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 . . .

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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