Toronto Stock Exchange (September 02, 1991)

Turmoil turned to tranquility during the week ended Aug. 27 as investors put the Soviet crises behind them and looked ahead to Labor Day vacations in Canada and the U.S.

As the New York Stock Exchange’s Dow Jones Industrial Average of blue chip stocks hit a record high of 3,040.53 midway through the reporting period, the market is clearly betting on a strong economic recovery.

But analysts say the mining sector and metal prices in particular may lag behind other industrial groups if hopes

for an improved economy are realized.

While the gold price was almost unchanged, closing down US$1.70 at US$354.50 today, Aug. 28, in London, Placer Dome was the week’s most active issue. Trading on 1.5 million shares, Placer Dome gave up 25 cents in sympathy with the weaker gold price.

Also down was Pegasus Gold, which lost 38 cents, to finish at $12.50. Franco-Nevada Mining bucked the trend adding 25 cents while Central Crude dropped five cents to close at $1.30. Cathedral Gold made the active list as crews attempted to identify drill targets on a 300,000-acre polymetallic property north of Cook Inlet in Alaska. The issue was even today at 65 cents. American Barrick Re-sources, which is spending $130 million to develop its Purple Vein discovery in Nevada, was a loser, giving up 13 cents. Expected to be in production by 1995, Purple Vein is slated to produce 400,000 oz. annually.

LAC Minerals said a month-long strike at subsidiary Bond International’s El Indio gold-copper mine in Chile has ended after workers voted to accept the company’s latest offer. But the lower gold price shaved 25 cents off LAC. Even though Mikhail Gorbachev is back in his post as Soviet president, doubts about Russia’s ability to maintain its nickel output at current levels is keeping Inco close to its yearly high of US$43.88. The nickel miner gave up 13 cents to close at US$40.

Inco’s strong performance, combined with a rally in the price of Alcan Aluminum shares, helped to spark Toronto’s 300 composite index in the days after the coup attempt. But after losing some steam, the index closed today up 3.54 points at 3521.28 as 20.7 million shares worth $266.1 million changed hands.

Speculation that the breakup of the Baltic states could also affect uranium supplies and drive prices higher sparked Cameco to a new 52-week high of $14.88 today compared to the July 4 issue price of $12.50.

Shares of Potash Corp. were also on the active list this week after the Saskatchewan government announced plans to sell 7.3 million of its Potash shares at $18.75. After dropping slightly, the issue ended the week at the planned sale price of $18.75.

Toronto-based Madeleine Mines, being followed in the U.S. because of its 50% owned platinum-palladium project near Thunder Bay, Ont., closed down 10 cents to $3.90. On Aug. 23, platinum fell to US$331.50, an oz. its lowest level since December, 1985, after miners returned to work at the Impala operation in South Africa which accounts for 40% of world supply.

Meanwhile, Newmont Exploration informed Atlanta Gold this week that it isn’t going ahead with the second exploration phase on Atlanta’s Elmore gold property in Idaho because potential reserves are below its requirements. As investors bailed out of the stock, Atlanta has slipped to 80 cents from a high of $3.10. Finally Fairbanks Gold confirmed speculation that Amax Gold of Colorado is negotiating to acquire all of the company’s outstanding shares as well as the remaining interest in the Fort Knox property in Alaska. Fairbanks ended the week down 13 cents at $7.38.