Gold and Silver – Page 265 – Republic of Mining

Eric Sprott: Gold shortage coming, data shows (Mining.com – May 15, 2014)

May 16, 2014

http://www.mining.com/

Eric Sprott, Founder and Chairman of Sprott Asset Management, said recently that he expects a “significant re-rating of the gold price” due to high physical demand from China and India, coupled with a gold supply shortfall. The effect, which he calls the “Chinese Gold Vortex,” is rapidly taking physical gold from West to East. When the West runs out of gold, the price should go much higher, he believes. I recently spoke with him on the phone about his near-term views.

Hello Eric, what do you see happening today in the metals markets?

Eric Sprott: I am very excited about developments in the gold and silver markets today. I have been speculating since late 2012 that Western central banks could be running out of gold. I put the sell-off in gold and silver in 2013 to the fact that the Western banks needed a way to generate physical gold supplies. As the metals prices went down, there was a lot of liquidation of gold which increased the supply by an estimated 900 tonnes last year.

Let’s look at the figures. The annual supply of gold is around 4,300 tonnes. 3,000 tonnes come from mining and the other 1,300 tonnes or so from recycled material2. In 2013, an additional 900 tonnes came onto the market from ETFs that were being liquidated – a supply increase of around 21%.

What does Modi’s victory mean for gold in India? – by Lawrence Williams (Mineweb.com – May 16, 2014)

May 16, 2014

http://www.mineweb.com/

While Narendra Modi may be pro-gold in principle, there are doubts whether there will be any quick major gold policy changes following his BJP party’s Indian election victory.

LONDON (MINEWEB) – As I write it has become apparent that Narendra Modi’s Bharatiya Janata Party (BJP) party has won the Indian election with what in Indian terms looks like being a landslide victory. The ruling Congress party has conceded defeat. The only unknown as I write is whether the BJP will have won enough seats in India’s parliament to rule on its own without the support of its potential coalition partners or not.

It is widely believed that Modi is favourably inclined towards gold and one suspects the very big Indian gold fabrication and trading sector will have voted en masse for the BJP in the hope that the import restrictions on gold will be eased at the very least.

This will have followed on in particular from Modi’s address at a Bombay Bullion Association meeting last October where he expressed sympathy for the plight of the Indian gold sector and poured scorn on the then government’s gold policies to try and reduce the country’s balance of payments problems. However it should be recognised that Modi is an astute politician and he would have been in full pre-election mode addressing a sector with a potentially significant electoral impact given India’s love affair with gold.

He did say at the beginning of his address that he personally had little connection with gold but did comment: “We have not seen gold just as money, it is related with all aspects of our social life.

Historic silver price ‘fix’ coming to an end after 117 years – by Peter Koven (National Post – May 15, 2014)

May 15, 2014

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

The silver market is poised to undergo a major shake-up, as the ancient method of setting a benchmark price is coming to an end.

Since 1897, the London “silver fix” has been negotiated each trading day at noon through an auction between bullion dealers. Remarkably, the process has endured despite all the evolutions in trading since then. Similar daily fixings continue to be set for gold, platinum, and palladium.

The silver fix is now dying because the banks that set the price don’t want to do it anymore, and no one else is rushing forward to take their place.

Last month, Deutsche Bank said it planned to give up its seats on the silver and gold fixes as it scaled back its commodity business. That left only two banks to determine the silver fix: Bank of Nova Scotia and HSBC. Now all of the parties have decided to withdraw, meaning the last fixing will take place on Aug. 14. All three banks will stay on until then.

The decision to end the silver fixing comes as regulators put more scrutiny on the fixing process amid concerns that it could be manipulated. That follows a scandal in 2012 over the manipulation of the London Interbank Offered Rate (Libor).

Silver Institute: Physical Silver Demand Rises 13% In 2013 To Record High – by Allen Sykora (Kitco News – May 14, 2014)

May 15, 2014

http://www.kitco.com/

(Kitco News) – Global physical demand for silver rose by 13% in 2013 to an all-time high of 1.081 billion ounces, according to the World Silver Survey 2014 released Wednesday by the Silver Institute.

The rise was driven by a 76% increase in retail investment in bars and coins coupled with a recovery in jewelry and silverware fabrication, the report said. Data for the World Silver Survey was compiled independently by Thomson Reuters GFMS. The Silver Institute has published the annual report since 1990.

Andrew Leyland, manager for precious-metals demand for the GFMS team at Thomson Reuters, identified three major trends in the silver market during 2013 that were attributed largely to a 24% decline in the average price.

