Toronto Stock Exchange (July 29, 1991)

After switching into high gear, the summer doldrums were interrupted during the week ended July 23 by the first trickle of second-quarter earnings.

Despite earlier warnings by management, the market was clearly surprised by an 85% drop in Inco’s 3-month results, as indicated by the slump in the nickel miner’s previously high flying share price. After peaking at US$43.88, the issue closed out the week at US$41.63.

News that merger discussions involving American Barrick Resources and Newmont Mining are off also took some of the wind out of Barrick’s stock. When a joint announcement revealed that some substantive issues couldn’t be resolved, Barrick gave up $1.37 on over one million shares. But as the market anticipated record second-quarter earnings, the shares bounced back to end the week at $26.88.

While the Hemlo Gold Mines issue was also sparked earlier this week by its quarterly results, the issue fell 25 cents in tandem with gold. Today, July 24, the yellow metal closed at US$366 per oz. in London, representing a US$3.20 decline on the week. Toronto’s 300 composite index also posted its fourth straight losing session to close down 16.75 points at 3518.6. In light trading, 19.3 million shares worth $231 million changed hands. Ironically, Richardson Greenshields analyst David James is advising clients to switch to Freewest Resources, Hemlo’s partner at the Harker-Holloway, Ont., gold project where a feasibility report is expected next month. Hemlo owns 11.3% of Freewest’s shares which were unchanged today at $3.40. Suffering from the lower gold price and the scuttled Barrick/Newmont discussions, the Franco-Nevada Mining issue fell by $1.13 today in light trading. As owner of royalties on Barrick’s Goldstrike mine in Nevada, Franco-Nevada would have benefited from potential synergies resulting from a combined mining effort on the Post deposit shares by Barrick and Newmont. In an interview with The Northern Miner, Barrick President Bob Smith said the Post deposit may not come into play until 1998.

Even today at $10.25, LAC Minerals topped the active list with a volume of just under three million shares. Analysts who toured LAC’s Bousquet No. 2 gold mine at Cadillac, Que., say they were impressed by an operation expected to produce 246,000 oz. by 1993, compared with 175,000 oz. this year. That is well ahead of the 150,000 oz. predicted by LAC in its 1988 annual report. Timmins Nickel reached a new high of $1.40 this week due to investor confidence in the price of nickel. However, by the end of the week the issue had drifted back to $1.24. Wheaton River Minerals touched an initial high of 52 cents as the company prepared to begin drilling two 1,500-ft. holes on its Chieftain Hill property southwest of Whitehorse, Yukon.

Other active stocks included Asamera Minerals which added five cents today to close at $1.75. Crown Butte Resources shot up to $10.13 earlier in the week before falling back to $10 in light trading. A 60% owned Hemlo Gold affiliate, Crown Butte owns the New World gold-copper project in Montana where reserves stand at 8.3 million tons of 0.19 oz. gold (uncut). Hitting new lows this week were Breakwater Resources at 42 cents, Minera Rayrock at 65 cents and Audrey Resources at $2.20.

Audrey issued a press release stating it could now see reason for the recent drop in the price of its shares and it is still negotiating with Billiton Minerals regarding the sale of its Mobrun polymetallic mine. Shares of Royal Oak Mines were expected to begin trading July 25, after shareholders of Pamour Inc., Giant Yellowknife Mines, Pamorex Minerals and Akaitcho Yellowknife Resources gave the nod of approval to a merger with Royal Oak.

Headed by President Peggy Witte, the combined company expects to produce 200,000 oz. of the yellow metal annually.

In other news, Northgate Exploration and Cominco subscribed for 1.5 million special warrants issued recently by affiliate Geddes Resources.