Global trends in silver mining

By Scott Wright
SilverSeek.com

Over the course of silver’s secular bull, the miners have steadily increased production in order to meet fast-growing demand. And in 2012 mine production exceeded 24k metric tons (770m+ ounces), an all-time production high and 28% increase over 2001. As an investor interested in silver’s structural fundamentals, this rapid growth begs a question. Where in the world is this silver coming from?

In our modern information age we can ask questions like this and easily find the answer. And we need look no farther than the data provided by the U.S. Geological Survey. The USGS is a global authority in collecting, analyzing, and disseminating information on both domestic and international mineral supply and demand. And for silver it dutifully provides annual detailed country-level mine production data.

My preferred way to distill data like this is visually, via crafting a custom chart to paint a clear picture. And in the chart below I plot the bull-to-date global silver-mining trends for the world’s top dozen silver producers using the USGS’s initial 2012 estimates that were released just this week.

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Two ways to go big on gold stocks

By Don Miller
Money Morning

There are plenty of reasons for you to have some gold stocks in your portfolio.

Governments are stockpiling record amounts of the shiny metal. Mints are pumping out new coins as fast as they can. And the Fed under “Helicopter” Ben Bernanke is wallpapering the world with greenbacks, pumping out $85 billion a month until … well, who knows when?

But there’s more.

The Europeans have joined the party by bailing out their weak sisters with hundreds of billions of euros. And the Bank of Japan just announced a $1.2 trillion bond purchase program for 2013 and $150 billion per month after that — almost twice the size of the Fed’s folly.

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Brent Cook: 2013 good year to buy juniors

Author and geologist Brent Cook says that one-third of junior miners could disappear this year. But, the good news is the coming year will also offer values for quality assets and companies. For investors, the purge of struggling companies focuses the money on quality.

Cambridge House Live anchor Bridgitte Anderson interviewed Cook at Cambridge House International’s Vancouver Resource Investment Conference last week.

Interview: African Barrick Gold’s Hawkins

By Emma Rowley
The Telegraph (UK)

Greg Hawkins

Not many companies get more popular when their share price plummets. Still, more than a few people are pleased that a Chinese rival has walked away from African Barrick Gold, the FTSE 250 gold miner.

Last August, Canadian mining giant Barrick Gold, from whose African assets ABG was formed, confirmed it was talking to state-owned China National Gold about selling its 74pc stake in ABG.
However, early this month the deal was taken off the table, disappointing hopes of a sale. But, says Greg Hawkins, ABG chief executive, at least it may have improved the company’s relationships on the ground in Tanzania.

“It didn’t really matter who it was,” he says, with reference to the Chinese bidder. “There was concern about what would be the security going forward and, for the community, does it all change? A new owner, what does it mean? So, all of a sudden, we became quite popular.”

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HSBC buys $876 million worth of silver

HSBC has quietly moved into acquiring large amounts of silver bullion.

Wealth Wire

Silver has now rallied for 7 days due to the flood of inflows into silver backed ETF’s and investment demand for coins and bars internationally. Analysts polled by Reuters expect silver to rise in 2013.

Holdings of iShares Silver Trust, the world’s largest silver ETF, stood at 10,689 tonnes on Jan. 22, up 604.9 tonnes, or nearly 6 percent, from the end of 2012.

By comparison, SPDR Gold Trust, the world’s top gold ETF, saw an outflow of nearly 15 tonnes so far this year.

This has helped silver prices rally over 6% so far this year and 4.5% last week alone. The close above $32/oz yesterday was bullish technically and could lead to silver testing the next level of resistance which is at $34/oz.

The U.S. Mint has sold out of 2013 American Eagle silver coins and will resume sales the week of January 28 when the US Mint said inventory would be replenished.

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Fresnillo 2012 silver production dips

Business News Americas

Silver production at Mexico City-based Fresnillo (LSE, BMV: FRES) dipped slightly in 2012 due to declining ore grades at the Fresnillo mine in Zacatecas state.

Fresnillo, the world’s largest primary silver producer, reported production of 41Moz for the year, compared to 41.9Moz in 2011.

The figures include Silverstream production which remained stable at 4Moz.

Production at the Fresnillo mine was down 12.9% at 26.4Moz (2011 30.3Moz) as average ore grade fell 17.2% to 328g/t, the company said in a production statement on Tuesday (Jan 22), with further declines towards 281g/t expected through the remaining life of the mine.

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Gold mania approaching for junior miners

Michael Ballanger

Low market valuations for junior mining companies have Michael Ballanger, director of wealth management at Richardson GMP, feeling like a kid in a candy store, and equities satisfy his sweet tooth more than the metal right now. Ballanger has had enough years in the business to recognize the advent of gold fever. In this Gold Report interview, Ballanger discusses his personal views and discusses how he looks for “well-incubated” companies that meet budget and timelines and raise funds without diluting shareholder value. He also shares why he sees junior miners as higher reward and lower risk than gold itself.

Interview by Brian Sylvester of The Gold Report

The Gold Report: Michael, can you tell us why you believe we are at the psychological and valuation bottom of the trough in the junior mining sector?

