Toronto Stock Exchange Easing nickel prices spark drop in metals

The sell-off in metals added fuel to a bout of profit-taking in general which resulted in the composite index giving up 16.87 points to 4008.48 points. Traders remain nervous over the direction of the economy which, two years after the crash of 1987, is not in recession as predicted by some economists.

Gold bullion continued to perform poorly, trading at $361.05(US) on the second London fix. The dismal trading pattern is being viewed by many analysts as a sign that a bottom is forming. If that’s the case, then the time for acquiring bullion and high-quality senior gold equity should be close at hand. Gold continues to suffer from a strong U.S. dollar and poor inflation outlooks.

The exploration play of the year continued to generate plenty of interest. Aur Resources soared to a new high of $13 during the week before settling back to $12.25. Louvem Mining, which disputes Aur’s ownership of the Louvicourt Twp., Que, copper-zinc deposit, was also a winner, advancing to $7.88. St. Genevieve Resources, which controls Louvem, was firm at $2.26.

The deposit, which is beginning to look like a 40-million tons find, has the potential for more than 60 million tons and higher, some analysts say. At that size, Aur will give a smelter some thought (see front page story).

Fears that the nickel boom may be coming to an end took their toll on the world’s largest miner of the metal — Inco Ltd. The issue lost $1 per share to close at $38.88. At current metal prices, however, Inco continues to make extremely healthy profits.

Timmins Nickel, which owns a 51% interest in the Redstone nickel mine near Timmins, Ont, also took some heat to close easier at $2.15. At presstime, the company released results from the deepest hole yet drilled on the property. Drilled to 2,800 ft, the hole cut 25 ft of 1% nickel. Reserves are only outlined to 700 ft.

Senior golds were lacklustre. Placer Dome added a quarter to $18.25 whereas American Barrick Resources lost 25 cents to $28.75. LAC Minerals was unchanged at $11.38. Corona Corp.’s A share was also steady at $8.25.

Strong copper prices, primarily the result of supply problems at a couple of large mines around the world, gave a boost to several issues. Gibraltar Mines, which operates a mine in British Columbia, was steady at $11.38 — up 38 cents during the week. Metall Mining was near its high of $14.62, closing at $14. Metall owns the Copper Range copper mine near White Pines, Mich.

Golden Star Resources was a winner this week after Placer announced a 30% increase in reserves at their Omai gold deposit in Guyana. Golden Star hit $3.65 before easing back to $3.20 — up 95 cents this week. Thunderwood Resources added 25 cents to $1.10 on some speculative buying. Sources say most of the buying came from the Rouyn, Que., area where Thunderwood has interests in two advanced gold projects with Falconbridge and Minnova. The company is run by the same people behind Aur.

Greenstone Resources perked up to $5.13. The company has several intriguing plays in British Columbia and a couple of small high grade gold mine developments in South America.

Cominco Ltd. backed off to $29.50. Faraday Resources added 50 cents to $5.63 on light volume. Trimin Resources, which is another promising base metals exploration play, continued to hold on to recent gains, closing at $3.15. Trimin has a 32% interest in the Hanson Lake zinc-copper deposit in Saskatchewan.

Junior golds continue to suffer. MVP Capital slipped to a new low of 25 cents this week before managing to recover to $26 cents . The company owns a share portfolio of junior explorers, none of which have much hope of becoming significant money-making gold producers. MVP also bought into a placer gold project in Alaska which shut down earlier this year.

Queenston Gold Mines was also in new low territory trading at 95 cents . The company has varying interests in several gold exploration plays mainly near Kirkland Lake, Ont.

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