Toronto Stock Exchange Market volatile as war enters second week

Equity markets had a rocky ride during the week ended Jan. 22 as gold and oil prices gyrated in response to the troubling events unfolding in the Persian Gulf war. During the war’s first week, investors feared that Israel would retaliate against Iraq for several devastating missile attacks on Tel Aviv which left three civilians dead.

The volatile week also saw Merrill Lynch Canada quit the Canadian equity business after the company’s president declared, “We must face the realities of today’s market environment.”

As well, the Gulf crisis prompted The Toronto Stock Exchange to temporarily close its visitor centre and suspend public presentations at the exchange.

Meanwhile, in London, gold bullion was fixed at US$378.30 an oz. on Jan. 23, down sharply from US$403 a week earlier. The metal’s brief rally last week was capped by profit-taking and producer selling, analysts said.

Light crude oil plunged to US$24.18 a barrel from US$32 last Wednesday when allied forces started bombing Baghdad.

“Gold’s latest decline represents a serious technical setback, but it’s likely to be short-lived,” says market analyst Peter Cavelti. He feels the Gulf war is sure to bring more negative surprises and a resolution to gold’s current impasse will likely be on the upside, he says.

During the report period, senior gold equities followed the yellow metal downward. Placer Dome shed $1.51 to close at $16.50 on volume of 2.8 million shares. American Barrick fell 88 cents to $22.63 on volume of 1.4 million shares, while Corona class A shares lost 39 cents to close at $4.30 on volume of nearly one million shares. Hemlo Gold was down 75 cents to $10.38 and Echo Bay dropped 75 cents to $10.

On the junior gold front, shares of Platinova Resources plunged 59 cents to $1.10 after Teck withdrew from Platinova’s gold-platinum project in Greenland. Teck said the project’s overall potential didn’t meet its criteria. Platinova will continue with its plan to drill test other targets where platinum and gold mineralization was discovered in late 1990.

Shares of Dayton Developments gained 12 cents to $1.77 after the company raised $3 million to complete feasibility work on its Andacollo gold project in Chile. Dayton said the open pit, heap leach mine will eventually produce 110,000 oz. per year at a cost of US$200 per oz.

Greenstone Resources also moved up 10 cents to $2 as drilling continued at its 49% owned Santa Rosa gold project in Panama. Greenstone is hoping to expand total reserves for that deposit beyond its current 12.5 million tons grading 0.061 oz. gold per ton.

Meanwhile, shares of TVX Gold, formerly Consolidated TVX Mining, fell 39 cents to $4.50 and Bema Gold dropped 23 cents to close at $2.66 on volume of 213,300 shares. Freewest Resources traded 51,200 shares to close at $2.85.

In the senior base metal area, nickel giant Inco traded 883,500 shares to close $1.63 higher at $30. Spot nickel prices rose 3 cents to US$3.81 during the week.

Shares of Cominco moved up 13 cents to $20.88 after the company announced preliminary results from its Pebble Beach copper-gold property in Alaska where a 200-million-ton deposit is shaping up.

Among junior base metal stocks active during the report period were Aur Resources, up 15 cents to $3.25, and Timmins Nickel, up 3 cents to 70 cents on volume of 31,900 shares. Timmins Nickel recently acquired the Vedron gold property from Belmoral Mines and plans to mill Vedron ore at its Carshaw mill near Timmins, Ont. The acquired property has reserves of 418,992 tons grading 0.16 oz. gold per ton, which are sufficient to produce about 30,000 oz. gold per year.

Queenston Mining traded 363,800 shares for a gain of 19 cents to $1.32 after the company reported assays from a recent base metal find on its 60% owned Robertson Twp. property in northern Ontario. One of five recent holes on the prospect cut 30.9 ft. grading 1.45% copper and 0.47% zinc. A 10,000-ft. drill program has been planned to follow up the discovery.

Claude Resources says an environmental impact study has been approved for its Seabee gold mining operation in northern Saskatchewan. The $22-million underground gold mine is expected to produce nearly 48,000 oz. per year at a cost of around US$250 per oz. The Claude issue rose 12 cents to close at $1.97 on volume of 25,200 shares.