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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (7781)	12/7/1997 1:20:00 PM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, DECEMBER 5, 1997 (2) Saturday, December 6, 1997 Howson Tattersall Investment Counsel's Buy & Sell Market Pullback Creates Opportunities By SONITA HORVITCH - The Financial Post Richard Howson, executive vice-president at Toronto-based Howson Tattersall Investment Counsel Ltd., is finding some good value in the Canadian equity market in the wake of the recent pullback. "The problems in Asia and the consequent decline in Canadian stock prices have eliminated some of the complacency evident in the market, which is a positive development," he said. Howson Tattersall manages the Saxon Group of mutual funds. Saxon recently launched a high-income fund to hold income trusts. Howson specializes in smaller cap stocks and is a value manager looking for candidates that are statistically cheap. His top picks are: Alliance Forest Products Inc. (ALP/TSE), which closed recently at $24.05 and has a 52-week trading range of $37.10 to $22.75. The Montreal-based company is a well-managed, low-cost forest products producer with operations in Eastern Canada and the southeastern U.S. The company has limited exposure to Canada-U.S. exchange rate fluctuations because about 50% of its operations are in the U.S. Management is focused on reducing the costs at its most recent acquisition, Coosa Pines mill and timberlands in Alabama. The company's book value per share is $23.65. Howson's earnings per share estimates are 95› for 1997 and $3 for 1998. Cash flow per share estimates are $2 for 1997 and $5 for 1998. "It is a cheap stock and there is no controlling shareholder." Silcorp Ltd. (SIL/TSE) $32 ($37.25-$17.55). The Toronto-based company is the largest convenience store chain in Canada, since its acquisition of the convenience stores and dairy operations of Becker Milk Co. Ltd. at the end of last year. "Strong profit growth will stem from the integration of this purchase," Howson said. Silcorp could make further small acquisitions. Howson's earnings per share estimates are $2.75 for 1997 and $3.50 for 1998. Cash flow per share estimates are $4.50 for 1997 and $6 for 1998. Howson's two income trust selections are: PRT Forest Regeneration Income Fund (PRTir/TSE) $6.40 ($7.20-$5.90). The fund closed an offering of instalment receipts on June 26. The first payment of $6 was due as closing, with the final instalment of $4 payable by July 10, 1998. PRT, which is based in Victoria, produces container-grown seed-lings in nurseries in British Columbia, Alberta and Saskat-chewan. It supplies major forest products companies with seedlings for the mandated reforestation, said Howson. "PRT is a major player in this fragmented industry and has built a reputation for innovation." The trust has stable, predictable cash flows with good growth prospects. Howson estimates the trust's 1998 distribution will be $1.15 a unit for an 11% yield on fully priced units. Halterm Income Fund (HALir/TSE) $6.45 ($7.75-$6). Launched late April, the first instalment of the receipts was $6 and the final payment of $4 is due May 13, 1998. The Dartmouth, N.S.-based trust indirectly owns the Halterm Container Terminal in Halifax, which handles international container shipping. "The flow of traffic through this terminal provides stable and growing cash flow," said Howson. He estimates the trust's 1998 distribution at $1.05 a unit for a 10% yield on a fully paid-up basis. The money manager continues to like Toronto-based Sherritt International Corp. (S/TSE) $5.85 ($8.75-$5.60), which has operations in Alberta and Cuba, refining and marketing cobalt and nickel. Howson estimates the company has a book value per share of $7.90, including $5.05 per share in cash. Another favorite is Woodstock, Ont.-based Nu-Gro Corp. (NU/TSE) $2.55 ($3.25-$1.90), which packages and distributes horticultural products such as potting soil and fertilizer and also markets cat litter. "It will use its low-cost position to increase its market share of the North American fertilizer market," Howson said. His earnings per share estimate for the fiscal year to September 1998 is 32›, compared with 23› for the year to September 1997. Howson has sold holdings of Four Seasons Hotels Inc. (FSH/TSE) $44.85 ($59.25-$24.50), which operates luxury hotels. "The stock has risen dramatically and it is no longer inexpensive." Saturday, December 6, 1997 Seeking Diamonds In The Rough The N.W.T. has become one of the world's most promising exploration areas By PAUL BAGNELL - Mining Reporter The Financial Post Since 1983, Mike Senn has spent a lot of his time hunting for diamonds in the Northwest Territories. This year, he's backagain. The veteran prospector is working for a small Vancouver-based mining junior, GMD Resource Corp., that has jumped into the diamond exploration play in the territories. Like other diamond explorers in the N.W.T., Senn and GMD will spend the coming winter months drilling in what has become one of the world's most promising diamond exploration areas. Each is hoping to become the next Dia Met Minerals Ltd. or Aber Resources Ltd. -- companies developing large N.W.T. diamond finds that will soon push Canada into the front ranks of world producers. GMD