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Gold and Silver

A pot of gold at the end of Manitoba mine cleanup? – by Peter Kenter (Daily Commercial News – April 25, 2013)

http://www.dcnonl.com/

A Toronto environmental company is cleaning up a toxic Manitoba mine site at no cost to taxpayers. Its compensation? It gets to keep any gold it can extract from a stockpile of arsenopyrite concentrate.

“As the price of gold and copper began to rise, we realized the possibility for extracting value from mine tailings,” says Ross Orr, president and CEO of BacTech Environmental Corporation.

The company is employing bioleaching technology, which uses microbes to extract valuable metals from undesirable materials.

“Bacteria digest the sulphides to break up the matrix of the tailings materials,” says Orr. “The arsenic and iron go into the solution and the precious metals go into a precipitate for which we can use conventional extraction methods.”

While the technology isn’t new, the application is. The plant would be the world’s first bioleaching facility for the remediation of toxic material. The company initially met with some resistance, however, when it presented its ideas under its other banner, mining firm REBgold Corporation.

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Centerra Gold and Kyrgyzstan: time for a marriage counsellor – by David Trilling (Globe and Mail/Report on Business Magazine – April 26, 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 guys who had set up the roadblock agreed to meet me in the dirt lane outside the village of Barskoon’s school. At sunset, as arranged, a black Mercedes-Benz comes creeping along the edge of the soccer field. An electric window drops and a hand waves me over. The local “youth council” has arrived to talk about the gold mine.

The question at the heart of our meeting: Is a Canadian mining company here in the Central Asian nation of Kyrgyzstan taking advantage of the locals, as the young men say–or the other way around?

Naris Kalchayev and his two friends, all in their 20s, look a little out of place in the village. Kalchayev prefers speaking Russian over Kyrgyz. Wearing a turquoise baseball cap with a Superman decal pulled low over his eyes, he looks like a nightclub DJ—not a shepherd, like most of the local guys.

Kalchayev says he’s concerned about what’s happening on the remote plateau far above this sleepy hamlet. But it’s unclear if he is legitimately worried about the environment and corruption, or is just political muscle. He might be more persuasive if he didn’t use the words “blah, blah, blah” to punctuate his arguments.

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Gold Rout for Central Banks Buying Most Since 1964: Commodities – by Debarati Roy, Maria Kolesnikova & Phoebe Sedgman (Bloomberg.com – Apr 25, 2013)

http://www.bloomberg.com/

Central banks bought the most gold since 1964 last year just before the collapse in prices into a bear market underscored investors’ weakening faith in the world’s traditional store of value.

Nations from Colombia to Greece to South Africa bought gold as prices rose for an 11th year in 2011, highlighting the reversal of a three-decade-long bout of selling that diminished the world’s biggest bullion hoard by 19 percent. The World Gold Council says they added 534.6 metric tons to reserves in 2012, the most in almost a half century, and expects purchases of 450 to 550 tons this year, valued now at as much as $25.3 billion.

Central banks are the biggest losers, with about $560 billion of value erased since gold reached a record $1,921.15 an ounce in September 2011. The metal was already in the eighth year of its longest bull market since the end of World War I when reserves started expanding again in 2008. They were also buying in 1980 when bullion peaked at the equivalent of $2,400 in today’s money, and selling in 1999 as prices slumped to a 20- year low.

“They sell at the wrong time and buy at the wrong time,” said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “They aren’t traders.

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A new gold ballgame – by Peter Munk (National Post – April 25, 2013)

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

This is an edited and condensed excerpt of comments by Peter Munk, co-chairman of Barrick Gold Corp., at the company’s annual meeting in Toronto Wednesday.

Gold price and resource nationalism change the industry

A year ago, the fundamentals for Barrick Gold were brilliant. Results were exceptional, optimism about gold prices was universal, we were riding high, our financial rating was the highest in the industry, we were the unquestioned global leaders. Barrick at that time was looking forward to the next 12 years and to opening up two of the most spectacularly unique gold mines, Pascua-Lama and Pueblo Viejo.

The fundamentals today could not be more different. Our two mines are both in trouble. Our write offs and capital commitments have multiplied. Gold itself is under attack. So there is pessimism about the industry.

