German researchers say mining intensifies social conflicts in Peru

A group of researchers from Berlin’s Humboldt University published a study where they say that mining activities are the leading cause of social conflicts in Peru.

According to the study, which is titled “Alternatives for the development of Peru’s mining regions,” one of the reasons that explains the unrest is the fact that the country’s economic policies do not allow for a large royalty collection from resource extraction and, therefore, there are few opportunities to reinvest those funds in mining cities and towns. On top of that, the experts say that the fall in commodity prices in the past years has worsened the situation.

Interviewed by Deutsche Welle, the mining and development advisor for the German episcopal organization Misereor, Susanne Pries, said that for the past 20 years most community groups in the South American country have been complaining about mining activities polluting their environment, poisoning them, displacing people and intensifying poverty.

Together with local NGO Red Muqui, Misereor’s team visited the northwestern Cajamarca region and, while observing the expansion project of a gold mine, they witnessed how the town of 130,000 people is competing with companies for water resources. This creates environmental conflicts that even though are balanced out by the regional government’s stand on regulating mining operations, are always present due to the antagonistic position of the federal government.

The experts expressed concerns over the fact that some firms are mining up to 660 metres deep, where the water table falls, and thus entire towns run out of water.

In the central Junin region, on the other hand, they noticed how half of the residents make a living by working in the mining industry while the other half do so in agriculture. The two worlds, they write, also tend to collide because everyone wants to have access to the Mantaro river, which is one of the tributaries of the Amazon river.

The German-Peruvian report states that if this situation is allowed to continue, the environmental consequences may go beyond the country’s borders and might affect the continent’s freshwater reserves.

The authors criticize the fact that the National Service of Agrarian Health, which is supposed to inspect and regulate mining operations, is led by someone with deep connections in the mining industry.

Peru is the world’s No.2 copper producer and the sixth largest producer of gold.

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Source:: Infomine

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Silver Squeeze, Gold Fails & GDX Breadth

VANCOUVER, BRITISH COLUMBIA–(Marketwired – May 15, 2014) – VMS Ventures Inc. (TSX VENTURE:VMS) (“VMS Ventures” or the “Company”) is pleased to announce that further to its news release of May 8, 2014 it has closed a private placement of 2,425,000 flow-through units (the “FT Units”) and 2,505,000 non flow-through units (the “NFT Units”) for total proceeds of $1,353,750 (the “Offering”).

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Source: Market Wired-MIning and Metals

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It was an interesting week in the precious metals complex. There appeared to be the start of a short squeeze in Silver (hedge funds were heavily short) but it ceased at important resistance. Meanwhile, Gold closed the week on a weak note, losing $1340-$1350. The gold stocks, like Silver closed the week below technical resistance. The price action in the complex continues to suggest that a breakout in Gold is the key to unleashing strong outperformance from Silver and the gold stocks.

While Silver has very supportive sentiment, it has not broken out from its downtrend yet. The net speculative position was at 1.1% a few weeks ago, an all time low. That won’t spring Silver by itself unless Silver can surpass critical resistance in the mid $18s. And that may not happen until Gold breaks $1360-$1370. Silver has strong support in the low to mid $16s.

Silver & Silver Net Speculative Position

Moving to Gold, the daily chart below shows Gold losing $1340-$1350 after rejection again at $1360. Immediate support for Gold lies at $1325 which if broken would lead to a test of $1300-$1310 and the 200-day moving average.

Gold Daily Candles

We have a few observations to share with respect to the gold stocks. First, GDXJ has pulled back from trendline resistance around $34. Second, breadth indicators for GDX such as the advance decline line (A/D) and the bullish percentage index (BPI) are showing a positive divergence. The BPI has reached a 52-week high while the A/D line is not far from its January peak when GDX nearly hit $25. So while GDX has been relatively weak, its internals are showing more strength.

Silver and the gold stocks have yet to break important resistance as Gold once again was turned back at major resistance. If the US Dollar, which closed at 90.07, rallies up to its 200-day moving average at 92, Gold would likely test $1300-$1310. Should Silver and the gold stocks hold up well in that scenario (which could be suggested by current breadth) then it would imply a good rebound from the sector back to resistance points. Lower prices in the juniors would be a welcome sign and another opportunity to accumulate ahead of a major breakout in the not too distant future. In anticipation of that breakout, we have been accumulating the juniors with 300% to 500% upside potential over the next 18-24 months. To follow our guidance and learn our favorite juniors, consider learning more about our premium service.

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Source:: The Daily Gold

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