Twitter
Boston-Bay-Mines-Announcement

Gold and Silver

Meltdown? 15% of world’s gold miners face collapse after plunge in price strips $169-billion off market value – by Soraya Permatasari, David Stringer and Liezel Hill (Bloomberg News/National Post – April 18, 2013)

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

Gold producers, ignored as global stocks rebounded in the past two years and investors turned to exchange-traded funds that track bullion, face closing mines or shutting themselves down after the metal’s worst slump in three decades this week made 15% of miners unprofitable.

Barrick Gold Corp. and Newmont Mining Corp., the world’s two largest producers, are among companies in the FTSE Gold Mines Index that have collectively lost about US$169 billion in market value since bullion peaked in 2011. Gold equities are trading at the lowest level relative to gold in at least 20 years after the metal’s 14% plunge so far in April.

Barrick took another hit this week when the cost to insure its debt surged to the highest in four years after Moody’s Investors Service said it may downgrade the company’s bonds.

The review of Barrick’s Baa1 debt rating was prompted by a legal challenge to its US$8.5 billion project in the Andes, Moody’s said in a statement. Toronto-based Barrick is the biggest producer of the precious metal with US$7.5 billion of bonds.

This month’s futures price drop to as low as US$1,361.10 an ounce brings gold closer to the global average production cost of about US$1,200 an ounce, according to Nomura Holdings Inc.

Read more

McKenna documentary is a fool’s guide to gold – by John Doyle (Globe and Mail – April 18, 2013)

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.

Here in the TV Cranny, financial management consists of occasional bouts of scribbling numbers on a scrap of paper followed by some basic addition and subtraction. Hopes for the future rest on six bucks spent weekly on the Lotto 6/49.

If I read the wonderfully written Streetwise Blog of this great newspaper, I do so with admiration and complete bafflement. I’m sure that Boyd Erman and Jacqueline Nelson are absolutely right about capital markets and equity backers, but I couldn’t explain why.

I am deaf to the countless commercials urging me to trade in my old gold jewellery for cash. I have no gold jewellery, new or old. Besides, those places where such transactions occur always seem to be located in areas of Toronna so obscure that a journey there would require a warning to friends and colleagues that if I’m not back in two days, send out a search party. If I had old gold jewellery, I wouldn’t go there.

The lure of gold. I get it. Precious stuff. Or I thought I did. After watching the wonderful documentary The Secret World of Gold (CBC, 9 p.m. on Doc Zone [April 18, 2013]), I’m not so sure. And, as the price of gold is crashing, apparently, this program might help to explain the situation.

Read more

Eric Sprott: Why a gold bug won’t throw in the towel – by Pav Jordan, Tim Kiladze, Jacqueline Nelson (Globe and Mail – April 17, 2013)

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 biggest rout in gold prices in decades isn’t enough to sway Canada’s chief gold bull from his faith in the metal.

Eric Sprott turned his ability to call the gold and silver markets into personal wealth that once topped a billion dollars. His investment firm, Sprott Inc., has been hurt by gold’s recent plunge, but the company founder predicts gold will roar back and even hit new highs by the end of the year.

“I’ve always imagined that gold would hit a new high by the end of this year, over $1,900, so that is what I think,” Mr. Sprott said in an interview Tuesday, with gold bobbing below $1,400 (U.S.) an ounce.

Mr. Sprott believes the yellow metal is safer than paper money, which can be printed by governments. He backs that up with his own investments, saying a few months ago that he has about 80 per cent of his money in the precious metals sector.

“I think [gold] will end up for the year, just like in 2008 … because in a financial crisis, you don’t want your money in a bank,” he said.

Read more

End of the supercycle looms as commodities, stocks sell off – by Nathan Vanderklippe and Carolynne Wheeler (Globe and Mail – April 16, 2013)

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.

CALGARY AND BEIJING – For months now, worries have mounted that the end was approaching for the near-decade of dizzying good times in a commodities boom that saw companies rush to build mines and oil fields to feed surging global demand.

But for some it wasn’t until Monday, amid a rout in gold, copper, oil and a host of other commodities, that it became undeniably clear the so-called “supercycle” has expired.

“The alarm bell has been ringing for a while for the supercycle, but today looks to be the day the world woke up to the reality,” said Douglas Porter, chief economist at BMO Nesbitt Burns, as a free-fall in gold prices led broad selling fuelled by unease over the prospects for the global economy.