holds rights to a large block of exploration claims about 250 kilometres southwest of Lac de Gras and, after completing a series of airborne surveys and samples of surface minerals, is getting ready to drill holes for the first time. Like all early-stage mineral exploration, it's a long shot. But Senn believes the presence of several "indicator minerals" on the surface points to at least two nearby kimberlite pipes, the volcanic rock formations that can host diamonds. GMD is pinning its hopes on Senn's belief that the mineral fragments' large size, jagged edges and the presence of coating on their surface are signs they were not carried far by glaciers that passed over the kimberlites they came from. "These characteristics are found within 10 kilometres of the primary source." The company can also take inspiration from the experience of other diamond players this year. Shares in another exploraton junior, Winspear Resources Ltd., shot up to more than $4 from 80› last fall and winter. Its shares have since declined to $1. And BHP Diamonds Inc. is developing the Ekati mine to exploit the now-famous Dia Met discovery of 1991. Geologist Chuck Fipke, after years of following trails of indicator minerals for 600 km across the N.W.T. found a spectacular diamond-laden kimberlite pipe near Lac de Gras, about 300 km northeast of Yellowknife. Aber grabbed a large property immediately to the southeast of the Dia Met lands and began exploring. In 1994 and 1995, it found four kimberlite pipes, discoveries that most experts say trump the Dia Met find. Two of those pipes are considered the richest diamond deposits in the world, measured in terms of the per-tonne value of kimberlite rock. A third pipe ranks 13th in the world, the company says. At the time, GMD's Senn was working on the project on behalf of Kennicot Exploration Co., Aber's partner in the venture. Aber, in a joint venture with Rio Tinto PLC of London -- Kennicot's parent -- is expected to develop the N.W.T.'s second diamond mine. The Dia Met-BHP mine is to begin production in October next year, but the timetable of the Aber-Rio Tinto mine is less clear. Aber says it is aiming for production in 2001, but the project must gain environmental approvals, a process that took two years in the case of the Ekati mine. Aber's pipes are beneath Lac de Gras, making mine development -- and perhaps environmental approval -- a tougher task. "These two mines would put Canada in sixth place in world diamond production and account for about 10% of production," says John Hainey, an analyst at Yorkton Securities Inc. in Toronto who has followed the N.W.T.'s diamond play closely. Ekati and Diavik will generate about US$1 billion a year in total revenue, he estimates. "These are very rich mines by any standard." The stock market, however, has been decidedly cool to both companies of late. Shares of Dia Met (DMMb/TSE) closed Friday at $24.20, down 5›, after reaching a two-year high of $32.15 in mid-October. Aber's stock (ABZ/TSE) has fared worse, falling from a high of $28 in March to $12.50 Friday, unchanged. Hainey says the low share prices offer value to investors and has "buy" recommendations on both stocks. He characterizes Dia Met as a fairly low-risk investment, now that mine production is on the horizon. "The levels of earnings and cash flows we're projecting would suggest a share price above $35 as it gets closer to production," he says. Aber's stock price has fallen, he says, largely because investors have realized there is still a long wait ahead before production at Diavik actually begins. John Kaiser, a California-based analyst, agrees. "Aber has great pipes, but they're in Lac de Gras. It's going to be a permitting nightmare. I would say we are looking at a permitting cycle of three to four years. So it could be five or six years before this mine is in production." Michael Jones, Aber's vice-president of corporate development, says the firm believes it can start production by 2001. It will submit a formal project proposal, marking the start of the approval process, in the first quarter of 1998. Shares of Dia Met, Kaiser notes, took a sharp dive during the period its project was being scrutinized by environmental panels. In the shorter term, Hainey says, diamond stocks are likely to move up during the winter months, simply because of a seasonal bounce they experience when exploration activity increases. That trend has made itself clear during each of the past five years, he says. Since lake beds are common sites for diamond exploration, many drilling projects are scheduled for months when lakes are frozen. Hainey is recommending investors buy a basket of diamond exploration stocks soon, in the expectation of gains between now and the end of the first quarter of 1998. "By then, interest wanes and the stocks go back down again." Among juniors exploring in the N.W.T., most attention is focused on Mountain Province Mining Inc., a Vancouver-based company that has found four rich kimberlite pipes on its property near Lac de Gras, and is planning bulk sampling programs on each. Mountain Province is partnered with a subsidiary of De Beers Consolidated Mines Ltd. Both Hainey and Kaiser are keen on this junior. "Mountain Province shares have the potential to double over the next year as we get bulk sample results," Kaiser