Gold and Silver – Page 289 – Republic of Mining

Mine Closure: Who Pays Giant Costs? – by Jack Caldwell (I Think Mining.com – June 25, 2013)

June 25, 2013

At this link is my EduMine course on Mine Closure: The Basics of Success. One issue I do not address in the course is a looming tendency, namely should we tax existing mines to pay for closure of old mines?

This evening in a Vancouver pub, I drank the evening away with friends of forty and more years vintage. We have all been involved in mining for that many years and have seen our share of closed mines and mines that will never be closed. We drifted inexorably to the Giant Mine in Yellowknife, Northwest Territories, Canada.

Here is what I read today about the closure of that mine:

“A northern review board has given its conditional stamp of approval to a federal cleanup plan for an abandoned gold mine near Yellowknife.

The main environmental hazard at Giant Mine is the 237,000 tonnes of highly toxic arsenic trioxide dust stored in 15 underground chambers — there’s enough to kill every person in the world. The arsenic trioxide is a byproduct from decades of gold mining.

Barrick plans board changes after ‘huge wake-up call’ from investors – by Jacquie McNish (Globe and Mail – June 25, 2013)

June 25, 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.

Barrick Gold Corp. plans to overhaul its board of directors in the wake of a backlash from powerful shareholders. Two of Barrick’s independent directors, Donald Carty and Robert Franklin, recently met or telephoned officials from eight major Canadian pension funds that spearheaded a revolt by shareholders complaining about lavish compensation practices.

More than 85 per cent of Barrick’s shareholders signalled in a non-binding vote in April that they opposed a $17-million (U.S.) paycheque for the company’s new vice-chairman John Thornton and multimillion-dollar payments to company founder Peter Munk and director Brian Mulroney.

According to people familiar with the meetings, Mr. Carty, a Dallas-based director with Virgin America and Porter Airlines Inc. described the vote as “a huge wake-up call” about the need for better governance at Barrick.

The directors told the pension funds the board has launched a search for independent directors with an emphasis on executives with mining operating experience. It is expected that some of Barrick’s current directors will be replaced but the number of departures is unclear.

Barrick Gold slashes 100 corporate jobs, mostly in Toronto – by Dana Flavelle (Toronto Star – June 25, 2013)

June 25, 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.

Company cuts 30 per cent of head office jobs as gold prices sinks.

As the price of gold continues to lose its lustre, some of the biggest miners in the world are feeling the strain. Barrick Gold Inc. is cutting about 100 jobs, mostly at its Toronto headquarters, the company confirmed Monday.

Meanwhile, Newcrest Mining Ltd., in Australia, wrote down the value of its mines by as much as $5.5 billion (U.S.), the biggest one-time charge in gold mining history. Global miners spent $195 billion buying new assets in the past decade as gold prices soared. But the precious metal has been sinking on talk of the end of low interest rates.

Goldman Sachs Inc. has cut its year-end price forecast for gold to $1,300 (U.S.) an ounce from $1,435. The spot price of gold slipped $12 to trade at $1,287 in New York Monday.

Gold is down 33 per cent from its peak of $1,921 in September 2011, with much of the losses coming since January. That’s been bad new for gold miners.

South Africans worried Nelson Mandela’s health more dire than officials saying – by Matthew Fisher (National Post – June 25, 2013)

June 25, 2013

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

PRETORIA — With virtually no fresh information about the precarious state of Nelson Mandela’s health for four days, South Africans Tuesday feared his condition could be even worse than officially acknowledged.

“There are just so many rumours and nobody will tell us anything,” said Kgopotso Nkoe, a law student at Pretoria University. “We know nothing and it is frustrating. We want to know because we love him as a man who chose peace over revenge and because he did so much for our people.”

Ms. Nkoe and her friend, Faith Sithole, had come to the Mediclinic Heart Hospital to learn more than what the country had been told in three terse bulletins since Saturday, when Mr. Mandela was rushed to hospital in the wee hours.

As of late Tuesday, all that had been officially announced was South Africa’s revered first black president, the man who vanquished apartheid, was in intensive care in “serious, but stable condition.”

Despite the dearth of official news or perhaps because of it, the frail 94-year-old statesman’s anxious countrymen had been speculating — often wildly — about his health since he was hospitalized for the fourth time in seven months for urgent treatment for a recurring lung infection.