And there is ever-growing resource nationalism. It’s understandable. You’re sitting there, the new president of a small country, and you’ve just been elected, you’ve got serious issues with your budget, you’ve got two choices: keep on taxing the people or go after that big multinational huge global corporation with billions of dollars in assets and say: “Now hold on. We signed this contract with you a few years ago. We wouldn’t have signed that contract had we known that gold was going to $1,500.”

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Barrick shareholders reject executive compensation resolution at tumultuous AGM – by John Shmuel (National Post – April 25, 2013)

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

TORONTO – Barrick Gold Corp. said it would “carefully consider” an unprecedented rejection by shareholders of the company’s executive compensation plan on Wednesday, even as management strongly defended a record payment given to the co-chairman.

The rejection at Barrick’s annual meeting here was a direct challenge to a board that last year agreed to pay US$17-million to co-chairman John Thornton, which included a staggering US$11.9-million signing bonus.

Barrick founder and chairman Peter Munk was defiant during the meeting, defending his company’s decision to bring on Mr. Thornton, a former president at Goldman Sachs.

“We had to secure him,” Mr. Munk told shareholders. “The right thing was to have this advanced investment … to secure the kind of access he could give us and the credibility he could provide us with in securing major capital.”

Under the terms of his hiring, Mr. Thorton had to invest the bonus in Barrick shares, which he did in December, paying a market price of about $33.50. The compensation vote is non-binding, but Barrick CEO Jamie Sokalsky said management would carefully consider the views of shareholders. In a second vote, shareholders agreed to re-elect all 13 directors to Barrick’s board.

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Peter Munk confronts Barrick’s ‘perfect storm’ – Pav Jordan (Globe and Mail – April 25, 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.’s quest for growth turned it into the world’s largest gold company. Founder and chairman Peter Munk says that’s also what helped send it off the rails.

It would be difficult to imagine what more could have gone wrong for Toronto-based Barrick over the past year. It started with the replacement of its chief executive officer in June of last year, followed by a multibillion-dollar cost overrun at Pascua-Lama, the ambitious gold project it is building in the Andes. The company also took a $3.8-billion charge on a highly-criticized copper acquisition. The company’s stock price has plunged to around 20-year lows.

“If you add to that the softening of the gold price, if you add to that that we had a major writeoff in our copper business … by the early part of this year, it really felt, it really smelt, and it really looked like, the perfect storm,” Mr. Munk told shareholders at the company’s annual meeting Wednesday.

And the bad news continued, as Barrick said Wednesday that it would consider suspending the Pascua-Lama project altogether after a court ordered construction halted in Chile amid allegations the project is polluting local groundwater. Experts say a resolution to the problem could be as much as six months away and add up to $500-million to costs.

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Barrick Gold could have avoided say-on-pay public backlash – by Theresa Tedesco (National Post – April 24, 2013)

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

Public revolts by shareholders are uncommon in Canada and no major company has ever suffered the ignominy of losing a say-on-pay vote. That could change Wednesday.

Barrick Gold Corp., once the largest gold miner in the world, is headed for a showdown with a prominent group of shareholders over executive compensation. Seven of Canada’s largest pension funds are fuming over a US$11.9-million signing bonus the Toronto-based company awarded former Wall Street investment banker John Thornton to join the company as co-chairman last year. Juxtaposed against the 54% plunge in value for Barrick’s stock price during the past year, Thornton’s eye-popping bonus “is outrageous,”says Richard Leblanc, a governance expert and associate professor at York University in Toronto.

A group of seven major institutional shareholders have threatened to demonstrate their displeasure by voting against an advisory resolution on executive pay and withholding votes in the election of directors who comprise Barrick’s five-member compensation committee during the company’s annual shareholders meeting Wednesday in Toronto.

The group of seven, which collectively manages assets worth more than $900-billion, fired off a letter to Barrick founder and chairman Peter Munk, outlining their grievances against the “inducement,” arguing it is “inconsistent with the governance principle of pay-for-performance,” while setting a “troubling precedent in Canadian capital markets.”

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Barrick Gold’s board needs to learn how to say no – by Sophie Cousineau (Globe and Mail – April 24, 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.

MONTREAL — Shareholder meetings are usually dull, scripted affairs. It’s rare that anything eventful happens in the hotel meeting halls where they are set.