says. As for the rest of the exploration juniors -- companies like GMD, for instance -- Hainey and Kaiser say there is little to distinguish one from another. "The rest are pretty well exploration situations that are purely speculative -- only for the high-risk, high-reward investor," Hainey says. Investors buying these stocks should select more than one to dilute their risk, he says. OIL & GAS December 5, 1997 Oil Prices Edge Higher After Iraq Halts Oil Shipments Oil futures prices edged higher Friday after Iraq halted oil exports until the United Nations approves a new distribution plan for its oil-for-food program. Light sweet crude oil for delivery in January settled at $18.71 per barrel, up 11 cents on the New York Mercantile Exchange. The U.N. Security Council on Thursday renewed the oil-for-food program for a third time, allowing Iraq to sell $2.1 billion in oil over six months to buy food and medicine for its people. The program is an exception to U.N. sanctions that were imposed after Iraq invaded Kuwait in 1990. But Iraq has repeatedly expressed dissatisfaction about delays in actually being allowed to buy goods, and said it won't ship oil again until those concerns are addressed. U.N. officials and Arab diplomats said that probably means a delay of about a month - three weeks for Iraq to submit the distribution plan and a week for the United Nations to review it. The absence of Iraq's oil would reduce the amount of oil arriving on world markets by about one per cent. In London, North Sea Brent blend crude oil for delivery in January settled at $18.13 a barrel, up 13 cents, at the International Petroleum Exchange. December 5, 1997 US Foreign Crude - Clutch Of Latam Tenders Awarded U.S. foreign crude traders digested the results of a handful of Latin American tenders on Friday which should set the pace for next week's spot trading. Sour markets have been paralyzed in recent days in the run up to the award of three term contracts for Ecuador's high sulfur Oriente grade. State-owned Petroecuador awarded the one-year, 12,000 barrels per day (bpd) contracts at a premium of 40 to 41 cents to the minimum bid price of $4.88 under WTI at Cushing, traders said. "It's a very strong price and it will certainly set the tone for other sour trade, but I don't think these levels reflect the fundamentals...there's no shortage of sour at the moment," said one trader. Tripetrol and its Ecuadorean subsidiary Totisa were heard to have won a contract each, while there was uncertainty in the market over who was awarded the third. Some traders speculated that Petroecuador had in fact received enough strong bids to award four contracts, but this could not be confirmed with the company. Tripetrol and Totisa were first awarded contracts last week at a premium of 39 cents, but these were withdrawn by Petroecuador because of a technicality over financial guarantees. A tender for a January 9-13 cargo of Colombia's sweet Cusiana grade was awarded at a discount of between 45 and 50 cents to February WTI, fairly steady on the last deal done for a cargo loading on the December/January cusp. The last December Cusiana to find a home, a 29-30 loader was being actively offered on Friday but no deal was heard done. A cutback in production at the Cao Limn field to 100,000 bpd from normal levels of 175-180,000 bpd was not expected to affect liftings at the Caribbean export terminal at Coveas due to high storage levels. A rebel attack on two electricity pylons supplying the field caused the cutback, but a spokesman for field operator Occidental Petroleum said normal output should be resumed in two to three days. No winner was heard in a tender for Colombia's minor South Blend grade, which loads on the Pacific and is usually taken by West coast refiners. "It's a mystery, I think (state oil firm) Ecopetrol may keep it if they didn't get a high enough bid," one player said. A buy tender from Chile's ENAP for a 960,000 barrel cargo for mid-January delivery will be supplied by a European oil company with West African crude, an ENAP official said. But he declined to give further details. Interest in West African grades in the Americas has waned in recent weeks due to a narrow Brent/WTI spread which on Friday was still stuck at a lean 60 cents. Nevertheless, one trading company was still heard touting cargoes of Nigerian Forcados, Qua Iboe and Brass River. Also on offer in the Gulf was a cargo of Argentina's Canadon Seco for mid-January delivery at $1.10 under WTI on an fob basis. December 5, 1997 Late Short Covering Lifts Most NYMEX Gas Contracts NYMEX Hub natgas futures mostly ended higher Friday in a moderate session, with a late wave of short covering ahead of the weekend lifting most contracts into positive ground though many remained bearish. January eased 0.3 cent to close at $2.453 per million British thermal units after dipping below support this afternoon to $2.38. February settled 0.2 cent higher at $2.399. Other months ended up by one-half to one cent. "The rally at the end was just some pre-weekend short covering. I think we'll see more pressure next week. The jet stream goes flat next week which should mean no really cold air down here," said one Midwest trader. Sources said growing concerns about the year-on-year storage surplus coupled with the lack of sustained Arctic air