“The first was the reaction from the price-elastic markets, in particularly jewelry and silverware,” he said, pointing out that jewelry fabrication was up nearly 10% and silverware was up 12%. “They were very much price-sensitive moves, with people feeling they could put more silver content into silverware and move away from plated (silver) products into more sterling silverware products.”

Mining: Geologist takes mineral hunt to his hometown – by James Kwantes (Vancouver Sun – May 13, 2014)

May 14, 2014

http://www.vancouversun.com/index.html

Rob McLeod returns to Stewart to explore for gold at Red Mountain, site of his first job after graduation

When exploration geologist Rob McLeod graduated from the University of B.C. in 1993, his first job was drilling for gold at an underground project at Red Mountain near his hometown of Stewart.

It was a “dream job” for McLeod, who grew up fishing, hiking and exploring abandoned mine shafts in the area. During the winter drill program, he would pack ski equipment on the Snowcat they used to travel up the mountain and ski down at the end of the day.

The skiing was good, and so were the drill hits. “I’ve had my eyes on it ever since,” McLeod said of the property at the southern edge of B.C.’s “golden triangle,” a mineral-rich area beside the Alaska panhandle that hosts high-grade gold and stores of copper and silver.

McLeod now has his hands on Red Mountain as well, after an option agreement with current owner Seabridge Gold. The deal gives McLeod’s Revolution Resources 100-per-cent ownership of the project in exchange for a total of $3.5 million in cash and the expenditure of $7.5 million in exploration and development expenses over the next three years.

Gold miners tarnished by tumbling reserves – by David Parkinson (Globe and Mail – May 14, 2014)

May 14, 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.

For the world’s major gold mining companies, bullion’s sharp price decline has put them in an unfamiliar and not altogether comfortable condition: They’re shrinking. The question now is whether the downsizing is destined to continue – or if a bit of price stability will lure them back into their comfort zone of rebuilding reserves through acquisition.

A new report from independent research firm SNL Financial notes that the combined gold reserves of the five biggest global gold producers (Barrick Gold Corp., Newmont Mining Corp., Goldcorp Inc., AngloGold Ashanti Ltd. and Kinross Gold Corp.) fell by 11 per cent in 2013. Their reserve total has retreated to 2006 levels, wiping out six years’ worth of growth.

The culprit was the gold price. As it tumbled from $1,800 (U.S.) an ounce in late 2012 to $1,200 in late 2013, the miners were forced to slash the price assumptions they used in their reserve calculations – and remove higher-cost ore from reserve estimates as producing it was no longer economic.

The result has not only been substantial and costly writedowns to reserves, but also a shrinking reserve base that is far from business as usual at the big miners.

Paulson-Backed Detour Plots Supersizing Mine: Corporate Canada – by Liezel Hill (Bloomberg News – May 13, 2014)

May 13, 2014

http://www.businessweek.com/

Everything about Detour Gold Corp. (DGC) is big, from its shovels that scoop up 100 tons of rock at a time to its index-leading share price. Now it’s exploring ways to make Canada’s largest gold mine even bigger.

The company, whose biggest shareholder is billionaire John Paulson’s hedge-fund firm, plans to reach full production at its Detour Lake mine in northern Ontario at the end of the year while it considers options to boost output.

“Our priority remains the ramp up, but it’s not our sole priority,” Chief Executive Officer Paul Martin said in an interview at Bloomberg’s Toronto office. “The next step is to look at our near-term organic growth opportunities.”

Detour Lake, built for C$1.5 billion ($1.4 billion) on 630 square kilometers (243 square miles), is grand by several parameters. Trucks with capacity to each carry 300 tons of rock rumble through the growing pit and the inside of the mill is as large as two football fields, according to Martin.

The size is partly a function of the mine’s lower grades: the company must move about four tons of rock to get one gram of gold. That means the more ore Detour can mine and process, the more profitable the operation becomes.

Kibali helps Randgold to record production – by Martin Creamer (MiningWeekly.com – May 8, 2014)

May 9, 2014

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

JOHANNESBURG (miningweekly.com) – Output from the new Kibali gold mine in the Democratic Republic of Congo (DRC) helped lift the gold production of Randgold Resources to a record level in the first three months of this year.

The London-listed company produced an unprecedented 283 763 oz in the March quarter, with Kibali producing at just over $500/oz. A 3% increase in the average gold price received saw higher quarter-on-quarter gold sales of $363-million.

