Toronto Stock Exchange Dividend sparks Rio Algom, as budget

A pro-business budget that ignored the mining sector failed to ignite the kind of activity that investors might have hoped for during the week ended Feb. 26. As allied troops moved in to take out Iraq President Saddam Hussein’s elite soldiers and Finance Minister Michael Wilson set out his debt reduction targets, share prices headed upward after the briefest of market corrections.

Today, Feb. 27, the composite 300 index closed up 23.69 points at 3445.06 on a moderate volume of 24 million shares. While the price of gold dropped by US$3.75 per oz. on the week to close at US$360 in London, the precious metals index gained 69.53 points to finish at 5072.28.

The metals and minerals index also hit positive territory, gaining 40.9 points on the day.

Amid this activity, shares of Rio Algom shot up $3.25 today as the Toronto metal producer said it would pay out a special $6.25 per share dividend to compensate shareholders for the sale of its U.S. and Canadian steel operations. By contrast, shares of Noranda, the company that will benefit most from an expected drop in interest rates, were unchanged at $17.63.

Noranda’s minerals wing confirmed that it will close its Mattabi and Lyon Lake mines in northern Ontario this spring because of financial losses and a lack of new ore.

Employees at the Renabie gold mine near Wawa, Ont., will also be seeking alternative employment now that owners Corona and American Barrick Resources are planning to shut the operation down. As far as investors are concerned, the Goldstrike mine in Nevada is the one that really counts in the Barrick portfolio. This week’s 88 cents drop in the price of Barrick shares was due to the soft gold price, which also spelt lower share prices for LAC Minerals, down 25 cents, Placer Dome, down 75 cents, and Corona A, down 4 cents.

Euro-Nevada added 25 cents on news that it has increased its royalty interests to include the Mattawasaga gold zone, near American Barrick’s Holt-McDermott mine at Kirkland Lake, Ont. Soon to be brought into production, Mattawasaga hosts two million tons of grade 0.18 oz. gold per ton.

Speculation on new results from Freewest Resources’ Benoit Twp., Que., gold property may also have driven the company’s shares up 20 cents this week. Assays from three new holes, including two stepouts, continue to match discovery hole grades (0.18 oz.) over encouraging widths.

The least surprising news of the week is that St. Genevieve Resources Chairman Pierre Gauthier is looking for a buyer for his company. The Montreal holding firm’s most appealing asset is affiliate Societe Miniere Louvem’s 45% stake in the Louvicourt Twp. massive sulphide discovery.

A former stockbroker, Gauthier can hardly be described as a mining man and having sorted out Louvem’s recent dispute with partner Aur Resources, he is said to be impatient with the performance of St. Genevieve’s 28.6 million issued shares. Those shares were even this week at $1.02, while Louvem added 15 cents to close at $4.75. Shares of Aur were beaten down 19 cents to $4.

While financially stricken Denison Mines presumably gained some breathing space by selling its 60% stake in the Denison-Potacan Potash operation in New Brunswick, more problems appear to lie just around the corner.

Ontario Hydro is preparing to serve Denison notice of the price it is willing to pay for uranium extracted from the company’s mine at Elliot Lake, Ont. If the two sides don’t agree, long-term contracts signed in 1977 give Hydro the right to walk away from its obligations to Denison and more layoffs at Elliot Lake would almost certainly follow. Denison A shares moved up 18 cents to 90 cents.

VSM Exploration and privately owned partner Serem-Quebec will announce a significant increase in minable reserves at the Grevet Twp. base metal joint venture near Quevillon, Que., says a Toronto analyst who prefers to remain anonymous until a study he is preparing is released to the public.

When the Grevet partners make an official announcement, the analyst expects minable reserves to be 12.48 million tonnes grading 9% zinc, 0.5% copper and 37.8 grams silver, up from 10.2 million tonnes before a preliminary feasibility study. However, early market reaction was muted as VSM gained only 7 cents on the week to close at $1.17.

Finally, shares of Jonpol Exploration moved up smartly by 12 cents as drilling continues at a highly prospective Casa Berardi, Que., area project held by 17% owned affiliate Northway Explorations. As Societe d’Exploration Vior’s Douay Twp. and Agnico-Eagle’s Vezza Twp. projects are all in the vicinity, potential investors will be watching this one carefully.