STOCK MARKETS — Despite pressure, TSE makes gains

Despite downward pressure from rising interest rates and falling bond prices, the Toronto Stock Exchange (TSE) still managed to gain ground over our report period, ended May 31.

On May 31, the Bank of Canada rate rose 28 basis points to 6.59%. This followed a selloff of the Canadian dollar and bonds, which analysts are attributing to the recent increase in rhetoric over Quebec separatism. The increase raises the prospect of higher borrowing rates in the near future. The Canadian dollar fell as low as US72.10 cents on May 31 but managed to close at US72.33 cents, down 20 basis points over the period. The TSE 300 index posted a gain of nearly 40 points to close at 4,326.77 for the week.

The gain was mainly due to a surge in the gold and silver sub-index which tacked on 108.67 points to close at 10,246.33.

The London afternoon gold fix on June 1 was US$386.30 per oz., down $1 from a week ago.

Most of the senior golds posted increases on the week. Lac Minerals gained 50 cents to close at $12.63 on a volume of nearly 3.6 million shares; Placer Dome posted a gain of 50 cents to close at $31.88; Echo Bay Mines jumped 50 cents to $15.88; and American Barrick Resources closed up 50 cents to $34.25. Bucking the upward trend were Hemlo Gold Mines and Goldcorp, which were unchanged at $12.63 and $8.63, respectively.

Junior gold issues were mixed on the week, with: Kinross Gold down 13 cents to $6.75; Agnico-Eagle Mines off 13 cents to $16; Miramar Mining down 13 cents to $6; and Pegasus Gold off 88 cents to $23.13 on a volume of 160,800 shares. On the flip side, Royal Oak Mines gained 13 cents to $5.88 and Northfield Minerals added 7 cents to close at $1.07 on a volume of 259,100 shares.

Sikaman Gold Resources was a big trader, posting a gain of 2 cents to finish at 27 cents on a volume exceeding 2.3 million shares. The company has formed an alliance with Golden Star Resources whereby Golden Star will transfer its 91.5% interest in the Mahdia gold project in Guyana to Sikaman and provide up to $14.5 million in financing. In return, Golden Star will take a 70% interest in Sikaman through the issuance of treasury shares. Golden Star was down 25 cents to $18.63.

Shares in Altai Resources lost 6 cents on the week, to close at $1.42 on a volume of 193,400 shares. The price drop comes in spite of the company’s having acquired a perpetual mining lease on the Kings Mountain gold property in North Carolina. Altai plans to carry out a feasibility study on the deposit which has drill-indicated reserves of 275,000 tons at 0.25 oz. per ton.

Late in the week, Denver-based Atlas reported that it had signed a deal to acquire a 19.4% interest in Dakota Mining. Atlas plans ultimately to combine with Dakota, Granges and Hycroft Resources, thereby forming a new intermediate-sized North American gold producer. Dakota lost a dime to close at $3.35; Granges dropped 20 cents to $3.30; and Hycroft was also down 20 cents to $3.40.

The most active issue on the week was Aber Resources, which has recovered 38 macrodiamonds and 116 micros from its A-21 kimberlite pipe in the Lac de Gras area of the Northwest Territories. The property is owned 40% by Aber and 60% by Salt Lake City-based Kennecott. Aber shares soared $1.63 to close at $7 on a volume of 5.7 million.

Caledonia and SouthernEra have teamed up to explore a large property surrounding the Drybones Bay kimberlite claims southeast of Yellowknife, N.W.T.

Repadre Capital was down a nickel to $4.20 on a volume of 118,500 shares. The drop comes despite Repadre’s holding a 1% royalty on the net proceeds from any diamond production on 919 claims near Lac de Gras, which includes the recent discovery by Aber.