Total cash cost an ounce of $685 was down 19% on the corresponding prior year quarter owing to Kibali’s ramp-up and Loulo-Gounkoto’s significantly higher grades. Profit from mining was up 14% on the corresponding quarter in 2013.

While cone crusher mechanical failure again resulted in Tongon, in Côte d’Ivoire, delivering a below-par performance, overall the company’s total cash cost and production guidance for the year remained intact.

“We have looked closely at our mines to ensure that they will still be profitable at $1 000/oz,” said Randgold CEO Mark Bristow.

Gold Prices: The Coming End To This Bear Phase – by Bob Kirley (Kitco Commentary – May 7, 2014)

May 9, 2014

http://www.kitco.com/

Background

It’s been almost 30 months since the gold bull hit the dizzy heights of $1900/oz back in August 2011, sending many of us into raptures. However, it has been a very different story since then with gold slipping to a low of $1180/oz in June 2013 before bouncing higher to almost touch the $1400/oz level. Fast forward to today and we have gold trading at around $1310/oz level, having tested the June bottom around Christmas time 2013. Many believe that the bottom is now in and the bull has resumed charge, with the bears being exhausted. We would like to agree with them but we are still of the opinion that a challenge to the June lows could still lie ahead of us.

Gold

Gold prices are presently being dragged in both directions with the geo-political issues in the Ukraine putting upward pressure on gold as it is viewed as a safe haven in terms of protecting ones wealth. Gold is something you can take with you should the need arrive and you have to move to a safer location in a hurry. However, for many of us our need to own gold is based the perennial devaluation of our own countries currency.

Don’t put too much stock in Putin’s so-called soft talk – by Lawrence Williams (Mineweb.com – May 8, 2014)

May 8, 2014

http://www.mineweb.com/

Is President Putin just buying time over Ukraine to protect Russia against strong sanctions should he send in the military? What does the current ebb and flow in rhetoric and action mean for gold?

LONDON (MINEWEB) – Russia’s President Putin appears to have pulled back from the brink over intervention in Eastern Ukraine – but has he really? Could he just be biding his time and taking advance measures to best protect Russia from an inevitable increase in Western sanctions – which might even have some bite next time – before making a military move. Whether Russia has troops on the Ukraine border or not is, in reality, pretty irrelevant.

If they are moved away they can just as easily be moved back again, and then across the border to ‘protect’ what Putin sees as Russia’s strategic interests. But some de-escalation just buys time in helping Russia set up bilateral trade agreements, which exclude the dollar, for key imports and exports should Russia suffer the ultimate financial sanction of exclusion from the SWIFT payments system.

This may be unlikely, but has to be in the Russian President’s thinking as a worst case scenario given the other ‘worst case’ of a military conflict between NATO and Russia has effectively been ruled out by the West.

Centerra Gold continues to navigate minefield of Kyrgyzstan politics – by Peter Koven (National Post – May 8, 2014)

May 8, 2014

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

Centerra Gold Inc. is so used to getting threatened by its host government in Kyrgyzstan that it scarcely blinks anymore.

Over the past couple of weeks, Centerra watched as the Kyrgyz parliament passed a law prohibiting activities (like gold mining) that affect glaciers, and as a government agency suggested the company’s flagship Kumtor mine could be suspended. On top of that, its 2014 mine plan has still not been approved by the state.

If these events happened in another country, mining investors would be running for the hills. But they are so commonplace in Kyrgyzstan that Centerra shares barely budged, remaining around the $5.50 mark so far this week. It is simply the price Centerra has to pay to operate in a country that the Fraser Institute recently deemed the worst mining jurisdiction on earth.

Yet through all the noise, the one constant is that the Kumtor mine continues to run and churn out cash. It has done so for 16 years, with only one brief interruption last year that had anything to do with politics.

“Even though the mine comes under a lot of rhetoric and is used as a political football, they do allow it to continue to operate because it’s such a key part of the country,” Centerra chief executive Ian Atkinson said in an interview.

Gold Fields CEO Sees South Deep Mine Ready by End 2017 – by Kevin Crowley (Bloomberg News – May 8, 2014)

May 8, 2014

http://www.bloomberg.com/

Gold Fields Ltd. (GFI)’s South Deep mine, plagued by delays since it was bought for $3 billion in 2006, will underpin long-term growth and be ready for full output by 2017, Chief Executive Officer Nick Holland said.

