STOCK MARKETS — Voisey issues ride high as golds trip and fall

While golds fell sharply during the report week ended Feb. 13, the Toronto Stock Exchange, as a whole, moved little. The TSE 300 composite index fell 4.16 points over the period, to finish at 5,045.31. Trading over the week was in a narrow range, with the lowest close on Feb. 7 (5,026.50) and the highest on Feb. 12 (5,049.87). Market volumes were high, reaching 138 million shares on Feb. 7.

The Bank of Canada put the brakes on the strengthening dollar by cutting the bank rate to 5.19% on Feb. 13 from 5.39% the week before. The Loony settled at US72.50 cents by noon on Feb. 14, and was lower against the other major foreign currencies as well.

London bullion prices fell this week, wiping out almost all of gold’s spectacular advance the previous week, and taking away much of the other precious metals’ gains as well. Gold was back at US$403.90 per oz. at the morning fix Feb. 14, down $10.85 on the week. Platinum lost $9.50, falling to US$421.50, and silver lost 13 cents, reaching $5.69.

The bullion markets turned on the light and the gold bugs scattered for cover. The gold and precious metals subindex dived 672.64 points to 12,468.51, a loss of 5.1%.

Barrick Gold and Placer Dome both took big losses, with Barrick moving down $2.50 to $41.75 and Placer sliding $2.62 to $38.62. TVX Gold was the most active gold issue on the market, losing 62 cents to close at $14.25 on a volume of 9.9 million shares. Kinross Gold, off 88 cents to $12.75, and Echo Bay Mines, down 75 cents to $18.88, also traded heavily. Wharf Resources, added 12 cents to close at $11.12.

Base metal markets were more subdued but still negative. Nickel sagged 12 cents to US$3.68 per lb. and copper was off 3 cents to US$1.14 per lb. The TSE metals and minerals subindex was down 83.25 points to 5,240.85, 1.6% lower than last week.

Voisey’s Bay was the story among the metal miners this week, with Falconbridge bidding to take over Diamond Fields Resources at $31.12 per share plus fractional “participating equity shares” and shares in a new company that would hold Diamond Fields’ diamond properties. Investors rushed into Diamond Fields, pushing the price to $38.88 by the close of trading on Feb. 13, expecting that Inco would make a counter-offer before a deadline of 6 p.m. EST. At presstime, Inco announced it would not be making another offer at this time, but may do so in the future.

Oddly enough, the market punished both possible buyers — one for bidding on Diamond Fields, and the other for not bidding. Falconbridge was down $1.38 on the week to $29.50, and Inco lost $4.75 to close at $44.25. Noranda, whose 44% of Falconbridge could be diluted to 30% if the deal closes, was off $1.25 to $27.62.

A clear winner was Teck, whose B-series shares added $1 to close at $28.75. The company stands to make big money on its 10% interest in Diamond Fields no matter who takes over.

Junior issues fell as Cuban euphoria faded, with Joutel Resources losing 24 cents to close at 51 cents on a volume of 10.9 million shares. Tandem Resources, with an Indonesian play in the works, was down 57 cents to $1.58 as 2.7 million shares changed hands.

Misty Mountain Gold was up $4.67 to $9.62 after it announced drill results from its Harmony property on Graham Island, B.C. Arequipa Resources had another good week, picking up $1.12 to $10.25, and Bresea Resources, riding on rumors of higher resource estimates from affiliated Bre-X Minerals, was up the same amount to $11.38.

Montreal-listed JAG Mines was 33 cents higher to close at 67 cents. Greenstone Resources traded heavily, with 7 million shares on the move, and added 50 cents to $6.50.