Chile environmental court orders Barrick to close Pascua-Lama gold mine

By Reuters

SANTIAGO, Oct 12 (Reuters) – Chile’s environmental court on Friday ordered Canada’s Barrick Gold Corp to definitively close the Chilean side of its stalled Pascua-Lama mining project, a final procedural step that draws a line under a long-running saga.

The court, sitting in the northern Chilean city of Antofagasta, approved by two votes to one the closure of the polemical project that straddles the Andes Mountains between Chile and Argentina.

The gold and silver operation was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5 billion.

Barrick was told to close the mine by Chile’s environmental regulator in January this year and fined $11.5 million. Friday’s court ruling rubber-stamps that order.

Barrick, the world’s largest gold miner, did not immediately respond to a request for comment.

(Reporting by Antonio de la Jara; Writing by Aislinn Laing; Editing by Rosalba O’Brien)

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Asia Gold-High prices deter buyers ahead of India festival season

By Reuters

MUMBAI/BENGALURU, Oct 12 (Reuters) – Physical gold demand in India was subdued this week as a rally in domestic prices curbed retail purchases going into a key festival season, while buying remained lacklustre in other major Asian hubs.

In the Indian market, gold futures this week touched their highest since July 2016 at 32,014 rupees per 10 grams.

“Usually retail buying rises during Navratri (Dussehra) but the price rise is dampening demand,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant based in the southern city of Hyderabad.

Dealers in India offered a discount of up to $6 an ounce over official domestic prices this week, down from last week’s $6.50, which was the highest since mid-June. The domestic price includes a 10 percent import tax.

“Jewellers want to make purchase for Diwali but they are waiting for a price correction,” said one Mumbai dealer with a private bullion-importing bank.

Demand usually strengthens toward the end of the year as the traditional wedding season kicks in and as the country celebrates major festivals including Diwali and Dussehra, when buying gold is considered auspicious.

India’s gold imports in September dropped more than 14 percent from a year earlier as demand was dented by a rally in local prices because of a depreciating rupee, according to provisional data from precious metals consultant GFMS.

Neighbouring Bangladesh, which approved its first gold trade policy last week, should register a boost in exports of ornaments because the policy proposes several incentives for increasing jewellery exports, including tax benefits, said Cabinet Secretary Shafiul Alam.

Meanwhile, global benchmark spot gold prices were on track to register their best week in seven as tumbling global stock markets sent investors rushing to the safe-haven asset.

In China, markets opened after the Golden Week festival and premiums ranged between $4.50 and $8 an ounce, versus $6.50-$8 in the week ending Sept. 28.

Premiums in Hong Kong rose to $1-$1.50 from between 70 cents and $1.30 last week.

“This week there was some fresh buying interest around the $1,185-$1,190 level. But with prices now up $30 dollars, the physical market may be quiet for a while,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

In Singapore, there was limited safe-haven buying, said Ronan Manly, precious metals analyst at Singapore-based dealer BullionStar.

Premiums of 80 cents to $1.20 were charged in Singapore, little changed from between 80 cents and $1.30 previously.

“We will see buying during the upcoming Diwali festival, as there is an Indian community in Singapore,” said Brian Lan, managing director at Singapore dealer GoldSilver Central.

In Japan, prices were on a par with the global benchmark, a Tokyo-based trader said.

(Reporting by Sumita Layek and Vijaykumar Vedala, Ruma Paul and Rajendra Jadhav; Editing by Arpan Varghese and David Goodman)

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Gold Fields CEO asks for `more time’ as investors get antsy

By Bloomberg News

(Bloomberg) — Gold Fields Ltd. shareholders getting impatient over the company’s failure to stem losses at the huge South Deep deposit in South Africa shouldn’t lose hope, said Chief Executive Officer Nick Holland.

Gold Fields said in August it’s embarking on yet another turnaround plan at the operation, its only one left in South Africa. South Deep’s disappointing performance has been a drag on the company for years and management is aware that investors are getting fed up, Holland said in an interview.

“They are now very impatient, and one can understand it but I think we need to calmly look where we are and evaluate the best way forward,” he said. “There is a large resource base there, it’s well-drilled and we have spent a lot on infrastructure development costs. We are not far away, we just need more time.”“We are not far away, we just need more time.”

South Deep is the world’s second-largest known body of gold-bearing ore but output targets have been repeatedly missed. The company has sunk more than 9 billion rand ($620 million) into the mine in addition to the 22 billion rand it paid to buy the asset in 2006.

