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Gold and Silver

Gold price breakout sparks massive move into mining stocks – by Frik Els (Mining.com – June 19, 2014)

 http://www.mining.com/

In a surprise move after months of subdued trade, the gold price jumped more than $48 or nearly 4% an ounce on Thursday, its best trading performance since September last year.

Gold ended the day at its high of $1,320 an ounce on Thursday, fighting back from lows of $1.244 at the beginning of this month. The metal is up 10% in value this year. The silver price jumped nearly 5%, climbing back above $20 an ounce for the first time in two months.

Gold’s positive momentum sparked heavy buying of gold counters with the Market Vectors Gold Miners ETF (NYSEARCA:GDX), holding stock in the world’s top gold miners, soaring 5.4% bringing its gains so far this year to 23.5%.

The bellwether for the industry for decades The Philadelphia Gold & Silver Index (INDEXNASDAQ:XAU) gained 5% and is back to levels last seen in March when gold hit a 2014 high of $1,379 an ounce.

By the close on Thursday, Barrick Gold Corp (NYSE:ABX, TSE:ABX) was up 3.2% with 4.3 million shares changing hands, more than double usual volumes for the world’s number one producer of the metal.

It was revealed earlier this week the company has been in talks about about possible partnerships with China’s largest gold producer, China National Gold.

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COMMENT: Who is anonymous and why is he saying all these nasty things? [African Barrick] – by Marilyn Scales (Canadian Mining Journal – June 19, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

The story broke in the June 18 issue of the Wall Street Journal that African Barrick has been accused of paying bribes to officials of the Tanzanian government to facilitate the company’s purchase of land near the North Mara gold mine.

The problem is that the accusation was made anonymously. Why does this person or persons want to hide their identity?

Several explanations come to mind. The accusers may fear reprisals for blowing the whistle. They may not have supporting evidence. They may want to defame African Barrick for a personal reason. They may be hoping to stir up trouble with local communities. Sending the accusations to the US Justice Department and US Securities and Exchange commission, as the accusers did, is a clear attempt to stir up legal trouble.

Making anonymous accusations is cowardly. If the accusations are true, the accuser should stand behind his opinion and offer proof. Not doing might weaken the case, except there are far too many people willing to think the worst of a foreign company in a poor country.

The very idea of an anonymous accusation goes against this writer’s sense of fair play.

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Gold Miners Feel Lucky in Search for Nevada Buried Riches – by Liezel Hill (Bloomberg News – June 18, 2014)

http://www.businessweek.com/

It’s not just gamblers, celebrity chefs and brides-to-be that find Nevada irresistible. About 400 miles north of the Las Vegas strip, the world’s two biggest gold producers are doing some prospecting too.

Even after more than a century and a half of exploration, Barrick Gold Corp. (ABX) and Newmont Mining Corp. (NEM:US) say there’s plenty of hidden gold still to be uncovered in Nevada, which already accounts for a third of their output and produces more of the metal than South Africa and Chile combined. The miners are refining exploration techniques, while looking deeper and in areas they’d previously dismissed to find new resources.

“In a lot of ways, even as mature as northern Nevada is, it’s still young from a discovery standpoint,” said Doug Livermore, Newmont’s regional project director for North America. The state accounts for more than 6 percent of global gold production.

With the 28 percent drop in gold prices last year forcing miners to look for lower-cost ways to increase output and cut exploration budgets, companies such as Barrick and Newmont are focusing more on existing holdings. Nevada’s deposits also offer lower investment risk than mines in less politically stable regions of the world.

One of the two potential new mines that Greenwood Village, Colorado-based Newmont is considering is in Nevada.

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Place of gold in a perilous world – by Lawrence Williams (Mineweb.com – June 19, 2014)

http://www.mineweb.com/

With numerous conflict flashpoints around the world and the possibility of market collapses there has never been a better time to hold some gold as insurance.

LONDON (MINEWEB) – The world is a dangerous place. One only has to look at the rise in extremism, rogue regimes, overthrown governments attempting to regain power, ethnic and religious factions fanatically opposed to one another, and other violent conflicts to see this. Indeed one could say that the populace of Western democracies are perhaps more in peril now than at the peak of the Cold War when the threat of mutually assured nuclear destruction kept most serious conflicts from ever starting.

Back then there would have been a state to target should conflict arise. Nowadays the threat tends to come from small disparate fanatical groups which have no easily identifiable physical power base and with leadership by individuals who may be located almost anywhere. But the weapons available to these groups and rogue states are often the most sophisticated money can buy, and the illegal arms trade can supply, and their awareness of the high tech means by which their leaders might be located makes them increasingly difficult to track down and sanction.

