Toronto Stock Exchange (November 11, 1991)

Happy shareholders of Fort Knox Gold (TSE) were reminded during the week ended Nov. 5 of some of the more spectacular stock price rallies of recent mining history.

While intersections from Fort Knox’s Shining Tree copper-nickel find can’t yet be compared with those that signalled the Louvicourt Twp. or Eskay Creek discoveries, the stock has rallied to $1.35 from 15 cents in September. Excitement over the play put Fort Knox just behind volume leader LAC Minerals on the active list and ensured a packed house when Goldhunter Explorations hosted a meeting in Toronto to discuss the Shining Tree area. Among other things, shareholders learned that Royal Oak Mines, while drilling on Queenston Mining’s Upper Beaver property, has staked 123 claims in the vicinity of the discovery area near Fawcett Twp., Ont.

Today, Nov. 6, as investors moved to liquidate some of their holdings, Fort Knox gave up 13 cents to close at $1.16, while Royal closed just shy of $1 at 97 cents.

Assisted by lower interest rates and indications that the economy is en route to recovery, the Toronto market has been outperforming New York and it ended the week on a winning note. Today the composite 300 index advanced by 5.37 points to 3531.08 after 36.1 million shares worth $393.6 million had changed hands.

After rallying to US$365 per oz. on the strength of revelations regarding the state of Russia’s reserves, gold has cooled off somewhat. Today in London, the metal closed at US$354.40, down US$5.30 on the week. In the precious metals sector, LAC edged up 13 cents to $8.88 after losing some ground while American Barrick Resources was unchanged. Fellow gold miners Placer Dome and Hemlo Gold both gave up 13 cents.

Inco, Fort Knox’s controlling shareholder, made the active list as concern over the slump in nickel prices persuaded Falconbridge to announce production cutbacks at its Ontario and Dominican operations.

Trading at US$3.34 per lb. on the spot market, nickel is well below its 1990 average of US$4.02 and about US$1 per lb. short of the bench mark used when nickel companies consider investing in new projects. After hitting $37.25 earlier in the report period, Inco gave up 25 cents today, while nickel refiner Sherritt Gordon added 12 cents.

Cominco, down a quarter, is planning to operate its zinc refinery at Trail, B.C., at 90% of capacity and further cutbacks are planned if zinc prices don’t improve.

After Denison Mines announced a loss of $17.7 million for the first nine months of this year, the company’s 9.5% preferred B shares fell by 60 cents to $2.25 earlier this week. Contributing to the loss was a $16.1-million writedown on Denison’s Egyptian oil properties.

Ironically, in a week when Fort Knox was on a roll, Richardson Greenshields analyst David James was flashing buy signals for shares of Franco-Nevada Mining. The Toronto royalty company, which shot up to $8.38 from $3.38 when American Barrick hit pay dirt at its Goldstrike mine in 1987, will continue to outperform the TSE gold and silver index, says James. Franco added 25 cents to close at $20.50.

A Fort Knox-style rally would greatly help Wheaton River Minerals with its effort to raise $4.5 million for development of the Mount Skukum gold project in the Yukon. At today’s 33-cent closing, equity financing is out of the question, according to Secretary-Treasurer Kerry Knoll.

Lake Ponask Gold was active after agreeing to sell three grassroots mineral licences in Jamaica to Citadel Gold in exchange for shares of Citadel and the cancellation of $18,000 debt. Trading on more than 700,000 shares, Lake Ponask ended the week up two cents at 20 cents.

Shares of Minnova saw some activity after the Noranda affiliate reported third-quarter earnings of 18 cents a share, compared with four cents in the same period last year. Unchanged today at $16.50, Minnova attributed the earnings increase to reduced operating costs at four mines.

Princeton Mining said this week it will take a significant fourth-quarter writedown on its Cassiar asbestos operation as part of a financial restructuring. The assets are currently being carried on Princeton’s books at $62 million. Princeton was even today at $1.40.