Toronto Stock Exchange (March 09, 1992)

Recovering from a computer breakdown that forced the exchange to close for more than half a day, the TSE 300 was up 10.85 to 3587.64 today, March 4. The moderate increase followed a record high set on the NYSE on March 3. Despite a crippling US$300-billion federal debt, American investors have discovered reasons to celebrate. During the week ended March 3, three telling statistics — the index of business activity, the index of leading economic indicators and the GDP — all pointed to recovery for the U.S. economy.

But the unbridled optimism has yet to spread to Toronto. Faced with a falling dollar, constitutional bickering, and recent reports of a worse-than-expected decline in the GDP during the last quarter of 1991, Canadian investors remain cautious.

In February, market activity on the TSE showed a marked decline. Trading volume, at 672.8 million shares, was down 17.9% from the previous month while value dropped by 25%.

Investors who have been waiting patiently for an increase in the gold price may have an even longer wait ahead. As gold closed off the week at an uninspiring US$350.20 per oz., the CIBC’s vice-president of precious metals, David Dunn, warned gold producers that there would be few opportunities to hedge at attractive prices this year. “I think it’s going to be a very tough road going forward,” said Dunn. “The era of the pure gold play is coming to a close.”

For the week, the senior golds turned in a mixed but generally dull performance. While International Corona and LAC Minerals both moved down in heavy trading, American Barrick Resources and Placer Dome showed increases of 75 cents and 25 cents respectively.

Freewest Resources, gaining 5 cents to $3.90, continues to be the darling of the junior golds. Recent activity is tied to speculation about four holes on the company’s property in Benoit Twp., Que., where Minnova is earning an interest. “They’re confirming some of our results and extending the known zone to depth,” Freewest President Mac Watson told The Northern Miner. Minnova shed 63 cents to $16.88.

But if this week’s most active stock is any indicator, interest in gold is being challenged by the world’s most glamorous stone. Trading 1.8 million shares, Aber Resources is betting that a diamond mine lies beneath the frozen barrens of the Northwest Territories, and has staked up a sizable piece of land to prove its theory.

To pay for exploration work, Aber has arranged a private placement of one million common shares at $1.05 per share with warrants attached. Meanwhile, a make-it-or-break-it bulk sampling program is under way on a diamondiferous pipe next to Aber’s ground. Aber gained 18 cents today to close at $1.33. Investors also seem to be taking a shine to Denison Mines, which reduced its annual losses by $200 million in 1991. As Denison announced a deal to sell a 70% interest in its Australian uranium project to concentrate on its Saskatchewan deposits, the company’s common A shares jumped 25 cents to 44 cents while common B shares gained 11 cents to 26 cents.

Shareholders also welcomed news that Curragh Resources will end its troubled relationship with smelter owner Asturiana de Zinc of Spain. As a result of the unwinding, Curragh will have approximately $60 million available “to ameliorate the severe effects of the recession.” Curragh tacked on 38 cents to close at $3.63.

But the downside for Curragh and other zinc miners without smelters is that smelting charges are going up. European smelters plan to raise the cost per pound of zinc to US27 cents from the current US20.6 cents, a 31% increase. “This is particularly bad news for Brunswick Mining and Smelting and Curragh,” says Ray Goldie, a mining analyst for Richardson Greenshields. Brunswick closed down 13 cents to $7.50 even as the zinc price strengthened to 54 cents.

Trading over 800,000 shares, Wheaton River Minerals headed south, losing 9 cents to 50 cents. The company recently raised $419,130 as shareholders exercised warrants to buy Wheaton stock at 60 cents.

An agreement to buy the Pandora gold project near Malartic, Que., from American Barrick added 4 cents to Queenston Mining, which closed at 87 cents. Preliminary reserves on the property stand at 2.42 million tons grading 0.13 oz. per ton after more than 100,000 ft. of diamond drilling.