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Gold and Silver

Chilean President gives Barrick Gold its Pascua-Lama fix-it orders – by Brent Jang and Josh Wingrove (Globe and Mail – May 31, 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.

VANCOUVER, OTTAWA – Chile’s President says Barrick Gold Corp. must follow 23 steps to comply with orders from his country’s environmental regulator, a message that underscores the tough road ahead for the company to get its crucial Pascua-Lama gold project back on track. Sebastian Pinera, in Ottawa to discuss Canada-Chile economic relations, admonished Barrick for its handling of the $8.5-billion (U.S.) mine development so far.

“The company didn’t comply with all the conditions that were established in that environmental impact assessment,” Mr. Pinera said during a joint news conference with Prime Minister Stephen Harper. “We have identified 23 areas where they will have to improve their behaviour with respect to the environment in Chile.”

Last Friday, Chile’s environmental regulator halted development of the gold and silver mine, citing “very serious violations” by Barrick. Mr. Pinera said Chile wants Barrick to eventually proceed with its Pascua-Lama mine – as long as it obeys environmental rules.

But lengthy delays are likely for the project, due to the time likely required for Toronto-based Barrick to carry out environmental fixes, including canals to divert run-off water away from the Chilean mine.

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Pebble Mine could spark economic transformation in SW Alaska – CEO – by Dorothy Kosich (Mineweb.com – May 31, 2013)

http://www.mineweb.com/

The Pebble Project’s estimated $1 billion in annual operating costs “could define a new economic engine for Alaska,” says a new report commissioned by the Pebble Limited Partnership.

RENO (MINEWEB) – A study by economic analysis firm IHS Global Insight advises that development of the Pebble copper deposit “could have significant economic impacts” for the state of Alaska including $136 million to $180 million in yearly taxes and royalties, and support more than 16,000 jobs nationwide during construction including nearly 5,000 jobs in Alaska.

The study, which was commissioned by the Pebble Limited Partnership estimates that Pebble-related jobs could pay an average annual wage of $63,500 per year. “Once the mine is constructed, it could provide approximately 2,900 operating jobs, of which 915 will be at the mine,” said IHS Global Insight. Pebble workers on-site could earn approximately $109,500 per year on average with about 75% of the workers expected to be Alaska residents.

“The Pebble Limited Partnership has the potential to develop one of the most significant discoveries of copper, molybdenum, gold and silver in the world,” said the report.

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Excerpt from “An Insider’s Guide to the Mining Sector: An in-depth study of gold and mining shares”– by Michael Coulson

To order a copy of An Insider’s Guide to the Mining Sector, please click here: http://www.harriman-house.com/book/view/66/investing/michael-coulson/an-insiders-guide-to-the-mining-sector/

Madness in Mining Markets

This section looks at a few examples of the sort of madness that can infect mining share markets. Such events are sometimes loosely described as scams, although often what happens is far more an issue of wild over enthusiasm on the part of investors. However, we start with a genuine scam, and a fairly recent one at that, with plenty of lessons to teach about market navigation – Bre-X and its gold project on Kalimantan.

Bre-X Minerals

The company was incorporated in Canada in 1988. The two key personalities in Bre-X were John Felderhof and David Walsh, the former a geologist and the latter a stockbroker. Both men had been short of money in their early professional years, and in its early days Bre-X seemed infected with the same problem. Interestingly Felderhof and Walsh’s first venture together was a trip to the island of Kalimantan in Indonesia some five years before Bre-X was founded.

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Biggest Big Event so far [Timmins mining tradeshow] – by Ron Grech (Timmins Daily Press – May 30, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – If anyone needed evidence the success of this year’s Big Event mining expo, the lineup of parked cars on both sides of highway near the McIntyre Arena should have been indicative enough.

This fifth-annual Big Event proved to be its biggest ever. “We keep saying the Big Event can’t get any bigger, but then each year we find a way to get in more people and make it bigger than the last year,” said Jay Cornelsen, national marketing director for the event.

To accommodate everyone who wanted to put up a display this year, Cornelsen said they extended the area of outdoor exhibits further up along the Prospectors Trail leading towards the McIntyre Mine headframe.

This year’s Big Event saw about 450 exhibitors from across Canada and the United States. Some came from as far away as California and Utah, said Cornelsen. He added there were about 50 exhibitors from Sudbury alone.

Guy Lamarche, manager of tourism, events and communications for the City of Timmins, said the number of visitors to this event provided a major economic boost to the community.