Even when a proxy fight threatens to disturb these gatherings, a last-minute truce is often brokered to avoid a public spat and an embarrassing defeat. Remember Canadian Pacific Railway’s acrimonious battle with activist investor Bill Ackman? It got resolved in the wee hours of the night behind closed doors, not in front of cameras.

But Peter Munk is not one to cave in, and Barrick Gold, the gold producer he founded 30 years ago, is still standing its ground in its showdown with Canada’s most powerful pension fund managers over the $17-million (U.S.) compensation awarded to its new co-chair, John Thornton.

In a statement Tuesday afternoon, the company said: “The Barrick board takes the shareholder vote seriously and intends to carefully consider our shareholders’ perspectives regarding executive compensation matters,” it said. Translation: We hear you.

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Munk warned against irrational exuberance in gold – by David Olive (Toronto Star – April 24, 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 he prepares to meet shareholders, Peter Munk must deal with a plunging gold price, a stalled mining development and controversy over executive compensation.

If Peter Munk was a genuine goldbug, the kind who see the yellow metal as the “one true way,” a lifetime gold bear like me could hail a comeuppance for the founder and chairman of Toronto-based Barrick Gold Corp., world’s biggest gold miner.

But I don’t, because the GTA philanthropist who rose phoenix-like from the ruins of Clairtone to build a global mining empire has always had a sensible regard for the aptly named “currency of fear.”

Real goldbugs are besotted with a commodity that doesn’t pay interest or dividends, is too cumbersome to be a viable method of exchange, and even as a metal is too soft to be of use in all but a handful of industrial applications, suitable only for jewellery.

By contrast, in some 30 years of building Barrick, Munk has not been an evangelist for gold, despite having a powerful vested interest in being one.

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Barrick Gold at 20-Year Low Turns to Thornton – by Liezel Hill (Bloomberg.com – April 23, 2013)

http://www.bloomberg.com/

April 23 (Bloomberg) -– Barrick Gold Corp. (ABX) founder Peter Munk sees a successor in former Goldman Sachs Group Inc. (GS) President John Thornton as the world’s biggest gold miner tries to reverse a 54 percent plunge in market value in the past year.

“I searched the world for a successor,” Munk, the 85- year-old chairman of Barrick, said yesterday in an e-mailed statement. “I am delighted I found John. I am confident he will take Barrick to a new level as a global player.”

Thornton, 59, faces his first annual shareholders’ meeting tomorrow as co-chairman after the Toronto-based miner has struggled with cost overruns, writedowns, and opposition to his $11.9 million signing bonus from shareholders including Canada’s six largest pension fund managers.

Barrick, which also reports first-quarter earnings tomorrow, this month lost its position as the top gold miner by market value to Goldcorp Inc. (G), which produces fewer than half the ounces of the precious metal. It’s “appropriate” that the company considers a path to new leadership at a board level, Munk wrote in Barrick’s annual report filed March 25.

“My job was to develop the strategic vision, seek new opportunities, develop strong partnerships, build relationships with government leaders, and navigate some of the tough environments we work in,” Munk said in the e-mail yesterday. Thornton has those skills, he said.

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At the barricades with Barrick Gold – by Terence Corcoran (National Post – April 23, 2013)

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

With all the problems Barrick Gold is facing, the giant government-created Canadian pension institutions have zeroed in on a mostly trivial obsession: executive compensation

On Wednesday, Peter Munk’s Barrick Gold will stage its annual meeting while under fire on all fronts. The price of gold has crashed, major projects are coming in way over budget, third-world governments are giving the company a hard time, Barrick’s stock price is at its lowest in decades, investors have lost billions in market value.

Third quarter results will also be released Wednesday. In the face of all this turmoil, what do the Giants of Self-Important Canadian Pension Institutions do? Move in with an attack on the most trivial issue of all: executive compensation.

In a news release last Friday, seven of Canada’s government-based institutional pension investors and a pension-management firm from the U.K. announced that they would be voting against Barrick’s say-on-pay resolution and against the three directors who are members of the company’s compensation committee.

For the record, the seven Canadian funds are: Alberta Investment Management Corp., B.C. Investment Management Corp., Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System, Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board.

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Eric Sprott: Can the gold hawk find magic after the commodities crash? – By Tim Kiladze and Jacqueline Nelson (Globe and Mail – April 22, 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.

Surfing the Internet in his home office one day more than a decade ago, Sheldon Meingarten came across an unusual investment fund.