Hemlo dodges Barrick cuts – by Carl Clutchey (Thunder Bay Chronicle-Journal – June 25, 2013)

June 25, 2013

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

Barrick Gold’s flagship Hemlo mining operation won’t be negatively affected by major job cuts that the company announced on Monday. But locals are worried that the operation will be hurt if the price of gold continues to lose its shine.

“The job reductions announced (Monday) do not impact the Hemlo mine,” Barrick spokesman Andy Lloyd said in an email.
Barrick is laying off about 100 corporate staff, mostly from its Toronto headquarters, as it struggles with falling gold prices and various internal challenges.

Barrick employs about 700 full-time workers and contract employees at its Williams and David Bell gold mines about 40 kilometres east of Marathon. The jobs that are being cut represent about 30 per cent of the total corporate office positions for the Toronto-based mining company, which is the world’s largest gold producer.

Most of jobs are at Barrick’s head office in Toronto, but some are at its regional offices. An email to The Canadian Press from Barrick says staff at a Barrick office in Salt Lake City, Utah, may also be affected.

The company advised staff last week that the layoffs were coming. The cuts affect a small portion of the 25,000 employees that Barrick has worldwide, but represent its ongoing efforts to streamline during a period of falling gold prices and internal challenges, including mounting costs at its Pascua-Lama project in South America and losses at its copper business in Africa.

Gold Miner Writedowns at $17 Billion After Newcrest – by David Stringer & Liezel Hill (Bloomberg News – June 24, 2013)

June 24, 2013

http://www.bloomberg.com/

Newcrest Mining Ltd (NCM).’s decision to write down the value of its mines by as much as A$6 billion ($5.5 billion) will lead to the biggest one-time charge in gold mining history. It also heralds pain for competitors.

Barrick Gold Corp. (ABX), the biggest producer, Newmont Mining Corp. (NEM) and Gold Fields Ltd (GFI). may be next, according to Jefferies International Ltd. Nouriel Roubini, professor of economics and international business at New York University and known as Dr. Doom for predicting turmoil before the global financial crisis began in 2008, says gold may drop to $1,000 an ounce by 2015. The metal traded as low as $1,277.20 in New York today.

Gold companies that spent $195 billion on acquisitions in a decade-long price boom are at risk of taking writedowns like Newcrest’s. Producers face more stresses with brokers from Goldman Sachs Group Inc. to Citigroup Inc. cutting price forecasts as bullion heads for its first annual drop since 2000.

“We would expect that there would be several, if not many companies, who would also in the next reporting period be coming to a list of impairments,” Michael Elliott, sector leader for Ernst & Young LLP’s global mining practice, said in a phone interview from Sydney. “It’s just a question of timing, and who had the largest exposures.”

UPDATE 1- Barrick to lay off up to a third of its corporate staff – sources -by Euan Rocha (Reuters U.S. – June 24, 2013)

June 24, 2013

http://www.reuters.com/

TORONTO, June 24 (Reuters) – Barrick Gold Corp will lay off up to a third of its corporate staff at its headquarters in Toronto and other offices, sources said, as the world’s top bullion producer intensifies a downsizing plan amid a slump in the price of gold.

Barrick and miners such as Newmont Mining and Newcrest Mining are shaking up operations and taking measures like shutting down development projects, slashing exploration spending and cutting jobs due to the sliding gold price.

The cuts were announced by Barrick’s Chief Executive Jamie Sokalsky at a town hall meeting with staff in Toronto last week, said the sources, who asked not to be named as they are not officially authorized to speak about the matter.

One source said this is the first ever round of across-the- board layoffs for the company at its corporate headquarters in Toronto. Besides the falling gold price, it is also facing operational and regulatory issues at some of its mines and projects.

Barrick has over 400 people working as corporate staff with the vast majority of those located in Toronto, said the sources. A spokesman for Barrick was not immediately able to comment on the matter.

Plunging prices put squeeze on gold miners – by Peter Koven (National Post – June 21, 2013)

June 21, 2013

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

Another steep drop in gold and silver prices is forcing mining companies to look at severe cost-saving measures that would have been unthinkable at the start of the year.

When bullion plunged 13% in two days back in April, miners evaluated contingency plans they would adapt if prices continued to weaken. Those included major production cuts, dividend cuts, layoffs and mine closures.

