Old Economy holds firm as New Economy shakes

Bubbles don’t stay aloft forever, and the giant one propelling the much-ballyhooed New Economy was hit by a mean downdraft over our report period ended April 18. While bargain-hunters jumped in to keep the day of reckoning at bay, some investors were nervous enough to take refuge in the less-glamorous but more solid Old Economy stocks.

The Toronto Stock Exchange 300 index fell 288.53 points, or 3.1%, between April 11 and 18 to end the week at 9,069.50. One of the few brights spots was the gold and precious minerals sub-group, which shot up 117.92 points, or 2.9%, to end the week at 4,129.61. While it didn’t rally during the market turmoil, the yellow metal did maintain its “safe-haven” reputation by rising US$1.15 over the week to trade at a London fix of US$281.40 per oz. on the morning of April 19.

The TSE’s most active list told the new-versus-old story in a nutshell. While technology upstarts William Resources, Vengold and Sikaman Gold all lost ground — a nickel, 35 and a dime, respectively — the major gold producers enjoyed a mini-rally. Placer Dome posted a gain of 95 to settle at $12.45, while Barrick Gold was up 50 to finish at $24.80. Franco-Nevada Mining also got a boost, up 55 at $17.55.

Even Cambiex Exploration basked in some positive investor attention, up 8 at 36 in the process. The junior is a partner with Miramar Mining at one of Canada’s most interesting gold projects: the Boston and Doris deposits in the Hope Bay belt of northwestern Nunavut. Some high-grade results reported last week (T.N.M. April 17/00) are expanding the potential of these highly prospective projects.

The metals and minerals sub-group rose marginally over the week to 3,560.04 points, with base metal prices generally remaining static.

Spring means annual meeting time for many Canadian mining companies. Nickel was front-and-centre this past week, with Canada’s top producers, Inco and Falconbridge, both reporting healthy earnings. However, Inco was down 75 at $24.60, while Falco posted a healthy gain of $2.10 to $21.60. Both companies are busy testing laterite nickel deposits in far-flung New Caledonia (which, in Inco’s case, is about as far away from Newfoundland as you can possibly get). As yet, there is no progress in the Inco-Newfoundland impasse at Voisey’s Bay, and it appears the only hope for a breakthrough is the exploration program now under way at the Labrador site.

Noranda enjoyed a day in the sun, posting a gain of 40 to reach $14.90. The major has the makings of an interesting massive-sulphide discovery in the Matagami camp of northern Quebec, near its Bell Allard zinc-copper mine. The new discovery is called Perseverance, in honour of the years of effort Noranda geologists have expended to keep this venerable mining camp alive.

Diamond hopeful Tahera lost two pennies to sit at 18. The junior has been active in the Great Canadian Diamond Hunt almost since it began. The junior’s Jericho project in Nunavut is now at the feasibility stage.