The next milestone will be the announcement of a new plan in February and the company will probably need about 18 months after that to assess whether it’s working, Holland said.

To be sure, South Deep’s challenges aren’t unique in South Africa and other gold producers aren’t making money either thanks to persistently high costs, Holland said.

The country’s deep, aging mines and labor intensive mining methods keep pressure on expenses and South African gold production fell for a 10th consecutive month in July. The decline is being compounded by a shortage of investment in exploration, Holland said.

(By Felix Njini)

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Gold revitalized as equity sell-off spurs second weekly advance

By Bloomberg News

(Bloomberg) — Gold may have finally snapped out of its inertia.

Prices largely held the biggest gain since June 2016, when the U.K. voted to exit the European Union, after a slump in global equity markets stoked demand for the metal as a store of value. Bullion received another shot in the arm during Thursday’s surge after data showing weaker-than-expected U.S. inflation raised speculation that the Federal Reserve may slow the pace of interest rate increases.

Gold, which hit a 10-week-high of $1,226.42 an ounce on Thursday, had held near $1,200 since late August as traders weighed geopolitical risks that could boost the metal’s allure as a haven against rising interest rates that curb its appeal. On Friday, prices dropped but gold still poised for a second weekly advance. Most Asian and European stocks recovered after the biggest sell-off in global equities since February, as U.S. stock futures extended gains and Treasury yields ticked higher.

“Gold bulls were unstoppable on Thursday as global risk aversion sent investors sprinting to safe-haven assets,” said Lukman Otunuga, research analyst at brokerage FXTM. “Although gold prices are noticeably weaker this morning, bulls remain in the driving seat above the $1,213 level. While the technical outlook points to further upside, fundamentals are still in the bear’s favor.”

A gauge of gold-mining equities tracked by Bloomberg Intelligence also had the biggest increase since 2016 on Thursday. On Friday, Randgold Resources Ltd. gained 4 percent, Newcrest Mining Ltd., Australia’s largest producer, rose 3.3 percent and Zijin Mining Group Co. climbed 5.5 percent in Hong Kong.

Other precious metals Silver +0.2% Platinum steady, set for 4th weekly advance in last 5 weeks Palladium +0.9% to $1,089/oz, near highest since January, when record set

(By Ranjeetha Pakiam and Rupert Rowling)

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Canada’s Rusoro Mining reaches $1.3B deal with Venezuela

By Cecilia Jamasmie

Canadian junior Rusoro Mining (TSX-V: RML), which in March scored a major victory in its international arbitration complaint against Venezuela, has accepted the almost $1.3 billion offered by the country’s government as settlement for the seizure of the company’s gold projects.

The deal gives Venezuela Rusoro’s mining data and forces it to fully release the arbitral award issued in favour of the miner in August 2016.

Settlement creates partnership that could lead to restarting production at Rusoro’s former mines in the South American country.

It also creates a partnership between the parties that will assess the current status of Rusoro’s former gold projects and consider options of restarting production at two mines. A decision of the future of those assets will be made by the end of January, the company said.

The dispute between Rusoro and the South American nation goes back to 2011, when former president Hugo Chávez nationalized the gold industry and seized the company’s 95%-owned Choco 10 mine as well as its 50%-owned Isidora mine.

The Vancouver-based company attempted a series of negotiations with Chávez’s left-wing government but after they all failed, its legal team took the matter to the International Center for the Settlement of Investment Disputes Expropriation (ICSID).

That Tribunal upheld Rusoro’s claims that Venezuela had breached its obligations under the Canada-Venezuela Bilateral Investment Treaty. It also order the country’s government, in addition to pay compensation for damages, to contribute $3.3 million towards Rusoro’s costs in the arbitration.

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Unloved gold sector regains shine with mergers, price spike

By Cecilia Jamasmie

Merger and acquisitions in the precious metals sector are gaining momentum following Barrick’s recently announced $6.1 billion-deal to acquire Randgold Resources.

Shortly after, Canada’s Americas Silver (TSX:USA) announced it was buying Pershing Gold (Nasdaq:PGLC) for $50.78 million in an all-stock deal.

“This transaction aligns with our stated initiative of building a profitable and low-cost precious metal company in the Americas by operating and building low risk, low capital, high return projects,” Darren Blasutti, President and Chief Executive Officer of Americas Silver tells

Low precious metal prices had led to low trading volumes and corresponding share prices as generalist investors looked elsewhere for returns, resulting in a lack of interest in the sector from the capital markets.

