Toronto Stock Exchange Familiar factors combine to depress share

In a week when the Canadian government was offering a 11.5% return on Canada Savings Bonds, it was hardly surprising that equity investors were taking their profits and sheltering their money elsewhere. That — together with now familiar factors including high interest rates, the G.S.T. and fear over the Meech Lake Accord — explains why the composite 300 index lost 18.58 points today, May 16, to close at 3486.76.

The effect that all of this is having on the mining sector was indicated by significant declines in both the Metals and Minerals index and Gold and Silver index. They fell by 16.79 and 5.35 points respectively in conjunction with a slight decline in the price of gold. The yellow metal closed at US$369.85 an ounce on the second London fix, compared with US$370.50 a day earlier.

“I still feel that high interest rates is the main factor that is putting a damper on the market,” said Paul Piazza, senior mining analyst at Merit Investment Corp. in Toronto. “I hope the market will improve if we get a decrease in interest rates,” he said.

In the current climate, Piazza is strongly advising market players to be heavy on the major mining companies while keeping a smaller percentage of their portfolio in the small speculative situations.

The fact that many investors were thinking along the same lines was indicated this week by the trading patterns of at least three companies. Moneta Porcupine, for example, gave up 5 cents to close at 50 cents after concluding an option agreement with respect to the Lik base metal property in Alaska.

Subject to due diligence and regulatory approval, an agreement with CGO Minerals of Houston, Tex., to earn up to 80% of the Lik property which contains a 25-million-ton zinc-lead silver deposit.

The Claude Resources issue was even at $3.25 after announcing a production decision at its Seabee gold project in northern Saskatchewan. At full speed of 400-ton-per- day, the project is expected to produce 48,000 oz. annually at a cost of US$210 per oz. Claude gained 10 cents earlier in the week.

Cambior lost 75 cents, closing at $13.75, after agreeing to purchase the 50% stake it doesn’t own in Chimo gold mine east of Val d’Or, Que., from Societe Miniere Louvem.

Trading of both Louvem and parent St. Genevieve Resources resumed trading after being halted May 11 pending the Chimo announcement. St. Genevieve closed down 6 cents at $1.02 today while Louvem gave up 20 cents to close at $4.35.

Elsewhere, Noranda continues to suffer from its affiliation with Noranda Forest and MacMillan Bloedel. While remaining even today at $18.75, the issue is still hovering close to its 52-week low.

“A large part of Noranda’s difficulties arise from its exposure to the troubled forest products industry, and it was news of the massive decline in the earnings of the forest products companies which triggered Noranda’s price fall,” said John Lydall, a mining analyst at First Marathon Securities in Toronto.

An interest in the holding company that controls Vancouver-based giants Teck and Cominco explains why shares of Metall Mining were off slightly today after hitting a 52-week high earlier in the week.

On the eve of releasing first- quarter results, that are expected to reflect those of Teck, Metall was down 25 cents to close at $14.25. Teck’s first-quarter earnings dropped by 6 cents a share from last year’s levels. A block of 500,000 Metall shares, bought on behalf of clients by Gordon Capital, drove the Metall issue up to a high of $15.25.

New highs were also reached by Black Swan Gold and Stikine Resources. Closing down $1 at $60.50 today, Stikine is benefiting from activity around the “Stikine Arch” in British Columbia where Prime Resources has announced a plan to spend $24 million.

Finally a $10.35 increase in platinum prices has driven the price of Madeleine Mines’ shares up 25 cents to close at today’s $6.88. Madeleine is moving to bring its Lac des Iles, Ont., palladium/platinum project into production, but local geologists in the Thunder Bay, Ont., region say President Pat Sheridan is still a long way from obtaining the appropriate mining permits.