Toronto Stock Exchange Metals issues help composite above 4,000-pt

Base metals, which were the stars of 1988, are behind the current market rally. Strong commodity prices and excellent corporate earnings capped by a $2.8-billion takeover bid for Falconbridge Ltd. by Amax Inc. have caught the attention of both institutional and, until just recently, retail investors. The prospects for gold remain poor as the low inflation-recession scena rio gains more believers. Bullion dipped to $364.60 on the second London fix. Surprisingly, gold equities have not mirrored the fall in bullion prices. Rather, senior issues have made gains which pushed the gold and silver index to a new high of 6384.73 pts earlier in the week.

Noranda Inc. made a small gain to $26 on volume of more than 200,000 shares today. Traders are still betting that more money will be offered for Falconbridge which closed at $36.38, a fraction above Amax’s offer of $36.12 per share.

Inco Ltd., which is also a takeover candidate despite a poison pill, was firm at $40.13 on volume of more than 500,000 shares. Investors are still watching Noranda for signs of that company’s intentions with respect to Falconbridge and Amax. Noranda is the former company’s largest shareholder. Takeover offers for either Falconbridge or Amax are possible from Noranda. Other major base metals issues firmed this week. Cominco Ltd., which is a major world zinc and lead producer, added 25 cents to $30.25.

Another positive development of the base metals boom is that it’s starting to filter down to the lower capitalized issues. Audrey Resources, which had the foresight to look at zinc-copper deals during the height of the gold market in 1987, is reaping rewards. A big new mine is coming on stream in Quebec, backed by Minnova. Audrey made a good gain to $3.95. (A recent base metals issue on COATS, Bonanza Metals, doubled its issue price of 55 cents in one day).

Trading in the shares of Aur Resources, Louvem and St. Genevieve Resources remained solid all week. Aur closed at $10.25 whereas Louvem and St. Genevieve ended up at $7.50 and $2.77 respectively.

Placer Dome Inc. was a volume leader, trading to $19 before settling back to $18.88. Armed with more than $800 million in cash, Placer is known to be on the hunt for a major acquisition. With the pace of major resource acquisitions in Canada barely under way, many are betting that Placer will become an important participant in future deals.

Corona’s A shares were unchanged at $8.50 following talk that a court decision would be forthcoming on the Lac-Corona suit. However, sources say that rumor is untrue. LAC was also unchanged at $12.63.

American Barrick Resources eased up to $30.63. The company has sold its stake in LAC Minerals. Echo Bay Mines, another big Canadian gold miner, reported net earnings of $7 million(US) for the second quarter, down from $12.3 million last year. Lower gold prices were to blame, Echo Bay says. The issue made a small gain to $19.88.

Officers of Bachelor Lake Gold Mines are in Val d’Or, Que., holding talks with mine staff on ways to keep their gold mine open in that province. High costs and low bullion prices are driving nails into the coffin of Bachelor Lake — something both management and employees are trying to avert. The issue was steady at 80 cents .

St Andrew Goldfields, which is controlled by Quebec Sturgeon, also Bachelor Lake’s parent, was up a nickel to $1.95. The company’s mine near Timmins, Ont., opened quietly last month. Early indications appear positive.

Trader Resources was unchanged at 25 cents . A reserve study for its property near Timmins, shows potential reserves of 10 million tons grading 0.1 oz gold per ton. Although the potential exists for open pit mining, the grade excited few investors.

Another casualty of the downturn in gold prices is LynnGold Resources. The company dipped to a low of 65 cents before closing higher at 70 cents . The company’s MacLellan gold mine in Manitoba is on the verge of shutting down.

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