Toronto Stock Exchange Gold shares dive as bullion hits three-year

The persistent decline in the fortunes of gold were reflected in the gold and silver index, which crashed to a new low of 5317.14 pts — off 15.53 pts for the day. Both seniors and juniors are feeling the wrath of disinterested investors who continue to dump precious metal equities in favour of high yielding debt instruments.

In fact, last week’s comment that few, if any, gold shares can demonstrate any real value in their current share prices, is finally being realized by investors.

Senior golds managed an uneventful day, staying unchanged or dipping lower. Agnico-Eagle Mines was on the new low list again, trading at $10 before closing at $10.13 America Barric Resource was unchanged at $23.5 toda bu of mor et optioned by Placer Dome tha $ durin th week.

LAC Minerals gave up 13 cents to $12.50 whereas Echo Bay Mines managed a 25 cents advance to $16.25. Placer Dome Inc., Canada’s largest gold producer, lost a quarter to $14.63.

One of Canada’s lowest cost producers, Hemlo Gold, slipped to $12.25. Central Crude, in which Hemlo is the largest shareholder, traded at a new low of $5 before recovering to $5.13. Crude has an advanced gold project in the Mishibishu area of Ontario.

The slowing economy view is also being heeded by base metals investors who believe that an economic downturn will take the spark out of record high commodity prices. The result was another day of weakness amongst the base metals producers. The index slipped 29 pts to 3340.64 pts.

However, few tears can be shed for base metals investors who reaped handsome profits in 1988 from a sector, which by all accounts will likely be the star performer this year as well.

Cominco Ltd., which is building what will be the world’s largest zinc mine in Alaska, fell to $25.88. The current largest zinc mine is still New Brunswick’s No 12 owned by Brunswick Mining & Smelting. The issue was firm at $11.

Inco Ltd. and Falconbridge Ltd. were both marginally easier closing at $3r6.38 and $30.75 respectively. Falconbridge is taking some heat from minority shareholders of New Quebec Raglan (NQR). Falconbridge made an offer to buy the minority interest in NQR not already owned by itself. The offer of $5.36 is being rejected by several NQR shareholders as being too low. Last week we implied there was plenty of room to sweeten the pot, especially when we estimate that Raglan’s rich nickel deposit has a gross value of about $6 billion at current prices. The issue was unchanged at $5.50.

A sign of just how bad it is for junior companies is in how the market reacts to exploration news. In 1987 a good drill hole sparked buying. Today investors first yawn, then sell. Moneta Porcupine experienced a dose of this lethargy. A good drill hole from a property east of Timmins, Ont., failed to add a penny to its shares, which closed unchanged at 45 cents .

Rayrock Yellowknife Resources, a tightly held gold and industrial minerals producer, was firm at $7.75. This perennial performer has a good-looking copper play in Chile which is a future producer (see front page story).

DeBeer’s Canadian diamond- hunting affilate, Monopros Ltd., is building a small processing mill on site at its diamond find in Saskatchewan, sources say. The kimberlite pipe found last year is diamond- bearing. The mill is likely a test facility needed to process large quantities of rock in order to determine diamond grade and quality. This is welcome news for Claude Resources which is one of the largest landowners in the area. The issue was up a dime to $3.30.

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