It had been a tough time for investors to make money: The bursting of the tech bubble, 9/11 and a moderate recession in the U.S. had conspired to send stock markets on a downward spiral. But one portfolio manager, Eric Sprott, seemed like a wizard, generating annual returns of roughly 30 per cent since 1997.

Mr. Meingarten invested a chunk of his wife’s RRSP into the Sprott Canadian Equity Fund. Soon after, he added his own money, spreading the investments across several funds. In all, he put in a “healthy six figures.”

For years he felt like a genius. At one point his return on the investment had climbed to about 250 per cent, so he didn’t pay much attention to Mr. Sprott’s world view that hard assets such as gold and silver would thrive in a world awash in debt, and that producers of these precious metals would soar when the financial system collapsed. “I was riding that rocket,” Mr. Meingarten said.

The rocket has now crashed. Falling prices for commodities and resource stocks have badly hurt the performance of Sprott Asset Management, and Mr. Sprott has lost more than a little of his reputation as the man with the Midas touch.

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Investors look for Barrick’s ‘Plan B’ as gold prices tank – by Pav Jordan (Globe and Mail – April 22, 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.

Peter Munk could not have anticipated what lay before his company when he publicly berated the management team at Barrick Gold Corp.’s annual meeting last May for failing to boost the company’s share price, despite six years of record profits.

Fast-forward a year and shareholders might have their own harsh words at this year’s meeting on Wednesday for Mr. Munk and for Barrick, the Toronto-based company he built into the world’s largest gold miner.

The past 12 months have been some of the hardest in Barrick’s 30-year history. The company has changed CEOs, shuffled its board and been hit with project delays and multibillion-dollar cost overruns and writedowns. It’s also facing some anger by institutional shareholders over its decision to pay an $11.9-million (U.S.) signing bonus to co-chairman John Thornton, a former Goldman Sachs executive.

Just as the company looked to be getting its finances under control, it has been whacked by a tectonic shift in the gold price, which last week dropped as low as $1,361 an ounce from highs of $1,900 in 2011.

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Barrick rebellion: With gold miner’s stock in the dumps, investors push back – by Peter Koven (National Post – April 20, 2013)

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

This has been the worst month in Barrick Gold Corp.’s modern history. It is about to get worse. On Wednesday, the Toronto-based gold miner will be greeted by some very frustrated shareholders at its annual meeting. The company does not usually face hostility from investors at its AGMs, but this year appears to be different.

Virtually everything has gone wrong for Barrick lately. And as gold began a steep descent last week and the company’s key project was partially halted, the stock price plunged 33% in six days. It is an gut-wrenching freefall for a company of Barrick’s size and it takes the stock to its lowest levels since 1993 when gold averaged just US$360 an ounce.

Remarkably, an even bigger source of investor ire emerged on Friday. Seven of Canada’s largest pension funds announced that they are opposing the US$11.9-million “signing bonus” that Barrick paid to co-chairman John Thornton last year, and plan to vote against the entire compensation committee. Mr. Thornton received a whopping US$17-million in 2012, and he was not the only beneficiary of Barrick’s largesse. Chairman Peter Munk (US$4.3-million), chief executive Jamie Sokalsky (US$11.4-million) and “ambassador” Brian Mulroney ($2.5-million) all received big pay hikes despite a bad year for the stock price.

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The Secret World of Gold – Canadian Broadcasting Corporation (CBC) Documentary (April 18, 2013)

 

First broadcast on Thursday, April 18, 2013 AT 9:00 P.M. ON CBC-TV

The Secret World of Gold is a documentary exploring the power and politics of gold, a precious metal with more allure and fascination than any other. Valued for its permanence, beauty and scarcity, people will lie, cheat, steal and kill in the name of gold.

To finance the Third Reich, the Nazis went after the gold of Europe. Allied countries stored their gold offshore to keep it safe. In the first months of the Second World War, the gold of England and France was secretly shipped to vaults in Montreal, Ottawa and New York.

Those ships made it safely to port, but throughout history, many were not so lucky. It is estimated that worldwide, 3 million shipwrecks loaded with treasure lie at the bottom of the ocean. Odyssey Marine, an American company listed on the NASDAQ stock exchange, spends huge amounts of money to search for that gold. But there’s always the risk they will have to hand it over to countries claiming ownership.

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