Toronto Stock Exchange Falconbridge, Corona keep mining sector hot

A counter bid from Noranda Inc. and a Swedish company of $37 per share for all of Falconbridge Ltd. thrilled investors who see a classic bidding war emerging. Falconbridge hit $39.13 before closing at $38.75 — a full $1.75 above the Noranda offer. Amax Inc. bid $36.12 per share a few weeks earlier.

All the action kept both the gold and base metals indices near their 1989 highs. Metals and minerals advanced to 3801.55 pts whereas gold and silver closed at 6416.90 pts — up 29.36 pts today. Bullion prices however, provided little support. The second London fix remained unchanged at $367.60(US).

A miners strike in Peru, one of the world’s largest copper and zinc producers, lit a spark under copper and zinc prices. Unfortunately, the strike failed to have much of an impact on the share prices of major base metal mining companies. The Noranda counteroffer for Falconbridge added another stamp of approval on the entire base metals sector.

Inco Ltd. advanced to $42 — just a snicker off its high of $42.37 reached earlier in the week. The world’s largest nickel producer, Inco is looking toward another year of record profits. Investors are also viewing Inco as a possible takeover candidate, despite its poison pill. Noranda remained firm at $25.50.

Corona Corp.’s A shares firmed to $9.38 on volume of more than 2.3 million shares. LAC Minerals held on to $12.13, not much lower than its pre-court decision price.

Drill results from the Aur- Louvem base metals discovery prompted many analysts to predict new highs for the three companies involved in the find. To most people’s surprise, the exact opposite happened. Aur Resources fell to $10 on weakening volume today of 93,000 shares. Louvem was easier at $6.88 whereas controlling shareholder St. Genevieve Resources slipped to $2.47.

The immense price gains made by all three companies — especially by Louvem — since the discovery was announced in mid-June appear to be discounting the encouraging results in the last three holes. However, persistent rumors of spotty results, deviating holes and difficult continuity likely added to the selling pressure.

One smaller base metals play which has made a tidy sum for the early players is Black Hawk Mining. The company has purchased a 100% interest in the Minago nickel deposit from Canamax and Granges. Just three weeks ago, the issue was trading at less than 50 cents . The price hit $1.50 today.

The Minago deposit hosts 7.2 million tons grading 1.33% nickel per ton. At a higher cutoff grade, the reserve is 2.2 million tons grading 1.64% nickel. Located in Manitoba near a highway and powerlines, Black Hawk sees an $80-million 2,000-ton-per-day nickel mine in the future.

Cominco Ltd. didn’t respond to the Peruvian miners strike which sent zinc and copper prices higher. The issue was firm at $30. The high is $31.

Another phenomenal drill hole completed by Newmont Gold in the Carlin area had little impact on American Barrick Resources. The issue was easier at $30.50. Franco- Nevada, which holds lucrative royalties on Barrick’s big Goldstrike deposit should benefit most from the Newmont discovery — just 100 yards from Barrick’s boundary.

Low gold prices and less than expected gold recoveries are being blamed by ERG Resources for the poor financial results from that company’s large tailings recovery project in Timmins, Ont. ERG fell to a new low of $1. A major Australian lender, Westpac Bank, is stuck with a large portion of ERG’s debt.

A series of very rich drill holes from a gold property controlled by Newhawk Gold Mines and Granduc Mines sent both issues soaring. Newhawk climbed to $4.25 before closing at $3.65 — up 60 cents in one day. Granduc firmed to $3.20 for a 45 cents gain.

Dumagami Mines was also active, moving up to $14.63. The company operates a gold mine in Quebec. A merger is being planned with parent company Agnico-Eagle Mines.

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