Toronto Stock Exchange Sliding bullion prices pull resource issues

A crashing gold price, which erased 232.13 pts from the tse’s gold and silver index today, was the only highlight in a generally lacklustre trading week. Bullion tumbled through the $440-mark to $435.75(US) per oz on the second London fix. A traditional inflation and dollar hedge, bullion is responding to concerns that the U.S. dollar has bottomed and that inflation in 1988 will remain quiet around 4%. Most analysts have stated that if bullion breaks through $440, the next support level could be in the $410-$420-range.

Despite the sell-off in gold, the composite index only gave up 1.18 pts to close at 3,159.64 pts — still up 29 pts during our review week. The metals and minerals index mimicked golds, and lost 17.68 pts to 2,573 pts.

Senior gold issues mirrored bullion’s slide. Canada’s largest gold miner, Placer Dome, gave up 37 cents to $14.13 today. American Barrick Resources, which is aiming for gold production of more than one million oz by the early 1990s, was easier to $24.13. Earlier in the week, the issue was as high as $26. Another highly capitalized issue, Echo Bay Mines, bucked the downtrend and gained 25 cents to close at $23.63. Echo Bay, like Barrick, holds most of its gold reserves in Nevada.

Murray Pezim, via his new merchant banking company, Prime Capital, appears to be eyeing Pioneer Metals, the mid-sized gold miner built by Pioneer’s president Robert Willis (see front page story). Pioneer has been bandied about as a logical takeover candidate and Prime has the financial clout to pull it off. Pioneer was steady at $7.75. Prime has already purchasd more than 7% of Canacord Resources, which holds a 9.9% interest in the Premier gold mine project in British Columbia. Pioneer also holds a large stake in that project, operated by Westmin Resources.

Second tier golds, with growing production, such as Canamax Resources, continued quiet. Canamax slipped to $6.63 whereas Aur Resources remained unchanged at $5.

Platinum prices and forecasts for 1988 and beyond look bearish. The price, which soared to more than $600(US) per oz last year, is languishing under $500 today. Several large South African mines are coming on stream, and combined with a recession scenario, the price outlook looks poor. As a result, platinum players on the tse took a beating. Madeleine Mines, which hopes to have an open pit palladium-platinum mine in operation this year, tumbled to $3.35 — off 35 cents today. The high last year was over $16.

La Fosse Platinum, which has several less developed projects when compared to Madeleine, was also easier at $1.50. International Platinum, another explorer, was quiet at $2.20.

A lawsuit launched by little Opawica Explorations against Minnova Inc., is sparking buying of the former’s shares. Opawica holds a net profits royalty in Minnova’s producing Lac Shortt gold mine in Quebec. However, Opawica alleges that it has yet to see a cent. The issue was stronger at $3.90 — up 70 cents for the week.

Falconbridge, which like most base metal mining companies, stands to make big money from strong copper and nickel prices this year. The issue slipped to $20.63 — despite the fact that copper, and especially nickel prices, remain firm. Inco Ltd, which could potentially enjoy a booming year in 1988, was also a loser, giving up 75 cents to $24.13.

Talk of a hot hole drilled by HSK Minerals helped move the stock 15 cents to 85 cents . Rumor is that a 400-ft section of disseminated pyrite and other sulph ides was pulled from the company’s Vigrass Lake property near Kirkland Lake, Ont. Hemlo combatants International Corona Resources and Lac Minerals say that Lac’s appeal will be heard by the Supreme Court of Canada in October. Corona was off a quarter to $7.75 whereas Lac lost 37 cents to close at $12.25.