STOCK MARKETS — TSE continues to gain some ground

With Parliament in summer recess and worries about Quebec on hold for the time being, the TSE continued its mid-summer rally this past week.

On July 12, the 300 index jumped 27.78 points to close the week at 4,131.72, its highest level since June 17 when it finished at 4,156.78. The Bank of Canada key rate fell to 6.48% from 6.62% on July 12. In response, the chartered banks trimmed their prime lending rates by a quarter of a point to 7.75%. The prime and bank rate cuts were precipitated by a rally in the Canadian dollar which closed the week up 0.12 cents to US72.22 cents. For the third straight week, the gold and precious metals sub-index lost ground, losing 59.14 points over the report period. The London afternoon gold fix on July 13 was US$384.65, down 85 cents from a week ago. The senior gold producers were mixed on the week, with: Placer Dome dropping 38 cents to close at $28.38 on a volume of just over 2.6 million shares; Echo Bay Mines gaining 75 cents to $15.25; American Barrick Resources losing $1 to $31.38; and Hemlo Gold Mines posting a 13 cents gain to $12.13. Market watchers were taken by surprise as Royal Oak Minerals made an unsolicited and unexpected bid for senior gold producer Lac Minerals. The former offered $3.75 in cash and 1.7 Royal Oak shares — or alternatively, 2.4 Royal Oak shares — for each share of the senior company. With more than 148 million Lac shares outstanding, the value of the offer is about $2 billion, or $13.59 for each Lac share. The offer is based on closing stock prices before the bid was announced: $11.25 for Lac and $5.50 for Royal Oak.

Shares of Lac gained $1.50 to close at $13 while shares of Royal Oak added 63 cents to end at $6.13.

Junior gold explorer Sudbury Contact continues to forge ahead, hitting a new 52-week high. The company gained $2.25 over the week to close at $16.13. Affiliated company Mentor Exploration, which has a significant holding in Sudbury Contact, also gained ground, adding $1.50 to reach a new 52-week high of $13.75. Agnico Eagle remained unchanged, ending at $16.78. Joint-venture partners VenCan Gold and Chesbar Resources have engaged financial advisers to assist in the plan to merge their common interests in Venezuela into a new entity. VenCan rose 19 cents to finish at 79 cents while Chesbar edged downward by 2 cents to close at 48 cents.

The recent ruling of a lower court regarding the activity and ownership of the Brisas concession in Venezuela had a negative effect on the shares of Gold Reserve. The courts ordered that the Venezuelan subsidiary of Gold Reserve must cease exploration work on the concession in the Kilometre 88 area. Shares of Gold Reserve hit a new 52-week low of $6.25 before climbing back to close at $8.25, off $1 on the week.

Thunderwood Resources tacked on 6 cents to 47 cents on news that the first phase of an exploration program has begun on its nickel-copper property on the Ungava Peninsula of northern Quebec. The property, which is a joint venture with First Canadian Gold, is in the same belt that hosts Falconbridge’s Raglan nickel deposit.

On the diamond scene, Dia Met Minerals was the big winner of the week, gaining 88 cents to close at $28. It and partner BHP expect to finish the bulk-sampling program on their Lac de Gras property by mid-August, and the feasibility study by the end of September. A production decision would follow. Interim results released this week show grades ranging from a low of 0.23 carats per tonne in the Fox pipe to a high of 3.3 carats in the Misery pipe.

Other diamond issues were mixed, with: KWG Resources gaining 40 cents to close at $4.30; SouthernEra adding 13 cents to close at $5.88; and Ashton Mining Canada losing 2 cents to $1.93. Aber Resources was the big loser, dropping $1 to $10.38 on a volume of almost 1.2 million shares.