahead for a second phase of preproduction at its Grevet polymetallic project; the work is expected to cost $62 million. The Grevet hosts possible and probable reserves of more than 10.9 million tonnes averaging 8.5% zinc and 0.45% copper, plus 35 grams silver and 0.09 grams gold per tonne. Shares of Cambior dropped 63 cents and ended at $14.75.

Joint-venture partners Exall Resources and MacMillan Gold have been granted the right to explore the Wakadanawa property, a large gold prospect in southern Guyana. Shares of both companies were down, with Exall losing 10 cents and hitting a new 52-week low of 70 cents, while Macmillan shed 1 cents to end at 24 cents.