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Gold and Silver

Analysis: For the next round of gold deals, small is beautiful – by Allison Martell (Reuters U.S. – September 28, 2013)

http://www.reuters.com/

DENVER – (Reuters) – Gold miners may be tempted back into the takeover game by lower prices and the need to replace reserves, but they are likely to shy away from flashy mega-projects that require big capital expenditures.

Mining deals have slowed to a crawl, thanks to a volatile market and pressure from investors still angry about the steep premiums paid during boom times. The pause can’t last forever, but the excesses of the last cycle will cast a long shadow. “Everyone is really gun-shy of the high capex projects,” said Randy Smallwood, chief executive of Silver Wheaton Corp (SLW.TO), which provides miners with cash to finance mine construction in exchange for the right to buy future silver production at a set price.

Smallwood said projects that use relatively low-cost heap leaching could be more attractive than those with mills. In a heap leach, ore is crushed, stacked and irrigated with chemicals that separate out the valuable metals.

Across the industry, executives have vowed to chase profits rather than production, which often means focusing on higher-grade ore. But projects that require significant capital spending may take years to break even, a risky proposition when commodity prices or tax regimes are volatile.

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Mining in the Dominican Republic: Sickness and wealth (The Economist – September 21, 2013)

http://www.economist.com/

THE $4 billion that two Canadian companies, Barrick Gold and Goldcorp, have poured into developing Pueblo Viejo, a gold mine, since 2009 amounts to the largest single foreign investment in the history of the Dominican Republic. The companies say that the money has turned the polluted ruins of what was the state-owned Rosario mine, abandoned in 1999, into a “truly world-class” operation that should provide the country’s government with $10 billion over its 25-year life.

But the project has been controversial. Just weeks after the mining started in January, President Danilo Medina, who was elected last year, declared: “For every $100 of gold exports, Barrick will receive $97 and the Dominican people $3. That is simply unacceptable.” (In fact, Pueblo Viejo Dominicana Corporation, or PVDC, the company operating the mine, is 60% owned by Barrick and 40% by Goldcorp.) Mr Medina demanded that the contract be renegotiated; otherwise, he said, he would raise taxes on the mine’s profits.

This month the two sides agreed to changes that have front-loaded tax payments and could see the government get an extra $1.3 billion in 2013-16 provided that the gold price rises and stays above $1,600 an ounce (it is now around $1,350). Gustavo Montalvo, Mr Medina’s chief of staff, tweeted: “Together we ensured that words like ‘national sovereignty’, ‘justice’ or ‘transparency’ were transformed into something more concrete.”

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Fifty Shades of Gold – by Frank Holmes (Frank Talk – Insight For Investors – September 23, 2013)

http://www.usfunds.com/

Goldman Sachs created a stir recently when it forecasted that gold would fall to $1,000 an ounce by the end of 2014, as the firm expected the Federal Reserve to reduce its bond buying program. Goldman also suggested that gold miners might want to hedge their output, locking in 2013 prices.

HSBC analysts have also been bearish on gold, although the firm admits that lower gold prices tend to draw out tremendous demand from emerging markets, especially China. Because of that demand, HSBC believes gold will end 2014 at around $1,435 an ounce, says MarketWatch.

Keep in mind that “Goldman Sachs does things that are good for Goldman, not you,” says Bryon King from Agora Financial. Things can change quickly in the gold market, as investors saw when, only days after Goldman’s assertion, the Federal Reserve surprised everyone by announcing it would continue purchasing $85 billion worth of bonds. Gold investors cheered as the precious metal shot up the most in 15 months.

Unlike many commodities, there are many shades to gold, such as the Love Trade’s buying gold for loved ones and the Fear Trade’s purchasing gold as a store of value.

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The gold rush for commodities isn’t over yet, despite claims the super-cycle is dead – by Christopher Silvester (Spear’s.com – September 24 2013)

http://www.spearswms.com/

Demand from governments and private investors for gold and other commodities suggests that, contrary to popular opinion, the latest super-cycle has plenty of life left in it

WE’VE BEEN HERE before, haven’t we? Perhaps the clamour of Cassandra-like voices was not so great in 2011 when Spear’s previously wrote about the supposedly imminent demise of the commodities super-cycle, but it was nonetheless already a clamour. The past nine months or so have heard that clamour amplified several times over.