has helped fuel bearish sentiment. "People are coming out of the ground real hard and that's what's pressuring us," said one Texas-based trader, referring to reports storage holders were looking to trim stocks early in the season. Weather Services Corp expects below-normal temperatures for much of the U.S. ove the weekend, but milder weather is forecast by early next week. Chart traders said the technical picture turned bleak early this week when a January rally attempt stalled and prices subsequently dove through some key support points in the face of fairly mild extended weather forecasts. They pegged support in January at today's low of $2.38, with next support seen at $2.25, which is the low for January this year. Resistance was seen at the $2.81 double top from early this week and then at $2.84, with better selling expected at $3.03, 3.11 and then at $3.21. In the cash Friday, weekend Gulf Coast quotes were down a nickel or more to the high-$2.30s. Midcon pipes were little changed in the mid-$2.20s. New York city gate gas slipped almost a dime to the low-$3s. The NYMEX Henry Hub 12-month strip edged up one-half cent to $2.286. NYMEX said an estimated 41,741 Hub contracts traded,

To: Kerm Yerman who wrote (7781)	12/9/1997 9:14:00 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, DECEMBER 8, 1997 (1) Tuesday, December 9, 1997 Stock Markets TSE POSTS STRONG GAIN Financial Post Bay Street stocks rode a strong showing by banks and oils to a solid advance, playing catchup with Wall Street, where blue chips faltered on fears that US$ strength would weaken profits The Toronto Stock Exchange 300 composite index rose 63.34 points, or 0.9%, to 6787.71, adding to last week's surge of more than 200 points. Trading volume was 99.1 million shares, down from Friday's total of 116.6 million, and trading value rose to $1.83 billion from $1.66 billion, helping to mark the first time yearly trading value on the TSE has surpassed $400 billion. In New York, the Dow Jones industrial average fell 38.29 points, or 0.5%, to 8110.84, hurt by profit-taking after Friday's 98-point jump and ending a string of six straight advances. But the broader measures fared better on the day. Toronto's bank stocks reflected the session's bullish tone, as investors bet on continued earnings growth in the sector. The group rose 1.28%. Canadian Imperial Bank of Commerce (CM/tse) closed up 65› at $46.50. Rolie Bradley, institutional salesman at Maison Placements Canada Inc., calculates the banks trade on average at 12.7 times future earnings, about half the market's overall multiple. "They are a good safe investment," benefiting from the strength of the economy and the increasing amount of money people have to invest, he said. Overall, 11 of the TSE's 14 stock groups rose. The utility stock group led the way, rising 1.84%. Telecommunications giant BCE Inc. (bce/tse) rose $1.40 to $47.20 to set a new 52-week high. The oil group was not far behind, rising 1.49% as Talisman Energy Inc. (tlm/tse) gained $1.05 to close at $45.05. Investors bought into the sector on predictions that oil production in the North Sea might fall short of expectations in 1998, boosting the underlying commodity price. But investors continued to show no faith in the gold group, which dropped 1.19%. Barrick Gold Corp. (abx/tse) fell 35› to $22.55. On the Comex division of the New York Mercantile Exchange, gold fell US50› an ounce to US$287.90. In other Canadian markets, the Montreal Exchange market portfolio index added 42.68 points, or 1.3%, to 3454.58 and the Vancouver Stock Exchange composite rose 2.63 points, or 0.4%, to 620.21. On Wall Street, shares of Coca-Cola Co. (ko/nyse) fell US$29 1/816 to US$639 1/816. An analyst at Morgan Stanley Dean Witter Discover Inc. lowered the firm's estimates of the beverage giant's 1998 profit, saying the company faced continued pressure on the currency front owing to the strength in the US$. Nagging concerns about multinationals' exposure to currency problems played a key role in the unraveling blue-chip stocks underwent, beginning in August. In yesterday's session, they prevented the Dow from making headway in returning to its closing high of 8259 Aug. 6. "From time to time, the bull market sentiment will be challenged," said Joseph Battapaglia, chairman of investment policy at Gruntal Co. Technology stocks managed to rally in the session, paced by gains in computer and software names, as worries diminished about the growing popularity of low-priced computers. Some analysts were worried that a boom in lower-priced computers would come at the expense of more expensive units, but a study by a market-research firm, Odyssey LP, said computer buyers were more interested in computing power than in price. Advancing issues enjoyed a narrow advantage over decliners on the New York Stock Exchange, 1,595 to 1,341. Volume was 494.7 million shares versus 556.9 million Friday. Major overseas markets were higher. London: Stocks closed sharply higher for a third day, hoisted by a rally in bank stocks and further yearend buying by cash-rich institutional funds. The FTSE 100 index closed at 5187.4, up 44.5 points, or 0.9%. Frankfurt: The Dax 30 index closed at 4223.36, up 53.28 points, or 1.3%. In later screen-based trade, the IBIS Dax index ended at 4208.14, up 16.33 points, or 0.4%. Tokyo: Stocks lost modest ground by the close as market worries over Japan's economic gloom weighed down domestic demand-sensitive sectors. The 225-stock Nikkei average closed at 16,131.57, down 292.91 points, or 1.8%. Hong Kong: Stocks ended higher, but late profit-taking pushed the Hang Seng down from its highs to close below 11,800. The blue-chip index jumped 195.34 points, or 1.7%, to finish at 11,722.94 after touching a high of 11,842.73. Sydney: The Australian market ended up 1.2% in line with Friday's U.S. gains, but activity was slow with some early signs of a summer lull. The all ordinaries index closed at 2587, up 29.8 points, or 1.2%. HOT STOCKS Shares of Marleau Lemire Inc. (MRM/TSE) closed down $1.05 yesterday at $4.25, bringing its loss to $1.65 in the past six trading days. Founder Hubert Marleau resigned as chairman and chief executive and the company began a search for new leaders. Trading was halted for most of the morning, reopening at 1 p.m. The company said because of "continuing industry changes and challenges," the board, led by the new chairman, Richard Renaud, a Montreal merchant banker, will urgently seek a new president and chief executive and develop a new strategic plan. Shares in Donner Minerals Ltd. and Northern Abitibi Mining Corp. more than doubled yesterday after the companies said they have found "massive mineralization" at a site near Voisey's Bay, Nfld. Shares in Vancouver-based Donner Minerals Ltd. (DML/VSE) closed at $2.50, up $1.27. Calgary-based Northern Abitibi Mining Corp. (NAI/ASE) closed at $1.62, up 87›. Trading in the shares of both companies was halted on Friday after officials noticed an unexplained spike in trading volume, then resumed yesterday morning. A spokeswoman for Northern Abitibi said volume jumped on rumors of the find that began circulating on the Internet on Friday. Donner and Northern Abitibi are involved in a joint exploration project on a property about 90 kilometres south of Inco Ltd.'s massive Voisey's Bay nickel discovery. According to the release, issued yesterday, geologists at the Labrador site found 15.7 metres of sulphide mineralization. While calling it the most significant piece of mineralization to be found since the Voisey's Bay find, Donner CEO David Patterson cautioned that "it's a little early to talk about what might be there." Analyst Andrew Muir of Canaccord Capital Corp. urged caution. "This is not a discovery yet and I wouldn't extrapolate from this hole." Northern Abitibi CEO Glen Harper was travelling and could not be reached for comment. Golden Rule Resources Ltd., (GNU/TSE) closed Friday at 70›, up 12›. The company owns 32% of Northern Abitibi,. Trading was halted yesterday morning and will resume today, said TSE spokesman Steve Kee. Shares of World Heart Corp. (WHRTF/NASDAQ) closed yesterday up 1/8 at US$5 1/8. An Ottawa consortium that has developed a medical device to help a damaged heart continue working is ready to move to the manufacturing phase of its multimillion-dollar development plan. Rod Bryden, chairman of World Heart Corp., said yesterday the final manufacturing specifications for HeartSaver have been completed and manufacturing will begin in January. The device, generically known as a left ventricular assist device (VAD), is an implant developed by scientists at the Ottawa Heart Institute. The institute is in a commercial partnership with Bryden and other investors in World Heart. "This is a huge commercial opportunity," he said of the company whose shares are traded on Nasdaq and the Canadian Dealing Network. World Heart is completing its manufacturing facility and the first devices will be used for clinical animal and human tests. The first human use is expectedin 1999. Kingsway Financial Services Inc. shares (KFS/TSE) ended the day up 5› at $22.50. Non-standard auto insurer Kingsway has bought two U.S. companies that conduct similar businesses. When this deal and another earlier acquisition are completed, Toronto-based Kingsway will be close to double its present size. The sale price wasn't disclosed. The acquisitions announced yesterday are American Service Investment Corp., also based in Illinois, and Southern United Holdings Inc., which does most of its business in Alabama and Louisiana. Both are privately owned. The deals are subject to regulatory approval. The announcement of the purchases were made after the stock market closed. In trading yesterday, TimberWest Forest Ltd. receipts (TBW/TSE) fell 50› to a record low of $5.50. The trust's 52-week high is $7. Slocan Forest Products Ltd. (SFF/TSE) dropped 5› to close at $8.15. The stock's 52-week high is $16.10; the low is $7.25. A multi million-dollar legal battle has erupted between TimberWest and Slocan over a $200-million forestry sale earlier this year. The lawsuit stems from Richmond, B.C.