Toronto Stock Exchange Equities dive as gold bullion crashes

The price of gold bullion breached the $400 (US)-per-oz barrier culminating a week-long freefall which erased more than $22 off its price. The price closed today at $399. Gold’s slide impacted on all gold equities which are being ravaged by investor indifference and more importantly, by fears that the bottom has yet to be reached.

Over-all market performance registered a modest decline of 2.6 pts on the composite index which closed at 3,258.60 pts. Volume continued dull and lethargic as a paltry 18.9 million shares exchanged hands.

Metals and minerals gave up 32.97 pts to 2,705.81 pts whereas gold and silver dipped to 5,434.75 pts — off 14.95 pts. That loss is surprisingly low considering the magnitiude of bullion’s decline. This suggests that the week-long crash in gold equities has already discounted a majority of the price weakness.

Despite the gravity of the situation, most analysts are becoming bullish about gold prices, suggesting that the lows for the year could have been reached.

Not all issues gave up ground. American Barrick Resources gained 25 cents to close at $19.25. The advance is attributed to news that Minorco, controlled by South Africa’s largest corporation, Anglo American, has launched a $6.6 billion bid for all the shares of Consolidated Goldfields. The connection with Barrick? Speculation is that to pay for the deal, Minorco will consider selling Cons Goldfields 50% stake in Newmont Mines, which controls the Carlin gold camp in Nevada. Newmont, with production slated to reach 1.6 million oz per year, is the ultimate gold mining acquisition. Barrick is a possible buyer.

Other majors recorded mixed results. Echo Bay Mines eased 13 cents to $19.75 while Lac Minerals remained unchanged at $11.50. Placer Dome Inc. slipped to $14.63.

Agnico-Eagle Mines tumbled to a new low of $12.88 before recovering to $13. Problems at the company’s gold operation near Joutel, Que., have resulted in a loss for Agnico.

Some relief came to Granges Exploration which has been in a freefall for weeks. The issue advanced to $3.70 after trading at a low of $3.35 during the week.

One of the few issues to advance was Cassiar Mining which closed at $4.15. We noted the issue two weeks ago at $3.80. Cassiar is making good money from copper and asbestos mining in B.C.

Base metal giants Falconbridge Inc. and Inco Ltd. were firm at $20 and $33.13 respectively. Inco traded more than 480,000 shares valued at almost $16 million.

News that production has officially started at the Francoeur gold mine in Quebec, helped Rouyn Mining Resources advance to $2.55. Neptune Resources gave up 15 cents to a low of $2.85. Dickenson Mines was better at $5.25, despite the retreat in gold prices. The company is especially sensitive to price as its Arthur White mine near Red Lake, Ont., is a relatively high cost producer.

The companies most seriously affected by the crash in gold are the low capitalized juniors with no cashflow. Again, another crop made new lows. Total Erickson, which is becoming Total Energold, fell to $2. Syngold Resources was also weak, trading at a low of 81 cents before recovering to 86 cents . Aur Resources also lost ground, closing at $3.80, just a nickel above its 52-week low.

HSK Minerals crashed to a low of 55 cents before scratching back to 65 cents today. HSK’s only real asset is marketable security, namely 20% of Queenston Gold Mines which was also a loser, tumbling to $1.95. Just last week, Queenston was trading over $3.

Pioneer Metals has been particularly hurt, falling to $3.65 before recovering today to $3.85. Pioneer was a $7 stock just a few weeks ago.

Last years highflyer, Noramco Mining Corp. has faded badly, testing new lows of $1.51. The issue managed to get back to $1.72 at the close. That’s still a far cry from the heady days of 1987 when Noramco fetched upwards of $18. The company’s credibility has been seriously affected by the closure of its Golden Rose gold mine last month — after being opened with much fanfare and great promises just 12 months ago.