With gold sinking another 6.4% on Thursday to below US$1,300 an ounce (along with an 8% drop for silver), those contingency plans no longer feel like such a longshot. Numerous analysts have warned that if prices fall much below US$1,200 for a prolonged period, even the large companies would consider large restructuring initiatives.

Many gold miners have curtailed capital spending, delayed projects or both. However, some development companies are already starting to overhaul their business in more dramatic ways. It is a potential sign of things to come if the bear market gets worse.

One example came this week, when Ottawa-based Orezone Gold Corp. tossed out its entire development plan for a project in West Africa and replaced it with a cheaper option that has a better shot at being financed.

Is It Sustainable To Mine Gold In This Current Price Environment? – by Alex Létourneau (Kitco News – June 14, 2013)

June 21, 2013

http://www.kitco.com/

(Kitco News) – After seeing gold prices plummet in 2013 and with gold miners battling high operating costs, gold companies find themselves with razor thin profit margins with the ounces they’re pulling out of the ground.

The cost to mine and produce an ounce of gold, on average, ranges from $1,100 to $1,250.. Some mines produce gold at a very affordable cost while others are now producing gold at costs that are higher than the metal is valued.

As gold rose to over $1,900 an ounce in the fall of 2011, the general thought process that accompanied the rise was that gold miners were reaping enormous profit margins.

Not so, said Peter Gray, managing director of Headwaters MB, a US-based investment bank. “Everyone thought at $1,600, $1,800 and $1,900 gold (that) all the mining companies were making profit hand over fist, but, the reality is that the capital costs of construction had escalated so significantly that the margins of production and the margin of operation were still tight,” Gray said.

“$1,300 is not a sustainable gold price. In the long term, I think it’s good that this correction happened, but for the immediate future of gold there’s going to be some systemic changes that will result as a consequence of this price environment, no question.”

PRECIOUS-Gold hits 2-1/2 year low as Fed flags end to easy money – by Jan Harvey (Reuters U.S. – June 20, 2013)

June 20, 2013

http://www.reuters.com/

LONDON, June 20 (Reuters) – Gold prices tumbled to their lowest in more than 2-1/2 years on Thursday and silver fell more than 6 percent after the U.S. Federal Reserve gave its most explicit signal yet that it plans to bring the era of easy money to an end.

Gold plunged after Fed Chairman Ben Bernanke said on Wednesday the U.S. economy was expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.

Its fall picked up momentum after it broke through its April low at $1,321 an ounce, a key support level, knocking it to a low of $1,285.90, down 4.5 percent and its weakest since September 2010.

Spot gold was down 3.5 percent at $1,302.90 an ounce at 1141 GMT, while U.S. gold futures for August delivery were down $71.40 an ounce at $1,302.60. “For western investors, there’s certainly less incentive to hold gold at the moment,” Mitsui Precious Metals analyst David Jollie said.

“The markets have clearly decided that the withdrawal of QE is bad for gold prices,” he said. “The risk of the euro zone falling apart is less, the risk from the banking system is less, and prices certainly haven’t been going up for a while.”

Bonds, shares and commodities fell sharply around the world on Thursday and the dollar rose after Bernanke’s comments.

Gold plunges again: unleashes perfect storm for the bears – by Lawrence Williams (Mineweb.com – June 20, 2013)

June 20, 2013

http://www.mineweb.com/

Ben Bernanke’s latest statements on QE hit the gold market hard, driving prices down below the $1300 level in this morning’s trading. There could still be worse to come for the gold bulls!

FUNCHAL, MADEIRA (MINEWEB) – Some heavy selling following Ben Bernanke’s upbeat statement suggesting a cutting back of QE later this year, and a possible end next, hit gold hard overnight with the bullion price falling back close to $1300 before making a small recovery – and then falling back again in London to breach the $1300 level on the downside in a very volatile market. There were renewed sales from the big SPDR gold ETF, GLD, taking it down below 1,000 tonnes for the first time since February 2009.

SocGen’s analyst Michael Haigh was predicting a fourth quarter gold price average of only $1200 while Nouriel Roubini would have been smiling given his recent prediction that gold would fall back to $1,000. The U.S. dollar surged, seemingly yet another nail in gold’s coffin. All in all something of a perfect storm for gold bears. Could the downturn be turning into a rout?