-based Slocan's acquisition of three sawmills, including the annual timber rights to 2.5 million cubic metres of Crown land, from TimberWest of Vancouver. The operations in Mackenzie, B.C., were controlled by Timber West subsidiary Timber North Forest Ltd. According to an Oct. 29 statement of claim filed in the Supreme Court of British Columbia, Slocan alleges TimberWest negligently misrepresented the company's debt by about $9 million. In addition, the forecast failed to take into account "most recent cost and production data," Slocan claims. Panorama Resources NL (PAM/VSE) stock was unchanged at 13›. The comany plans to join forces with a fellow mining junior in the search for African gold, marking the beginnings of a merger trend in the cash-strapped junior gold sector, analysts say. Under the terms of the deal released yesterday, Panorama shareholders will receive three shares of Tanganyika Gold NL for every four shares of Panaroma. The two companies are based in Perth, Australia, and are exploring for gold in East Africa. The new company will have about A$16 million in cash ($16 million), no debt and an estimated gold resource of about 1.5 million ounces. Last December, Panorama traded as high as 71›, but has since tumbled to the 10› level. Toronto-based Mosaic Group Inc. (MGX/TSE) closed unchanged yesterday at $2.65. The company has acquired ZGC Ltd. of Britain for $14.6 million in cash and shares. This is the latest in a series of acquisitions by Mosaic. The company's earlier purchases have enhanced its financial performance. In the third quarter, ended Sept. 30, profit jumped 275% to $1.5 million (4› a share) on revenue that rose 209% to $39.6 million. The year before, net income was $400,000 (2›) on $12.8 million in revenue. ZGC is one of Britain's last significant independent agencies, said Ben Kaak, Mosaic's chief financial officer, and has about $16 million in annual revenue. He said the purchase should add to earnings next year. Future acquisitions are likely in Europe, where it needs to bolster its sales service business, and in the U.S. TSC Shannock Corp. (TSH/TSE) closed unchanged yesterday at 80›. The company fired a salvo yesterday at rumors alleging the video wholesaler is in financial trouble. In an unusual news release, the Vancouver-based firm said undisclosed market rumors intended to "harm the company" are unfounded and it is seeking legal recourse. After the release of poor first-quarter results, gossip began circulating that TSC was in critical financial health, said senior vice-president Trudy Dalinger. This is believed to have originated with an unidentified TSC competitor and at least two Canadian brokers, she said. Fierce competition, declining margins and a lack of new video product led to a dismal first quarter. For the three months ended Aug. 31, TSC reported a loss of $430,463 (13› a share) on revenue of $17.8 million, compared with a loss of $37,502 (1›) on revenue of $18.5 million a year earlier. The losses hammered TSC's thinly traded shares. In September, the stock traded near its 52-week high of $1.55. Since then, the stock has slowly crumbled to a 52-week low of 80› Dec. 4. Toronto-based Beta Brands Inc. (BBI/ASE) shares closed at $1.80 yesterday, up 10›. The company said yesterday that, as part of its acquisition of candy maker McCormick's, almost 50% of its shares will be controlled by New York-based CM Equity Partners LP. Beta will finance the acquisition by issuing 11.5 million shares to CM Equity at $1.15 each. Eugene Melnyk, chairman of Biovail Corp., will sell an additional 5.6 million shares to CM Equity for an undisclosed price. Beta said last spring it would acquire McCormick's from Culinar Inc. Kenneth Cancellara, secretary of Beta, said the ownership change was part of a larger restructuring at Beta designed to stem its widening losses. If the McCormick's acquisition is approved by shareholders Dec. 23, it will swell Beta's revenue to $90 million a year from $30 million. News of the ownership change was posted after markets closed. Bank of Nova Scotia (BNS/TSE ), up $2 to $67.90, on volume of 1.1 million shares. BNS led yesterday's rally in bank shares that saw the financial services subindex rise by 108.28 points, or 1.28%, to close at 8541.05. Hummingbird Communications Ltd. (HUM/TSE), closed up $1.65 to $48.15, on volume of 37,737 shares. Hummingbird announced a new scanning application yesterday called Common Ground Paper2Web that makes it possible to publish paper documents directly on an intranet. Paper2Web converts paper documents to DigitalPaper, a portable, Web-ready file format that preserves the original appearance of a document and can be viewed through any Java-enabled browser. Aeterna Laboratoires Inc. (AEL/ME), down 45› to $4.75, on volume of 316,902 shares. Aeterna fell as much as 30% yesterday before bouncing back. The Quebec-based company, which is developing a cancer treatment based on shark cartilage, said it was not aware of any material fact that could explain the trading volume and price of its shares over the past two days "except for actual market conditions which have occasioned sell orders for margin accounts of some holders who are not Aeterna insiders." Hyal Pharmaceutical Corp. (HPC/TSE), up 5› to $2.60, on volume of 90,400 shares. Hyal said it could not explain the recent drop in its share price. Shares in the Toronto-based company, which is developing products using hyaluronic acid, closed Friday at a 52-week low of $2.55, after steadily drifting down from $3.60 two weeks before. Hyal recently completed a $13.9-million private placement of three-year, 14.5% subordinated convertible debentures. The company said yesterday that results of its phase three trial for Hyanalgese-D are unknown. "As stated in previous disclosure documents, the Hyanalgese-D trial is blinded," the