STOCK MARKETS — TSE flat despite strong money markets

A surging dollar, coupled with lower interest rates, failed to ignite the Toronto Stock Exchange during the 5-day report period ended Sept. 13. The composite 300 index was off by 2.95 points to end the period at 4,344.22.

In Quebec, despite a majority win by the Parti Quebecois over the Liberals, the almost equal split in the popular vote lifted the spirits of investors, which sparked a surge in the money markets. Investors apparently saw the election result as a mandate for change, not a vote for separation. The election results helped the Canadian dollar climb to its highest point since early this year, jumping by more than a full cent to close at US74.15 cents. The strengthening dollar allowed the Bank of Canada to lower the bank rate to 5.71%, a drop of 0.21 basis points on the week. This prompted many of the banks to cut their prime lending rate by 0.25% to 7%.

The gold and precious metals sector continued to gain ground, closing the week at 10,326.65, up 31.61 points over the report period.

Gold bullion also advanced, with the London afternoon gold fix on Sept. 14 set at US$390.30 per oz., up US60 cents from a week ago.

Senior gold producers were mixed on the week, with American Barrick Resources posting a gain of $1.13 to $33.25, Hemlo Gold Mines and Lac Minerals each tacking on 50 cents to close at $14.75 and $16.13, respectively, and Echo Bay Mines losing 63 cents to $17.63. Placer Dome shed 63 cents to close at $32. Many of the junior gold issues also surged, the main players being Kinross and TVX Gold, which traded in excess of 5.7 million shares each. TVX was up 25 cents to $9.13, while Kinross added 13 cents to close at $7. Kinross recently announced a 60-million-oz. increase in reserves at its Candelaria mine in Nevada. This figure includes open-pit minable reserves of about 15 million oz. silver and 42,000 oz. gold, and drill-indicated underground reserves of 45 million oz. silver and 46,000 oz. gold. Cash operating costs are expected to be about US$4.23 per oz. silver over the life of the open-pitable reserve.

Gold producer Royal Oak Mines appears to be undaunted after failing to acquire Lac Minerals. This week, Royal Oak announced plans to raise more than $100 million through an equity issue of 17.4 million shares. The company said the proceeds will be used to fund acquisition opportunities that might emerge. The shares will be sold to an underwriting syndicate for $5.75 and then to the public. Shares of Royal Oak closed down 50 cents to finish at $5.75.

Another company making news on the gold front was Caledonia Mining, which announced that it had acquired an additional 58.4% interest in the Filon Sur gold mine in southern Spain. In 1994, the mine is expected to produce 20,000 oz. gold and 103,000 oz. silver at a cash operating cost of US$214 per oz. Base metal producer Rio Algom completed the purchase of NCO Mines for $57 million. NCO, a subsidiary of North Canadian Oils, holds a 25% royalty interest in production from the Polaris zinc-lead mine in Canada’s Arctic. In addition, NCO also holds a 25% participating interest in a joint venture to explore a 79,000-acre property in the same area. Rio shares edged upwards by 13 cents to finish at $25.50.

In Ivory Coast, Eden Roc Mineral has completed more than 60 drill holes and well over 22,000 soil geochemical samples on exploration and mining permits it holds in that country. The company is planning to drill an additional 50 holes and revise its ore reserve figures. New figures are expected to be released around Oct. 10. Shares of the company closed at $6, up 13 cents. A private placement of US$30-35 million worth of convertible debentures in Bema Gold was announced this week. The company plans to use the proceeds to fund its equity requirements for the Refugio gold project, jointly owned with Amax Gold, in Chile. More than 3.4 million shares changed hands as the stock gained 11 cents to end at $2.61.

Toronto-based Altai Resources reports that a feasibility study on its Peruvian copper project, the Manto Azul project, is proceeding satisfactorily. Preliminary results indicate that 77% of the total copper can be recovered on a 10-day leach cycle. Altai rose 5 cents to close at $1.25.