Commodities fell hard on Monday, led by a 9-per-cent drop in gold and a 12-per-cent plunge for silver. Copper and other metals slumped along with wheat, coffee and other crops. Oil prices sank about 3 per cent, continuing last week’s retreat. The selloff spread to stocks, as the S&P/TSX composite index dropped more than 332 points or about 2.7 per cent, and the Canadian dollar, often tied to commodities, sank more than a penny against the U.S. dollar.

Read more

Tumbling gold prices add to miners’ miseries – by Pav Jordan (Globe and Mail – April 16, 2013)

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 free fall in gold prices spells more bad news for an industry already fighting cost overruns, asset writedowns and project cancellations.

Gold dropped to its lowest price in two years on Monday, reaching $1,361 (U.S.) an ounce, driving the Toronto Stock Exchange gold index down nearly 10 per cent as shares of major producers sank to 52-week lows.

The crumbling gold market is raising fears that industry profits will be extinguished as the price of gold closes in on the cost per ounce required by many companies to produce the metal and replace their reserve base.

“Costs are rising faster than gold and if gold isn’t rising, then producers are in trouble,” said Pawel Rajszel, an analyst with Veritas Investment Research Corp. in Toronto, who calculates the all-in, sustaining costs of producing gold at around $1,100 (U.S.) an ounce on average.

“It’s the story of the decade and nobody noticed because gold prices were going up,” Mr. Rajszel said. “Now that gold prices are going down, you see who’s swimming naked as the tide falls.“

Read more

Gold pares losses, but can we ever consider it a ‘safe haven’ again? – Phoebe Sedgman (Bloomberg News/National Post – April 16, 2013)

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

Safe havens are safe. Safe havens are stable; gold is not safe and certainly it is not stable

Gold rebounded as some investors deemed a 14% plunge over two days to be excessive and an Asian central banker said that policy makers may take the opportunity to buy. Silver, platinum and palladium advanced.

Gold for immediate delivery traded 2.1% higher at US$1,376.20 an ounce at 2:53 p.m. in Singapore after dropping 1.9% to US$1,321.95, the lowest level since January 2011. Prices fell 9.1% Monday, the most since 1983, and have lost 28% since reaching a record in September 2011.

Bullion fell in 2013 after twelve annual gains that raised the price of bullion more than sixfold as the Standard & Poor’s 500 Index climbed 8%. Gold dropped this year as data showed the U.S. recovery was gaining momentum and some Federal Reserve policy makers signalled that stimulus may be scaled back, curbing haven demand. Societe Generale SA said that the slump was overdone as quantitative easing, or QE, will continue.

“Everything isn’t looking that rosy, so gold should hold up,” said David Poh, Singapore-based regional head of portfolio-management solutions at Societe Generale Private Banking.

Read more

After gold market meltdown, future looks even more perilous for miners – by Peter Koven (National Post – April 16, 2013)

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

After a two-day meltdown in the gold market, the future looks increasingly perilous and uncertain for an industry that was already facing major headwinds.

Gold miners have watched their screens in shock since Friday, as the price of the key gold futures contract has plummeted a staggering US$204 an ounce, or 13%. That is the biggest percentage drop since 1980, and even if it is temporary, it sends a strong message to companies that they need to lower costs, eliminate unnecessary capital spending and put a halt to all marginal projects.

“People are going to have to look at their all-in costs very seriously and whether they can survive or not,” said Gerald Panneton, the chief executive of Detour Gold Corp.

“Companies will cut back, companies will not put projects in production. And a lot of companies will not survive this.”

The carnage was widespread among the equities on Monday, as the S&P/TSX Global Gold index plunged 9.2%. Canada’s two big emerging producers, Toronto-based Detour and Montreal-based Osisko Mining Corp., each fell more than 20%. Detour’s market value is now less than the capital it spent on its namesake gold project.

Read more

Gold on Track for Biggest One-Day Fall Since 1983 – by Tatyana Shumsky, Francesca Freeman and Clementine Wallop (Wall Street Journal – April 15, 2013)

http://online.wsj.com/home-page

Gold plunged for the second straight day Monday, dropping more than 8% at midday in what was shaping up as the metal’s biggest one-day percentage decline in 30 years.

Gold for April delivery, the front-month contract, was down 8.6% at $1,372.10 a troy ounce on the Comex division of the New York Mercantile Exchange at midday in New York, its lowest price in more than two years.

Trading volume hit an all-time high, exceeding 590,000 contracts. The previous record was 486,315 contracts set Nov. 28, 2012, according to CME Group Inc., CME -1.54% which owns the Comex.

