Toronto Stock Exchange Gold issues recover as buyers move back

After taking the worst drubbing since Saddam Hussein’s Iraqi forces entered Kuwait, gold managed to regain some of its lustre following the week ended October 16. Pressured by a series of factors including a big sell-off by Middle East traders and a sharp decline in the price of oil, the yellow metal fell to US$364 an oz., its lowest point since before the Iraq invasion.

But today, Oct. 17, as buyers moved back into the market, gold recovered some ground to close at US$366 per oz. on the second London price. The impact of gold’s slight recovery on the resource- oriented Toronto market was to drive the composite 300 index into positive territory for the first time in six sessions. It moved up 13.5 points to finish at 3023.38. As gold stocks recovered, so too did the gold silver index which moved up by 2.9%. to end the week at 5384.90.

Although shares of Inco and Noranda dropped by 50 cents and 25 cents respectively today, the metals and minerals index advanced by 0.41%. Inco is now trading at $1 above its 52-week low point. That may add some credence to speculation that we are on the brink of a very deep recession. Demand for base metals is generally low during recessionary periods. The Inco price decline coincides with the announcement of a preliminary reserve estimate at the Inco, Societe d’Exploration Vior, Cambior gold project northeast of Joutel, Que.

Estimated reserves in the Douay West zone are 584,000 tons of grade 0.30 oz. gold per ton, according to Inco.

Not surprisingly, the Madeleine Mines issue has taken it on the nose as the price of platinum fell by a full US$48.20 per lb. this week. Madeleine is affected by the platinum downswing because it is currently developing a palladium/ platinum project at Lac des Iles, near Thunder Bay, Ont. Closing up 5 cents today at $3.85, Madeleine is trading just above its yearly low point of $3.80, compared with a high of $9.88.

Gold producer American Barrick was hit by something of a double whammy this week. If a US$26.45 downswing in the gold price wasn’t bad enough, rumors sparked by brokers resulted in a $4.25 drop for the Barrick issue. Barrick executives moved quickly to limit the damage and the issue added a full $1.50 today before closing at $21.63. Other gold issues including Echo Bay, up 37 cents, Placer Dome, up 63 cents, and Euro-Nevada, up $1.25, also hit positive territory after taking a spanking earlier in the week. Echo Bay has agreed to sell an 8.7% stake in Crown Resources for $5.9 million.

At a New York mining conference, Oct. 10-11, hosted by investment banker Goldman Sachs, Placer Dome President Anthony Petrina hinted that his company may be ready to diversify into base metal production. Ironically, the statement was made just as newly listed VSM Exploration shares were hitting an initial high of $1.12. A 52% owned Placer Dome subsidiary, VSM, recently pulled a 20-ft. intersection averaging 12-14% zinc at its Grevet Twp. project northeast of Quevillon, Que. VSM ended the week down 5 cents at $1.

Audrey Resources added 15 cents to its share price following commencement of a surface exploration program at its Mobrun polymetallic mine project near Rouyn-Noranda, Que. Having already found five new massive sulphide lenses on the property since 1988, Audrey believes the chances of finding more are high. Partner Minnova will have an equal share of any new discovery.

Vancouver-based Rea Gold, down 34 cents, has agreed to acquire 80% of the shares of Kookaburra Gold Corp. for $1.3 million. Kookaburra is also based in Vancouver. Shares of Royal Oak Resources closed down 8 cents at $1.12 on news that a $33-million bid for control of the Pamour Group has been put on hold until Oct. 24. By that time, Royal Oak expects to have completed a $16-million international equity offering.

In other news, Corona is planning to finance development of the Eskay Creek gold project by selling a 49% stake in Poco Petroleums. The company expects to receive $10-15 for the 20 million Poco shares it now holds. However, Corona has yet to announce any statements regarding a development program that would also involve Placer Dome. Corona Class A shares closed up 12 cents today at $5.50.

Corona controls the Eskay Creek property through a 45% stake in each of Prime Resources and Stikine Resources, the joint venture partners at the property. Placer Dome owns 45% of Stikine.