Toronto Stock Exchange — Barrick surges on 1991 results, future

A sharp contrast between the fortunes of two of North America’s premier gold producers emerged during the week ended Feb. 4, as Placer Dome and American Barrick Resources laid their cards on the table.

While Placer is writing off almost $400 million on the value of some of its projects, including Mount Milligan and Eskay Creek, Barrick is gearing up for a US$180-million development of its high-grade, low-cost Purple Vein deposit in Nevada. Barrick has also reached a long-awaited co-operative mining agreement for the Carlin Trend with Newmont Mining.

The writedowns will give Placer a “substantial” 1991 loss. Barrick, meanwhile, reports 1991 income of US$92.4 million (68 cents per share), a 59% increase over last year’s results.

Reflecting its bad fortune, Placer lost 25 cents during the week to close at $11.75 on a volume of 858,100. Barrick continued to delight its shareholders, closing up 75 cents to $32.63. Today, Feb. 5, the issue gained another $1.38. Also responding to improved results, gold miner LAC Minerals edged up 13 cents to close at $8.88.

But although gold producers are able to exert some control over the price they receive for their commodity, the fortune of base metal producers remains closely tied to metal price swings. In 1991, as prices for base metals plummeted, Cominco racked up a loss of $41.3 million, Inco reported sharply lower earnings, and Timmins Nickel announced a second-quarter loss of $2.73 million.

The share prices of all three companies dropped in sympathy this week, but Inco, which shed $1.63 to $36.25, was the biggest loser. The metals and minerals index also moved down sharply, from 3453.06 to 3033.86. After falling out of favor during the post-Christmas season, Fort Knox Gold Resources vaulted back into investment circles, taking top spot on the most active list for the report period. As operator Inco moved two rigs on to the junior’s base metal prospect in northeastern Ontario, Fort Knox gained 61 cents to $1.22, but was still well shy of its 52-week high of $3.25. The issue lost 9 cents today to close at $1.13.

Junior companies associated with the diamond play in the Northwest Territories are also showing some volatility. Trading 244,800 shares, Aber Resources completed a takeover that gives it control over 420,000 acres of ground immediately east of Dia Met’s diamond discovery near Lac de Gras, N.W.T. Nearby, Pure Gold Resources has taken a 75% interest in a 25,000-acre land package where Aber retains a 25% interest.

Aber will start trucking fuel up to the site this month, and expects to start an airborne geophysical survey in March. Next door, drilling for a 200-ton bulk sample from the discovery kimberlite is rumored to be under way. BHP-Utah Mines is expected to drill about 20 holes using an 8-inch diameter oil rig shipped recently from Calgary.

Pure Gold gained 3 cents to 16 cents while Aber jumped 13 cents to $1.25. Although the gold price remained sluggish during the week, closing today at US$354.30, platinum staged a modest rally. Prices jumped by almost US$12 to US$358.25 as strikes in South Africa and production troubles in Russia spooked platinum traders.

After agreeing to buy Royal Oak Mines’ 50% stake in the Mikwan gold property and 100% interest in the Papoose Creek project, both in Northern Ontario, Trader Resources jumped to a 52-week high of 30 cents. After the sale, Royal Oak will own more than 50% of the outstanding shares of Trader. Royal Oak was unchanged at $2.

In order to exploit their Guyana properties more effectively, South American Goldfields and Golden Star Resources have agreed in principle to a merger. The two companies have appointed David Fagin, former president of Homestake Mining, as their chairman and chief executive officer.

South American slipped 2 cents to 65 cents, while Golden Star closed unchanged at $1.25.

Uranium producer Cameco moved up 38 cents to $15.75 as the company announced plans to sell shares to the public at $14.60. With the completion of the sale, the public will own 41.8% of Cameco, with the remainder split between the province of Saskatchewan (38.9%) and the federal government (19.3%) In a bid to gain exposure to the Williams Creek copper-oxide project in the Yukon, Queenston Mining has signed a letter of intent to buy 3.2 million shares of Thermal Exploration. Thermal has a 50% interest in Williams Creek, where minable reserves are estimated to be 11.6 million tons grading 1.08% copper.

Queenston shed one penny to close at 83 cents.

Galactic Resources gained 2 cents to 22 cents after the company announced it would not be paying the interest on its 7% exchangeable debentures on the scheduled Date. The company is in the process of developing a restructuring proposal.