STOCK MARKETS — TSE slides as gold continues to atrophy

Interest rate worries set off a round of selling on the Toronto Stock Exchange last week, and the TSE 300 composite index had fallen to 4,963.80 by the close of trading Feb. 20. The close represented a loss of 81.51 points (1.6%) from the week before.

Widely held opinion that the Bank of Canada would raise interest rates cast a dark shadow over the markets, with trading volumes falling sharply in the beginning of the week as investors awaited the Tuesday Treasury bill auction. The central bank allowed the 90-day yield to rise to 5.161%, and the bank rate, fixed at 0.25% above the yield, rose 22 basis points to 5.41%.

The Canadian dollar, which had been falling against all major foreign currencies since the Bank cut its rate the week before, clawed back some of the week’s losses as soon as the rate was hiked. By noon on Feb. 21 the Loony was trading at US72.54 cents, up 0.04 cents on the week and 0.17 cents from its Feb. 16 low.

Gold and the other precious metals were all lower on London bullion markets, with gold sinking below US$400 on Feb. 21 for a morning price of US$398.50 per oz. On the week, gold lost $5.40 per oz. Platinum, off $4 to US$417.50, and silver, down 14 cents to US$5.55 per oz., also lost on the week.

Gold stocks, battered last week when the yellow metal went over the cliff, were mixed this week. The TSE gold and precious metals sub-index lost 40.86 points (0.3% of its value) to close at 12,427.65 on Feb. 20. THe most active gold was Echo Bay Mines, making up 25 cents of last week’s loss to close at $19.12. Also on the plus side were Kinross Gold, up 12 cents to $12.88, and Barrick Gold, up 25 cents to $42. Placer Dome fell 62 cents to $38, and heavily traded TVX Gold was down 12 cents to $14.12.

Goldcorp announced further results from underground exploration at its Red Lake mine and saw a gain of $3.75 to $24.12. The mineralization picture continues to expand on the deep levels of the former Dickenson mine, with some assays above 10 oz. per ton.

Copper lost 1 cents to close Feb. 21 at US$1.13 per lb. on the London Metals Exchange, but other base metal prices were steady or improved. Nickel added 5 cents to close at US$3.73 and the London Metal Exchange’s Cinderella, lead, added 2 cents to US36 cents per lb.

The TSE metals and minerals sub-index was off 95.34 points (or 1.8%) to 5,145.51. Aur Resources was up $1.50 to $9.50, virtually alone among the issues on the sub-index. Diamond Fields Resources was the most active of them, with 6.6 million shares crossing the trading floor — slightly quieter than last week, when 17.9 million shares were traded. Both possible suitors for Diamond Fields were off fractionally, Falconbridge closing at $28.88, down 62 cents, and Inco ending the reporting period at $43.38, down 88 cents.

Among junior issues, Arequipa Resources announced results of sampling from underground that confirmed earlier estimates of grade at the Pierina project in northern Peru. Shares were off 25 cents to $10 with volume of 6.3 million on the week.

Campbell Resources was also actively traded, following a share issue. The gold miner fell 11 cents to $1.75. Excitement cooled a bit for Misty Mountain Gold, which fell $2.88 to $6.75 in apparent profit-taking after the stock rose as high as $10 last week.

Tiomin’s deal to develop the Cerro Colorado porphyry copper in Panama was ratified by that country’s government. With a $23-million warrant issue hanging on the ratification, Tiomin stock rose $1.30 to close at $3.60.

Jonpol Explorations announced that it had acquired an interest in two properties 10 km north of the Busang property on the island of Kalimantan, Indonesia, and added 22 cents to 67 cents on a volume of 6.2 million shares. Mispec Resources confirmed that its Indonesian joint-venture partner had been awarded an exploration concession in Kalimantan, and rose $1.38 to $3.88.

Yamana Resources, also with a property on Kalimantan, was up 88 cents to $5.25. Goldstake Explorations announced it had been awarded a contract of work on the big island and picked up 89 cents to close at $2, as 8.4 million shares moved.