The Financial Times declared that the super-cycle was dead at the end of June, only to declare about ten days later that rumours of its death were greatly exaggerated. Most recently, the Wall Street Journal reported that the broad consensus of analysts and investors has called the end of the super-cycle.

But super-cycles tend to die slowly. The first identifiable commodities super-cycle in modern times lasted from 1894 to 1932, peaking in 1917, according to academics Bilge Erten and José Antonio Ocampo. The second lasted from 1932 to 1971, peaking in 1951, and the third lasted from 1971 to 1999, peaking almost as soon as it began.

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Denver Gold Forum Keynote Speaker Calls For ‘Honest Money’ Based On Gold – by Allen Sykora (Kitco News – September 23, 2013)

http://www.kitco.com/

(Kitco News) – Denver – The masses would never consider allowing the size of a kilogram to fluctuate, the founding editor of the New York Sun told the 2013 Denver Gold Forum on Monday. That’s because nobody would know whether they were getting the appropriate quantity of any product they might purchase in kilograms.

Yet, the U.S. dollar is allowed to “float” under a fiat currency system, with the end result that the value of the greenback has fallen sharply in the last half century, said veteran financial journalist Seth Lipsky. Such a move would have dismayed the founding fathers of the U.S., who clearly felt the dollar should be tied to precious metals, he said.

Lipsky gave a keynote speech titled “Mainstreaming the Gold Standard” at the 2013 Denver Gold Forum. He called on the U.S. to return to some kind of gold standard, and urged those attending the Gold Forum not to be shy about entering the political fray.

In an interview ahead of his speech with Kitco News, Lipsky described the New York Sun as an online newspaper standing for limited government, free enterprise, strong foreign policy and “sound and honest money,” carrying more editorials on the gold standard than any other newspaper in the U.S. A book, “It Shines For All,” includes many of the editorials from the Sun for a gold standard and was distributed to those attending the speech.

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Barrick Gold’s brave (and scary) new world – by David Milstead (Globe and Mail – September 21, 2013)

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 buzzword at Barrick Gold Corp. is governance, as the miner responds to unhappy shareholders by adding new members to its board and revising its pay practices for key executives.

The changes that may make the biggest difference to its survival, however, are occurring at the Toronto-based company’s mines. During the past few months, Barrick has cut its head count and deferred capital spending. It has also slashed its dividend as the price of gold has slumped.

As the most debt-heavy miner in the industry, Barrick has the most to lose as gold prices decline. It also has the most to gain as gold prices rise, which may explain why the shares are now near $20, up about 40 per cent from their weakest points earlier this year, as gold has bounced off its recent lows.

Investors who choose Barrick as a means of playing a gold rebound, however, could be in for a long, painful slog if the metal’s price languishes.

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Sept. 19, 1992: Labour tensions high as Yellowknife blast kills replacement gold miners – by Chris Zdeb (Edmonton Journal – September 19, 2013)

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

Nine gold miners were killed in an explosion during a strike at the Giant Gold Mine in Yellowknife in one of the worst mass murders in Canadian history. The replacement workers were riding in a man-car more than 200 metres below the surface when the blast happened about 10:30 a.m. Six victims were from Yellowknife, two from Ontario and one from New Brunswick.

The union vehemently denied any responsibility for the explosion, which was investigated by the RCMP. Still, union officials expected violence in Yellowknife to get worse as more people who blamed the union for the explosion vented their anger. The mine was built in the 1930s and owned by Royal Oak Mines Ltd. It had continued to operate through the strike with replacement workers.

About 240 members of the Canadian Association of Smelter and Allied Workers walked off the job on May 23 in response to the company asking workers to take wage and benefit cuts and to tie any new contract to the price of gold, because of declining gold prices.

Workers wanted better pension benefits, improved safety standards and a five- to 10-per-cent wage increase.

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Pressure on Barrick Board Centers on Long-Time Directors – by Liezel Hill & Katia Dmitrieva (Bloomberg News – September 18, 2013)

http://www.bloomberg.com/

Investor pressure to change the board at Barrick Gold Corp. (ABX), the world’s biggest producer of the metal, is centering on long-serving directors, including former Canadian Prime Minister Brian Mulroney.

