Toronto Stock Exchange Billiton emerges as favorite to take over

While stalled interest rates kept share prices on an even keel during the week ended May 14, Billiton Minerals was being widely tipped to take over Quebec polymetallic miner Audrey Resources.

Audrey President Guy Hebert and his colleagues are keeping their cards very close to their chests. But insiders believe he is near to cutting a deal with Billiton that would require the Royal Dutch Shell Group subsidiary to pay out at least $4 a share to holders of Audrey’s 15.5 million issued shares.

Although Audrey ended the week at $3.20, sources say Hebert recently offered strong evidence of his intention not to be sold short by storming out of a meeting with Billiton officials. A spokesman for Northgate Exploration, which owns 18% of Audrey, says negotiations are continuing. But other insiders expect an announcement as soon as Royal Dutch puts the rubber stamp on an agreement.

Meanwhile, Central Crude and Hemlo Gold were among this week’s winners as gold edged up US$2.45 to close today, May 15, at US$359.85 an oz. Central Crude jumped 50 cents earlier this week before slipping back to $1.95 today. President Richard Nemis is doggedly determined to put the company’s Eagle River gold project into production even though partner Hemlo Gold considers the return on investment too low at current prices.

Nemis met with officials at Deak Resources recently to inquire about the cost of milling Eagle River ore at Deak’s Kerr mill at Virginiatown, Ont. But no announcement was forthcoming.

The Hemlo issue advanced smartly to $9.25 today, up 13 cents, as investors anticipate the benefits to be derived from the acquisition of Noranda’s gold assets. As the offer would automatically make Hemlo a 2-mine company and increase its gold reserves by 39%, Sanwa McCarthy Securities analyst Jim Perrone views the proposal as “a very positive development for Hemlo.”

As the current recession continued to place downward pressure on commodities, copper sank to a 15-month low of US$1.03 on the New York Commodity Exchange. Analysts say the drop is due to weakening demand for the metal as a result of slowing industrial production. However, shares of copper miner Metall Mining were unchanged today at $12.50 after falling 13 cents this week.

At the company’s annual meeting, Metall President Klaus Zeitler says he expects net income in 1991 to be significantly higher than in 1990. Metall reported a $4-million first-quarter loss due to a modernizing program at its Michigan copper mine.

Shares of Noranda slipped to $18.38, down 13 cents today as the Toronto market posted its third successive losing session. The composite 300 index dropped 17.68 points to 344.71 as 22.5 million shares worth $245.9 million changed hands. Scotia Mcleod Vice-President Fred Ketchen attributed the decrease to some economic signals that may persuade the Federal Reserve Board not to move any lower on interest rates.

“Share prices will remain in the same range until there are more indications that the recession is on its way out,” said Ketchen.

He says this week’s softening in the price of Inco shares represents an opportunity for investors to get into the market at lower prices and get ready for the next move. Inco closed down 25 US cents at US$37.75.

In other news, Brenda Mines, the 69% owned Noranda subsidiary, reached a new high this week of $15.75 before edging back today to $15.50. Equipped with $97.7 million in cash, the company is looking for new projects to replace its exhausted Okanagan, B.C., mine.

Shares of Westmin Resources advanced by 95 cents to $4.50 after announcing results from a previously untested area at its Myra Falls mine project near Campbell River B.C. Drill results included a 128.9-ft. massive sulphide intersection which assayed 0.105 oz. gold per ton over 108 ft.

Uranium Resources moved up $1.38 this week amid speculation that the Dallas uranium miner is about to be taken over by Rio Algom. But in a brief press release, the company said no proposal has been made and no agreement or understanding has been reached concerning any proposal.

Finally, shares of Campbell Resources were down 40 cents today even though the company has trimmed its debt load by $13.5 million after closing out a forward sales contract. Campbell ended the week at 35 cents