STOCK MARKETS — TSE slips in wake of Quebec election call

Fears of higher interest rates in the wake of the election call in Quebec kept investors cautious, thereby leading to a small downturn on the TSE. The downturn comes despite reports of positive second-quarter earnings from companies in several business sectors.

On July 26, the TSE 300 index fell 18.49 points to close the week at 4,149.90, as 12 of the 14 sub-indexes lost ground.

A surge in demand for short-term Canadian investments led to a modest drop in the Bank of Canada rate. On July 26, the key rate fell to 6.04% from 6.11%. The prime rate remained unchanged at 7.5%, while the Canadian dollar closed the week down US0.20 cents to US72.50 cents.

The gold and precious metals sub-index continued to gain ground adding 102.82 points over the reporting period. The London afternoon gold fix on July 27 was US$388.55, up $1.10 from a week ago.

The most active senior gold producer during the week was Lac Minerals, which added $1 to close at $14.25 on a volume of just over 8.4 million shares. The price surged ahead after American Barrick Resources announced it was making a bid for the beleaguered million-ounce producer. The Barrick bid could spell trouble for Royal Oak Mines, which initiated the Lac takeover process on July 7. But the adventure may be far from over since Lac announced that it has held third party talks with other companies interested in doing a deal. (Rumour has it Cyprus Amax and Lac have been talking.) Barrick lost 50 cents to close at $31.50, while Royal Oak was unchanged at $5.88.

Other senior gold producers all followed the price of the yellow metal over the week with Placer Dome rising by 13 cents to close at $29.13 on a volume of just over 2 million shares, Hemlo Gold Mines posted a $1 gain to $13.25, while Echo Bay Mines was up 88 cents to $16.25.

Gold royalty companies Euro-Nevada Mining and Franco-Nevada Mining also enjoyed a good week, with each gaining $2.88 to close at $33.88 and $71.75, respectively. Sister company Redstone Resources didn’t fair so well, losing 13 cents to close at $6.38.

Junior gold explorer Sudbury Contact continues to dazzle investors, hitting a new 52-week high of $18.25, up $1.13 on the week. Sudbury Contact is currently drilling its Victoria Creek property.

A new junior gold producer, Triton Mining, has begun trading on the TSE. Triton is engaged in the production of gold in Nicaragua and in the acquisition, exploration and development of properties in Central and South America. Annual production at the company’s El Limon mine in Nicaragua is scheduled to increase to more than 40,000 oz. from the current 24,000 oz. sometime later this year after mine and mill expansion plans are completed. Triton shares closed unchanged at $2.75 on July 26.

Repadre Capital, which holds a one-third interest in Triton as well as a 5% net smelter return and 6% net profits interest on the Limon mining operation, also fared better on the week, gaining 10 cents to close at $3.45. Central Crude lost a nickel to close at $1.65. The company recently completed a $9.3-million private placement to fund further exploration and development on its Eagle River gold property in northern Ontario.

Juniors active in Venezuela continue to be affected by the disappointing drill results from Vengold’s Kilometre 88 properties. Gold Reserve was the big loser, closing down $1.63 to $9; Vengold lost $1.38 to close at $4, a quarter of its 52-week high; and Queenstake Resources ended at $1.35, down 15 cents. Montreal-listed juniors also lost ground, with Chesbar Resources off a dime to close at 40 cents and VenCan Gold down 5 cents to 72 cents. At presstime, Aber Resources had moved up $1.25 on a volume of 1.1 million shares. Aber says an announcement regarding its diamond property in the Northwest Territories will be released in the near future. Aber closed at $13 on July 27.