STOCK MARKETS — TSE trading gains reflect Diamond Fields negotiations

Talks of mergers and acquisitions by resource-sector companies and others helped the TSE 300 composite climb for the fourth week in a row. Over the 5-day report period ended June 6, the TSE 300 composite rose 47.76 points to close at 4,484.55

Signs that the Canadian economy may be softening made foreign investors edgy and precipitated a fall in the value of the Canadian dollar. For the third consecutive week, the dollar dropped, losing more than half a cent to end at US72.37 cents.

The weaker economic signals also forced the Bank of Canada to lower its trend-setting rate. The new Bank of Canada rate was set at 7.38%, down over a quarter of a percentage point, almost reaching a new 5-month low.

Precious metals prices were mixed, with platinum losing ground while silver and gold eaked out meager gains. The London morning gold fix for June 7 was US$384.65 per oz., up US40 cents; the silver fix added US40 cents to close at US$5.34 per oz.; and platinum shed US$1.95 to end the week at US$432.15 per oz. The gold and precious metals subgroup did not fare well either, losing 1.5% to close at 10,246.04.

Base metal prices were also mixed, but showed little change from the previous week. Lead and zinc prices fell while nickel posted a strong US10 cents gain to close at US$3.51 per lb. The metals and minerals subgroup followed the commodity prices, gaining 1.9% to close at 4,391.48.

In recent weeks, most senior gold companies have been posting solid gains, with several hitting new 52-week highs. This week, however, their fortunes turned and profit-taking ensued. Hemlo Gold Mines suffered the biggest loss, falling 63 cents to $15.38. Similarly affected were Placer Dome, which lost 13 cents to $34.38; Echo Bay Mines, which dropped 13 cents to $12.25; and Barrick Gold, which shed 25 cents to $34.25.

Hemlo signed a deal enabling it to earn a significant stake in a Ghanaian gold property. The company can earn a 72% interest in the Dunkwa project, 90% of which is held by CDN-listed Birim Goldfields. Birim shares ended at 61 cents, down 3 cents.

The market was abuzz with news that Diamond Fields Resources had entered advanced-staged negotiations to sell an interest in its Voisey Bay nickel-copper-cobalt discovery to nickel giant Inco. Although no definitive agreement could be confirmed at presstime, the market reaction was mixed, with Diamond Fields shares dropping $2 on the day of the announcement. Overall, however, Diamond Fields shares surged ahead on the week, rising $11.25 and hitting a new 52-week high of $80.25 before slipping back to close at $80. Shares of Inco were lower, dropping 63 cents to $34.63. B shares of Teck, the only company currently with a minority interest in Diamond Fields, shed 13 cents and closed at $27.13.

Falconbridge, which is also believed to be hungry for a slice of the Voisey Bay pie, made an announcement unrelated to that play. A definition drilling program indicates the gargantuan, 50%-owned Collahuasi copper project in northern Chile hosts geological resources of 3.1 billion tonnes averaging 0.82% copper. Falconbridge shares rose 50 cents on the news, to close at $23.38.

Another battle for control of a junior company and its mineral assets is taking shape between Glamis Gold and Eldorado. Glamis is offering $1.20 cash and 0.4% of a Glamis share for each outstanding Eldorado share, representing an offer value of about $130 million. Eldorado owns the Colorada gold mine in Mexico, which yielded 19,000 oz. gold last year, and a 51% interest in another Mexican gold property with contained ounces estimated at 173,000. Eldorado shares rose $1.13 to close at $5.88, while Glamis dropped to $10.88, down 88 cents.

Latin American gold-producer Greenstone Resources poured its first gold dore bar at the fully commissioned Santa Rosa mine in Panama. Results to date have surpassed expectations, and the company expects the mine will produce 30,000 oz. gold in 1995. Greenstone shares added 10 cents to close at $2.60.