Toronto Stock Exchange Markets test post-crash lows following sell-

The post-crash rally, which saw almost 500 pts added to the TSE composite index since October, 1987, has all but disappeared over the past two months. Following a week of small but steady declines, the market took a major walloping today as investors unloaded everything. The damage tallied up to 63.82 pts off the index which closed at 3,228.68 pts.

The fear and nervousness over interest rates, global debt and inflation — which essentially underlie the Oct 19 fiasco — never quite left the markets, but rather were ignored during a 3-month bear-market rally.

Today’s crash, which is actually testing the Oct 19 lows of 2,800- 3,100 pts, could signal the beginning of another major selling spree which has the potential to batter the market below 3,000 pts.

Concerns over rising interest rates, which will put a lid on both the booming North American economy and inflation, triggered the panic. Gold, which is inflation sensitive, gave up $10 to $339 (US) per oz on the second London fix. The gold index reflected the downturn with a 159.01 pt loss to 6,289.65 pts.

Seniors and juniors alike felt the brunt of the sell-off. An extra dollop of sympathy goes out to the small capitalized juniors which never really shared in the recovery enjoyed by their larger capitalized brothers following Oct 19.

American Barrick Resources gave up 88 cents to $23.50 on good volume. Lac Minerals was also weaker, losing 38 cents to $13.75. Placer-Dome Inc., which plans to sell its stake in Falconbridge Ltd, failed to avoid the hammering, giving up 25 cents to $15.63. Falconbridge, which seems to have missed the full effect of the nickel price boom due to problems in the Dominican Republic, slipped to $21.75. Placer’s Falconbridge interest is valued at more than $500 million, but with the current market sentiment, don’t expect much of a premium or a quick sale. Inco Ltd. took a $1.63 beating to $32.50. One rumor bandied about was that Inco was a possible buyer of the Placer stake in Falconbridge.

Other base metal producers which got hurt by the selling were Minnova Inc. at $19.25 and Noranda Inc., which slipped 63 cents to $21.25. Junior Greenstone Resources, which has been making steady gains all week, gave up 15 cents today to $4.75. The company is expecting gold production this year from a mine in Costa Rica. Sonora Gold Corp. reached a new low of $4.65. The company operates the Jamestown open pit gold mine in California.

No one said mining was easy. Two operational disasters which underlie the fact that no matter just how good the numbers and figures touted around by mining analysts and managment appear to look, there is also technical risk involved. Take a look at the Tartan Lake mine in Manitoba. Plagued by low grade problems, operators Abermin and Granges have taken a beating — and at a time when the markets are in no mood for even more bad news. Granges was steady at $5.25 whereas Abermin drifted to a new low of 46 cents .

In Quebec, the Beacon gold mine is deemed uneconomic. Little wonder that D’Or Val Mines, the owner, has taken investors for a terrible bath from a high of $6.75 last year to a new low of 68 cents . Many of those investors are Europeans who took down an exorbitant convertible debenture for almost $30 million. These people have just taken an expensive lesson in something called due diligence.

Getting back to the markets, signs of the current downturn have been everywhere. Low volumes and the increasing presence of shorts have been the most obvious ones. Short players, smelling quick profits, have taken big positions in most issues. More notable include Muscocho Explorations (171,100 shares) and International Corona (517,000 shares). One of the larger postions is in Pacific Trans-Ocean at (294,500 shares).