Toronto Stock Exchange Northgate nose dives after Colomac mine

Northgate Exploration was forced into a damage control mode this week after affiliate NorthWest Gold revealed its decision to take a $149-million writedown on the remote Colomac gold mine. Not surprisingly, shares of Northgate dipped to a 52-week low today Nov. 14, after the Toronto company declared a net charge of $78.3 million against earnings in conjunction with a $3.68 million third-quarter loss. The Northgate issue fell to $1.95 after losing almost $1.50 within a 48-hour period. Northgate officials are now in discussions with their bankers in a bid to raise $20 million for working capital next year and re-scheduled $90 million in debt.

The disappointing news came at the end of a brief market rally that saw four successive gains for Toronto’s composite 300 index. A drop in oil prices and hopes for a decline in interest rates brought investors back into the market. Northgate’s woes are tied to a gold price that ended the week pretty much as it began, at US$383.90.

The Toronto company needs gold to trade at well over US$400 per oz. and that seems unlikely now unless U.N. forces declare war on Iraq. This week, most analysts were ruling out gun fire as an immediate possibility.

Today’s 2.88% decline in the gold silver index coincided with across the board losses for most of the big gold issues. American Barrick and Placer Dome were two of the biggest casualties in the precious metals sector. They lost 62 cents and 63 cents respectively. Echo Bay was down 38 cents. LAC, which has failed to impress analysts with its future growth prospects, gave up 12 cents.

Although it released more encouraging results from the Eagle West discovery at Joutel, Que., Agnico-Eagle failed to sustain recent gains including a $1 price jump on Nov. 7. However, there is still no word yet on the Ontario Securities Commission’s investigation into trading activity before the first results were released.

Corona A shares continue to take a real beating. Today, the issue gave up 10 cents to equal its 52-week low point of $4.75. Among the most active issues on the Toronto Exchange, Corona traded over three million shares this week.

Other issues on the active list included Aur Resources and Bema Gold. Like Bema, the Aur issue lost 5 cents today after making some steady gains this week. As the Societe Miniere Louvem issue has also moved upward, street sources say surface drilling on the Louvicourt Twp. project east of Val d’Or, Que., is yielding some interesting results. However, that speculation has yet to be confirmed by either Louvem or partner Aur. Louvem’s parent company St. Genevieve Resources gained 5 cents today to close at $1.15.

The mines and metals index, which has been declining steadily all week, gave up 24.94 points before ending the day at 2568.91. Inco went into retreat after gaining $1.13 earlier this week. The big nickel miner closed down 50 cents at $28.38, still perilously close to its yearly low.

By contrast, Noranda, which ranks as one of the most “interest sensitive” stocks due to the impact of higher interest rates on earnings, was a winner today. The Noranda issue closed up 13 cents at $15.63.

Meanwhile, attention continues to focus on the lawsuit launched by Ontex Resources against former partner Metalore Resources over the Brookbank gold property near Beardmore, Ont. As lawyers representing Ontex presented their case summaries to the trial judge this week, shares of Metalore bottomed out at $12. Today, the Metalore issue recovered some ground to close at $12.13. Since the trial began, Metalore shares have fallen from $19.

After reaching a high for the year of $1.30 this week, the VSM issue slipped today to $1.10. VSM says it expects to release a reserve estimate from zone III on its Grevet zinc project by year-end. The estimate should then be followed by details of a 1991 exploration plan.

As part of a plan to merge with Inco Gold, a unit of Inco, Consolidated TVX Mining will acquire interests in Wilanour Resources and High River Gold Mines. Wilanour, which traded this week at $2.10, is involved in developing the former Cochenour-Willans mine with Inco Gold. Shares of TVX closed up 5 cents at $4.95 today.

Moss Power Resources, Pioneer Resources and RFC Resources were among this week’s active issues.