Canada’s biggest pension funds want new independent board members and say the miner should consider replacing directors who have been there longer than 20 years and are close to Co-chairman and founder Peter Munk, according to two investors briefed on the matter who asked not to be identified because the information hasn’t been made public.

Barrick said yesterday it will add new independent directors and strengthen its executive pay policies after investors criticized governance at the company. The gold miner took $8.7 billion of writedowns in the second quarter and cut its dividend 75 percent after gold prices fell the most in three decades.

“The tenure on the board is far too long and there are far too many non-independent directors,” said Robert Gill, a Toronto-based fund manager at Aston Hill Financial Inc. (AHF), which manages C$7.8 billion ($7.6 billion), including Barrick shares. “It’s time to change the board and we need to bring in more independence into the board,” he said by phone Sept. 11.

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‘Price of Gold’: Mining in Mongolia [Documentary] – by Cynthia Fuchs (Pop Matters.com – September 17, 2013)

http://www.popmatters.com/

I Think It’s Like a Human Life

“Everything is difficult.” As she speaks, Aagi bends over a cook fire, preparing supper for a crew of gold prospectors. “I’m the only woman and have to cook for many men,” she goes on, “This is a tough situation, I think. I’ve never cooked so much.”

Cooking isn’t the only difficulty Aagi faces. As revealed in the film Price of Gold, the current excursion employing her doesn’t have a schedule or even a specific goal so much as it has hope. Or, as the gold digger Khuyagaa puts it, the workers have dreams, dreams that come with a price. ““They say dreams cost nothing,” he says in voiceover as you look out on what seems the endless Gobi Desert in Mongolia “But today, you have to pay for your dreams. I think first you have to find the money, to make our dreams come true.” The frame cut to a close shot of Khuyagaa as he draws on his cigarette, backed by a pile of dirt and rocks, the result of his labor, the earth turned inside out.

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REFILE-Anglo departure not the end of Alaska’s Pebble mine, locals say – by Yereth Rosen (Reuters U.S. – September 17, 2013)

http://www.reuters.com/

(Reuters) – Supporters and opponents of a giant mine to tap Alaska’s gold and copper wealth have found a rare point of agreement: The Pebble project remains alive even without its heavyweight financial backer.

Anglo American, the global mining group that partnered with Canada’s Northern Dynasty Minerals Ltd in 2007 to develop Pebble, said on Monday it was pulling out, less than two month after promising shareholders it would cut costs and halve its $17 billion pipeline of potential mines.

Anglo’s departure dealt a sharp blow to the ambitious plan to build an open-pit mine in Alaska’s unspoiled Bristol Bay region, at a time when investors are increasingly cautious about plowing cash into building expensive new mines.

But the hiccups aren’t stopping Northern Dynasty. It sees plenty of opportunity to push ahead on the project, which is expected to produce some 1 million tonnes of copper concentrate a year, on its own or with a new partner.

“This is a huge asset – a huge, valuable asset for the State of Alaska,” said Ron Thiessen, Northern Dynasty’s chief executive, who added that he remains very confident the mine will be built within the next 10 years.

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Investors turn up the heat on Barrick for boardroom change – by Jacqueline Nelson (Globe and Mail – September 17, 2013)

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.

Some investors are seeking reform in Barrick Gold Corp.’s boardroom and want the company to hasten the transfer of power from co-chairman Peter Munk, according to a published report.

In the most recent sign of tensions at the world’s largest gold miner, about 10 shareholders based in Europe will soon send the board of directors a letter to push for faster changes, the Wall Street Journal said, citing sources close to the company.

“Some directors have sought change at a faster pace than others have been comfortable with,” the report said. The Journal said director Robert Franklin planned to give up his board seat if some new directors weren’t appointed.

Earlier this year, a group of seven major pension funds took issue with the beleaguered gold producer’s board after a large sum was paid to Mr. Munk’s co-chairman, John Thornton.

More than 85 per cent of the company’s stakeholders did not approve of the $17-million payout to Mr. Thornton, voting against it and other multimillion-dollar payments to board members, including Mr. Munk.

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Cutting Risks to Move Forward: Agnico Eagle leads Nunavut into modern mining era – by Bill Braden (Canadian Mining Journal – September 2013)

The Canadian Mining Journal is Canada’s first mining publication providing information on Canadian mining and exploration trends, technologies, operations, and industry events.

