Gold and Silver – Page 277 – Republic of Mining

Ghana’s Crackdown on Chinese Gold Miners Hits One Rural Area Hard – by Dan Levin (New York Times – June 29, 2013)

July 9, 2013

http://www.nytimes.com/

MINGLIANG, China — To the people of Shanglin County, gold is a curse. For nearly a decade, thousands of peasants from this rural speck in southern China’s Guangxi Autonomous Region borrowed heavily before boarding flights for Ghana, Africa’s second-largest gold producer, with glinting ambitions and no backup plan.

The Chinese found their gold, though trouble soon found them, in the form of crooked police officers and armed bandits who prowled the mining camps. Then, this month, the Ghanaian authorities declared the mines illegal and arrested more than 200 Chinese miners, accusing them of polluting the land and abusing local workers. Countless others fled as local residents armed with guns and machetes attacked the camps, robbing miners of their possessions and killing some who fought back.

After the crackdown, images of violent deaths and vandalized mining camps blazed across Chinese social media, fueling national anger and soul searching. But here in Shanglin, a mountainous county of 470,000 in one of China’s poorest regions, it is despair over financial ruin that is most pronounced.

“My son might be killed in Ghana, but if he comes back he’s dead anyway,” said Shen Aiquan, 65, whose family borrowed 3 million renminbi, or $489,000, to build a mining operation, though from whom exactly she did not know. All she could do was wait for her son, and the debt collectors who would surely follow.

South Africa now only world’s sixth biggest gold producer – by (Mineweb.com/Reuters -July 8, 2013)

July 8, 2013

http://www.mineweb.com/

Thomson Reuters GFMS ranked South Africa sixth in global production in 2012, when it fell behind Peru and produced 177.8 tonnes of gold.

KROMDRAAI/JOHANNESBURG (REUTERS) – A hand drill lying in the hillside tunnel of a 19th-century South African gold mine testifies to the back-breaking labour by black miners that built what was once the world’s biggest bullion industry.

But even with basic tools and cheap labour, costs overran returns at the Kromdraai gold mine north of Johannesburg, which listed in London in 1893 and closed in 1914.

A century later, South African’s remaining gold mines, which still employ a mostly black and lowly paid workforce, look set to follow the same fate, as the sun sets on an industry that has produced a third of the bullion extracted from the planet.

Gold’s sliding price and surging costs are hitting an industry that laid the foundations for Africa’s largest economy but has been slowly dying for decades as ore grades decline and shafts reach depths of 4 kms, the world’s deepest.

JIM ROGERS: Gold Mining Stocks Face Two Major Headwinds – by Mamta Badkar (Business Insider – July 7, 2013)

July 8, 2013

http://www.businessinsider.com/

As gold prices plunged, gold mining stocks have taken a beating too. We saw a brutal sell-off on Friday, and the Market Vectors Gold Miners ETF has been down 49.5% year-to-date.

In the second of our two-part interview with Jim Rogers, the commodities guru told us about the biggest headwinds for gold miners.

Also, he’s not convinced that the commodities supercycle has ended just yet. Business Insider: What’s next for gold miners and mining stocks? Jim Rogers: I don’t own gold mining stocks. There’s so many other easy ways for people to buy gold now that the miners have stiff competition. And there’s lots and lots of competitive situations in mining.

30 years ago if you wanted to buy gold, you were almost restricted to gold mining shares. That’s not true anymore. You can buy all sorts of coins. In those days only Krugerrands were available, 30 years ago. Nobody even made gold coins except Krugerrands. Now many countries have them. All sorts of ETFs, ETNs, futures, now there’s many ways to buy gold. So the miners have a serious competitive situation and of course there’s hundreds of them.

Jim Rogers Correctly Predicted Gold Would Fall To $1200, And Now He Thinks It Could Go As Low As $900 – by Mamta Badkar (Business Insider – July 6, 2013)

July 8, 2013

http://www.businessinsider.com/

The price of gold peaked at just over $1,900 per ounce in the fall of 2011. And it was right around that time that commodities guru Jim Rogers began warning investors that the yellow metal could hit a low of $1,200 before the sell-off was over.

He was right. Gold prices entered a bear market (down 20% from its high) in April. And on June 27, they touched $1,200.

