Toronto Stock Exchange Mixed economic signals underlie uncertainty

Golds continued to send confusing signals. Last week, as gold prices tumbled below $360 per oz, senior equities advanced. Now that bullion has added about $10, share prices eased up. The trading will likely prompt gold bugs to claim that last week’s rise in equity prices merely discounted this week’s advance in bullion. The more skeptical see confusion rather than keen foresight in the performance of gold stocks.

Today’s action saw profit-taking as American Barrick Resources declined to $28.75 from $29.25 on robust volume of more than 400,000 shares.

Echo Bay Mines was the volume leader in the sector, trading more than 1.2 million shares to gain 12 cents to $19.50. Much maligned over the past few months for its poor financial situation, Echo Bay responded to advancing bullion. Several analysts, albeit a few, feel that with gold forming a downside base at $360, Echo Bay’s exposure to more declines in bullion prices is reduced.

LAC Minerals was also active, trading more than 540,000 shares to close at $11.75. Pegasus Gold, a so-called second-tier gold producer, was unchanged at $13.13.

News that Placer Dome plans to buy up to $300 million worth of its outstanding shares had little impact on traders. The price briefly advanced to $19.38 before settling back to $19, unchanged for the day. Volume, however, was healthy at 766,000 shares.

A strong buy recommendation by Ray Goldie, a mining analyst at Richardson Greenshields, sparked Aur Resources to $10.25. Goldie says the stock is a double within 12 months and calls for $19.

Aur has a major copper-zinc- gold-silver discovery in Quebec, which Goldie says could double in size from the current 18 million tons defined by drilling.

Louvem, which is suing Aur for the property, added 50 cents to close at $6.75. St. Genevieve Resources, which controls Louvem, was a bit better at $1.98.

Falconbridge Ltd., which is still trading on thin volume, was steady at $36.50. A consortium of Noranda Inc. and Trelleborg is paying $37 per share for 100% of Falconbridge. Noranda was firm at $26.

Inco Ltd., which opened its first mine ever in the U.S. last week, was stronger at $38.75. The company has a 50% stake in the small Mineral Hill gold mine in Montana which is expected to produce 42,000 oz of gold per year.

Timmins Nickel, which built a small but profitable nickel mine near Timmins, Ont., in less than six months, was steady at $1.75. The company has also purchased the former producing Langmuir nickel mine near Timmins and several other prospective properties which are potential feed sources for its mill.

RFC Resource Finance has a deal with Bunting Warburg to raise $6 million. The cash is required to advance its Pend Oreille zinc project to the production stage. Situated in Washington State, the former mine is just 55 miles south of Cominco’s smelter at Trail, B.C. The issue was steady at $2.20.

Geddes Resources is also making ground in getting funds. At presstime the company said it was proceeding with a $10.2-million financing. The cash will be used for the company’s Windy Craggy copper deposit in B.C. Geddes was unchanged at $1.55.

Control of Pamour Inc., the troubled Aussie-controlled gold miner, is on the auction block. With little money being made by its Canadian operations at current gold prices, parent Giant Resources has hinted that it would like to cash out. The issue was unchanged at $6.

]]>