Toronto Stock Exchange (September 23, 1991)

A much anticipated drop in U.S. and Canadian interest rates during the week ended Sept. 17 failed to generate much enthusiasm for equities.

As the gold price continued to hover at the low end of its US$350-415 per oz. annual trading range, many issues were either touching or getting close to their 52-week low points. Since the metal sector doesn’t usually pick up until well into an economic recovery, analysts don’t see much relief in sight. Among the issues to hit bottom this week were Placer Dome, International Corona, Rayrock Yellowknife Resources and Pegasus Gold. Placer Dome fell below $12 for the first time this year even though it has cleared the way for development of the Eskay Creek gold project in British Columbia by agreeing to put up $240 million for mine construction. In the process, Placer Dome will increase its interest to 50% of the project. Corona, which will control the other 50% (through Prime Resources and Stikine Resources), fell to a low of $6.88. Pegasus dropped to $11, and $6.25 represented bottom for Rayrock Yellowknife.

After a 50-US-cent drop from last week’s level, gold steadied today, Sept. 18, to close at US$348 in London. However, analysts are bracing themselves for another slide toward US$320 if the Soviet

republics sell off their vast holdings to pay for their independence. Other issues affected by gold’s malaise this week were Mentor Exploration, which sank to $1.40. Princeton Mining was down to $1.60, a low for the year, while Queenston Mining bottomed at 65 cents. Central Crude is once again a penny stock after slipping this week to 97 cents.

Fairbanks Gold shares fell by $1.75 earlier this week to close at a 52-week low of $5 after Robert Friedland, the company’s biggest shareholder, agreed to a takeover offer from Amax Gold. However, the Fairbanks issue recovered strongly to end the week at $5.63.

About the only gold issue to buck the trend was Asamera Minerals, which peaked at $1.90 this week after the company declared a 90-cent dividend to reduce the amount of cash on its books. Predictably, the issue gave up 15 cents today to end the week at $1.75. As listings on the gold and silver index represent about 8% of the weighting on The Toronto Stock Exchange’s composite 300 index, the slump in the gold sector is clearly affecting the broad market.

Today, the composite 300 eked out a slight gain of 0.82 points following a week of moderate trading. The index closed at 3418.48 as 17.5 million shares valued at $194 million changed hands.

Not all of this week’s bloodletting occurred in the gold sector. Shares of Aur Resources came under pressure as word leaked out that Aur and partner Societe Miniere Louvem won’t begin sinking a shaft at the Louvicourt Twp. property until project financing has been secured. After losing 38 cents during the reporting period, Aur steadied today to close at $3.20. Aur Secretary Peter McCarter says the postponement makes sense because the capital cost of building a mine at Louvicourt will be at least $300 million. As Noranda owns 52% of Louvem, it will participate with Aur in negotiations with bankers that are expected to begin this fall.

News that Platinova Resources is abandoning the Kap Edvard Holm project in eastern Greenland did nothing to bolster confidence in the Platinova issue. Platinova closed at 80 cents (down five cents today) compared to a high of $1.88.

Freewest Resources, even today at $2.85, is also expecting partner Hemlo Gold Mines to release a feasibility report on the Holloway gold project near Harker-Holloway, Ont. A resumption of surface drilling is also imminent. In other news, Atlanta Gold says terms of its private placement of stock-warrant units to Consolidated Ramrod Gold have been amended at the request of The Toronto Stock Exchange. Atlanta was even at $1.25. Shares of Matachewan Consolidated Mines are suspended from trading because the company failed to pay its sustaining fees. Matachewan is currently fighting an order by the Ontario Environment Ministry to pay the cost of cleaning up contaminants from a tailings pond which spilled into the Montreal River. Matachewan officials say the costs involved in this incident could force the company out of business altogether.