Toronto Stock Exchange Middle East crisis takes toll as investors

The Persian Gulf crisis continued to take its toll on the stock market during the week ended Aug. 21, as nervous investors struggled to protect themselves from unfolding developments. Today, Aug. 22, sell-offs in both New York and Tokyo spilled over to Toronto and the composite 300 index gave up 26.45 points before closing at 3431.20. It marked the fourth straight loss for the index.

While the gold price remained relatively steady, dropping by just US$1 per oz. to end the day at US$408.25 on the second London price fix, an outbreak of rocket fire in the Middle East would almost certainly spark another rally. That’s why analysts are keeping a close eye on the situation.

“We need a skirmish to take gold out of its holding pattern,” said Michael Jalonen, precious metals analyst with Midland Walwyn Capital Inc. in Toronto. In the absence of any gunfire, he believes gold won’t fall too far from its current level while gold issues weaken slightly.

Reflecting a 20.11-point drop in the gold-silver index, a number of the big gold issues lost ground today. They included LAC and American Barrick Resources which gave up 25 cents and 12 cents respectively. Franco-Nevada took it on the nose as it lost 75 cents. Shares of Placer Dome were even at $21.75.

Although base metal prices aren’t nearly as sensitive to developments in the Middle East, the metals and minerals index dropped 46.97 points today. That drop was accompanied by 50 cents decline in the price of Cominco shares. Teck also headed southward, dropping 38 cents to close at $27.75.

Noranda, even on the day, was involved in a number of key developments this week, including some encouraging drill results from the Lynn zinc-copper project in Wisconsin and the Freewest Resources gold project at Harker-Holloway, Ont.

Aur Resources, Societe Miniere Louvem and St. Genevieve Resources were back at the bargaining table after failing to force Noranda out of their Louvicourt Twp. project. Aur President Jim Gill indicated that a solution to the current impasse may be imminent but that certainly wasn’t reflected by the market. While all three issues lost ground today, Louvem was the biggest casualty. It gave up 25 cents.

New results from Audrey Resources’ Mobrun mine property near Rouyn-Noranda, Que., appear to indicate the potential for an appreciable increase in mine reserves which now stand at 15 million tons. However, Audrey was even today, closing at $3.50. Audrey’s partner Minnova gave up 37 cents, after gaining $1.38 earlier in the week.

While Minnova is funding the cost of exploration and development on Mobrun’s 1100 lens and newly discovered C lens in return for a 50% stake in the structures, the jump in its share prices was obviously tied to drill results at Minnova’s Winston Lake mine near Shreiber, Ont.

In other developments, Cambior and Camindex Resources, a unit of MVP Capital will resume mining at the Valdez Creek placer operation in Alaska. Operations were suspended there in Oct. 1989. Camindex owns 51% of the project while Cambior has the other 49%.

Among the companies to reach a new high this week was Starrex Mining. It touched $2.40 before falling back today to $2.30. Bema Gold continues to make progress as indicated by today’s 15 cents upswing. Bema is trading at $4.25. Other active issues included Golden Rule, down 5 cents today, and Trimin Resources. The latter company has agreed to sell its stake in the Hanson Lake zinc copper property to Billiton Resources for $17.5 million.

Also, the preferred A and B shares of Denison Mines (TSE) took a severe beating after Denison said it would not be paying dividends on the issues. The preferred B shares gave up $7.87 while the preferred A shares lost $4.75.

At the same time Denison said it had taken a $80-million writedown on its oil and gas assets in Italy. A $4.2-million pretax provision for the cost of down-sizing its Uranium operations at Elliot Lake, Ont., also contributed to a net loss of $97.1 million during the second- quarter loss, the Toronto-based company says.