Toronto Stock Exchange Steady gold price behind directionless

A bout of sloppy trading was evident on the exchange this week as gold prices steadied at $458(US) per oz after repeated stabs through the $460 level. The directionless trading and minor profit taking saw a 1.1% decline in the tse’s gold and silver index to 9,193.09 pts.

The tse 300 composite index was marginally stronger at 3,829.71 pts; up 6 pts at the close. One of the main reasons behind the gain was a record reached by the metals and minerals index, which gained almost 1% to 2,970.33 pts.

But gold is what drives the mining sector today, and no where was that more evident this week than in the stellar performances of American Barrick Resources and Franco- Nevada Mining Corp. Barrick added almost $9.50 during the week to close at $51.62, not far off its 1987 high of $54.50. Although the company is expecting to earn more than 80 cents per share this year from interests in six gold mines, major buying is being fuelled by results from the company’s Goldstrike property in Nevada. Several monster holes, including 620 ft grading 0.3 oz gold per ton, suggest Barrick is into a large tonnage, high grade deposit. Talk is of at least 6 million oz — and all in a deposit remaining wide open. Franco-Nevada, which holds a healthy royalty on the deposit, surged to $13.87. Less than two months ago, Franco traded at $7.50.

Hemlo? Who needs it. Lac certainly doesn’t, especially after announcing at its annual meeting this week (see front page story) that gold production will hit 500,000 per year by the 1990s. News like that helped the stock trade just a shade under $50 — and that’s with its Page- Williams mine at Hemlo under the cloud of an appeal.

International Corona Resources, which won the Page-Williams mine from Lac in a landmark court battle last year, took a dive to $42. Word on the street is that it has nothing to do with the outcome of the Lac appeal. Rather, another Hemlo lawsuit, launched by Scintilore Explorations, which initially had little to do with Corona, is believed to be more complex than first believed. The markets hate lawsuits, and sources say this could be a reason behind the Corona drop. Scintilore remained steady at $2.75.

The Lac annual meeting also indirectly provided good news for Queenston Gold Mines. This company gets royalty income from a portion of the grounds mined by Lac’s Macassa mine near Kirkland Lake, Ont. Lac announced that a new $13-million mill is going to be built at the site which will handle both Macassa ore and tailings. The Macassa, bolstered with a new deep shaft, is expected to produce more than 70,000 oz of gold this year — a 25-year record. Queenston, which is described as a `sleeper’ by one Toronto broker, also holds key claims west of the shaft and within 300 ft of the Macassa underground drifts. The issue was quiet at $2.75.

Spying a good thing when they see it, partners HSK Minerals and Joutel Resources signed a deal to acquire control of Queenston at $2 per share. Both companies expect to complete private placements this week to close the deal. HSK remained steady at $1.55 and Joutel traded between 59 cents -62 cents .

In platinum circles, Madeleine Mines is making market waves as it punched through the $8 level to a new high of $8.37. Madeleine is busy with its platinum group metals property north of Thunder Bay, Ont. However, no production date has been set for this potential open pit operation.

Want to talk about a beauty of an investment? Then take a look at the performance of Noramco Mining common shares and warrants. The units which came out just one month ago at $10 each, have a combined value today of $17.56. No wonder the unit offering, which raised $50 million for Bruce McDonald’s mining finance house, was oversubscribed within weeks.