Toronto Stock Exchange Market takes a pause on its way down

The slide on the Toronto Stock Exchange continued, whipsawing investors with violent swings as it declined. The shortlived rally of Oct 21 was obliterated by three days of losses which wiped out another 400 pts from the tse’s 300 composite index. Today, a semblance of stability — albeit nervous — was in evidence as the composite declined 38 pts to 2,837.70 pts. The gold index staged its first comeback in weeks, scratching its way to a marginal 43.36-pt gain to close at 6,495.64 pts. Due to the massive flood of sell orders which have hampered processing of trades, the exchange closed at two o’clock during each day of this week.

Gold bullion continued to display strength, trading at $477(US) per oz in New York. Gold’s robust performance was reflecting lower interest rates in the U.S. and the resultant tumble of the U.S. dollar. The question on everyone’s mind undoubtedly is — in 1988 which way will the economy move, towards deflation or inflation? The answer to this question will impact on all metal prices.

A survey of major gold producers showed most issues holding or moving marginally higher. American Barrick Resources closed at $22.75 after opening at $21 this morning. Agnico Eagle Mines hit a low of $19.75 before recovering to $20.13. In fact, from the opening bell, the tse gold index was off by more than 300 pts at one time during the morning. Other big players such as Hemlo Gold and Placer Dome Inc. remained steady at $17.63 and $17 respectively.

Talk about poor timing. Dickenson Mines bought 942,000 shares of Wharf Resources on Oct 16, two days before Black Monday. At that time Wharf was in the $8.50 range. Today the issue closed at $6. Dickenson has continued buying at lower prices to increase its stake to 9.8%. Dickenson, which is a solid gold producer, has built a sizeable war chest for such acquisitions. The issue closed at $8.

Claude Resources, which is developing a promising Saskatchewan gold deposit with Placer Dome, was a casualty of the market collapse. The company was forced by its underwriter to cancel a $12.5-million share offering which was priced at $6.25 per share. Hayes Resources however, completed an equity- linked debt issue with Swiss-based Bank IndoSuez — fast becoming the darling of Canadian resource companies. Hayes, which has no cash flow operations at the moment, managed to get the 40-million Swiss Franc issue completed. The stock was steady at $1.25.

The huge drop in share prices is not fazing everyone. A large number of companies are moving to issue normal course issuer bids which enable them to buy back their shares on the open market. All are saying such a move is a good use of their cash.

The entire Royex Mining Group is instituting such a game plan. International Corona Resources was active at $47.25, but still way off its high of $85 following its court victory over the big Page-Williams gold mine at Hemlo, Ont. Affiliate Royex Gold Mines was steady at $5.50. Hemlo loser Lac Minerals, was off to $8.50 at one point today before recovering. One broker commented, “at those prices, if Lac isn’t a buy something’s wrong.”

Has anything bucked the downtrend? Take a look at Comaplex Resources International, a junior oil and gas producer with several mining interests. The issue, which sources say is the target of a takeover bid from a group of Austrian- based investors, surged to a high of $10.50 before closing at $10.25. In early October, the issue was trading at $5.