This week in junior gold quarterlies – lower gold price weighs – by Kip Keen ( – May 10, 2013)

Adding pain to the the junior gold miner balance sheet: lower gold prices this year than last.

HALIFAX, NS (MINEWEB) – The lower price of gold in the first three months of the year, as compared to same in 2012, started to weigh on junior gold producers quarterlies. It wasn’t the only factor in dropping net incomes, to be sure, as operating costs remained flat or worsened. But this just made the lower gold price all the harder to bear.

A year ago spot gold prices over the January to March period averaged a bit higher, around $1,690 an ounce, while in the first three months in 2013, they averaged around $1,630. That difference, around four percent, took its toll, adding to pressure on balance sheets as junior gold producers contend with the cost of mine expansions and longer term projects.

The lower spot price this year in January to March might be viewed as a small difference, yes, and one confounded by such idiosyncracies as when a miner sold its loot. However, it’s not looking like a one-quarter blip. Rather, the effect is set to worsen for gold miners in the coming quarter.

Last year the spot price of gold averaged about $1,650 and 1,585 per ounce in April and May, respectively. This year it was $1,485 and $1,462 in the same months, to date, setting up junior gold producers for an even tighter squeeze in the coming round of quarterlies. It could only be reversed if the price of gold makes a strong U-turn over the next month and a half.

Here’s a quick look at some of the latest junior gold producer stats, per recently released quarterlies this week:

McEwen Mining (NYSE: MUX) – produces 29,839 ounces gold, up 31 percent over a year ago, with operating cash costs around $885, up from $688 a year ago (San Jose gold mine only) over the same period a year ago. Production jumps with its El Gallo gold mine in Mexico now online. It reports $50.6 million cash, no debt.

To note: McEwen Mining reports no dividend from San Jose in Argentina (49 percent owned) with such proceeds covering debt and other purchases for mine expansion instead. McEwen Mining also mulls over financing options for its second phase El Gallo mine, which has an estimated $180 million capital cost.

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