STOCK MARKETS — Summer slowdown given boost from private

Trading activity on the Vancouver Stock Exchange has entered the summer slowdown, though a surge in private placement financings is providing a boost. More than $551 million has been raised through the VSE so far this year, significantly ahead of the $395-million total raised last year.

With gold prices back below US$400 and no new developments on the diamond exploration front, trading on western markets reflected a general downturn. The resource index lost 45.9 points at 1298.19 over our report period ended noon, Aug. 18. The composite index was off 23.7 points at 965.5 during the same period.

This week’s volume leader, La Rock Mining, was up 24 cents at 78 cents based on drill results from its Brandywine property near Squamish, B.C. The company previously reported it had intersected 73 ft. of 0.23 oz. gold per ton from a hole drilled on the property. But the VSE asked the company to clarify the matter and it was subsequently learned that a small, high-grade interval (2.5 ft. of 2.22 oz. gold) accounted for most of the gold value. The hole was broken down into 15 intervals ranging from 2.5 ft. to five feet. Ten of these intervals returned gold values below 0.1 oz., with many below 0.01 oz. As one mining veteran said, not many rubber holes get past the VSE these days. Weaker gold prices headed off a rally among junior gold mining issues, although a few managed to buck the trend. Prime Resources Group was up 12 cents at $6.12. The company said its share of gold production from the Snip mine (operated by Cominco in northern British Columbia) increased by 20% to 31,750 oz. as a result of higher-than-expected grades and increased mill throughput. Cash production costs fell 19% to US$140 per oz. during this 6-month period.

Miramar Mining completed its $45-million financing and is moving ahead with plans to acquire the Con gold mine in the Northwest Territories. It is being bought for US$25 million through Red Lion, a private company run by Miramar President Walter Berukoff. Miramar will reimburse Red Lion’s costs of acquisition and plans to issue the company up to 2.5 million Miramar shares (subject to various approvals and reviews). Miramar is holding at the $5.12 level, so this represents about $12.5 million.

Miramar describes as “sour grapes,” rumors that Nerco was behind on development. The company says current reserves (3.5 million tons of 0.31 oz. gold) are sufficient for eight more years, and 275,000 oz. are fully developed and ready to mine. Miramar points out that Nerco spent $78.4 million on underground development between 1987 and 1993. And it says the autoclave, which was commissioned last year, had some startup problems but is nevertheless running at design capacity.

Venezuelan Goldfields was off $1.12 at $9 after the government of Papua New Guinea threw a wrench into plans to acquire a 20% interest in the Lihir Island gold project from RTZ.

Diamond issues did not fare well during our report period and juniors involved in the DHK Resources-Kennecott joint venture continued to lose ground. Dentonia Resources was off 67 cents at $4.45, while Kettle River Resources fell 62 cents at $9.00. Alberta-listed Horseshoe Gold Mining was off 60 cents at $4.10.

Companies involved in the Saskatchewan diamond play also took a beating. ASE-listed Rhonda Mining, though tightly held, was off 25 cents at $5.75. Consolidated Pine Channel slid $1.15 to $2.50 after reporting that synthetic diamonds contaminated some core sent to an Australian lab for processing. Paul Sarnoff’s Gold Stocks Advisory has given the thumbs up to Akiko Gold Resources, but it wasn’t enough to give the junior a boost in share price. The issue was off a nickel at $1.60.