It hard to tell through all this volatility but some of the attacks on gold are misguided. There appears to be a general belief that gold protects against inflation, thus if inflation is taken out of the equation, gold must fall. But long term research doesn’t necessarily show this to be accurate. Gold does tend to rise on fears of inflation, but some of its best performances in the past have been in recessionary periods – and most notably during the years of the Great Depression of 1929 and thereafter. We’re not saying that we are heading for a repeat of this, but the dangers that we could be falling into another such period are far from over.

NEWS RELEASE: Silver Aiding New Medical Technologies

June 19, 2013

http://www.silverinstitute.org/site/

(Washington, D.C. – June 18, 2013) – Recent advances in biotechnology have brought a focus on silver’s centuries-old role in medicine; that of acting as an important weapon in the fight against infection and disease. Silver is a critical element in bandages used to treat wounds and reduce the threat of infections in difficult environments. It has also been a key component of treatment in hospitals to reduce the spread of surgical infections in the operating room and in patient care areas.

The medical use of silver has helped reduce the growing threat of antibiotic-resistant germs spreading through a hospital population. “Today, advances in coatings technology has enabled medical equipment producers to introduce silver-coated instruments and hospital equipment for use in treating patients — eliminating, on contact, almost every bacterial or fungal exposure,” said Michael DiRienzo, Executive Director of the Silver Institute.

To that point, as one of many recent developments regarding silver and health, NMI Health, located in Reno, Nevada, recently launched its SilverCare Plus antimicrobial performance soft surface products at the 40th Annual Association of Professionals for Infection Control conference in Florida earlier this month. NMI Health exhibited its suite of SilverCare Plus performance fabrics including: scrub and lab coat material, patient gowns, linens, blankets and cubicle curtains. Collectively, these products account for over 90 percent of soft surfaces found in the patient environment, according to the company. NMI Health partnered with Noble Biomaterials to manufacture the SilverCare Plus line.

Peru protesters push to stop $5 billion Newmont mine project – by Mitra Taj (Reuters India – June 17, 2013)

June 18, 2013

http://in.reuters.com/

PEROL LAKE, Peru – (Reuters) – Thousands of opponents of a $5 billion gold project of Newmont Mining circled a lake high in the Andes on Monday, vowing to stop the company from eventually draining it to make way for Peru’s most expensive mine.

Lake Perol is one of several lakes that would eventually be displaced to mine ore from the Conga project. Water from the lakes would be transferred to four reservoirs that the U.S. company and its Peruvian partner, Buenaventura, are building or planning to build.

The companies say the reservoirs would end seasonal shortages and guarantee year-round water supplies to towns and farmers in the area, but many residents fear they would lose control of the water or that the mine would cause pollution.

“Hopefully, the company and the government will see the crowd here today and stop the project,” said Cesar Correa, 28, of the town of Huangashanga in the northern region of Cajamarca. He was one of some 4,000 protesters who arrived at Lake Perol on foot or on horseback, many wearing ponchos, as well as traditional broad-brimmed straw hats or baseball caps.

Some carried blankets and bags of potatoes and rice – planning to camp out at the site for weeks to halt the project. “Why would we want a reservoir controlled by the company when we already have lakes that naturally provide us water?” asked Angel Mendoza, a member of a peasant patrol group from the town of Pampa Verde.

Exiting Ecuador the right move for Kinross – by Peter Koven (National Post – June 11, 2013)

June 11, 2013

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

Kinross Gold Corp. has abandoned plans to develop the massive Fruta del Norte project in Ecuador after refusing to pay a 70% windfall profits tax demanded by the government.

It is a major disappointment for the company. Fruta del Norte was acquired for more than US$1-billion in 2008, and was expected to become one of the Toronto-based miner’s cornerstone operations. But more than two years of fruitless negotiations convinced Kinross that it was not going to get a deal that would generate good investor returns.

The Ecuadorian government played hardball with Kinross from the beginning, insisting on the monstrous windfall profits tax and never backing down. That was by far the biggest sticking point in the negotiations, chief executive Paul Rollinson said in an interview Monday. He is certain that walking away is the best move for shareholders.

“It really was a tough decision, but I do think it was the right decision,” he said. “I’m not prepared to sign anything with a 70% windfall profits tax.” Since taking over as CEO last year, Mr. Rollinson has put an emphasis on boosting profitability rather than building new mines for the sake of growth. This was clearly a project that could not generate a strong return because of the punitive tax regime.