Toronto Stock Exchange Base metals boom propels miners to new highs

Despite an initial decline in the TSE and New York indices this morning, base metal issues saved the day. Responding to another round of record prices for commodities, the base metals index soared to 3493.5 pts — up 112.47 pts for the week. This incredible performance is being fueled by copper and zinc prices which show no sign of quitting. Copper spot prices on the London Metals Exchange (LME) hovered around $1.54(US) per lb whereas zinc tiptoed across the 80 cents (US) barrier for the first time. In fact, zinc now appears to have the real possibility of trading over the magical dollar-mark this year — a notion first mentioned by well- known Canadian mining analyst Raymond Goldie late in 1988.

The bottomline of the base metals euphoria is that those who believed the boom was real are making buckets of money and those who didn’t are wishing they had.

What better example than Inco Ltd. Management at Inco believed so much that they announced a $1 billion(US) special dividend when the stock was $33. After paying out the $10(US) per share windfall, Inco today trades at $34. We call that enhancing shareholder value.

Nickel prices, which show no sign of quitting, helped propel the issue to $34 today — up $1.75. Falconbridge Ltd. was also active, trading more than 850,000 shares to close at $29.13, a new high.

Zinc giant Cominco Ltd. was also in the stratosphere, closing at an all-time high of $26.88. The company’s big Red Dog zinc mine Alaska is set to open in 1990. However, production will approximately offset lost output from the shutdown Pinepoint and Sullivan mines in Canada by that time. Noranda Inc. was also firm, closing at $26.

Another zinc producer which is reaping the benefits of higher prices is Mineral Resources International. The issue was steady at $5.38 — a new high. Only Cassiar Mining showed some weakness today, slipping to $5.75 from $5.88

The gold and silver index managed a small 3.89-pt gain to 5569.09. The second London fix was $402.50 (US) per oz. The highflyer this week in the gold sector was Belmoral Mines which closed at $1.88 after opening at $1.94 today. The issue, which was down around $1.25 earlier this month, traded more than 2 million shares this week. Unconfirmed rumors of a gold discovery in Quebec could be behind the volume.

Falconbridge Gold started trading this week. The company’s 13 million shares were valued by parent Falconbridge Ltd., at $7.50 per share. The market had a different view. The issue opened at $4 and promptly dived to $2.50. Some critics of the company say the parent will be taking high management fees which will bleed too much money from Falco Gold’s bottomline.

Major gold producer Echo Bay Mines firmed up this week to $17.63 before closing down at $17.13. The company is looking to a major expansion of gold production from its Cove deposits in Nevada.

American Barrick Resources was steady at $21.13. Controlling shareholder The Horsham Corp. has acquired another 500,000 shares of Barrick from Barrick’s visionary chairman Peter Munk. Horsham now holds a 22.4% interest in the gold mining company.

Viceroy Resource Corp. was a big winner, advancng to $7.25 — up $2.75 for the week. The company has a gold property in the United States which is being readied for production. Hemlo Gold Mines is Viceroy’s major shareholder and partner in the project. Hemlo, which is Canada’s lowest cost gold producer, was unchanged at $11.25.

Cheni Gold has started gold production from its Lawyers property in British Columbia. The stock dipped to $4.15 today. Duration Mines, which suffered through a difficult 1988, is starting 1989 with its main property, the Theresa, back under its control. The company lost the property after running into financial problems with its mine contractor. The issue has been resolved and Duration was better at 25 cents .

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