At the same time, production among the world’s largest gold producers has declined by around 5 percent on average over the past three years as they focused on cutting debt and costs, selling off operations that were expensive to operate, and reducing investment in exploration, projects and acquisitions.

The lack of significant capital sources has impacted good projects as they wait for funding, and Pershing Gold’s Relief Canyon project is a good example of that, says Darren Blasutti, President and CEO of Americas Silver.

“We expect this situation to turn around in the near-to-midterm as producers will inevitably have to replace their precious metal resources,” Blasutti says.

The lack of significant capital sources has impacted good projects as they wait for funding, says the executive, adding Pershing Gold’s Relief Canyon project is a good example of that. “[The asset] is a great multi-year, low capital, shovel-ready project with advanced permitting in Nevada, one of the world’s best locations for precious metals mining,” he say.” We believe it will provide further leverage to precious metals for our investors.”

Pershing’s feasibility study estimated a pre-tax net present value of approximately $120M (5% discount), capable of producing approximately 90,000 ounces of gold annually and generate post-tax cash flow of $30-35M per annum over the 6 year life (at $1,290 /oz Au).

By acquiring Pershing, Americas Silver is expected to increase precious metal production by five times and silver equivalent production to about 14 million AgEq ounces by 2020.

While mergers and acquisitions have become cheaper than expanding reserves of gold through exploration, Americas Silver does not see further acquisitions in the horizon. “The company’s philosophy has been to find value through better execution, but not event-type risk so the strategy is to remain Americas focused,” Blasutti says.

Currently, Americas Silver expects to produce between 1.6 million and 2 million ounces of silver and between 7.2 and 8 million silver equivalent ounces this year. The company, which owns multiple producing assets in Mexico, has also focused on zinc and lead as silver prices have been lackluster through most of the year.

The deal, expected to close in early 2019, comes at a time when gold prices are on their way up, hitting their highest in two months Thursday.

Spot gold gained 0.8 percent to $1,203.30 an ounce by 0947 GMT, while US gold futures added 1.1 percent at $1,206.20 an ounce.

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Gold gets ignored as global equity rout fails to fire up havens

By Bloomberg News

(Bloomberg) — Equities are plummeting, President Donald Trump says the Federal Reserve’s gone ‘loco’ and the trade war’s heating up, yet traditional havens in times of trouble such as gold are not getting any love.

The biggest selloff in equities since February rolled through Asia and into Europe on Thursday, triggering steep losses in benchmark share indexes, but gold has barely stirred, while other havens from U.S. Treasuries to the Japanese yen and the Swiss franc showed only limited fluctuations.

“Prices haven’t quite had the safe-haven bid many investors would have expected, though they have bounced from below $1,185 an ounce earlier in the week,” said Jordan Eliseo, chief economist at ABC Bullion in Sydney, referring to the precious metal. “Cash seems to be the only place to hide, though gold may well find a stronger bid if this correction in risk assets persists.”

Trump said in a telephone interview on Fox News late Wednesday night the market plunge wasn’t because of his trade conflict with China: “That wasn’t it. The problem I have is with the Fed,” he said. “The Fed is going wild. They’re raising interest rates and it’s ridiculous.”

Bullion has dropped about 8 percent this year, and in September capped a sixth month of declines, the worst run since 1997. The retreat has been driven by a rising dollar, Fed rate hikes, and a sell-off in holdings in exchange-traded funds. While global trade tensions haven’t provided a boost, prices have steadied at about $1,200 in the past two months.

Spot gold eked out a 0.3 percent gain to $1,198.83 by 10 a.m. in London, after rising 0.4 percent a day earlier when shares first tanked. The yields on 10-year Treasuries were little changed, while the Japanese yen and Swiss franc held mostly steady against the dollar.

Gold’s failure to react to significant market fluctuations and escalating trade war concerns has been in focus. The metal’s been a “massive disappointment” as a haven this year, David Govett, head of precious metals at Marex Spectron, said in August, while Newmont Mining Corp. Chief Executive Officer Gary Goldberg said last month that bullion is “numb” to news.

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Leagold closing Brazil mine for two months due to drought

By Cecilia Jamasmie

Canada’s Leagold Mining (TSX:LMC) has had to temporarily shut down its Riacho dos Machados (RDM) mine in Brazil as a result of continued drought conditions in the country’s Minas Gerais State.

The Vancouver-based miner said it planned to resume operations in early December, with the commissioning of the grid powerline project.

RDM was closed in August last year and restarted, on an intermittent basis, in early November with the onset of the region’s rainy season.

Riacho dos Machados (RDM) mine will be closed for about two months.

