Toronto Stock Exchange (August 08, 1988)

The lazy, hazy days of summer did little to inspire fervor for the market again this week in Toronto. Trading volume, at 396.6 million shares for the month of July, was the lowest level since December, 1986.

After regaining lost ground on Thursday and Friday last week, the composite 300 index was hewed again today and Tuesday indicating the lack of direction shown by the market.

Second quarter results from a number of mining issues helped push the metals and minerals index, an indicator of this prosperous sector, over the 2,951 mark, up about 17.11 points on the week. The gold and silver index was off marginally by about 17.36 points to 6,374.53.

The question analysts will be asking over the coming months is: Are these the peak earnings for the sector? If not, some aggressive buying could take place to hold prices up in an otherwise choppy market.

Earnings of $25 million (or 29 cents a share) in the first six months attracted ample investors to Hemlo Gold Mines, launching it past nickel giant Inco Ltd. in the weekly volume totals. This, the grand Hemlo-area producer, is now into ore averaging 0.39 oz gold per ton and 27,000 oz of gold are streaming from the mines’ furnace every month. The cost to the company is $116(US) per oz.

The issue closed today at $15, up 25 cents .

Inco, together with its stainless steel sister Falconbridge Ltd., has commanded the attention of mining investors in recent weeks. The reason: Nickel, the key ingredient in stainless steel, shows signs of sturdiness in the $6-7(US)-per-lb level. Thirty-eight cents were culled from the Inco issue during the report period, closing out today’s session at $37 on 255,400 shares.

The company decided this week to end the sale of nickel concentrates to Sherritt Gordon’s refinery in Fort Saskatchewan, Alta., at the end of 1989. But about one-third of that lost feed stock will be replaced by a new nickel mine being developed by Hudson Bay Mining & Smelting at Namew Lake, Man. It is set to produce nickel concentrates by the last quarter of 1989.

The Sherritt issue (which is more a fertilizer issue than a mining issue) was trading at $9.75 this week in moderate trading, while Hud Bay closed at $8.13, off a quarter, again in light volumes.

Falco retained its luster as the most active mine issue, tagging on another 50 cents in early trading in the process, closing at $25.75.

Second quarter results from Placer Dome were not neglected either by keen investors. So far in 1988, this gold giant has netted 35 cents a share, or $77.1 million. A 7% decline in the U.S. dollar over the past six months against the Canadian dollar hit the company’s bottom line with a thud. Today, the dollar closed at 82.88 cents (US) and Placer closed at $16.13, off an eighth.

The company plans to bring three more gold mines into production in 1989, bringing annual gold yield to 1.1 million ounces.

Gold closed today in London at $434.10(US).

News from Wright Engineers in Vancouver that City Resources Canada can make a buck mining a large (27-million ton), low grade (0.062 oz gold per ton) gold deposit on B.C.’s Queen Charlotte Islands, drew the speculative eye of at least one investment house. But trading this week was light at 279,600 shares at $3.25, off a nickel. The company plans to start production next year.

Coxheath Gold Holdings shipped its first gold from the Tangier gold property in Nova Scotia this week. The issue traded at 95 cents .

Acadia Mineral Ventures, an issue which controls the Mooseland property in the same East Coast province, reacted lethargically as well to news that joint-venture partners Hecla Mining Co. of Canada is clearing the way for shaft- sinking, beginning in early September, closing today’s session at $1.45.

An Alberta-listed issue Biron Bay Resources has raised $9.5 million for the underground program in exchange for a 25% interest. Hecla would get 35% and Acadia would be left with 40%.