NNSL (Dec 17/97) - CIBC Wood Gundy Securities Inc. predicts that if gold falls to $260 (US) an ounce and stays there for a year, the net assets Royal Oak Mines Inc. would plunge to four cents Canadian a share, the Globe and Mail reported.

Under the $260 scenario, several high cost mining companies, like Royal Oak, which owns Yellowknife's Giant mine, would be among those to fare poorly.

Royal Oak closed Monday up one sixteenth at $1.50.

Royal Oak vice- president investor relations Graham Eacott told the Yellowknifer in July if gold falls to $275, Giant would suspend production.

Gold closed Monday at $283.05. Royal Oak's hedge position is not known.

One gold company has hedged its position by selling forward or getting commitments from buyers on future sales, 10 million ounces of gold at $410 an ounce -- $4.1 billion in off-balance sheet future cash flow.

Despite the gloomy gold numbers, authors of the Wood Gundy report predict a stronger price down the road and has "strong buy" recommendations on seven gold companies.

Companies in their survey should be able to sell gold at $340 over the five- to 10-year life of their reserves. Royal Oak's estimated cash costs for 1997 are $332 an ounce dropping to $22 and $174 in 1998 and 1999 respectively.

The company said cash costs at its Kemess mine will be $79 an ounce.

Much of gold's recent decline has been linked to selling by European central banks.