Toronto Stock Exchange Gold sector heated up by bullion rally

The activity was wild and, as expected, unpredictable. Although the composite index gained 27.59 pts, the gold and silver index gave up 50.72 pts today to close at 5753.5 pts. The composite closed at a new high of 3785.73 pts.

Gold, which has felt the brunt of high interest rates and a booming U.S. dollar for the past few months, has managed to develop considerable support around $360(US) per oz. Most observers feel resistance will be met at $380.

Metals and minerals were also winners as the index gained 27.52 pts to close at 3438.98 pts. Copper, zinc and nickel continued firm this week.

This week’s biggest gainer was Canada Tungsten Mining Corp. which benefitted from the crisis in China. That country is the world’s largest producer of tungsten. Investors, fearing that tungsten supplies might b e hurt due to China’s internal conflict, picked up Cantung as a speculative play. The buying moved the issue up by more than $2.38 before coming off sharply today. At the close the issue was trading at $6.63 — off $1.37 for the day. Cantung has a large shutdown tungsten mine in the N.W.T. which requires improved prices to reopen.

Senior golds were the target of equity buyers earlier in the week. However, the mood of uncertainty with respect to gold continues to hamper the sector. The result was a bout of quick profit-taking today which forced most issues lower. American Barrick Resources slipped to $26.50 whereas Hemlo Gold Mines gave up 25 cents to $14.

Echo Bay Mines managed to add a quarter to close at $17.50. LAC Minerals was easier at $11.88. Dumagami Mines, which is being merged with parent company Agnico-Eagle Mines, managed to hold on to recent gains, closing at $13.63.

Golden Knight Resources, which is controlled by Teck Corp., was a big winner this week, advancing sharply by $1 to $8.75 before closing 25 cents lower at $8.50. Golden Knight has a 40% interest in the producing Golden Pond mine in Quebec’s Casa Berardi area.

Junior proxy MVP Capital was finally the subject of some buying as more than one million shares were traded during the week. Today’s volume was over 100,000 shares. The issue advanced to 45 cents before closing lower at 42 cents . MVP holds a large portfolio of junior exploration equity which has declined in value by almost 80% since the peak in 1987.

Midas Minerals has acquired cash flow — no mean achievement in today’s depressed market. The junior explorer has purchased a limestone quarry operation which generates more than $1 million of cash flow annually. The issue was easier at 38 cents . The company, which has a small market capitalization of less than $1.5 million, is on the hunt for more cash flow acquisitions.

South American Goldfields is now on the TSE. The issue traded at 53 cents . The company has a large ground position in Guyana, South America. The most advanced projects are joint ventured with Denison Mines and U.S.-based Homestake. Recent work by Homestake on the Akaiwong project has produced a large geochemical anomaly which yielded values in excess of one gram gold per ton in samples over large areas. The target will be drilled this year.

Noranda Inc. moved quickly to up its stake in Falconbridge Inc. to almost 25%. Noranda was stronger at $23.25 whereas Falconbridge advanced to $31.25. Inco Ltd., the world’s largest nickel producer, also advanced to $35.50. All three companies continue to generate impressive earnings. Falconbridge and Inco will likely have another record quarter ending June 30.

Metall Mining plans to increase its interest in seven mines held by parent Metallgesellschaft in West Germany. Metall was steady at $12.13. Cominco Ltd., in which Metall has an interest, was better at $26.50.

Claude Resources is hoping to make a production decision for the company’s Seabee project by fall. The issue was easier at $3.75. Galactic Resources managed to add 20 cents today to close at $3.90.

]]>