Toronto Stock Exchange Gold issues suffer as Placer Dome ponders

As investors awaited the outcome of the Meech Lake discussions and for Placer Dome to make the next move in the battle for Eskay Creek, gold issues continued to suffer today, June 6, from the recent price fall. After plummeting by US$5.90 earlier in the week, the yellow metal steadied up to close at US$359.50 per oz. on the second London price fix. However, the gold and silver index reflected the weakness shown in the precious metal sector by giving up 60.08 points.

The drop in price has been attributed to fears that Russia could be forced to sell more gold on to the open market to pay off more than $2 billion in debt. Those fears have been exacerbated by recent economic figures indicating a downward trend in inflation and a stronger U.S. dollar. Both factors are viewed as bad for gold.

However, Fred Knight, a precious metals analyst with Levesque, Beaubien Inc. in Toronto, believes gold will probably stay where it is unless the market is hit by another large bullion sale.

“There doesn’t seem to be any reason to think that the price will go up significantly and I don’t see much downside from here,” he said.

Knight declined to comment on today’s 37 cents drop in the price of Corona A shares. They closed at $7.50 as a team of lawyers representing Placer Dome examined the legalities of Corona’s new sweetened bid for control of the Eskay Creek gold discovery in British Columbia.

On June 4, Corona said it had increased its stake in Prime Resources to 45% from about 20%. According to Corona Chairman Ned Goodman, a number of private deals should also give Corona 42% of Stikine. But some analysts are betting that Placer Dome, which has already bid $67.50 a share for all of Stikine Resources’ shares, may move to tie up 26% of Stikine and, therefore, prevent a proposed amalgamation with partner Prime Resources. Placer Dome closed down 13 cents to finish at $17.75 while Stikine ended the day up 50 cents at $69.

Trading on the Aur Resources was halted late on June 1 after drill hole rumors sparked the exchange of over 300,000 shares and the issue jumped by $1.15 to $4.95. Shares of partner Societe Miniere Louvem and parent St. Genevieve Resources were also affected by the rumors to gain 95 cents and 35 cents respectively. However, when investors realized that results from two infill holes had not affected the size of the Louvicourt Twp. base metal deposit, Aur retreated to $4.35, while Louvem closed at $4.30, down from $4.95 earlier in the week. St. Genevieve gave up 6 cents to close at $1.07 today.

A new high reached by Pamorex Minerals this week coincides with the start of a 5-hole program at the Upper Beaver gold property near Kirkland Lake, Ont. Pamorex has optioned the property from Queenston Mining. However, according to Barry Simmons, Pamorex’ vice- president of explorations, it is much too early for the kind of hot drill hole rumors that have been making the rounds on Bay Street.

A new high of $10.13 was also reached by newly listed Curragh Resources, the company that controls the lead-zinc mine at Faro, Y.T. Curragh and partner Hillsborough Resources are set to bring the Mt. Hundere lead-zinc project into production next year, pending results of discussions geared to raising $70 million. The property was acquired from Canamax Resources last year which still retains a royalty interest. Canamax closed down 4 cents at $1.35.

Madeleine Mines retreated from a high of $9.75 to close down 12 cents today at $9.13. The strength of the Madeleine issue appears to reflect current platinum prices rather than progress at its Lac des Iles palladium, platinum project near Thunder Bay, Ont. However, for reasons that aren’t apparent, President Patrick Sheridan wasn’t returning phone calls this week.

New highs were also reached by Ateba Mines, Minera Rayrock, Redstone Resources, and Royal Oak Resources. In a bid to finance development of the Bellavista gold project in Costa Rica, Minera Rayrock has agreed to amalgamate with Vancouver affiliate Westlake Industries.

Among the issues to hit new lows this week was Consolidated TVX Mining. While it remained steady today at $4.65, TVX appears to be suffering from problems at its Novo Astro gold mine at the mouth of the Amazon River in Brazil.

Also reaching new lows for the year were Total Energold, Aurizon Mines, Jonpol Exploration, Sherritt Gordon and Rea Gold.