Even if the leadership is destroyed in say a drone strike, it tends to be like the Hydra’s head – cut them off and more grow in its place and often these are more extreme than the originals. Should some of these more extreme groups gain access to nuclear and biological weapons we could be closer to at least partial Armageddon than at any time in global history.

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REFILE-UPDATE 2-World Gold Council calls meeting to explore gold fix reform – by Eric Onstad and Clara Denina (Reuters U.S. – June 18, 2014)

http://www.reuters.com/

LONDON, June 18 (Reuters) – A discussion by gold buyers and sellers across the market on ways to reform or replace London’s global price benchmark, known as the “fix”, will be held next month by the World Gold Council.

The discussion comes as gold and silver fixes, along with other commodity benchmarks, face increased scrutiny by regulators in Europe and the United States following the London Interbank Offered Rate (Libor) manipulation case in 2012.

WGC, a gold mining industry group, said on Wednesday bullion banks, refiners, fund firms, central banks and mining companies had been invited to the forum, with a first meeting scheduled for July 7 in London. Britain’s Financial Conduct Authority will attend the discussion forum as an observer.

The discussions are separate to the London Bullion Market Association’s (LBMA) process aimed at finding a replacement for daily silver pricing, which will be disbanded in August.

Members of the association, including gold and silver fixing banks Deutsche Bank, Scotiabank, HSBC and other large bullion-trading banks will discuss proposals at a seminar on June 20. Sources say that an electronic solution to the silver fix could be applied to price-setting for gold and platinum group metals.

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China’s largest gold miner looks to partner with Barrick, Newmont – by Rachelle Younglai (Globe and Mail – June 18, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

China’s state-owned gold mining company is working on potential partnerships with both Barrick Gold Corp. and Newmont Mining Corp., its president said on Tuesday.

If the Asian company is successful, the alliances would bring one or both of the Western miners closer to China, a country that is now the world’s largest consumer and producer of the yellow metal.

“Both sides are making an effort to co-operate in the future,” Xin Song, the president of China National Gold Group Corp., China’s largest gold producer, said in an interview.

For Toronto-based Barrick, the talks represent a step forward, one that could be the beginning of a long-lasting and meaningful union that Barrick’s new chairman John Thornton wants to establish with the Chinese.

When Mr. Thornton was an executive at Goldman Sachs, he started developing relationships with key Chinese policymakers. The investment banker was chosen by Barrick’s founder Peter Munk for his contacts in China to align Barrick more closely with the rapidly growing economy and to further his vision of turning Barrick into a major, diversified miner.

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Kinross lobbying Ottawa over sanctions – by Rachelle Younglai (Globe and Mail – June 17, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Kinross Gold Corp. has been working feverishly to ensure that its prized Russian mines do not become a casualty of the diplomatic spat between Russia and the West.

During a difficult period in which the company has struggled to placate both sides, federal lobbying records made public in June show that Kinross’s chief executive Paul Rollinson and a lobbyist for the Toronto-based gold miner have had numerous communications with the Canadian government’s top officials, including Prime Minister Stephen Harper’s foreign affairs policy adviser.

The high level of interactions with the federal government comes as investors fret over Western sanctions against Russia, which were imposed in an attempt to curb the country’s aggression in Ukraine.

In April, Kinross hired three lobbyists with ties to Mr. Harper’s Conservative government. The lobbyists include Michael Coates, the chief executive of Hill and Knowlton Canada and a former adviser to Mr. Harper who helped him prepare for elections in 2004, 2006 and 2008.

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Treasury Metals aiming at becoming Ontario’s next gold producer – by Henry Lazenby (MiningWeekly.com – June 17, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Recent drilling results at TSX-listed Treasury Metals’ Goliath project, in western Ontario, have confirmed that gold mineralisation at a new zone continues at depth, highlighting the significant exploration upside at a project the company bills as probably being Ontario’s next gold producer.

Speaking to Mining Weekly Online in an interview on Monday, Treasury president and CEO Martin Walter noted that the company was well on its way to progressing the project up the value curve, being fully funded by South Africa-based Rand Merchant Bank (RMB) through to the “shovel-ready” stage.

“We have found a number of encouraging intercepts in the high-grade area of the C Zone, which is shaping our plans positively for the eventual underground mine. We will be testing more of these high-grade targets later in the year and we honestly believe that we will be able to breach the two-million-ounce resource level with our next resource update due out in the third quarter,” he said in Toronto.

