Toronto Stock Exchange Rally contunues unabated on strong volumes

Metals and Minerals remained a leader, advancing to 3558.09 pts for n 18.91-pt gain today. Golds were hammered by a major decline below the psychologically important $400(US) per oz barrier. Bullion was quoted at $392.80 on London’s second fix. Despite the listless performance of bullion, gold investors jumped in looking for bargains. The index advanced 77.24 pts to close at 5696.52 pts.

A report from G. Gurney Watson, a technical analyst with Prudential-Bache Securities, concludes that a stock market buying panic could occur. Watson cites corporate takeovers and LBO’s which have reduced the supply of equities in the U.S. by $420 billion, historically high levels of institutional cash reserves and the propsects for lower interest rates as evidence that the market rally could explode higher.

The 1988 success story of Canadian mining looked even better today. Inco Ltd. reported record earnings of $735 million(US) in 1988. In Canadian bucks that translates to a whopping $845 million. Not only did the world’s largest producer of nickel make more money than ever before in its history, it also delivered 495 million lb of nickel — the higest level since 1974.

Going out on a limb, we feel Inco’s chances of setting earnings records this year are excellent. A $1 billion year is in the making. The stock advanced to $35.63 on good volume. Falconbridge Ltd., which is also enjoying the benefits of record commodity prices, was firm at $28.63.

In the gold sector, not everyone is selling. Corona Corp. is looking for deals and thinks it has found one in the form of Dickenson Mines. Corona is making a cash offer for control of Dickenson and affiliate Kam-Kotia Mines. Corona’s A shares closed at $8.25, off 13 cents . Dickenson’s B shares advanced to $7.50 whereas Kam -Kotia was firm at $2.58. Street talk is that other major s are possible bidders now that Dickenson has been put in play. Talk is focusing on Homestake and Hemlo Gold. The latter company was steady at $12.38.

Speculators playing Kam-Kotia and Dickenson with the hopes of fetching a better price from Corona or another suitor, should be reminded of Nova Cogesco, which closed at $1.25. Cambior Inc. made a takeover bid of $1.80 which was withdrawn after Cambior only received 83% of the company’s stock. Nova immediately plunged to $1.20.

Weak gold prices are especially damaging to high cost mining operations. Stan West Mining, which is struggling with problems at its McCabe mine in Arizona, tumbled to $1.75. Scintilore Explorations, which tried to cash in at Hemlo via a lawsuit, was also weaker at $1.24. Its lawsuit was dismissed last week.

Pegasus Gold was off a $1.25 this week, closing at $13.50. The company is a major heap-leach mine operator in the U.S. Due diligence by Belmoral Mines on the Ketza River gold mine in the Yukon has resulted in a significantly lower offer by the company for the mine assets. Belmoral was a tad better at $1.64. The value of the company’s offer to Canamax Resources and Pacific Trans-Ocean has been cut in half.

Base metal issues continued firm. Noranda Inc. was actively traded, closing at $26.88. Metall Mining was easier, dipping to $12.63. Major zinc producer Cominco Ltd. was stronger at $27.13.

Almost one million shares of American Barrick Resources were traded today as the stock surged by a dollar to close at $23.63. Barrick is developing a one million-oz-per- year open pit mine in the rich Carlin area of Nevada.

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