company said. "This means that no one can know what the results are before the blind is broken." Tuesday, December 9, 1997 Market Eye Reindeer Rally In Sight Despite Far East Tremors By William Hanley - The Financial Post Coca-Cola is the best-known brand name in the world, a symbol of Corporate America's global reach. So it's no surprise that Wall Street, which sometimes summons up the energy to peer beyond the Hudson and East rivers, has decided that the crisis in Asia is likely to weigh on Coca-Cola Co.'s global profits. And it's no further surprise that the Street seems to be saying that Coke and many of the other 29 occupants of the world's most rarified corporate club, the Dow Jones industrial average, stand to be hurt by foreign turmoil, even though they are snugly headquartered in Fortress America. That sentiment was not rampant on Wall Street yesterday. But there was enough reaction to a downgrade of Coke (ko/nyse) by a couple of brokerages for the Dow to underperform the market. The Dow fell 38 points to 8110, the broader Standard & Poor's 500 stock index 1.42 to 982.37, and the Nasdaq composite, home to tech issues whose fundamentals often do not compute, actually jumped 17.64 to 1651.54. Other Dow stalwarts with plenty to lose in the economic and currency fallouts from Asia were struggling, too. Procter & Gamble Co., Minnesota Mining & Manufacturing Co. and United Technologies Corp. were high on the losers' list. Interestingly, International Business Machines Corp. hit a record high in early trade, tracking the advance of the Nasdaq techs. Yet IBM will find that the trouble overseas will affect its bottom line, too. Meantime, it's hardly surprising that the Dow and other indexes would give back a few of last week's handsome gains. But the herd on the Street still reckons a Dow record and further highs for the S&P are already stuffed into investors' stockings in this reindeer rally. While the yearend rally is by no means a lock, the Canadian market has gone up during December in 11 of the past 14 years, partly the beneficiary of tax-loss selling. Market Logic newsletter notes the period between the two days before the U.S. Thanksgiving and taking in the first five days of January produces well-above average returns. In fact, 40% of the overall price return of the S&P 500 over the past 70 years has been accrued in this span. ALL EYES ON JAPAN All eyes will be on Japan tonight as the Japanese government unveils its plan to defuse the country's banking crisis. If the plan meets expectations, the Tokyo market will advance and give encouragement to other markets around the world. If the outcome is not satisfactory, watch out. SILVER The people who have a taste for silver say it's the cheapest thing on the menu. True enough. But it's been getting pricier, increasing and holding its value even as gold gets cold and runny. The spot silver price is still up about 12% this year and 29% since July to US$5.40 versus a 22% decline for gold on the year. Though silver has struggled in the past couple of weeks along with gold, Bob Hoye, editor of the Vancouver-based Quantum newsletter, reckons its strong demand fundamentals could boost it further. The closely watched gold-silver ratio (the price of gold divided by the price of silver) has contracted to a relativelylow 54:1. Anyway, Hoye is still expecting a base metals rally that would appear to go against all the fundamental signals of the day. Just about all observers expect the Asian crisis and the benign inflation environment in the western economies to keep a cap on commodity prices. But Hoye says there is historical basis for a base metals rally. That would likely boost the resources segment of the Canadian stock market, but could weigh on the interest rate-sensitive groups that have led the domestic and U.S. markets. BULLS vs BEARS Gold Optimism Corrodes Monday, December 8, 1997 By Stephen Northfield - Investment Reporter Gold bulls are dropping off the radar screen faster than the stocks of bullion producers, according to The Globe and Mail's latest Bulls v. Bears survey of market professionals. Their sentiment on gold has virtually collapsed in the past few surveys. Only a handful of respondents now expect gold prices to be higher in six months, down from more than a quarter in the previous survey two weeks earlier. Those expecting lower prices for the yellow metal remained steady at about 40 per cent. The most interesting result from the survey is the percentage of respondents who expect no change -- up to more than half from just about a third in the previous survey. The change suggests that a solid majority of market professionals believe the freefall in gold prices is nearing an end. That would be a welcome relief to gold producers whose stocks have been crushed as bullion sinks lower. Gold, which hit nearly $420 (U.S.) an ounce in 1996, sank below $290 an ounce last week after Argentina said it had sold off most of its reserves. That, along with sales by other central banks, is undermining gold's traditional role in the global monetary system as a store of value. Low inflation and economic woes in Asia have also been factors. Canadian gold stocks have lost more than haltheir value this year. Many market watchers consider sentiment surveys such as these to be contrary indicators. They see excessive