The company’s only South African asset, and the world’s second-biggest gold deposit, will produce 650,000 to 700,000 ounces a year at about $900 an ounce by the end of 2017 even with disruptions in the first quarter, he said.

“The build-up in production is going to come with a commensurate reduction in the cost base,” Holland said in an interview. “We’ve got all the infrastructure already built.”

Gold Fields needs South Deep to help reverse a 54 percent slump in its stock since spinning off three South African mines to create Sibanye Gold Ltd. (SGL) in February last year. The mine cost Gold Fields about $4 billion, including the purchase price, and is seen producing 700,000 ounces a year until at least 2075.

South Deep “is going to fundamentally change the group’s margin delivery and performance,” Holland said.

Banks Sued on Claims of Fixing Price of Gold – by Alan Feuer (New York Times – May 5, 2014)

May 6, 2014

http://www.nytimes.com/

Frustrated traders and offbeat activists have complained for years in whispers and in online screeds that the price of gold has been subject to collusion. On Monday, these accusations of manipulation found a more august arena for expression: the federal courts.

At a 40-minute hearing, lawyers for more than 20 plaintiffs gathered in Federal District Court in Manhattan to coordinate their linked lawsuits against the five banks that make up what is known as the London gold fix. The suits, filed by hedge funds, private citizens and public investors like the Alaska Electrical Pension Fund, contend that the banks have used their privileged positions as market makers to rig the price of gold to their benefit.

The lawsuits — the first of which was filed in March — question the integrity of the gold fix, which dates to 1919, when a handful of bankers began to meet in the wood-paneled offices of N. M. Rothschild & Sons in London. The purpose of the fix is to set a benchmark price for gold, which is subsequently used by dealers, central banks and mining firms to buy and sell the precious metal and its various derivatives.

These days, the fix takes place by phone twice a day — at 10:30 a.m. London time and again at 3 p.m. — and generally lasts 10 minutes to an hour. According to one of the suits, “The ‘great flaw’ of the gold fixing process is that the member banks trade on the information exchanged during the call to manipulate the price of gold and gold derivatives before publication of the gold fix to the wider market.”

Famed Gold Rush era shipwreck yields more treasure – by Dorothy Kosich (Mineweb.com – May 6, 2014)

May 6, 2014

http://www.mineweb.com/

One of the U.S’s most famous shipwrecks – and the millions of dollars in gold that it carried when it went down 4 years before the U.S. Civil War – is being re-explored after 23 years.

RENO (MINEWEB) – Nearly 1,000 gold ounces (28 kilograms) have been recovered during the first reconnaissance dive since 1991 to the SS Central America shipwreck site deep in the ocean east of Charleston, South Carolina.

Launched in 1853, the SS Central America is an 85-meter (280 foot) wooden-hulled, three-masted side-wheel steamship that operated during the California Gold Rush era, making 43 round trips between New York City and Panama.

On August 20, 1857, the mail steamer Sonora left San Francisco harbor carrying about 600 passengers and crew, as well as 10 tonnes of gold ingots, freshly-minted U.S. $20 Double Eagle coins, nuggets and gold dust mined in the California Gold Rush.

It also carried the largest Gold Rush relic, the Eureka Bar, which weighed 933.94 troy ounces, and was valued at $17,433 in 1857. The Eureka gold bar was scheduled to be melted and turned into coinage at the Philadelphia Mint.

UPDATE 2-S.Africa’s Harmony Gold scales back Papua-New Guinea project – by Ed Stoddard (Reuters India – May 6, 2014)

May 6, 2014

http://in.reuters.com/

JOHANNESBURG, May 5 (Reuters) – South Africa’s Harmony Gold has scaled back the size and expenditure on building its Papua New Guinea Wafi-Golpu mine, enabling it to raise funding for the project, its chief executive said.

The gold and copper project, a joint venture with Newcrest Mining, sits on deposits with a metal content estimated to be worth $85 billion at current prices. The plans unveiled in 2012 called for spending of almost $6 billion to develop it.

The mining firm is now looking at a “significantly lower capex, something that will be well within our reach to fund”, CEO Graham Briggs told Reuters on Tuesday, after Harmony released its results for the March quarter.

“August is the time when we will be able to release more information on that,” he added. Harmony has scaled back its original plans as mining investors globally have shied away from big capital expenditures on projects in the face of rising costs and falling prices.

“The timing of big builds and the raising of that sort of money, and debt levels and shareholder views changed our minds, and now we are talking about a significantly smaller mine,” Briggs said.