Treasury last week reported that the company’s current drilling programme at Goliath, which was aimed at expanding the gold resource within the developing C Zone horizon as well as to tighten grades and extend known mineralisation at the Main Zone through infill drilling, was confirming significant upside to increase the resource beyond its current limits.

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PRECIOUS-Gold hits 3-week high on Iraq turmoil; platinum rebounds – by Clara Denina (Reuters U.S. – June 16, 2014)

http://www.reuters.com/

LONDON, June 16 (Reuters) – Gold hit its highest in nearly three weeks on Monday, as turmoil in Iraq and Ukraine supported its safe-haven appeal relative to higher-risk assets like equities, while platinum gained ahead of the outcome of talks to end a strike in South African mines.

Investors often turn to gold or other precious metals in times of political or financial trouble, as they can be perceived as an insurance against risk. Spot gold rose 0.3 percent to $1,280.00 an ounce by 1004 GMT, having hit its highest since May 27 at $1,284.85 earlier in the session. U.S. gold futures for August delivery gained 0.5 percent to $1,280.90.

“Escalating violence in Iraq is going to be bullish for gold and technically we could see another leg up pushing gold above $1,300,” Societe Generale analyst Robin Bhar said. “But safe-haven buying could only last until you have to sell any profitable positions to make up margins for other markets.”

Sunni insurgents seized a mainly ethnic Turkmen city in northwestern Iraq on Sunday after heavy fighting, solidifying their grip on the north after a lightning offensive that threatens to dismember Iraq.

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HISTORY: Gold rush sparked big headlines – by Karen Bachmann (Timmins Daily Press – June 13, 2014)

The Daily Press is the city of Timmins broadsheet newspaper.

Karen Bachmann is the director/curator of the Timmins Museum and a local author.

TIMMINS – About 105 years ago this month, the Great Porcupine Gold Rush took off in force. People had been looking for gold in the area as early as 1905, and a mini-rush around the Night Hawk waterway got people all riled up in 1907-08. However, it wasn’t until a few spectacular finds in the spring of 1909 in and around the Porcupine region that ears perked up and men got serious.

Today, I give you a few newspaper excerpts from the Cobalt Nugget, in celebration of those finds so many years ago. Those reporters and letter writers knew how to tell a great story. After all, I think we need to start celebrating the Porcupine Gold Rush. It is quite possibly the best kept secret in Canada. so let’s have a look at what they were saying back then that got their knickers all in a knot!

Headline: “Free Gold Over Big Area in Porcupine – Sam Wilson Describes What He Saw on Bannerman Claim – Quartz Vein a Mile Long and Four Feet Wide!!!” (Cobalt Nugget – Porcupine Lake, Nov. 1, 1909 – excerpt from the third letter of Sam Wilson, Cobalt Prospector to his partner Bob Andrews).

“Dear Bub – I’ve been looking at free gold so much I am just dazzled. They have it all through this country. They are finding it through Whitney and Tisdale, and there are great reports from the Reserve.

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Aroland First Nation rejects proposed open pit mine near Geraldton, Ontario – by Rick Garrick (Wawatay News – June 12, 2014)

http://wawataynews.ca/

Aroland has rejected the open pit mine proposed by Premier Gold Mines Limited near Geraldton over environmental concerns, including destruction of a 16-acre lake.

“My First Nation is generally supportive of sustainable mining development,” said Aroland Chief Sonny Gagnon. “Premier Gold wants to destroy Begooch Zaagaigan, a lake that supports our Aboriginal fishery. They just put a number on this lake – A-322 – and tell us they’re going to fill it in with mine waste. This is one of the worst project proposals I’ve ever seen. They’re going to seriously impact our lands and resources. Such a large and destructive project should receive the maximum examination possible – but instead, very little is being done under provincial or federal environment assessment laws. And virtually nothing has been done to consult with and accommodate the many serious concerns of Aroland First Nation.”

Aroland called on the federal government to hold a Panel Study Environmental Assessment on the project and the provincial government to hold a full Individual Environmental Assessment.

“It is shocking to me how much damage Premier Gold intends to cause and what it seems to want to get away with by avoiding scrutiny from environmental laws and Aboriginal consultation,” Gagnon said. “It is unclear whether Ontario will require more. We urge the Ontario government to use its laws to protect the environment, the water and our rights.”

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San Gold Corp’s new chief Greg Gibson sees smaller mines as key to survival – by Peter Koven (National Post – June 11, 2014)

The National Post is Canada’s second largest national paper.