In a phone interview this week, Rogers explained to us how he arrived at the $1,200 figure. He also offers his outlook for gold as it continues its complicated bottoming process. Business Insider: Two years ago, you told us you could see gold going to $1,200. How did you arrive at that level?

Jim Rogers: I’m sure it was all based on intuition from Business Insider, but gold had been up at that point 11 – 12 years in a row which is an anomaly.

I don’t know any asset that’s gone up 12 years without a down year, and gold needed and deserved a correction. And, if it’s going to happen where would it go? $1,200 was between 35% – 40% and 35% – 40% reactions are commonplace, so that was the first number. I wish I could tell you I had a formula.

A.M. Kitco Metals Roundup: Gold Sells Off Sharply on Stronger U.S. Jobs Data, Soaring U.S. Dollar Index – by Jim Wyckoff (Kitco News – July 5, 2013)

July 5, 2013

http://www.kitco.com/

(Kitco News) – Gold prices dropped sharply in the immediate aftermath of a U.S. employment report for June that showed better-than-expected jobs growth, including upward revisions for jobs in April and May. The U.S. dollar index pushed to a three-year high on the jobs data, which also helped sink the gold and silver markets.

August gold was last down $32.10 at $1,219.80 an ounce. Spot gold was last quoted down $31.60 at $1,221.40. September Comex silver last traded down $0.679 at $19.01 an ounce.

The U.S. Labor Department reported non-farm payrolls increased by 195,000 in June, which was significantly better than the 160,000 rise expected by the market place. The overall unemployment rate was unchanged from May, at 7.6%. The upward non-farm job revisions in April and May totaled around 70,000 for both.

The improving U.S. labor market lent additional weight to the hawkish camp of Fed watchers who think the Federal Reserve will start to back off on its quantitative easing of monetary policy (so-called “tapering”) as soon as later this year. That is seen as at least initially commodity-market bearish, including the precious metals. The very easy money policies of the major central banks of the world have boosted raw commodity prices in recent years.

Gold producers wrestle with dividend dilemma – by Peter Koven (National Post – July 5, 2013)

July 5, 2013

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

Gold miners have never been known for paying generous dividends. But thanks to free-falling stock prices across the sector, they carry some unprecedented yields.

Barrick Gold Corp. has a dividend yield of 5.3%, which puts it in the same league as BCE Inc. (5.4%) and ahead of all the Canadian banks. Other gold miners with outsized yields include Iamgold Corp. (6.2%), Newmont Mining Corp. (4.8%) and Centerra Gold Inc. (4.5%).

The situation is not likely to last very long. Experts said at least some gold miners would consider slashing their dividends if the gold market does not turn around soon. The cuts could begin later this month, when they report second quarter earnings and detail their responses to plunging prices.

Traditionally, gold miners paid little to no dividends. That changed over the last several years as they began to generate record profits and investors urged them to return more cash. Every significant gold producer has either introduced or increased its dividend (or both) in recent years.

Now that gold prices are falling, the downside of that strategy is becoming apparent. Margins are getting squeezed and many companies are struggling to generate any free cash flow at today’s price of US$1,250 an ounce.

Chavez’s 70% Gold Bet Unravels as Reserves Plunge: Andes Credit – by Charlie Devereux & Corina Pons (Bloomberg News – July 4, 2013)

July 5, 2013

http://www.bloomberg.com/

The bet on gold that former Venezuelan President Hugo Chavez made in the final years of his life is collapsing at the wrong time for his country.

Chavez, who argued that Venezuela should move away from the “dictatorship of the dollar,” stockpiled more than 70 percent of Venezuela’s foreign reserves in gold by 2012, the highest percentage among all emerging-market countries and more than 50 times that held by neighbors Colombia and Brazil, according to the World Gold Council.

After rewarding Venezuela with a rally of almost 400 percent in the past decade, gold has tumbled 25 percent this year, helping drive the central bank’s reserves to an eight-month low and compromising the government’s ability to repay foreign debt. The yield on Venezuela’s dollar-denominated bonds has risen 62 basis points, or 0.62 percentage point, to 11.84 percent in the past month, compared with an average increase of 57 basis points for other countries in Latin America.

“Venezuela’s reserves have taken a big hit,” Francisco Rodriguez, an economist at Bank of America Corp., said by phone from New York. If current gold price levels continue, “then you will see an increase in perception that Venezuela’s capacity to pay is weakening.”

