STOCK MARKETS — Gold shines as TSE continues to slide

A 67-basis-point rise in the bank rate, coupled with continuing weakness in the Canadian dollar and selloffs in the global bond market, has driven the TSE 300 index to its lowest level in eight months.

The index dropped 40.9 points to close at 4,047.55 for the week ended June 21. This is the lowest close since Oct. 5, 1993, when it hit 4,014.11. Only the gold and silver subgroup bucked the prevailing downward trend, closing up 0.97% in response to an increase in the price of gold. On June 21, gold in New York closed up US$5.40 per oz. to close at $394.30. Renewed inflation fears, brought on by a falling U.S. dollar and rising commodity prices, helped trigger the jump in the price of the yellow metal. The jump in the Bank of Canada rate to 7.09% caused the prime rate to hit an 18-month high of 8% on June 21. The increase added some stability to the tumbling Canadian dollar, which neared an 8-year low of US71.43 cents on June 20 before closing the week at US72.18 cents

In response to the strengthening gold price, all senior golds posted gains on the week. Lac Minerals rose 38 cents to close at $12.38, Echo Bay Mines jumped $1 to $16, American Barrick Resources closed up $1.13 to $34.25, Hemlo Gold Mines added 63 cents to finish at $12.75 and Placer Dome posted a gain of $1.13 to close at $31.63 on a volume exceeding 4.3 million shares. Precious and base metal producer Teck has filed a preliminary short-form prospectus for a proposed offering of US$150 million of convertible subordinate debentures due in the year 2006. It will use the proceeds to pay down part of its existing debt. The notes can be convertible into class B subordinate voting shares. Teck’s B shares lost $1.50 to end at $23.75. Shares of the Western world’s second-largest nickel producer, Falconbridge, were re-listed on the TSE this week after almost a 5-year hiatus. Shares came in at $18 and, at presstime, had lost 38 cents on a partial daily volume of more than 5.3 million shares.

Shares of Falconbridge’s 46% owner, Noranda, closed at $24.38, off $1.38. A decision by Rio Algom to acquire a 25% royalty interest in the Polaris lead-zinc mine failed to impress investors. Rio’s shares lost $1.88 and closed the week at $23.13.

In the Northwest Territories, news of the visual identification of two diamonds enabled shares of Aber Resources to reach a new 52-week high of $12.13 before settling back to end the week at $11.75. More than 4.5 million shares changed hands as the stock gained $3 on the week.

Other companies involved in the diamond hunt generally lost ground on the week. Ashton Mining lost 10 cents to close at $1.95, KWG Resources shed 15 cents to finish at $4 and Dia Met Minerals lost 13 cents to close at $28. Senior management at TVX Gold has decided to suspend operations temporarily at the Casa Berardi gold mine in northwestern Quebec, following a recent fatality. TVX gained 63 cents to close at $8.88, while joint-venture partner Golden Knight Resources was up 25 cents on the week to $10.

The most active issue on the week was Orvana Minerals, which traded nearly 5.7 million and closed up 63 cents to $7.50. The bulk of the trading occurred on June 20, when Goldcorp sold 5.6 million shares at $7.

The price gain may be related to the begining of drilling on Orvana’s Butte Highlands gold property in Montana.

Montreal-based Cambior announced it will not exercise its option to acquire an additional 5% interest in the shares of Omai Gold Mines, whose main asset is a gold operation of the same name in Guyana. The company’s decision was based on a decision by Golden Star to maintain its 40% interest in the project. Cambior’s shares added 13 cents to close at $18.75 and Golden Star rose 75 cents to end at $15.25.