The latest selloff came after China registered weaker-than-expected growth, stoking concerns that consumers there and in India—the world’s two biggest buyers—may slow their purchases.

Traders said part of the plunge in prices was a result of investors choosing to sell gold instead of putting up more money as collateral to keep their wagers open. Traders typically put down just a small percentage of a gold contract’s full value in order to trade it, and this amount, known as margin, must be increased when prices fall.

Read more

In Nigeria, a gold rush is poisoning children – by Matteo Fagotto (Toronto Star – April 15, 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.

Processing gold without modern machinery is leading to “worst lead-poisoning epidemic in modern history.” More than 460 children have died.

BAGEGA, NIGERIA—Every day, a white-dressed figure wanders around the gold-mining site of Bagega, a village in northwestern Nigeria. Lean and middle-aged, perfectly dressed in traditional attire, his black-and-white leather shoes in stark contrast to the bare and dusty feet of the miners, he inspects every piece of gold extracted by the hundreds of men who work under him.

In a space as big as two soccer fields, scores of young men crush, grind and wash gold stones, sheltered from the scorching tropical sun by makeshift, wooden sheds. Some as young as 5, they work from eight in the morning until sundown, united by a common dream: to “hit the jackpot” and become as rich as the “white man,” Alhaji Adamou Tsiko, chairman of the Bagega Gold Miners Association.

Until five years ago, Bagega was just one of the many countryside villages dotting Zamfara, one of the northernmost and poorest states in Nigeria. With nothing more than a rural clinic, a school, a mosque and a few hundred mud houses, the village’s 8,000 inhabitants relied on subsistence farming to feed their children.

“Everyone knew there was gold in the region, but people didn’t care,” says Alhaji Jibril, the village chief, sitting in his “office,” a simple mat under a big tree in front of his house. Then, the economic crisis hit and the price of gold started climbing. In a matter of months, Bagega was at the centre of a new gold rush.

Read more

Gold slumps to two-year low below $1,400 per ounce – by Clara Denina (Reuters U.S. – April 15, 2013)

http://www.reuters.com/

LONDON – (Reuters) – Gold dropped 6 percent on Monday to below $1,400 per ounce, its lowest since March 2011, as investors took fright at a market that is heading for its biggest two-day fall in 30 years.

Gold has capitulated in the last two trading days to pressure from a proposed sale of Cypriot gold holdings and concern that other nations might follow suit. Traders also cited concern that the U.S. Federal Reserve might reduce monetary stimulus towards the end of the year.

“You can’t stand in front of a steam train – the market has to run itself out and then I think you will see some meaningful correction towards the $1,510-$1,525 level,” said Gerhard Max Schubert, head of commodities at Emirates NBD bank in Dubai.

Weaker than expected Chinese economic data earlier on Monday simply gave investors another excuse to slash holdings as other commodities including oil and copper dived.

Spot gold dropped as low as $1,384.69 an ounce before recovering slightly to $1,406 during afternoon trading, still down nearly 5 percent. Gold is on course to record the biggest two-day fall since 1983.

U.S. futures for June delivery fell more than six percent to $1,385, the largest daily drop since June 2006.

Read more

Analysis: South Africa mine wage talks may be toughest yet – by Ed Stoddard and Sherilee Lakmidas (Reuters India – April 15, 2013)

http://in.reuters.com/

JOHANNESBURG – (Reuters) – Wage talks across South Africa’s mining sector starting in May will be among the toughest ever with strikes a certainty given inflation, worker militancy and shrinking company margins.

There is also real risk of a repeat of the labor violence and wildcat action that led to over 50 deaths last year, costing companies and the state billions of dollars in lost revenue.

Emboldened by the high settlements some received after the illegal 2012 strikes, labor militancy has spread from platinum to gold and coal. Some miners have downed tools even before talks start.

Their income is being devoured by rising prices but wages account for over 50 percent of company costs and they have paid above-inflation wage rises in recent years.  “The gold companies cannot afford anything above inflation,” said David Davis, mining investment analyst at SBG Securities.

“Just escalate $1,150 by 12 percent per year and by 2015 the gold price will have to be around $2,000 an ounce for the producers to make a 20 percent margin,” he said. Spot gold is currently at 2-year lows around $1,425 an ounce.

Read more

Barrick’s Pascua-Lama mine setback signals larger shift in Chile – by Pav Jordan (Globe and Mail – April 12, 2013)

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.

A ruling from a Chilean court to halt work on the world’s most ambitious gold project marks a growing backlash against the industry in one of the world’s most mining-friendly areas.

