Toronto Stock Exchange Madeleine issue rides drop in price of

The week ended June 4 contained both good and bad news for Pat Sheridan, the controversial mining executive who is battling with regulatory authorities to bring the Lac des Iles platinum project into production.

The good news was a sudden increase in value of his 18.5% stake in American Reserve Mining thanks to some startling drill results at the company’s 36% owned Paymaster gold mine near Timmins, Ont.

When mine operator and 64% owner Placer Dome announced it had intersected 96 ft. of grade 0.31 oz. gold per ton at the 6,025-ft. level, shares of American Reserve shot up by 42 cents in Vancouver within 48 hours. The company is waiting for more information before going ahead with attempts to sell its interest in Paymaster.

Less encouraging for Sheridan was this week’s US$14-per-oz. drop in the price of platinum. The sudden price drop was sparked by news that Nissan Motor Co. of Japan has developed a catalytic converter that uses only palladium as an agent to convert exhaust emissions of carbon monoxide.

However, the converter is rumored to be viable only for small vehicles, and shares of Madeleine Mines, which controls the Lac des Iles project, gave up only 35 cents throughout the week to close at $4.90. Sheridan is president of Madeleine.

By contrast, renewed hopes for an early end to the recession, which drove New York’s Dow Jones Industrial average to a record high, also pushed Toronto’s composite 300 index to the 3,546.10 level May 31. But as profit takers moved in the index lost some ground this week before recovering today, June 5, to close up 6.68 points at 3556.27 on a volume of 22.9 million shares.

As metal producers will benefit from an improved economy and lower interest rates, a number of them moved up sharply this week. Leading the way was Inco, which hit a new high for the year of US$41 after employees at the nickel miner’s Sudbury, Ont., operations accepted a new 3-year wage contract.

The contract raises the hourly wages of 6,500 unionized workers by 24% and offers a very generous pension scheme. Today, Inco shares slipped to US$40.63. Profit takers also trimmed the share price of Cominco which closed at $24.75 after advancing by $1.63. Hopes of a continued decline in Canadian interest rates spelt a $1 increase in the price of Noranda shares. They closed just below the $20 mark at $19.88. Metall Mining also gained 13 cents during the reporting period.

Other active base metal stocks this week included Arimathaea Resources. The issue hit a high of $2 after financier Graham Ferguson Lacey was named chairman of the Toronto-based company. Investors are betting that Lacey will repeat his recent success at New York-listed Nycal, which has acquired control of Gulf Resources and Chemical Co.

Also active were Sherritt Gordon, which added 38 cents, Great Lakes Nickel, up 12 cents and St. Genevieve Resources, up eight cents.

Meanwhile, as India exchanged 20 tons of gold for a US$240 million Swiss loan, the yellow metal advanced by US$2 per oz. to close at US$362.40 today in London.

Shares of American Barrick Resources moved ahead as analysts continued to speculate on the outcome of the gold miner’s proposed merger with Newmont Mining and 90.1% owned Newmont Gold. While many are complaining about the lack of information on which to evaluate the proposal, it appears that the companies were forced to reveal their intentions by reports in Britain’s influential Daily Telegraph. A Barrick spokesman confirmed this week that Barrick and Newmont were caught unawares and had to put out a release before they were ready. The issue added 76 cents to end the week at $24.13.

Meanwhile Corona held its annual meeting for the first time in Vancouver this week. At the meeting, company shareholders approved a 2-for-1 consolidation that the gold miner hopes will put the share price on an equal footing with similar-sized producers. The Corona issue was unchanged today at $5. However, shares of Placer Dome, which bottomed recently at $13.63, were up 13 cents today thanks to this week’s gold price increase.

Equinox Resources saw some activity following a new gold discovery at the Rosebud joint venture with LAC Minerals in British Columbia. Results from the 51% LAC and 49% Equinox-owned project include 40 ft. of grade 1.05 oz. gold and 2.37 oz. silver at a depth of 550 ft.