San Gold Corp.’s new chief executive faces a straightforward challenge: mine much less gold, and make it profitable.

Greg Gibson was named CEO of San Gold on Tuesday, a formerly high-flying company that has fallen into a cycle of losses and liquidity problems like many other small gold miners. He said in an interview that his mandate is to shrink output to where it should have been in the first place.

“I see a small producer that always had ambitions to be a big producer. And when you take small mines and try to make big mines out of them, they don’t work,” Mr. Gibson, 52, said.

Winnipeg-based San Gold is one of many small gold miners operating in Canada that emerged last decade, when gold prices were going up every single year. In order to attract investors and capitalize on rising prices, some of these firms set aggressive production targets. San planned to churn out more than 100,000 ounces a year from its Rice Lake mine in Manitoba.

“When you went to see the fund managers, the more ounces you could tell someone you were going to discover, the bigger the cheque you got,” Mr. Gibson said.

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Newmont Suspends Indonesian Operations As Minerals Export Issue Remains Unresolved – by Trefis Team (Forbes Magazine – June 9, 2014)

http://www.forbes.com/

Newmont Mining has announced the suspension of operations at its Batu Hijau mines in Indonesia. This follows the halt in production and processing of copper concentrate at its Indonesian operations after its copper concentrate storage facilities were filled to capacity.

The company had halted exports from Indonesia in January, as a law banning exports of unprocessed minerals from the country came into effect. Though last minute changes to the law permitted Newmont to export its copper concentrates, they imposed a 25% tax on exports which would rise to 60% by 2016. The company claimed that this tax violated the terms of its original investment agreement, or contract of work, with the Indonesian government.

The company is engaged in negotiations with the government regarding the export duty, leading to resumption of its exports from the country. The company invoked the force majeure clause of its contract of work, in order to suspend operations, after its storage facility was filled to capacity and production could not be continued.

The suspension of production will impact Newmont’s quarterly and annual results, though the extent of the impact will be determined by the duration for which operations remain suspended.

A law enacted in Indonesia in 2009 banned exports of unprocessed minerals from the country with effect from January12, 2014.

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Gold fix under scrutiny as regulators probe archaic system – by Rachelle Younglai (Globe and Mail – June 9, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The cozy little world of gold trading is getting less comfortable. A handful of bankers in London currently set the world standard for gold prices, a practice that started in 1919 and is widely used by governments, miners and brokers to buy and sell the precious metal and its financial derivatives.

But regulatory probes have shone an unwanted spotlight on the benchmark known as the London gold fix, and prompted calls for change.

The five banks that set the standard – Barclays, Bank of Nova Scotia, Société Générale, Deutsche Bank and HSBC – have been hit by multiple lawsuits from investors alleging they colluded to rig the price for their own benefit. Deutsche Bank, which gave up its seat on the gold-ixing panel, said the lawsuits had no merit. Barclays, SocGen and HSBC had no comment, and Scotiabank could not be reached.

“This is a setting that is very easy to be manipulated either by one individual bank or by a group of them,” said Rosa Abrantes-Metz, an associate professor with New York University’s business school, whose research identified a series of unusual trades before the gold benchmark was announced. “It completely lacks oversight and involves a very small group of competitors, so it is easy to co-ordinate behaviour,” she said.

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SA’s mining problem is one that runs deep – by Ray Hartley (Business Day Live- June 8, 2014)

http://www.bdlive.co.za/

THREE-and-a-half kilometres underground, no one can hear you scream, I tell myself as the drills hammer their way through solid rock. I am at the deepest point of Driefontein’s No 5 shaft, west of Johannesburg.

It is a work environment like no other. A rock-drill operator named Whitey is king. His kingdom is a jagged tunnel known as a panel, blasted out of the battleship-grey rock where the gold lies.

The panel’s low roof forces you into a crouch. The inclined floor is covered with loose rock, the detritus of previous advances into the earth. The rockface temperature approaches 60°C, and although mines are required to cool the stopes to about 28°C, humidity approaching 100% causes continuous and heavy perspiration. It is a cramped, claustrophobic space shared by stripped-down workers, rusted drilling machines and rock fragments.

Around Whitey, helmeted mineworkers toil in a strange, slow silence. Some spray-paint red dots on the rockface where holes must be drilled for blasting. Others attach air and water hoses to his rust-brown drilling machine, which has “AK47” as a nickname.

Earplugs seem a pathetic defence against the screaming, grinding and crunching of the drill bit as it fights its way into the rock, and water sprays from the stuttering machine.

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