This year, the mine remained operational until earlier this month as the processing plant benefitted from the water dam and pipeline that became operational in the second quarter of 2017, chief executive Neil Woodyer said in the statement.

The shutdown, Woodyer added, is expected to provide time for water to accumulate in the reservoir to support continuous operations.

Leagold expects to spend about $5 million a month in October and November during the mine shutdown, with $1.5 million needed to complete the powerline and $4 million to finish a tailings dam lift. It will also evaluate ways to reduce water consumption and ramp up the processing plant from 7,000tpd to 9,000tpd.

Due to the unplanned two-month, Leagold will have to update its 2018 full-year production guidance when delivering earnings report for the third quarter of the year.

The Latin America focused company had disappointed the market in August with a lower-than-expected updated 2018 production guidance, reflecting the inclusion of the RDM, Fazenda Brasileiro and Pilar mines in Brazil through its acquisition of Brio Gold.

It had then put guidance at 325,000-350,000 ounces of gold at an all-in sustaining cost of $940-$975 an ounce.

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Barrick maintains forecasts ahead of Randgold vote

By Reuters

Canada’s Barrick Gold Corp, which recently announced a $6.1 billion deal to acquire Randgold Resources Ltd, affirmed its 2018 gold and copper production forecast on Wednesday, reflecting improvements in operations.

Citing preliminary data, Barrick said its 2018 effective tax rate was expected at about 48 to 50 percent, up from a previous forecast of 44 to 46 percent, because of lower-than-expected sales from lower-tax mines. More details are expected when it reports quarterly results on Oct. 24.

In the third quarter, Barrick said it sold 1.2 million ounces of gold and 114 million pounds of copper, and produced 1.15 million ounces of gold and 106 million pounds of copper.

More details are expected when Barrick reports quarterly results on Oct. 24.

Gold production was about 8 percent higher than in the second quarter, while all-in-sustaining costs, a closely watched industry benchmark, were about 7 to 9 percent lower.

Third-quarter copper output was up 28 percent from the second quarter, Barrick said, largely reflecting gains at the Lumwana mine in Zambia. All-in-sustaining costs are expected to be 10 to 12 percent lower than in the previous quarter.

The average gold price was $1,213 per ounce, with copper at $2.77 a pound in the third quarter, down from second-quarter prices of $1,306 for gold and $3.12 for copper.

The miner said it expected to produce 4.5 million to 5 million ounces of gold this year, at an all-in sustaining cost of $765 to $815 per ounce.

Barrick also repeated its full-year copper production forecast of 345 million to 410 million pounds. All-in-sustaining production costs for 2018 are still seen at $2.55 to $2.85 a pound.

Shareholders of Barrick and Randgold will vote on Nov. 5 on an all-stock transaction that will create a company with operations in Africa, Australia, North and South America, Saudi Arabia and Papua New Guinea.

Investors backing the no-premium deal believe big improvements are possible under Randgold boss Mark Bristow, who becomes chief executive of the merged miner and is known as a deft operator in challenging jurisdictions.

“I look at the potential of what Barrick can become with Mark Bristow running the company,” said Joe Foster, portfolio manager at Van Eck, the biggest investor in Barrick and No. 2 holder in Randgold, and supporter of the deal. “I believe they can make it work.”

Opponents have argued that Randgold deserves a premium for its industry-beating performance and worry about a culture clash between Bristow and Barrick Executive Chairman John Thornton.

(Reporting by Susan Taylor; Editing by Peter Cooney)

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Mining in the Mekong: Myanmar to outperform, Thailand to underperform – report  

By Editor

The mining sector in the Mekong region will remain underdeveloped and dominated by domestic players in the coming years as foreign investment flows into the sector will be minimal amidst a myriad of risks, a recently published Mining in the Mekong Region report concludes.

Fitch Solutions Macro Research’s outlook for mining in the Mekong region report maintains that Myanmar will be an outperformer in the region while Thailand will underperform.

The outlook forecasts large, untapped mineral deposits of the countries in the Mekong region. While the Mekong region boasts rich mineral deposits of gold, copper, iron ore, bauxite, lead, tin and zinc, foreign investment flows into the sector are expected to remain low due to political uncertainty, resource nationalisation sentiment and poor infrastructure.

Myanmar is expected to lead in the Mekong region for mining industry growth, driven by the high production growth of tin, lead and coal. The country is experiencing a broadbased economic boom, while the construction sector continues to grow.

In contrast, Fitch reports that Thailand will be the underperformer of the region due to risk of political uprising and delays and cancellations of infrastructure projects.

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