Worries mount over Mongolian mining bill

By Frik Els
MINING.com

Concerns are mounting over draft legislation being considered by Mongolia’s parliament that would place severe restrictions on foreign ownership and greatly increase state control over mining and exploration companies.

The Asian country has enjoyed a resource investment led boom turning it into one of the fastest growing global economies. The sparsely populated country with some 3 million inhabitants grew at a 17% clip last year  from 30% the year before.

But ardour for new mining projects in the country is already cooling and growth could return to the single digits.

The Business Council of Mongolia, a five-year old business advocacy group, sent a letter to Mongolian President Tsakhia Elbegdorj the architect of the bill earlier in January expressing grave concerns about the bill which in its current form is much more far-reaching than anticipated.

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Peru’s smaller miners offer good values

Ricardo Carrión

The Peruvian mining sector has lots of promising developers and producers, but don’t ignore the smaller companies — 2013 may surprise to the upside in Peru. In this interview with The Gold Report, Ricardo Carrión, managing director for capital markets and corporate finance for Kallpa Securities in Lima, Peru, says it is fine to ride the wave with the rest of the market as lower-risk projects advance toward production in Peru. However, smart investors should balance a mining portfolio with smaller and earlier-stage companies that are selling at compelling valuations. Get there before the majors go on a New Year’s shopping spree.

Interview by Alec Gimurtu of The Gold Report

The Gold Report: How’s the mining investment climate looking in Peru for 2013, especially compared to 2012? What are the main trends and what are people looking forward to in 2013?

Ricardo Carrión: Our outlook for 2013 is generally pretty good. That was our assessment at the beginning of last year for 2012 and it has turned out to be a good year. Mining in Peru is set up to have another positive year. There are a lot of projects in the pipeline and the macro situation is strongly positive for the sector. However, in 2013 as projects advance, we are more actively watching project specific factors that control the advancement of individual projects including the environmental impact assessment (EIA) approvals. In addition, we are keeping an eye on the resolution of social situations on the more advanced projects.

One key project everyone is watching is the Conga project in the north of Peru, a joint venture betweenNewmont Mining Corp. (NEM:NYSE) and Compania de Minas Buenaventura (BVN:NYSE; BVN:BVL). That project has been delayed a couple of years and has caught a lot of media attention. Many other projects are quietly making progress in addressing social, environmental and community issues. We are watching these factors on a project by project basis for 2013. Overall, the project pipeline is very strong and in most locations communities are working with companies to explore and develop new mines.

TGR: Is the EIA process new or has it been recently revised?

RC: The EIA process has been stable for some time. The Conga example is a case where investors are concerned about the implementation of the EIA process—specifically, the revision of a previously approved EIA. In that case, the EIA was originally approved by the government, but was then revised after local social activists demanded changes. One result was uncertainty for investors.

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Gold market turns to China for support

By Tim Iacono
Seeking Alpha

Precious metals were pressured early last week (1/7/13-1/11/13) on continuing fallout from the release of Fed meeting minutes; the week before that, traders thought it might lead to the central bank tightening policy sooner than expected. However, lower prices once again spurred buying in Asia, where gold trading in Shanghai rose to record levels in advance of the Chinese New Year and a weakening yen led to record high gold prices in Japan, while, in the U.S., gold and silver coin sales surged.

Late in the week, better-than-expected trade figures from China spurred hopes of stronger demand for raw materials, leading to a precious metals advance. This persisted until higher-than-expected inflation in China was reported on Friday, prompting buyers to turn into sellers on fears that rising prices may limit the government’s ability to provide more stimulus for the world’s second-largest economy that now appears to be rebounding.

But, without a doubt, the most important gold-related news to emerge from China last week was of surging gold imports. As has been the case over the last year, demand from China is likely to play a key role in supporting metal prices and, eventually, pushing prices up and out of their recent trading range.

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Auriant Mines sees Russian gold potential

By Will Daynes
Business Excellence 

Denis Alexandrov

Having existed as an exploration company up until recently, Auriant Mining’s aspiration is now to become a mid-sized gold producer. Chief executive officer Denis Alexandrov explains how the company is perfectly placed to achieve this.

Until recently, gold mining in Russia was a wholly state monopolised industry, one with a history that dates back over 300 years to when the first gold bullion was poured at Nerchinsky mines in 1702. Indeed, it was during the era of the Soviet Union that, through substantial levels of government sponsorship, the industry experienced its most recent exploration boom period, with upwards of 6000 geologists estimated to have been working in the Soviet Union at one time.

The collapse of the Soviet Union brought with it a swift end to this period of prosperity and an end to major exploration investments. Nevertheless, gold and other precious resources remained hidden beneath Russia’s soil and this created a gap in the market that companies are to this day attempting to fill.

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Gold and Silver Shares: Nightmare or Opportunity?

By Dudley Pierce Baker
JuniorMiningResources.com

The last four or five years have been a nightmare for many investors, especially those of us investors in the natural resource stocks. Even though gold and silver rallied to new highs in 2011 most shares did not follow and have in fact greatly lagged in performance.

Of course during this time there have been some companies that have performed well and were big winners. But we know, as well as you, that on balance the natural resource sector has been a nightmare for investors of the shares of juniors and exploration companies. Frankly, that’s putting it nicely.

