Toronto Stock Exchange (October 14, 1991)

As investors braced themselves for the fourth anniversary of the 1987 stock market crash and another round of quarterly earnings, share prices moved lower during the week ended Oct. 8.

Predictions on how a sloth-like economic recovery will affect earnings are putting a number of issues in both the gold and base metals sectors under pressure. Shares of Inco, the week’s second highest trader, sank to US$32.88 after analysts slashed their 1992 earnings projections to US$1 from a previously estimated US$3. Investors sensing a buy opportunity helped the issue to rally today, Oct. 9, to US$33.50.

For similar reasons, zinc-lead miner Curragh Resources gave up 25 cents during the reporting period to close at $5.50. “After initiating coverage of Curragh last month, we are reducing our 1991 earnings estimate by 20 cents to a loss of $1 per share,” said BBN James Capel Inc. analyst Victor Lazarovici. He attributed the reduction to disappointing second-quarter results as well as weak metal prices and a strong Canadian dollar.

BBN is also reducing its earnings estimates for Princeton Mining from 0.15 cents to a loss of 25 cents per share in 1991 and from earnings of 40 cents to earnings of 20 cents in 1992 due to a continuing strike at the company’s copper operations. Princeton was unchanged this week at $1.38. Even a US$3.25 advance in the price of gold couldn’t pull Toronto’s 300 composite index out of a week-long losing streak that continued today with a 14.2-point decline. The index closed at 3339.5 after 21.3 million shares worth $289.6 million changed hands.

Riding on the gold rally, American Barrick Resources added 63 cents to close at $25.50 while Placer Dome climbed 38 cents to finish at $12.50. International Corona A shares advanced by 75 cents before shareholders met in Vancouver today to vote on the company’s consolidation plan. Speculation on results from a Kirkland Lake, Ont., gold project, optioned by Battle Mountain Gold from Queenston Mining, helped put Queenston on the active list this week. With over one million shares being exchanged, the issue moved up 18 cents to $1.13. Joutel Resources, which owns 21% of Queenston, was unchanged today at 10 cents on 575,800 shares. By contrast, Central Crude lost some steam today after climbing to $1.51 earlier in the reporting period. The issue was down 21 cents today. Hopes that Pat Sheridan’s resignation from the Madeleine Mines board will at last pave the way for commercial development of the Lac des Iles palladium-platinum project sent the stock up 35 cents today to $3. Great Lakes Minerals eked out a 2-cent increase today on speculation that the junior is about to option claims surrounding its Keweenaw copper project in Michigan to a major mining company. Sources close to the company say Great Lakes is also working on a custom-milling contract for the Keweenaw deposit, whose probable reserves stand at half a million tons grading 4% copper per ton to a depth of 400 ft.

In other news, a unit of Galactic Resources has agreed to sell its 48% interest in the Ridgeway gold mine in South Carolina to Placer Dome for US$18 million in cash. The agreement is subject to approval by the Placer Dome board as well as the right of first refusal by Galactic’s joint venture partner Kennecott Corp. Under the agreement, Placer Dome will also lend Galactic $3 million to pay down debt.

Finally, Canamax Resources says it is closing mine and mill operations at its Bell Creek gold mine near Timmins, Ont., because low gold prices have made the operation uneconomic.