Editorial: This is what a washout looks like [Barrick Gold] – by John Cumming (Northern Miner – July 3, 2013)

July 4, 2013

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists. jcumming@northernminer.com

Barrick Gold is the world’s leading gold company, and its Pascua-Lama gold-silver megaproject under construction on the Chilean-Argentine border is its leading development project. And so the gold industry watches in dismay as the major grapples with the project’s ballooning capital costs and construction delays, slumping gold prices, writedowns, job cuts and a pummelled share price.

At the time of writing, Barrick’s shares trade for only $15.29 — or US$14.69 — off 56% this year alone, and 74% since their peak in April 2011. Here again, Barrick is the leader of the gold sector that has seen overall share price declines around 50% this year.

Barrick has also led in terms of corporate-suite excess, with the pink-slipped minions at head office bearing the brunt. Fired CEO Aaron Regent was paid US$12 million last year, mostly as severance, while the whole management team pulled in an astonishing US$57 million, up 148% year-over-year. In April, Barrick shareholders finally had enough, and there was heated opposition to the $17-million pay package offered to incoming co-chairman John Thornton, a former president of Goldman Sachs.

Barrick may yet prove to be a leader in accumulating unwieldy debt and tabling enormous writedowns as Pascua-Lama moves forward. At the end of the first quarter, Barrick had US$2.3 billion in cash and US$15 billion in debt.

In La Rinconada, Peru, searching for beauty in ugliness [gold mining] – by Marie Arana (Washington Post – February 28, 2013)

July 4, 2013

http://www.washingtonpost.com/

Gold. The Aztecs killed for it. The Inca enslaved whole populations for it. Spain sent legions of marauding conquistadors up and down the Americas in a hallucinatory hunt, believing that gold was so abundant that chieftains rolled in it, washing away the glittering residue in their daily morning swims.

Down the centuries, the quest for El Dorado has held the South American continent in thrall, luring generations of fortune hunters to its far reaches, from 1st-century warlords to 21st-century adventurers. The earth beneath them has not disappointed. The geologic exuberance known as the Cordillera of the Andes has yielded a fount of treasure: the emeralds of Boyaca, the silver of Potosi, the gold of Cajamarca.

Indeed, when Pizarro conquered Cajamarca in 1532, he demanded a roomful of gold from the emperor Atahualpa; when it was produced, he chopped off the Inca’s head and established a new kind of Golden Rule. So it was that a mineral became king and a craze began.

Nowhere has Peru’s frenzy for gold been so fevered as in the mountains that surround Lake Titicaca. And nowhere has that fever been so intemperate as in a town tucked into a glacial aerie: La Rinconada, the highest human habitation in the world.

Top 10 gold miners face 2013 earnings nightmare – by Lawrence Williams (Mineweb.com – July 2, 2013)

July 3, 2013

http://www.mineweb.com/

The tribulations of the world’s No. 1 gold miner, Barrick, are a sign of huge difficulties ahead for the other gold majors too.

LONDON (MINEWEB) – Barrick Gold’s latest announcement of yet a further delay in the hugely costly Pascua Lama gold mine, high in the Andes makes one wonder if the company will ever bring it on stream – however the huge amount of money spent so far suggests the world’s No.1 gold miner has gone too far to can the project now and maintain any kind of shareholder confidence.

See also: Barrick’s huge Pascua-Lama gold mine start-up now delayed to mid-2016

Even so, the project could yet be delayed beyond its new projected start-up date of mid-2016 given continuing local hostility on both sides of the Chile and Argentina borders and one has to anticipate that overall capital costs to bring the mine into production may end up to be yet substantially higher – perhaps in excess of $10 billion when the money is finally counted.

Nowadays Barrick says costs have escalated from around $2 billion, when the initial development plans were set, to the current $8 billion plus and a revised capital cost update has been promised for Q3 this year when the re-sequenced construction schedule has been finalised.

Barrick may wipe out retained earnings with huge Pascua-Lama writedown – by Peter Koven (National Post – July 3, 2013)

July 3, 2013

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

Barrick Gold Corp. is poised to wipe out all of its retained earnings for the second time in less than four years.

An anticipated writedown of US$4.5-billion to US$5.5-billion on the bungled Pascua-Lama project would eliminate the US$3.9-billion in retained profits that the gold giant reported at the end of the first quarter. Back in 2010, Barrick wiped out more than US$2.2-billion of retained earnings when it took a US$5.2-billion charge to close out its hedge book.

