Vancouver Stock Exchange A bidding war looms large

The Vancouver Stock Exchange appears to have received the spark needed to ignite a widely predicted jump in activity. The combination of the announcement of a road into the Eskay Creek area, a takeover offer for one of the major players, and anticipation of the fast- approaching drilling season are credited for the jump in the composite index and increased trading volumes. Trading volume is pushing 23 million shares per day while the composite index was at 782 at 10:30 on Wednesday, May 30, up over 21 points from the previous week.

The announcement by the British Columbia government that it would help fund a road into the Eskay Creek area north of Stewart, B.C., was welcome news in itself, adding further credibility to the play. The icing for the cake was to follow with the offer by Placer Dome for all the shares of Stikine Resources at a price of $67.50 each.

As a result of the offer, Stikine jumped from the $60 level to $70 per share, while Prime Resources Group, the company’s 50% partner in the much coveted Eskay Creek property, rose from the $8.50 level to more than $9 per share.

Stikine’s premium to the takeover price would indicate that the market is anticipating a bidding war. Prime itself has not been ruled out as the next takeover candidate with its share price reflecting a valuation of over $360 million versus the $230-million capitalization of Stikine.

Other players in the area have been far from ignored.

Adrian Resources, which owns claims to the north of the Eskay property as well a claim fraction on Stikine’s ground, adds $1.30 to its share price closing at $3.90 per share on May 29.

American Fibre and Silver Butte, to the south of the Eskay Creek property, both rose to the 90 cents level as investors began picking away at the less active issues.

Canarc Resources, which holds claims to the east and west, continued to gain ground during the week ended May 22, adding 55 cents to finish at $2.90.

Goldbelt Mines, which holds a large land position in the Galore Creek area to the north of the Eskay Creek/Iskut River areas, put in a strong performance, rising about 20 cents to finish at $1 per share.

The announcement of a road into the Eskay Creek area gave a boost to Skyline Gold Mines, the issue jumping from $2.75 to a high of $3.30 before falling back to the $2.75 level.

The release of ore reserves for the Mexican Hat property owned by Placer Dome and Oneida Resources did not prove welcome, evidenced by Oneida reaching a new year-low of 33 cents. Reserves were reported at 6.9 million tons grading 0.035 oz. gold per ton. The figure doesn’t sound bad until it’s combined with a relatively high stripping ratio of 5-to-1, putting the break-even grade at 0.035 oz.

Vancouver players will soon be able to track more than one index. The Vancouver Stock Exchange plans to introduce three new indices; a venture index, a commercial/industrial index and a resource index. As a company develops, it will graduate from the venture index to one of the two more senior indices, depending on which sector its primary business is in.