Toronto Stock Exchange Falconbridge takeover bid ignites buying

Already blessed by Falconbridge’s rough and tumble chairman, Bill James, the deal will see control of one of Canada’s most venerable mining giants heading south. New York-based Amax is offering $36.13 per share. However, investors expecting a bidding war, pushed the price to $36.63 at the close.

Noranda, which already controls about 27% of Falconbridge via open market purchase, stands to reap a handsome profit in excess of $300 million if it decides to sell its stake. Noranda was also firm at $25.75 on volume of more than 1.3 million shares.

In fact, the entire base metals sector was booming. The Amax deal is a stamp of approval for base metals issues, telling the investing world that Canadian base metals companies are trading at absurdly low price-earnings ratios of less than five times. With nickel-copper- zinc supply-demand fundamentals remaining intact, Amax is bullish on these commodities and investors followed suit.

The metals and minerals index responded to the buying wave, surging by almost 5% or 167.81 pts to a new high of 3653.19 pts. Combined with a healthy 2.8% rise in the gold and silver index to 6192.18 pts, the composite reacted with zest to reach a new high of 3980.45 pts.

Inco Ltd., which is also a takeover candidate despite a poison pill, was not ignored. More than 600,000 share were bought and sold as the issue firmed to $39.75 — up more than $2. Cominco Ltd., which is a major world zinc producer, hit a new high of $31 before settling back to $29.88.

Senior golds, which have been on somewhat of a roller-coaster ride of late, made good gains. However, the buying was not driven by bullion prices which remained sluggish at $369.75 on the second London fix. Echo Bay Mines saw $1 added to its share price, which closed at $18.25. Hemlo Gold Mines was also active, advancing to $15.38. Placer Dome Inc. traded more than 1.6 million shares as it gained a dollar to close at $18.25. Of interest, Allen Born, Placer’s former chairman, set that company on its current course to bec ome one of the world’s largest gold producers. Born, as president of Amax, is about to reshape the Canadian mining landscape once again.

Noranda, which is looking more like an astute stockpicker as opposed to a buyer of mining assets, is making another play this time in Louvem Mining and St. Genevieve Resources, Louvem’s controlling shareholder. After making an initial investment in Aur Resources, Noranda was scooped by Cominco Ltd. and Teck Corp. who closed a private placement with Aur thereby preventing Noranda from acquiring control.

The Louvem-St. Genevieve deal gives Noranda a crack at Aur’s Louvicourt deposit from another angle. Noranda plans to buy 800,000 Louvem shares at $10 per share. Less than two months ago, Louvem was trading at 55 cents .

Aur reacted positively to the Noranda news, trading up to $11.50 before closing at $10.63 on more than 670,000 shares. Louvem and St. Genevieve advanced to $7.63 and $2.96 respectively.

Minnova Inc., which has struggled this year with poor earnings relative to other copper and zinc producers, made a good gain to $19.88. The company has a significant stake in Audrey Resources which controls a large copper-zinc- gold deposit near Rouyn, Que. Audrey, although recommended by several mining analysts, was easier at $3.50. Zinc producer Mineral Resources International was unchanged at $5.63.

Granduc Mines added another dime to $2.75 following release of more drill holes from its Sulphurets gold property in British Columbia. Several rich intersections have been assayed by the company and its partner Newhawk Gold.

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