Throughout the darkest hours we never lost the vision of our dream. The reasons for us investing in the natural resource shares over the last few years, particularly the gold and silver shares and our position in gold and silver bullion and coins, has never changed. All of the reasons for investing in this sector are even more compelling today than ever: the massive printing of monies by the Federal Reserve will, we believe, lead to incredible inflation, if not hyperinflation. Now we have Japan starting the printing presses. The entire world is awash in debt with no way out except to print, print and print. This will not end well and ultimately gold and silver will become investor’s safe haven during the coming crisis.

While it would not have been unusual to experience a pullback in the markets, virtually no one, professional or individual investor, expected what has occurred. The Dark Side of the Dream, our dream and perhaps your dream, of becoming rich in the bull market in the commodity stocks is either over or greatly delayed. So which is it?

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Corporate insiders bullish on gold

By Gary Lamphier
Edmonton Journal 

Corporate insiders see upside in Canadian stocks as the new year begins, according to the latest weekly report from Vancouver-based INK Research, which tracks insider buying and selling activity.

The firm’s INK Indicator – which measures the level of insider stock buying versus selling – currently sits at 148 per cent, the firm says. In other words, there are nearly 1.5 stocks on the Toronto Stock Exchange with key insider buying for every stock with insider selling.

“As measured by our indicators, we enter 2013 with basic materials (stocks) having the most insider buying among the 10 top-level sectors. Our indicator for the sector begins 2013 above 300 per cent,” INK says.

“Most of the buying is in the highest-risk junior exploration stocks, although more familiar producers such as Barrick Gold (full disclosure: a stock this writer owns) and Osisko Mining top the list of names in the sector with key buying. Sentiment in the traditionally high beta energy sector is not far behind at just under 300 per cent.”

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Brent Cook: How to turn rock into money

Brent Cook

What if the shockingly low valuations of some junior mining companies are really all they’re worth? As the market shakes off years of exuberance, Brent Cook, co-editor of the Exploration Insights newsletter, searches for the truly undervalued — finds as rare as gold itself. In this interview with Brian Sylvester of The Gold Report, Cook talks about high-margin deposits that the rest of the market can’t see.

The Gold ReportBrent, 2012 was difficult for many gold investors, and you paint a pretty bleak picture for certain junior mining companies in 2013 as well.

Brent Cook: We’ve actually had two pretty tough years on the TSX Venture Exchange. It is off about 30% from its peak in 2012 and around 20% for the year. That comes on top of a 35% decline in 2011. I do think much of the froth is washed out and we will see some opportunities in 2013.

During the most recent boom years, 2009 and 2010, roughly $11 billion ($11B) was raised on the Venture Exchange. Most of that has been spent without much success. Going by John Kaiser’s database of about 1,800 Venture Exchange listed companies, there are around 600 that now have less than $200,000 in the bank and a full 62% of the 1,800 companies have a median working capital of only $1.1 million ($1.1M) or less. These companies are trading at less than $0.20/share, which means that unless things improve dramatically in the next year, many of these companies are going out of business or will push excessive dilution on current shareholders just to stay alive. The Venture Exchange will truly be the land of the walking dead.

This coming year will be a cleaning-out process that in the long run is good for the sector.

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SEC defends oil, mining transparency rule

By Aruna Viswanatha
Reuters 

WASHINGTON — The U.S. Securities and Exchange Commission defended its new rule requiring oil, mining and gas companies to disclose payments they make to foreign governments, saying it declined to “second-guess” policy decisions made by Congress.

The agency on Wednesday responded to a lawsuit filed in October by four business groups challenging the new rule, which was mandated by the 2010 Dodd-Frank financial regulation overhaul Groups including the U.S. Chamber of Commerce and the American Petroleum Institute have argued the rule went beyond the intent of Congress and puts U.S. firms at a competitive disadvantage.

In a brief filed in a Washington federal appeals court, the SEC said the legislative history of the law made clear the provision was crafted by Congress to address the “resource curse,” or the phenomenon of resource riches leading to corruption in poor countries.

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Silver’s seasonal sweet spot has arrived

By Don Vialoux
The Globe and Mail

The “sweet spot” for seasonal strength in silver has just started. How does the seasonal trade line up this year?

Equityclock.com notes that the precious metal often sees gains from the end of December to the end of February. The trade has been profitable in 12 of the past 17 periods, including 9 of the past 11 periods. Average return per period during the past 17 periods was 12.0 per cent.

Seasonality in silver is influenced by an increase in industrial demand during its period of seasonal strength. Approximately 40 per cent of silver is used industrially – in solar batteries, water purification systems, cellphones, circuit boards, plasma televisions and radio frequency identification devices (RFIDs).

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3 gold stocks with recent insider buying

By Markus Aarnio
Seeking Alpha 

The Gold (GLD) price reached its 12th year of a record-breaking bull run that has increased the precious metal’s value 517% since 2001, from $272 per ounce up to $1,676 per ounce. The average yearly gain has been 16.8% as shown in the table below.

Date Gold price Yearly Change
December 31, 2000 $272
December 31, 2001 $278 +2.2%
December 31, 2002 $348 +25.2%
December 31, 2003 $415 +19.3%
December 31, 2004 $437 +5.3%
December 31, 2005 $517 +18.3%
December 31, 2006 $634 +22.6%
December 31, 2007 $833 +31.4%
December 31, 2008 $881 +5.8%
December 31, 2009 $1,097 +24.5%
December 31, 2010 $1,408 +28.4%
December 31, 2011 $1,566 +11.2%
December 31, 2012 $1,676 +7.0%

Despite gold being up every single year for the past 12 years, the Gold Miners (GDX) have had a down year in 2011 and 2012 as seen from the chart below.

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