Michael Ballanger: Using the TSX Venture Exchange (TSX.V) as a proxy for the junior mining sector, the TSX.V between 2003 and 2007 traded in a range of approximately 1.5 to 3.3 times the price of gold. In the 2008 crash, it went down to 0.8 times the price of gold. Going back 15, 20, 30, 40 years, the TSX.V had traded on a 1:1 correlation with either the oil price or the gold price. Since the 2008 crash, there has been an immense aversion to risk in the junior mining space. At the end of 2012, trading was around 0.71 times the gold price. We have never seen valuations like this in the junior mining sector.

At the bottom of any bear market, sellers become exhausted so only survivors are left. If you accept that premise, it becomes important to see who has survived or who has the management capabilities, the financing and high-caliber projects to advance. Those are companies that will benefit from what I think will be a normalization of the Venture Exchange’s ratio to the actual gold price. I think a realistic level would be 1.5–2.0 times the gold price.

Unlike most experts, I am far more bullish on the senior producers and on the junior and intermediate developer/producers and explorers than I am on the physical gold price. I think there is a lower-risk, higher-reward potential in the shares than in the metal right now.

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Hugo Chavez: Dictator vs. Investors

By Dudley Pierce Baker
JuniorMiningResources.com 

Hugo Chavez

What’s really happening in Venezuela with gold properties?

Is Hugo Chavez alive or dead? Will he return? How will these answers affect the gold properties in Venezuela?

From our friends at ResourceInvestingNews.com they reported in a January 7, 2013 article:

“Chavez seized 988 companies between 2002 and August 2011, according to a report from Conindustria, a Venezuelan industry chamber. He also nationalized the country’s gold mines in September 2011. At the time, the biggest foreign miner operating in Venezuela was Rusoro Mining (TSXV:RML), which had two producing mines in the country, along with 10 exploration properties. The seizure sent Rusoro’s stock tumbling 16.7% on the day the announcement was made, according to Mining.com.

In July 2012, Rusoro filed a claim with the World Bank’s International Centre for Settlement of Investment Disputes in a bid to receive compensation for its lost assets. “We tried to find an amicable solution but we never heard anything from the government, so then we decided to file the arbitration,” Andre Agapov, Rusoro’s president and CEO, told Reuters. “We lost it all. We don’t understand the situation now. We have no operations in Venezuela.”

Currently we are intrigued that three of the corporate officers of Rusoro Mining are buying shares in the open market, including Andre Agapov, the president, quoted in the article above. Agapov is a Russian national who several years ago was based inLondon. Rusoro is based in Toronto and the company is mostly owned by Agapov’s Russian family.

In August 2011, ETF Daily News reported that Agapov claimed to be a friend of Chavez and that he was not worried about nationalization of all mines. Agapov said he believed moves by Chavez were directed at the many illegal mining operations that operate under the radar and use environmentally damaging practices like mercury dumping.

Are some corporate insiders betting on the death of Chavez and thus a possible reversal of the anti-government stance toward mining in Venezuela?

To quote from the company’s website (which must be outdated):

“Rusoro Mining is a gold producer and explorer, with a large land position in the prolific Bolivar State mining region in southernVenezuela.

Rusoro’s corporate strategy is to become a mid-tier (>500,000 oz Au/yr), low cost gold producer in the near term. The Company operates the Choco 10 mine (formerly operated by Goldfields) and the Isidora Mine, which are located the El Callao district in south-eastern Venezuela.”

The three insiders have bought shares in the open market over the last six weeks and up to Jan. 14 at prices between C$0.045 to C$0.075, well off of last years low price of C$0.02.

In addition, you might recognize the name, Gordon Keep? Mr. Keep (the right hand man for Frank Giustra) has a current holding in Rusoro of 620,000 common shares at his last reporting on January 30, 2012.

All told this is a cross current of events and news and we’re not exactly sure what to make of it.

However, it is doubtful that the Rusoro’s objectives match the objectives of Hugo Chavez, so it will be an interesting outcome either way.

While we personally find this to be an interesting situation, investors, both individual and professionals, must always consider the total risk in every case.Venezuelais a difficult country to do business, particularly for foreign companies. In the World Bank’s 2013 Doing Business ranking, Venezuela was ranked 180 out of 185 countries. Venezuela is ranked very low in the categories of investor protection, paying taxes and trading across borders.

Following the trading activity of corporate insiders must be an essential piece of your investment research, but in the case of Rusoro Mining we will pass on this “opportunity” as we personally see risk still out weighing reward.

Africa mining needs junior exploration

By Chantelle Kotzé
MININGWEEKLY.com

Bruce Shapiro

There are various challenges facing the African mining industry that could be overcome by supporting the junior exploration industry to drive growth in the industry, says Africa-focused business development and marketing company MineAfrica president Bruce Shapiro.

“There is no local junior mining sector to speak of in South Africa and it is ultimately this sector that drives growth in the mining industry,” he says.

Shapiro advocates that the perception of investment communities needs to be changed through a long-term, consistent and well- managed investor attraction programme.

To develop this industry, Africa should establish a framework for juniors in which to operate. This framework must include, among others, tax incentives, investment funds and specialised banking facilities.

Shapiro, who is also the Canada–Southern Africa Chamber of Business president, notes that out of about 330 foreign-listed companies operating in Africa’s mining industry about 175 are listed in Canada and these are mostly juniors.

Read the entire article . . .