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Shabangu announces gold, platinum rescue plan – by Idéle Esterhuizen (MiningWeekly.com – May 28, 2013)

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

JOHANNESBURG (miningweekly.com) – Mineral Resources Minister Susan Shabangu on Tuesday announced that her department would develop a rescue plan, aimed at placing South Africa’s wrecked platinum and gold sectors on a recovery path.

Delivering her department’s R1.39-billion Budget Vote in the National Assembly, she said Department of Mineral Resources (DMR) officials had been instructed to “urgently” look at a rescue plan for the gold and platinum sectors, focusing on supply- and demand-side interventions.

“The platinum and gold sectors, which are among the largest sectors of our mining industry in terms of employment, investment and revenue generation, are negatively affected by the persistent global economic environment, which has an adverse bearing on their long-term viability,” the Minister said.

Shabangu stated that South Africa’s recently concluded bilateral agreement with Russia, under which the countries agreed to cooperate on platinum group metals (PGMs) initiatives, would contribute to the creation of a suite of interventions necessary to stabilise the platinum industry.

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OMA NEWS RELEASE: Gold is much more than a medium for jewelry and money

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Yes, there is no denying the gold price has taken a beating lately. However, by the pure share of news it receives, there is ample evidence to show that this commodity still mesmerizes mankind. The earliest gold jewelry dates back 6,000 years. By 325 BC, the ancient Greeks were mining gold from all ends of the Mediterranean Sea. Gold fever has sent men on treks around the world to “moil for gold.” In Canada, would we have Robert Service and Pierre Berton as renowned authors if not for this precious metal?

In recent years, gold has been the target of more than 50% of global mineral exploration budgets – in excess of $9 billion was aimed at gold targets in 2011 and more than $10 billion in 2012. Closer to home, in Ontario in 2011, more than 50,600 kilograms of gold were produced with a value of about $2.5 billion. Gold has a historic monetary role. It is used as currency; it backs up currencies and people invest in it with the hopes of making more money.

Jewelry stores and vaults of central banks, financial institutions and investors show that the biggest uses for gold are as items of adornment and for monetary purposes such as coins and bars. While the use of this precious metal, which is number 79 on the periodic table, goes back thousands of years, gold is a metal that because of its valuable properties and characteristics is a metal for the future.

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Little respite for gold – yet – by Lawrence Williams (Mineweb.com – May 29, 2013)

http://www.mineweb.com/mineweb/

Gold seems rangebound between $1350 and $1400 with no real signs of a breakout up or down, but recent developments in the physical markets may suggest a change ahead.

LONDON (MINEWEB) – Those looking for a sharp upwards reversal in the gold price given the continuing high levels of demand for physical metal, principally from the East and Middle East have so far been disappointed with the yellow metal struggling to retake the $1400 level, so far unsuccessfully. Price setting seems to be remaining well in the hands of North American markets where all that seems to be seen is the continuing offloading of inventory from the big gold ETFs in the light of artificially high stock markets, boosted by siren songs from the politicians and bankers and ever-continuing Quantitative Easing.

There is certainly a degree of continuing nervousness in the precious metals markets with many commentators predicting further falls in gold and silver ahead. What may, however, reverse the trend could be the figures for Chinese gold imports from Hong Kong for April as these may prove to be absolutely enormous.

While purchasing from the Asian markets has steadied a little now, after April’s mega rush, eastern demand mostly remains strong, although that in India has slowed somewhat as the government turns the screws on gold traders, and the farming community – responsible for much of that country’s gold purchasing and hoarding – is now in crop planting mode which tends to reduce demand at this time of year.

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[Timmins] Hollinger pit project ‘on track’ – by Benjamin Aubé (Timmins Daily Press – May 28, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Representatives from Goldcorp gave Timmins city council a tiny glimpse into the future of the Hollinger Mine open-pit project on Monday.

A handful of conceptual renderings of eventual Hollinger Lake were presented by general manager Marc Lauzier and mine superintendent Paul Miller as part of the report.

But the news everyone at council really wanted to hear was that the goals surrounding the Hollinger Project haven’t changed, despite nervous times in the gold market.

“I’m not going to lie to you, there’s a lot of questions around the community about what’s going on, with the price of gold declining,” said Lauzier. “Of course, it’s been steadily around $1,380, $1,400, $1,350 (per ounce), so people have been worried about that.

“I had a conference call with our COO and our VP of operations on Friday night, and I’m proud to report that after that call, we remain committed to doing this project,” he said. “We’re committed to returning it for safe public use, however, we’re going to do so in a fiscally responsible manner because we have to. Nothing’s changed, really. We’re going to keep our guys employed until we get our permit.