February 24, 2010, was a big day for Agnico Eagle Mines Limited’s Meadowbank project, as Board chairman Jim Nasso, flanked by Inuit business and community leaders, watched the first pour of molten gold and silver doré from the roaring refractory furnace at the $700 million project.

Nasso passed that still-warm ingot among his guests, and later among the hundreds of excited workers who posed to have a photo with it. President and CEO Sean Boyd toasted their work at a gala mine site dinner with glasses of gold-flecked champagne and news that gold bullion that very day had touched a new record of $1,260 an ounce on world markets.

Before the Meadowbank mine was launched in 2010, the vast Kivalliq region of Nunavut hadn’t seen an operating mine for 25 years. But it has been the engine of a new economy, creating hundreds of jobs and fostered millions of dollars in business ventures for a cluster of small Inuit communities with very few other career opportunities.

For its veteran parent company, the mine’s $1 million-a-day output is the biggest in its portfolio of five mines in Canada, Mexico and Finland, making Agnico Eagle Canada’s fifth largest gold producer at $US1.8 billion in revenue last year.

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Gold is plentiful, getting it is painful – by Russell Noble (Canadian Mining Journal – September 2013)

Russell Noble is the editor for the Canadian Mining Journal, Canada’s first mining publication.

Gold is always an interesting topic to feature in the magazine because regardless of what it’s doing on the Commodity Index, it seems that everyone wants to read about who’s still producing, or who’s going broke trying to find it?

A few years ago when it was deemed to become a $2,000.00 mineral, gold companies were boasting about their vast reserves and how rich their investors were about to become over the next few months and years ahead. Now, however, with production costs reaching or, in some cases, surpassing the value of the product, many of those same companies have gone dark and silent.

And that’s understandable. After all, it’s a hard thing to accept that what was once a sure thing isn’t worth the effort anymore; even with all of those grams still in the ground.

In fact, anyone involved with gold mining will tell you that it’s one of the toughest minerals to find, and the costs associated with recovering and processing it are among the highest in the entire mining world. And what’s more, the hit-and-miss odds of finding gold, as compared with iron ore, coal and certainly potash, are stacked in Mother Nature’s favour. Quite simply, she hides and protects the stuff really well.

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Good news of gold in NOW (Thunder Bay Chronicle-Journal – September 16, 2013)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

This is the ninth instalment of a multi-part series looking at the mining sector in Northwestern Ontario and the Ring of Fire development.

“For more than 2,000 years, the natural properties of gold have made it man’s universal medium of exchange. In contrast to political money, gold is honest money that survived the ages . . .’’

Although not everyone might agree with this rather dramatic statement, it is difficult to deny the timeless allure of the yellow metal and its association with wealth, strength and excellence.

References to gold permeate our culture, hence terms like “gold seal of approval,’’ “good as gold” and the awarding of first-place gold medals to the best of the best.

Despite its vulnerability to interest rates and market fluctuation, German-born economist, Hans F. Sennnhotz (1922-2007) demonstrated his complete faith in gold as a universally enduring commodity when he made this statement. Gold remains a powerful economic driver and is still a monetary reference in many of the world’s economies, where the value of a bill still guarantees or is “backed up” by a certain amount of gold.

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Gabriel threatens Romania with billion-dollar lawsuit – by Eric Reguly (Globe and Mail – September 12, 2013)

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.

ROME — Canada’s Gabriel Resources Ltd. is issuing a stern ultimatum to the Romanian government: Approve the Rosia Montana gold mine or face a lawsuit for billions of dollars.

The strategy marks a stunning reversal for the Toronto Stock Exchange-listed company, which until recently had expected the government would approve a draft law that would allow the $1-billion (U.S.) mining development in Romania’s Transylvania to go ahead.

Then, on Monday, Romanian Prime Minister Victor Ponta said parliament would likely reject the draft law, a move that would kill Europe’s largest gold project. Gabriel shares went into freefall. The same day, Gabriel said it would “assess all possible actions open to it, including the formal notification of its intentions to commence litigation for multiple breaches of international investment treaties.”

On Wednesday, Gabriel chief executive officer Jonathan Henry vowed that the legal action would go ahead if the government does kill the mining project, and attached a big number to it.

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