STOCK MARKETS — Promise of African diamonds fuels TSE

The Central African Republic became the “in” place to look for diamonds during the week ended Dec. 29, as investors opened their wallets for juniors acquiring property in the undeveloped country.

The activity added some pizazz to The Toronto Stock Exchange, where most issues were locked in a traditional Christmas slowdown.

Led by United Reef Petroleums, up $2.63 to $4.55, shares of several juniors raced to new highs on large volumes. The investor enthusiasm stemmed from United Reef’s recovery of 32 diamonds on its eluvial concession in the Bamingui region of the Central African Republic.

Canhorn Mining, holding about 10% of United Reef, tacked on $2.45 to $3.90. But Canhorn and United Reef lost 70 cents and $1.80 respectively today, Dec. 30, as profit takers moved in.

Taking the top trading spot was Sikaman Gold, up 76 cents to 95 cents on a volume of 4.25 million shares. Sikaman, which lost 17 cents today, has reached an agreement to earn a 50% interest in a concession next to United Reef’s property.

T&H Resources was also unusually active, prompting the TSE to request some public disclosure. T&H says it is negotiating for a concession to explore for diamonds in Central Africa.

But the market activity was not confined to explorers in Africa. Even though there is little news to report, almost all the companies involved in diamond exploration in Canada and abroad saw their shares leap as investors lined up to get a piece of the expanding play.

Lytton Minerals, still riding high on the discovery of indicator minerals on its Lac de Gras property, jumped 53 cents to $2.06. The issue lost one penny today.

“Everybody’s chomping at the bit to get at the diamond stocks,” said one observer. “Right across the board you’re looking at the beginning of an incredible bull market.”

But analysts warn that the speculative investment play, which will have its ups and downs, is not for the faint-hearted. And for every legitimate diamond explorer, there is likely to be at least one fake going along for the ride. The diamond market aside, trading was light with the TSE closed for two business days. During the report period, the composite 300 index shed eight points and the gold and silver index lost 31 points. Metals and minerals managed a 16-point advance.

Today, the composite 300 tacked on 12 points on a volume of 29.6 million. Trading more than one million shares during the report period was Joutel Resources, which recently signed a letter of intent with Minnova for exploration in Cuba. Joutel says it will have the right to choose three polymetallic projects in the country after it signs a formal agreement with the Cuban government.

Joutel added a penny to close at 14 cents. Minnova closed unchanged at $16. Also active among the juniors was Queenstake Resources, which holds an alluvial gold deposit in Venezuela near Placer Dome’s much-touted Las Cristinas gold property.

Queenstake added 15 cents to $1.45. Placer Dome, rapidly becoming a favorite among gold analysts because of its recent exploration success, lost 25 cents to $14.13 as the gold price slipped to US$332.75 per oz. in New York. The soft gold price is one of the reasons Crown Resources has opted to pull out of the Kettle River mining joint venture in northeastern Washington. On the hook is partner Echo Bay Mines, which financed Crown’s 30% share of the cost to build the mine with a US$20-million non-recourse loan. Crown, which was $8 bid, $9 ask today, says it will eliminate more than US$19 million in debt by withdrawing from the project. Echo Bay shed 12 cents to $6.13.

Drilling on its Sierra Valenzuela property in Chile, Minera Rayrock has intersected encouraging copper values over strong widths below previous mine workings. Intercepts include 72.9 metres of oxidized mineralization grading 2.88% copper in the first hole.

Minera, 70% owned by Rayrock Yellowknife Resources, added 25 cents to $1.20. Rayrock Yellowknife lost 12 cents to $10.