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Company hopes to usher in new era of Yellowknife gold mining – by CBC News North (May 27, 2013)

http://www.cbc.ca/north/

TerraX Minerals exploring same gold belt Giant Mine is located on

A junior exploration company — TerraX Minerals — hopes to bring a new era of gold mining to Yellowknife. The last gold mine close to the city shut down almost a decade ago, and exploration in the Yellowknife gold belt has been stagnant, until now.

In February, TerraX has acquired a site along the lucrative belt, located about 15 kilometres from Yellowknife. The Northbelt site is about 13 kilometres in length and 36 square kilometres in size, and sits just north the Giant Mine. It once belonged to Royal Oak, the last company to run Giant Mine.

“It’s the most promising expansion of mineralization that was mined in the past,” said company president Joe Campbell. TerraX Minerals is starting a small exploration program this summer. It’s doing geological surveys and combing through old drilling records.

But down the road, a big hurdle could be selling a project that neighbours one of the most toxic mine sites in Canada. The federal government is spending almost a billion dollars to clean up the Giant Mine and store 237,000 tonnes of arsenic trioxide, dust produced during gold production.

“Anyone that mentions gold mining in Yellowknife is obviously going to associate it with the gold mining that occurred in the past, and therefore the question that will come out is, ‘is this going to be another environmental disaster in 40 years like Giant’,” said Campbell.

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Gold Bets Cut to Five-Year Low as Prices Whipsawed: Commodities – by Tony C. Dreibus (Bloomberg News – May 27, 2013)

http://www.bloomberg.com/

Hedge funds are the least bullish on gold in more than five years as speculation about the pace of money printing by central banks whipsawed prices, driving volatility to a 17-month high.

Money managers cut their net-long position by 9 percent to 35,686 futures and options as of May 21, the lowest since July 2007, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 6.7 percent to a record 79,416. Net-bullish wagers across 18 U.S.-traded commodities slid 2.1 percent, as investors became more bearish on coffee and wheat.

Gold’s 60-day historical volatility touched the highest since December 2011 last week and a gauge of price swings for the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund, surged 73 percent this year. Bullion see-sawed as Federal Reserve Chairman Ben S. Bernanke testified before Congress on May 22. Two days later, Bank of Japan Governor Haruhiko Kuroda said he’s done enough to spur growth.

“Gold has so many drivers that it leads to a lot of getting pushed around by one thing or another,” said Dan Denbow, a fund manager at the $1 billion USAA Precious Metals & Minerals Fund in San Antonio. “It makes it impossible to determine a direction.”

May Returns

Futures dropped 5.4 percent in May, poised for a second monthly decline. The Standard & Poor’s GSCI Spot Index of 24 commodities fell 0.1 percent and the MSCI All-Country World of equities also declined 0.1 percent. A Bank of America Corp. Index shows Treasuries lost 1.3 percent.

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Canadian mine giant Barrick fined a record $16.4M in Chile – by Canadian Press/CBC News (May 25, 2013)

http://www.cbc.ca/news/business/

Native population complains of cancerous growths and aching stomachs

The Diaguita Indians live in the foothills of the Andes, just downstream from the world’s highest gold mine, where for as long as anyone can remember they’ve drunk straight from the glacier-fed river that irrigates their orchards and vineyards with its clear water.

Then thousands of mine workers and their huge machines moved in, building a road alongside the river that reaches all the way up to Pascua-Lama, a gold mine being built along both sides of the Chile-Argentine border at a lung-busting 5,000 metres above sea level.

The crews moved mountaintops in preparation for 25 years of gold and silver production, breaking rocks and allowing mineral acids that include arsenic, aluminum and sulfates to flow into the headwaters feeding Atacama desert communities down below.

River levels dropped, the water is murky in places and the Indians now complain of cancerous growths and aching stomachs. There’s no way to prove or disprove it, but villagers are convinced Barrick Gold Corp. is to blame for their health problems.

“We don’t know how much contamination the fruit and vegetables we eat may have,” complained Diaguita leader Yovana Paredes Paez. “They’re drying up the river, our farms aren’t the same. The animals are dying of hunger. Now there’s no cheese or meat. It’s changed completely.”

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Layoffs at Lake Shore Gold [in Timmins] – by Benjamin Aubé (Timmins Daily Press – May 25, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Despite laying off approximately 35 employees on Friday, Lake Shore Gold Corp. remains confident in its main commodity.