It is highly unusual for a company of Barrick’s size and profitability to be in this position twice in such a short time. And while these are non-cash charges, experts said they point to a troubling trend of poor decision-making and oversight at the world’s largest gold producer.

“The writedowns impact them in perception,” said George Topping, an analyst at Stifel Nicolaus.

The red ink could be a lot bigger when the company reports second quarter earnings in four weeks. Barrick warned of other possible impairments last Friday, and analyst Greg Barnes of TD Securities estimated they could total close to US$10-billion.

Analysis: Latest Barrick mine delay fans price tag fears – by Julie Gordon (Reuters U.S. – June 30, 2013)

July 2, 2013

http://www.reuters.com/

TORONTO – (Reuters) – Barrick Gold Corp (ABX.TO) has slowed spending at its Pascua-Lama project in South America, delaying first output to 2016, but that may not be enough for the its shareholders, who worry that the final price tag may creep beyond what the mine is worth.

While the flagship development, which straddles the border of Chile and Argentina, is one of the richest untapped gold deposits in the world, the string of delays and budget overruns have been a nightmare for world’s top producer and its investors.

“They should walk from Pascua-Lama,” said John Ing, president of boutique investment and research firm Maison Placements, adding that the embattled miner also needs to divest non-core assets, cut exploration spending and slash hefty board salaries if it wants to turn its fortunes around.

Barrick said late on Friday that it would re-sequence construction of the controversial project to target first production by mid-2016, deferring some $1.5 billion to $1.8 billion of planned capital spending in 2013 and 2014. The company has not updated the market on capital costs, last projected to be up to $8.5 billion.

The delay was in-line with a scenario that Credit Suisse analyst Anita Soni outlined earlier this week, as the bank downgraded Barrick to ‘Neutral’ from ‘Outperform’.

The case for $10,000-an-ounce gold – by Adam Mayers (Toronto Star – July 1, 2013)

July 1, 2013

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

As gold continues its sell-off, a book by a Toronto bullion fund manager predicts better things lie ahead.

It’s been a dreadful stretch for gold bugs. The past three months have seen a record quarterly drop in gold’s price. In the bigger picture, gold is more than a third below its peak of $1,900 (U.S.) an ounce, reached in 2011. Last week, the spot price tumbled anew, settling near $1,225.

Goldman Sachs now sees a price of $1,050 by the end of next year. Barrick Gold, one of the world’s biggest gold miners trimmed 100 head office jobs mostly in Toronto. And Australia’s Newcrest Mining wrote down the value of its assets by $5.5 billion. With news like that who’s buying gold now? Nick Barisheff, CEO of Toronto’s Bullion Management Group for one.

Barisheff runs several precious metal mutual funds, so always likes gold’s lustre. His funds have been around since 2002 and own gold, silver and platinum bars, rather than mining stocks. BMG’s holdings are stored in bank vaults and the funds are RRSP and TFSA eligible.

Barisheff is the author of the recently published $10,000 Gold: Why Gold’s Inevitable Rise Is The Investor’s Safe Haven (Wiley, $39.95). As the title boldly predicts, he sees the metal at $10,000 an ounce, and soon — within seven or eight years. The timing of the book’s release couldn’t be worse, but even so Barisheff says bullion is down, but by no means out.

Barrick faces new setback, more pressure – by Brent Jang (Globe and Mail – July 1, 2013)

July 1, 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.

VANCOUVER — Barrick Gold Corp. has gained some breathing room with its decision to delay development of its Pascua-Lama project, but the company faces pressure to shrink its global mining operations amid tumbling metal prices.

Barrick says first production from the South American gold and silver venture will be postponed by more than 18 months, as the Canadian company forecasts taking a writedown of up to $5.5-billion (U.S.) on the project.

Toronto-based Barrick said it has opted to vastly scale back capital spending this year and in 2014 on the project, which is located in the Andes mountains and straddles the border between Chile and Argentina. While construction of the $8.5-billion project has suffered another setback, the venture remains strategically important to the world’s largest gold producer, analysts say.

“With all this talk about what Barrick could look like in the future, Pascua-Lama will be key to the company’s future operational performance, especially if Barrick wants to shed high-cost mines,” said Chris Thompson, a Vancouver-based mining analyst at Raymond James Ltd.