STOCK MARKETS — Weakened diamond issues take shine off

For many investors (especially those with good timing), 1994 was a reasonable year, as evidenced by a rise in the Vancouver Stock Exchange composite index to a high of 1,171.13 for a gain of more than 100 points. The resource index topped out at 1,870.79 during the year, up 177 points from its opening at the start of the year.

For those who did not manage to sell on the way up (or better yet, at the top), 1994 may not have been such a great year. The composite index’s close at the 767 level represents a 34.5% drop from the year’s high and a 28% drop over the year. The resource index plunged 30% from its high to close the year down 23% at the 1,300 level.

Much of the damage occurred in the diamond exploration sector, precipitated by notoriously disappointing results from the DO-27 (Tli Kwi Cho) joint venture in the Northwest Territories. The participants included Kennecott, Kettle River Resources, Dentonia Resources and Alberta-listed Horseshoe Gold Mining.

Dentonia finished the year down $5.79 at 58 cents, a heart-stopping loss of $7.80 from its high. Kettle River lost $9.75 to $1.35, off $12.15 from its high for the year. Horseshoe Gold fared no better, finishing down $6.11 at 52 cents for a loss of $7.73 from its high trade.

Other prominent diamond exploration companies lost some shine during the year, including partners Mill City Gold Mining and Alberta-listed Tanqueray Resources. Disappointing results from their Yamba Lake project in the Territories left Mill City at 44 cents, down $1.18 for the year and down $2.35 from its high. Tanqueray, which recently received some encouraging gold values from its TQY joint venture with Alberta-listed Gitennes Exploration, finished the year at 73 cents for a loss of $4.65 from its high. Gitennes closed at $1.37, off 52 cents on the year.

Albert Applegath’s Kalahari Resources, which was working on several diamond targets in the north, took the “most news releases of the year” award, for the second year in a row. The issue lost $1.06 from its high to close the year down 16 cents at 44 cents. Adapting to the changing investment climate, Kalahari now holds interests in a number of gold projects throughout Ontario and Quebec as well.

Companies outside the diamond game generally fared much better during the year.

American Bullion Minerals, which is drilling off a copper-gold porphyry deposit in northwestern British Columbia, closed the year up $1.82 at $2.97. Property acquisitions and exploration success in Mexico helped Aquiline Resources jump to high of $3 during the year before finishing up $1.02 at $1.85.

Although off from a high of $1.60, Goldbelt Resources more than doubled to $1.15. The company hopes to begin construction this year on a gold-silver tailings joint venture in Kazakhstan.

Lysander Gold put in a stellar performance, adding 87 cents to finish at $1.06 for a gain of more than 450%. The company is exploring a porphyry copper-gold property in north-central British Columbia and is also active in Brazil.

A takeover offer for all the outstanding shares of Athena Gold helped that issue add 95 cents to $2.05. Toronto-listed Miramar Mining plans to issue one common share in exchange for each 2.8 shares of Athena.

Recent exploration success in northwestern Quebec helped Murgor Resources finish the year at a new high of $1.84, up $1.49. Drilling is returning high-grade gold values from a wide shear zone.

Investors repriced the value of exploration projects in Venezuela during the year, marking an end to the speculative bubble created back in 1992 by reports of a huge gold discovery in the Kilometre 88 region by Placer Dome. Some of the harder-hit issues include Carson Gold, which lost $2.60 to close at $1.70 (off from a high of $7.63), and Tombstone Exploration, which finished down $2.75 at $1.25 ($3.75 off its high trade).

El Callao Mining and Bolivar Goldfields, which are separately exploring gold concessions in El Callao region in Venezuela, were also hammered. El Callao plunged $4.28 from its high of $5.38 while Bolivar lost $3.15 to close at $2.35, down from $6.50 earlier in the year.