“We have a lot of confidence in the future of gold and we expect the price to go back up,” said Mark Utting, Lake Shore Gold’s vice-president, investor relations. “You just have to manage your business to be successful in the current price environment.”

The company employed “about 560” workers prior to Friday’s cuts. With localized operations in the region including the Timmins West Mine, the Bell Creek Mine, the Fenn-Gib Project and a rapidly expanding mill site, a large majority of the company’s employees are Timmins residents.

“You never want to do this, and it’s not something you do lightly,” said Utting. “But if you look at our company, we’re very proud of the fact that we’ve grown from 10 employees in 2007 to over 500 employees, even after these reductions today.

“The gold price is down over $250 an ounce so far this year, and we’re a rapidly growing company that’s currently in the heaviest part of its capital spending period. We’re investing a lot of capital in Timmins and as a company like that, we have to be responsive to changes in market conditions.

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Barrick Assesses Impact of Chile Resolution on Andes Mine – by Liezel Hill & James Attwood (Bloomberg News – May 24, 2013)

http://www.bloomberg.com/

Barrick Gold Corp. (ABX), the world’s largest producer of the metal, is studying details of a Chilean resolution that imposed a fine and ordered work to safeguard water supplies at its $8.5 billion Pascua-Lama mining project.

Construction work at the site on the border with Argentina can’t resume until measures have been taken to prevent contamination, Chilean environmental agency SMA said in a statement on its website today.

Barrick is “fully committed” to complying with the resolution, the company said in a statement. The shares fell 2.1 percent after trading resumed following an earlier halt.

Construction on the Chilean side of the mine was stopped by a Chilean court last month. Chief Executive Officer Jamie Sokalsky told the Bloomberg Canada Economic Summit on May 21 that Toronto-based Barrick won’t continue making significant investments if there’s uncertainty about the project’s future. He said Barrick has already invested $5 billion in the mine.

“I think Barrick should seriously consider canceling the project,” Pawel Rajszel, a Toronto-based analyst at Veritas Investment Research Corp. who has a buy rating on the stock, said today by phone.

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Barrick Weighs Shrinking to Add Profits: Corporate Canada – by Liezel Hill (Bloomberg News – May 22, 2013)

http://www.bloomberg.com/

May 22 (Bloomberg News) — Barrick Gold Corp. (ABX), the biggest miner of the metal by sales, is considering shrinking in size as the company focuses on returns over production volumes, Chief Executive Officer Jamie Sokalsky said.

“Being more profitable is better than being bigger,” Sokalsky said yesterday at the Bloomberg Canada Economic Summit in Toronto. “If we divested of some of those smaller, higher-cost assets and came down to a suite of assets that are long-lived and lower-cost and more valuable, I think that ultimately that can be a better investment proposition.”

Gold producers are trading at their cheapest in more than a decade relative to the broader market, according to data compiled by Bloomberg, as investors flee the industry amid rising mining costs, project delays and asset writedowns.

Sokalsky, who took over as CEO of the Toronto-based company 11 months ago, is reviewing growth plans and pursuing asset sales as gold trades at a two-year low and is poised to end a rally that has extended for 12 straight years.

Barrick, the owner or part owner of 27 mines, rose 2.1 percent to C$20.29 at 9:43 a.m. in Toronto. The company closed at a two-decade low on April 17, losing its position as the top gold miner by market value to Vancouver-based Goldcorp Inc. (G) last month.

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Gold space now a ‘buyer’s market’, Barrick chief says – by Peter Koven (National Post – May 22, 2013)

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

TORONTO – Gold mining stocks have been decimated in recent months, but Jamie Sokalsky does not think investors should expect any corresponding uptick in M&A activity.

Speaking at the Bloomberg Canada Economic Summit, the chief executive of Barrick Gold Corp. said there is a general “anti-M&A” mood in the gold space right now, and that investors don’t even ask him about it much anymore.

“It’s a lot harder to sell assets now than it would have been a year or two ago,” he said, adding that it is a “buyer’s market.”

Until recently, Barrick would have been taking advantage of a buyer’s market to snap up almost anything that caught its eye. But as the company shifts its focus from growing production to growing profitability, it is trying to dump its smaller and higher-cost mines rather than purchase anything new.

The Toronto-based miner has stated that its oil, nickel and Tanzanian gold assets are on the block, and sources confirmed to the Financial Post that its Australian gold mines are being shopped as well. Other seniors are also keen to shed non-core assets to upgrade their portfolios.

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