The Pascua-Lama gold and silver project straddles the Andes mountain range between Chile and Argentina and is slated to go into production this time next year, if project owner Barrick Gold Corp. can convince an appeals court in the northern town of Copiapo – population 167,000 – that it isn’t polluting the water supplies of indigenous communities.

The ruling represents a rare injunction against a mine that has been more than a decade in the making, having cleared regulatory hurdles including environmental permitting in Chile and Argentina. It’s also the latest instance of a Chilean court hearing a complaint against a project already cleared by environmental authorities.

Chile has long been viewed as a miner’s Utopia, complete with some of the richest mineral reserves on the planet as well as one of its most mining-friendly, stable governments, but some say it has become so saturated with projects that its infrastructure is straining at the seams and communities are becoming alarmed. The shift comes amid a growing wave of resource nationalism, which has touched most of the world’s mining jurisdictions.

Read more

Gold mine to benefit Sudbury, North: Company [Iamgold] – by Laura Stricker (Sudbury Star – April 12, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

A proposed gold mine in Gogama will see a lake in the area lost for the 15 years the mine is expected to operate, representatives from Iamgold Corporation told city councillors in Sudbury this week.

“(We) will lose Cote Lake during the life of the mine, and until the pit is filled, that water will be gone,” said Steven Woolfenden, Iamgold’s manager of Corporate Environmental Assessment and Approvals.

The Cote Gold open pit mine is still in the early stages of the government’s approval process, but the company hopes to start construction in 2015 and open the mine in 2017.

An estimated 1,200 people will work at the mine, 170 km from Sudbury, in the construction phase and 500 once the mine is up and running. “We’re excited to have this potential opportunity in Ontario, Cote Gold,” said Woolfenden. “We’re really hoping to establish ourselves in this region.”

Iamgold has mining operations in South America, Africa and Quebec. Cote Gold was previously owned by Trelawney Mining. The company was bought by Iamgold last June for $608 million.

Read more

Mountain of Gold Sparks Battles in Greek Recovery Test – by Jonathan Stearns (Bloomberg.com – April 9, 2013)

http://www.bloomberg.com/

A mountain of gold has divided Aristotle’s birthplace in northern Greece. Violent opposition to Eldorado Gold Corp. (ELD)’s $500 million project to develop the site prompted Mayor Christos Pachtas to flee the county’s seaside capital for his home village in the highlands. In some communities, locals shun each other because of the planned mine. Torched heavy equipment on the mountaintop area cordoned with barbed wire testifies to the dispute.

For Greece’s devastated economy, the fight is more than a conventional standoff between the forces of development and environmental protection. Authorities’ ability to navigate the conflicting demands in the nation’s biggest-ever metals project provides a telling clue to how soon Greece emerges from six years of recession, a pair of bailouts and the biggest sovereign debt restructuring ever.

“This dispute is very significant because it will determine whether Greece can attract foreign investments in the future,” George Tzogopoulos, a research fellow at the Hellenic Foundation for European and Foreign Policy in Athens and the author of a book on media coverage of the Greek debt troubles, said by telephone on April 4. “This is the type of project that the country needs to overcome the economic crisis.”

Since 2008, Greece’s gross domestic product has shrunk by about a fifth and unemployment has soared to a record 27 percent, underscoring the urgency of investments like Vancouver- based Eldorado’s. Overall in Greece, Eldorado plans to invest more than $1 billion.

Read more

Barrick’s woes in Chile deepen as Pascua Lama is suspended – by Pav Jordan (Globe and Mail – April 11, 2013)

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.

Barrick Gold Corp. has suspended construction in Chile on its massive Pascua-Lama gold and silver project, responding to a court order that further delays work on a mine already a year behind schedule and billions of dollars over budget.

Barrick stock fell 8.6 per cent to a new 52-week low of $24.81 per share on Wednesday after the appeals court said Pascua-Lama should be halted amid allegations the project is polluting precious groundwater and rivers in the Atacama desert region, one of the driest areas on earth.

The allegations have not been proven in court, but they mark the latest roadblock to a project that has been more than a decade in the making, enduring intense environmental scrutiny that has reverberated from Santiago to Toronto.

The complaints are also another instance of communities demanding more control over their environment amid building resource nationalism.

Less than a year ago, Barrick raised the development price tag on Pascua-Lama to more than $8-billion, compared to estimates of around $3-billion when the company launched the project in 2009. A significant portion of higher costs were attributed to a year-long delay in building the mine.

Read more