Toronto Stock Exchange (November 04, 1991)

Inco affiliate Fort Knox Gold emerged as one of the most active issues during the week ended Oct. 29 as investors positioned themselves for future results from the junior’s Shining Tree, Ont., project.

Fuelled by the recent discovery of a copper-nickel sulphide deposit, Fort Knox shot up by 37 cents after more than 1.1 million shares had changed hands. Shaping up to be a classic “drill play” situation, Fort Knox is set to resume exploration on the northeastern Ontario property after intersecting 110.9 ft. of grade 1.03% nickel and 0.43% copper about 300 ft. from surface. Fort Knox was one of two juniors to make the active list on a week when market watchers were making sense of a myriad of economic indicators and more third-quarter results. The other was Joutel Resources, which traded over 1.3 million shares before closing at nine cents. Although Aur Resources is conducting field work on Joutel’s 26-claim copper prospect in northwestern Que., Chairman Hugh Harbinson attributed this week’s trading activity to speculation on other assets including 21% owned Queenston Mining. Jonpol Explorations’ Garrison Twp. gold project and the Scott Lake base metal property of Thunderwood Resources and Greenstone Resources are also experiencing renewed drilling activity.

While gold gave up some recent gains to close at US$359.35 per oz. in London, a number of precious metals advanced this week. Leading the charge was Franco-Nevada Mining, which roared ahead by $3.25 to end the week at $21.75. Boosted by second-quarter earnings from royalties on American Barrick Resources’ Goldstrike mine, Franco-Nevada posted successive gains of $1.50 and $1.75.

By coincidence, American Barrick and its controlling shareholder Horsham were the volume leaders this week with over 1.4 million and 2.6 million shares respectively. Barrick gave up 51 cents this week in sympathy with gold. Among other winners this week were Battle Mountain Gold which shot up by 38 cents during the report period to $8.75 while Metalore Resources added 63 cents to close at $7.63.

Reflecting the perception that the investment climate is about to improve, Toronto’s composite 300 index posted three back-to-back winning sessions including a 12.18-point gain. Today, Oct. 30, the index closed at 3497.60 after 29.9 million shares valued at $324.6 million changed hands. Base metal stocks, already squeezed by interest rates, a high Canadian dollar and weak commodity prices, received more bad news when the loonie soared to 89.04 US cents, its highest level in over 13 years.

Resource companies like Noranda and 64% owned Brunswick Mining and Smelting say the rising dollar makes their products less competitive internationally at a time when they are attempting to cut costs. After reporting a third-quarter loss of 39 cents a share, Noranda was down 25 cents. Although Cominco suffered an even larger loss, its large mines give the company long-term appeal, says the Canadian Resources & PennyMines Analyst. The Toronto-based publication says future efforts to rebuild the crumbling Soviet empire will likely have a positive impact on base metal prices because they will add to demand. Cominco shrugged off a work slowdown at the 50% owned Highland Valley copper mine in British Columbia to add 38 cents today. Developments in Chile, where Dayton Developments is readying its Andacollo gold project for startup next year, should help to add value to the company’s share price, according to Burns Fry analysts Felix Freeman and James Potvin. Impressed by the project’s potential (110,000 oz. gold annually), they have set a 1-year target price of $3.90 for Dayton which closed at $2.42 today after gaining seven cents.

Last week, senior Chilean politicians gathered with representatives from TVX Gold and Placer Dome for a ribbon-cutting ceremony at La Coipa gold mine. The new 16,500-ton-per-day plant at La Coipa is expected to produce 200,000 oz. gold and 14-16 million oz. silver annually. Placer Dome and TVX were both unchanged today at $13.63 and $4.13 respectively.

In other news, Curragh Resources expects to take a loss on the sale of its 20.8% interest in the Spanish smelting company Asturiana De Zinc which was purchased for $138 million in May, 1989.

As part of the deal, the Spanish company is expected to give up its 5% stake in Curragh and 30% interest in Stronsay. Asturiana paid $40 million for its interest in Curragh and $22 million for the Stronsay interest.