Toronto Stock Exchange Gold shares ease as bullion price drifts

The sell-off was sparked by a dip in gold bullion prices which eased to $413 on the second London fix — off $4 for the day. Despite the weakness in the index, the gold rally appears secure and has not turned sour. In fact, over the week ended Dec 12, the index remains up by more than 350 points.

General trading activity took the composite index back over the 4000-point mark adding 2.77 points to 4005.76 points. Volume was a robust 34.4 million shares.

LAC Minerals continued a strong trader, leading the weekly volume list at 4.3 million shares. Today’s trading saw more than 500,000 shares exchanged to slip 50 cents to $14.75. There is still no concrete explanation behind the flurry of buying of LAC’s shares two weeks ago which was driven by speculation that Minorco was accumulating a position. Despite the lack of news, several industry observers still feel someone has picked up a 4.9% stake in the company.

Most senior golds retreated today. American Barrick Resources, which has completed a $100-million financing, closed at $19.38. Echo Bay Mines and Placer Dome were also easier, closing at $22.63 and $22.38 respectively.

Talk overheard at the Ontario Mines and Minerals Symposium in Toronto this week is that Corona Corp. has found a discrepancy in the reserves reported by Asamera Minerals in the latter company’s Cannon gold mine in Washington State. Corona has a deal to buy control of Asamera from Gulf. Corona fell to $10.63 whereas Asamera gave up a nickel to $3.45.

Another gold loan which has soured badly is ERG Resources’ 81,000-oz deal with Australia’s Westpac Bank. Westpac issued a default notice to ERG this week. ERG has a problem-plagued tailings recovery operation in Timmins. The issue was at a new low of 34 cents .

First Toronto took a drubbing to $1.45 before managing to recover to $1.50. A loan in Australia, which might force an asset sale in that country, has been called.

Granges Inc. finally reacted to the firming gold price by trading up to $2.85. The company is controlled by Australian mining company MIM. Madeleine Mines was also active, advancing to $4.10 before easing back to $3.80.

Base metals issues have been under selling pressure lately, hurt by mounting evidence of a recession next year and continued weakness in most base metals prices. Today, the metals and minerals index managed to recover some lost ground by gaining 25.28 points to close at 3332.81 points.

Cominco Ltd., which has begun operations at its massive Red Dog zinc mine in Alaska, advanced to $26.50. Inco Ltd. also managed to make a small gain of 50 cents to $31.50. Inco has been under considerable selling pressure over the past month as nickel prices dipped below the $4(US)-mark. The issue is still above its 1989 low of $27.50.

One of the most successful gold shares in years continued its upward performance. Franco-Nevada Mining reached a new high of $19 today before closing at $18.75. The company holds lucrative royalties on Barrick’s Goldstrike gold property in Nevada. Affiliate Euro- Nevada Mining, another gold royalty play, was also firm closing at $8.63.

At the other end of the spectrum, LynnGold Resources and Dominion Explorers both traded at or near their lows. LynnGold’s MacLellan gold mine in Manitoba is closed and the company is in bankruptcy. The issue closed at 16 cents .

Dominion plans to close its Durham antimony mine in New Brunswick after being battered by low antimony prices. The issue was at a low of 10 cents .

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