bullishness as a warning sign that a market is peaking, while excessive bearishness may signal opportunities. While the outlook on gold gets gloomier by the moment, things are looking up elsewhere. Sentiment on stocks and bonds has improved during the past two weeks. Forty-four per cent of respondents predict bond prices will rise -- and yields will drop -- over the next six months, the highest level of bullishness since the survey's launch in June, 1996. That's up from 37 per cent in the previous survey. The number expecting bond prices to fall slipped slightly. There's been a marginal improvement in the outlook for the Canadian stock market. Fifty per cent of respondents forecast the Toronto Stock Exchange 300-stock index will close higher in six months, up from slightly more than 40 per cent two weeks earlier. But there are also more pessimists than in the previous survey, and they now total more than one third. The shift in sentiment on U.S. stocks was more decisive. Almost a third of respondents foresee the Standard & Poor's 500-stock index will close higher in six months, up from about 30 per cent in the previous survey. Those expecting the index to be lower slipped slightly, although the balance of opinion has improved for the bulls. The markets have fared well generally during the past two weeks. The Standard & Poor's 500-stock index is up about 4 per cent. And, while the TSE 300 slipped somewhat in the first week, the market regained its position over the second week. The Canadian market is struggling a little because of its heavy weighting in natural resource stocks. The stocks of commodity-linked companies are pressured by concerns that an economic slowdown in Asia will reduce demand and prices for many raw materials. Bulls v. Bears is a proprietary survey developed by The Globe and Mail as an indicator of Canadian professional market sentiment. There were 26 respondents to the latest survey. The investment pros fight it out Every two weeks you survey money managers, strategists and advisers on where they expect financial markets to be in six months -- up, down or unchanged. Here is what they think this week. .............. Bullish......Bearish* TSE 300..........50%...........35% S&P 500..........31%...........50% Bond prices......44%...........32% Gold............. 8% ..........38% -*The rest are neutral. Dollar Cost Averaging 12/8/97 One of the most frequently asked questions in regards to formulating a sound investment strategy is "when is the best time to invest?" Experienced investors have learned that trying to beat the market is unwise, and that there is, in fact, no bad time to enter the market. The key to successful investing is to have a long-term perspective, a clearly defined investment objective and by investing in the market on a regular basis. In order to protect you, the investor, from having to time the market it is best to take advantage of Dollar Cost Averaging. Although this may seem complicated it is in fact a very simple concept. You must invest a fixed amount of money in an investment at regular intervals, preferably over a long period of time. By investing regularly, market volatility is substantially reduced. The key advantage to this strategy is that the investor does not have to invest a large amount of money at once. There is no need to follow trends in the market, or to subsequently attempt to time the market, because investors are buying units consistently, and fluctuations will balance themselves out over time. This eliminates the temptation to stop buying when the unit price of a particular stock goes down in value, or to wildly invest when the units rise in value. To illustrate how dollar cost average works to an investor's advantage, here is a simple explanation using mutual funds. Let's assume you invest $100 in a mutual fund every month (minimum purchases vary with fund companies and investment firms). It fund units sell for $10 a unit, and no additional charges are involved, your first quarterly investment would purchase 30 units. Should the market then fall dramatically, reducing fund unit value to $5 your regular $100 monthly investment in the second quarter would purchase 60 units. If the market were to rebound and fund units were to rise again to $10 during the third quarter, your investment would again purchase 30 units, valued at $10 per unit. Looking back over the past three quarters, here is how you would stand. You would own 120 units which you purchased for a total investment of $900. With an ending market price of $10 per mutual fund unit, your units would actually be worth more than you paid for them ($1,200 in total current value versus the $900 purchase price). Another way of looking at this strategy is comparing the average price per mutual fund unit and the average cost. The average price per mutual fund unit during the three quarters illustrated above would be $8.33 ($10 + $5 + $10 divided by 3). The average cost to you on the other hand worked out to be only $7.50 ($900 divided by 120 units). As it is becoming increasingly difficult for many individuals to come up with a lump sum payment at RRSP time, dollar cost averaging is a sound RRSP savings strategy. It is important to maximize your contributions every year, and contributing on a regular basis is a sensible investment strategy.