Toronto Stock Exchange Investors take cover as CEIP killed in

Investors continued to stay out of the market today, Feb. 21, as they waited for the dust to settle on Federal Finance Minister Michael Wilson’s sixth budget. Designed to trim the deficit from $30.5 billion to about $28.5 billion next year, the no-surprises package was accompanied by a steady gold price — US$420 per oz. on the second London fix — and a 19.79- point drop in the 300-stock composite index.

The gold and silver index also gave up 34.80 points as the mining industry awoke to find that a government hell bent on deficit reduction is in no mood to subsidize resource exploration.

However, some tax experts were wondering if the $75 million the government expects to save by killing off the less than 2-year-old Canadian Exploration Incentive Program is really worth all the effort. While the elimination of CEIP wasn’t unexpected, analysts say it will make the going even tougher for an already beleaguered junior exploration sector.

Earlier in the week that ended Feb. 20, American Barrick Resources (TSE) said it had won a “major victory” in its fight with Utah-based Gold Standard for control of the Mercur gold mine.

Barrick said it has won a motion for a partial summary judgment in its litigation with Gold Standard, stating that the Utah company’s 25% interest in Mercur was properly converted to a 15% net profits interest.

Although the case has still to be tried in court, the ruling is significant because Gold Standard has always maintained that its previously held 25% working interest gave it the right of first refusal when the mine was put up for sale in 1985. The Barrick issue responded by climbing to a high of $24.25.

Two more companies that are keeping their lawyers busy are Golden Rule Resources and Northern Abitibi. Under dispute is Inco’s right to earn an interest in properties adjacent to the Societe d’Exploration Vior gold discovery in Douay Twp. near Casa Berardi, Que. Golden Rule closed the week up 5cents at $1.65.

A major player in the Casa Berardi camp, Inco is a partner with Cambior on the Vior discovery claims where a 59.3-ft. intersection averaging 0.23 oz. gold per ton was reported last week. Today, assays were in the hands of Inco geologists who refused to say anything. Inco lost 25cents before closing at $27.63.

Shares of Joutel Resources have traded heavily as investors wait for Inco to option Joutel’s Aloigny Twp. property, seven miles north west of the Vior claims. However, as one insider observed, Casa Berardi has traditionally presented exploration teams with continuity problems and one drill hole doesn’t make a mine. Nevertheless, close to four million Joutel shares changed hands as the issue closed up 2cents at 38cents. Joutel affiliate Queenston Mining nudged its 12-month high of $2.10 this week before settling back at $1.85.

The other big news this week is a dramatic drop in the share prices of Aur Resources and Louvicourt Twp. partner Societe Miniere Louvem shares. Aur shares were trading as low as $9.75 as some investors decided that no news from the company’s Val d’Or, Que., base metal discovery meant bad news. Louvem also flirted with $6.88 before recovery to close at $7.25. At presstime, Aur President Jim Gill was promising to make amends by releasing assays from five holes on Feb. 23, three of which were drilled to below the 3,000-ft. level.

Slow going at the drill site and busy assay labs are reported to be the reason for the delay. Waiting anxiously for those results is Vancouver-based resource giants Teck and Cominco, which together hold a 21% of Aur. Cominco is busy with an unresolved dispute over bonuses at its Sullivan zinc mine in Kimberley, B.C., and startup troubles at the Red Dog zinc project in Alaska. The Cominco issue gave up 12cents to close at $23.38.

Meanwhile, Thunderwood Resources, an Aur sister company, has reported zinc-rich massive sulphides and copper-bearing stringer sulphides on its Scott Lake base metal project in Chibougamau, Que. The Scott Lake drill core is similar to that which is being assayed at Aur’s Louvicourt property, and results from Chibougamau include 24.5 ft of grade 8.79% zinc. With a 50% project interest, Thunderwood has been trading in the $1.50 range, while Greenstone which holds the remaining 50% closed down 37cents at $5.63.

Jonpol Exploration and T&H Resources both suffered after LAC Minerals forfeited its option to earn an interest in the Garrison Twp., Ont. gold project. Jonpol recently arranged a $300,000 flow-through deal at 80cents to finance a shaft extension program. Both issues remained steady at 80cents and 50cents respectively. LAC ended the day down 25cents at $14.88.