Toronto Stock Exchange Noranda, Inco issues suffer as gold recovers

As Iraqi President Saddam Hussein promised to prepare his troops for an attack in the Persian Gulf, North American investors were also positioning themselves for the possibility of war. During the week ended Oct. 30, the threat of gunfire drove the price of gold up US$8.15 to US$379.50 per oz. on the second London price fix. While gold is traditionally regarded as a haven in times of uncertainty, at least one analyst believes the yellow metal has gradually become immune to the hourly Mid-East rumors that are dominating the headlines and affecting the price of oil.

“Gold may no longer rise significantly in response to Mid-East events until some shots are actually fired,” said Martin Murenbeeld, analyst and author of The Gold Monitor. “Gold would appear to be appropriately valued in the US$370 range within the context of a US$20-25 oil price expectation (as in a peace scenario) and within the context of current supply pressure,” he said.

An extremely hectic week in the mining sector ended today, Oct. 31, with a 2.63 point decline in the composite 300 index which closed at 3081.26. While the gold-silver index moved up 1.47% in tandem with the yellow metal, the metals and minerals index took a big drop, closing down 1.07% at 2606.99.

In the metals sector, an 82% decrease in third-quarter earnings had a predictable impact on the shares of Noranda. They gave up 75 cents before ending the week at $14.50. News that Inco is spending $287 million to expand production at its Manitoba nickel mines couldn’t prevent a $1.13 decline this week in the company’s share price. Today, the Inco issue lost a further 75 cents before closing at $27.75.

Another casualty this week was Metalore Resources. As lawyers representing Ontex Resources continue to extract evidence during the trial of the Brookbank property lawsuit, shares of Metalore fell by $2 to a low of $13. The Metalore issue recovered slightly to end the week at $14. According to a street rumor, Ontex’ interest in the Brookbank property will be dealt to Hudson Bay Mining if the trial judge rules in its favor.

Affected by the outcome is Vancouver-based Placer Dome, which is earning a 50% interest at Brookbank. In a week of mixed fortunes for gold issues, Placer Dome gave up 25 cents before finishing at $17.25. On a more positive note for the big gold producer, employees at the Dome mine voted to end a long and bitter strike that began back in May.

The 80-year-old mine accounts for roughly 12% of Placer Dome’s gold output.

The Hope Brook Gold issue was even at 61 cents as the union representing employees at the company’s Newfoundland mine considered the possibility of strike action while attempting to win a first contract.

Shares of Newhawk Gold and partner Granduc Mines headed southward after it was reported that their Sulphurets joint venture in British Columbia is uneconomic at current gold prices. After peaking at $3.15 this year, shares of Granduc fell to 56 cents today, while the Newhawk issue closed the week at 65 cents. The high for Newhawk this year is $3.90. Shares of Corona which owns 42% of Newhawk were even today at $5.38. That is uncomfortably close to their annual low of $5.13.

As holder of a 27% interest in Breakwater Resources, Corona is also hurt by the suspension of operations at lead-zinc mines owned by Breakwater in New Brunswick and Honduras. Predictably, the Breakwater issue today remained at a low for the year of 70 cents.

Among other gold issues, American Barrick Resources responded to some stellar third-quarter results with a 62 cents jump in its share price. Echo Bay moved up 38 cents to end the session at $13.13.

By contrast, shares of Falconbridge Gold haven’t responded favorably to the recently announced asset swap with Falconbridge Ltd. Under the deal, two African gold mines and a basket of Canadian exploration projects held by Falconbridge Ltd. would be transferred to Falconbridge Gold in exchange for shares. The Falconbridge Gold issue ended the week down 10 cents at $1.80.

Finally, despite inhospitable climate for such things, Royal Oak Resources expected to close its $33-million acquisition of control of the Pamour group of companies as scheduled Nov. 1. While Royal Oak ended the week down 6 cents at 82 cents, the acquisition marks a personal triumph for Royal Oak’s president and chief executive officer, Margaret (Peggy) Witte.

Platinova Resources moved up 15 cents to $1.65 on news of a gold and platinum ore zone in Greenland. A volume of more than 340,000 Platinova shares changed hands.