Toronto Stock Exchange Falconbridge, Inco highlight lethargic week

Trading in the shares of Inco Ltd and Falconbridge Ltd was the only highlight in a generally lethargic week of activity. Today, both issues raced near their highs, primarily due to firming commodity prices. A secondary reason for the surging price moves of both companies is takeover talk.

The TSE composite index, which is strongly weighted by Inco and Falconbridge, reflected the buoyant activity. The index gained 32.63 pts to close at 3,360.94 pts. The metals and minerals index was also up sharply, adding 83.12 pts to 2,762.7 pts.

Golds were hurt by a sell-off in bullion, which tumbled to $449.85 (US) on the second London fix. Gold has been extremely erratic following the October 19th crash last year, trading in a narrow range between $430-$450.

The nervousness stems from conflicting recession-inflation scenarios — essentially the same concerns which sparked the October 19th crash in the first place. According to Arthur Levitt, chairman of the American Stock Exchange, “the conditions that created the atmosphere in which a market meltdown nearly occured, are still present creating a kind of economic time bomb that threatens the whole system.”

Getting back to Inco and Falconbridge, both companies are ripe takeover targets representing good value. Inco is probably the better, being highly leveraged to nickel. Also the company, control of which is on the street, has a 100% interest in Inco Gold, a future 100,000-oz- per-year producer. Inco Gold could be taken public to help defray a small part of the acquisition costs. Miners, with a secret desire to become the Robert Campeau of Canadian mining, should take a close look at Inco.

The big news in gold mining was the announcement of plans to amalgamate the main companies in the Royex Group. Not totally unexpected, the merger will see International Corona, Lacana Mining, Mascot Gold, and Galveston absorbed by Royex Gold Mining. Today, all the issues were under a cease trading order. The new company will produce more than 650,000 oz of gold per year (see front page story).

Other golds took a beating on the gold price decline. American Barrick Resources gave up 50 cents to $25.63. Echo Bay Mines was also easier, closing at $27.13. Lac Minerals, which is letting a large portion of its contract exploration staff go, was firmer at $14; up 37 cents .

Pine Point Mines was unchanged following news that the company will be acquiring a piece of the Polaris lead-zinc mine operated by Cominco in the high Arctic. The issue closed at $18.75. Royalty king, Franco-Nevada, which made its mark via a lucrative royalty on the Goldstrike and Post deposits controlled by Barrick in Carlin, slipped to $8.63. The company plans to begin a share buyback program on the open market. Franco plans to acquire up to 855,000 of its common shares.

Flanagan McAdam Resources lost some ground, following a couple of weeks of good gains. The issue was quiet at $3.55; down 45 cents for the week.

Flanagan holds a 50% interest in the Magnacon gold deposit which will be in production by the first quarter of 1989. News of a nickel- copper find by Duration Mines near Geraldton, Ont., did little for the stock. The issue gave up a few cents to $1.07.