Toronto Sock Exchange Firming golds buoyed by Persian Gulf fears

Mining issues are enjoying the benefits of firming metal prices, both base and precious. For the week, of 292 issues which traded 124 advanced versus 91 which declined. Although the tse composite slipped marginally today by a scant 0.34 pts to 3,940.27, the gold index picked up another 66.48 pts to 8,783.2. During the near term, and that means the next month, gold could experience several $10 price swings as a result of the increasing instabiltiy in the Persian Gulf. With Kuwaiti oil tankers dressed up as American ships now plying those waters, the U.S and Iran are standing eye to eye waiting for the first to blink. Any potential disruption of Western world oil supplies as a result of escalated Iranian attacks on Gulf shipping will have a definite upward impact on oil prices, and subsequently on gold which is inflation sensitive.

As a result, gold remained firm at $453.50 at today’s close. Most issues were stronger from the opening bell. Campbell Red Lake Mines firmed to $38.13 as did Dickenson Mines, which closed at $13.25. A strike which lasted 17 days in June disrupted gold production from the company’s Red Lake, Ont., gold mine. As a result, six month production totalled 30,000 oz; down from 33,000 oz last year. Earnings for the period were 21 cents per share or $3 million.

Lac Minerals is going back to the market seeking $88 million via a two million common share issue priced at $44 per share. Also, first half financial results are markedly improved. To June 30, the company earned $23.9 million or 84 cents per share. Taking the Page-Williams mine at Hemlo out, that earnings per share figure gets chopped in half to 42 cents .

Results from Lac’s appeal to win the rich mine back are expected this fall.

Something of a rally appears to be taking place in the base metals forum — a marketplace which has seen better days indeed. Copper, which last year was languishing around 60 cents (US) per lb is today trading at 78.5 cents . Not earth shattering, but definitely better. Improving industrial demand and low levels of inventories world-wide have helped not only copper but all the base metals such as lead, zinc and to a degree, nickel.

Minnova Inc, which is being touted by several analysts as a base metals buy, was firm at $31.88. Falconbridge Inc, was also better at $26.13. Sudbury competitor, Inco Ltd, was also stronger at $26.50. Noranda Inc, which is continuing in its efforts to reduce debt, is also a beneficiary of stronger base metal prices. The giant closed at $32.50.

In the precious metals arena, the name of the game is to acquire reserves either through discovery or via acquisitions. One company which is doing just that is Pioneer Metals. In one of its biggest deals to date, the company as announced plans to buy control of Silbak Premier Mines for almost $22 million. Silbak with partner Westmin Resources, is developing a major open pit gold deposit in the Stewart area of B.C. Silbak will be listed on the tse shortly. Pioneer added 25 cents to $13.50. At the beginning of the year, the issue traded on the Vancouver Stock Exchange in the $4.50-range.

Madeleine Mines, which is actively developing Canada’s first platinum group metals mine north of Thunder Bay, Ont., was steady at $13.50 (see front page story). Power Explorations was better at $1.35. The company continues to pull encouraging drill results from a gold play near Dryden , Ont.

Golden Knight Resources, which is planning to raise $30 million via a unit offering, was steady at $12. The cash will be used to fund the company’s share of capital costs at the new gold mine being built by Inco Ltd. in Casa Berardi Twp, Que.