The hidden crisis in the gold business

By Michael J. Kosares

Barrick CEO Jamie Sokalsky has some things to say about the gold mining business that will come as a revelation to many gold owners. In a speech at the London Bullion Market Association’s conference in Hong Kong last November, Sokalsky wades into a largely hidden crisis in the gold business — static mine production that has not responded positively to the rising prices over the last several years, and is unlikely to ramp up even if prices go higher from here.

Jamie Sokalsky

“There are very few mega-sized gold mines currently in production in the world,” said Sokalsky.

“In terms of a cross-section of total gold mines by size, there are about 400 gold mines producing. Only 156 of these, or about 40%, produce over 100,000 ounces per year. . .Twenty-one mines produce over 500,000 ounces per year. . .Only six mines produce over 1 million ounces. . .It is also interesting to note that although there have been some gold discoveries, none can be described as a super giant — that 20-million-plus ounce deposit. They are harder to find and that is directly impacting production growth because those super-giant discoveries are really the ones that can have a material impact on supply.”

Continue reading . . .

Endeavour sees cuts in gold exploration

By Olivier Monnier

Gold producers are likely to scale back exploration programs as lower prices spur cost cuts, the head of Endeavour Mining Corp. said.

Neil Woodyer

“The industry has just gone through quite a shock in terms of reduction in the gold price,” Chief Executive Officer Neil Woodyer said in Abidjan, Ivory Coast. “Mining expenditure on projects will be down. The industry will be focused on cost containment, essential expenditures and less exploration.”

Bullion has lost 12 percent this year, tumbling into a bear market last month, as the MSCI All-Country World Index of equities climbed 11 percent.

Efforts to boost economic stability have eroded demand for haven assets such as gold as money starts to flow into riskier investments.

The drop in prices has already affected “economic projects and ongoing operations” in the industry, Woodyer said in an interview yesterday. “It’s a process all mining companies are going through, and some are holding their development projects until they see results of changes in the economic environment.”

Continue reading . . .

Big Canadian miners should think small

By Eric Reguly
The Globe and Mail 

Barrick Gold’s Pascua-Lama mine site on the Chilean-Argentine border.

I think I have figured out Canadian gold mining executives. They assume that gold is not a mineral; it is a perishable commodity that will rot in the ground, like a potato, unless it is dug up immediately.

And not just immediately but in vast quantities. Canadian gold mining executives are obsessed with the concept of bigness. They want projects they can label “game changers,” ones capable of vaulting medium-sized firms into the big leagues, or thrust the biggies to the very top of the global heap. Bigness permeates their lives. They drive big cars, live in big houses. Some, like Barrick Gold Corp. boss Peter Munk, bob around the planet in the biggest of yachts.

The problem with bigness is that it translates into trouble when it’s extended to corporate development. Big projects are big gambles. They invariably come in far over budget, sometimes billions over budget, which gets shareholders rather annoyed. Big projects also attract lots of attention from environmental activists, politicians and aboriginal peoples. The result is expensive delays and bad publicity.

Continue reading . . .

Gold’s fall pressures South Africa mines

By Devon Maylie, Diana Kinch and Francesca Freeman
The Wall Street Journal

The recent plunge in gold prices has significantly raised the stakes in talks between South Africa’s gold mine operators and mine workers, set to kick off Friday when the country’s National Union of Mineworkers plans to present a claim for a double-digit pay rise.

The call for higher wages — which will be echoed by the Association of Mineworkers and Construction Union within two weeks — comes as employers face pressure to cut costs to retain profitability amid lower gold prices.

Gold prices have tumbled nearly 12% since the beginning of the year in sometimes erratic trading. At one point the gold price plunged 15.5% in just three days last month before recovering to the current level of $1,465 Thursday.

Continue reading . . .

Coeur d’Alene restructuring continues

Kitco News

Mitchell Krebs

Restructuring of the mining company Coeur d’Alene Mines Corp. is continuing and is something that will take time, said Mitchell Krebs, president and chief executive officer of the firm, on Thursday.

“We’re making steady progress,” Krebs said of the restructuring of the firm. He spoke in a conference call with analysts after the release of the company’s first-quarter earnings.

That restructuring is a top-down review of the firm, which included adding new staff in several areas, buying back shares, reducing costs and moving the company headquarters to Chicago this summer and changing the name to Coeur Mining, pending shareholder approval. The restructuring is something that started last year and will continue, even as prices fell sharply last month, he said.

Coeur, Krebs said, is looking to “succeed in the new world of mining.”

Continue reading . . .

Database of Common Stock Warrants

Help Us Spread The News

By Dudley Pierce Baker

Over the weekend we have greatly expanded and enhanced our warrant database to now include all warrants trading in the United States and Canada and for all industries and sectors.

To the best of our knowledge, this information has never been available before in one service. We are proud to bring all of this information to the attention of our subscribers, readers and followers and trust you will assist us in getting this news out to the investment community.

We realize many investors in the world are not interested in the natural resource sector. How about, banking, financial services, oil & gas, automotive, pipelines, restaurants, etc.? All industries and sectors are included in our databases.

If there is a warrant trading in the United States or Canada, we follow it and provide subscribers will all of the information and leverage calculations to make an informed decision.

Join us now for a world of new investment opportunities.



Brent Cook on volatile junior gold stocks

By Tommy Humphreys 

Brent Cook

We called up Brent Cook, economic geologist and editor of Exploration Insights, for a quick conversation on the junior resource sector as we head into the summer doldrums yesterday.

(Audio MP3 download link here.)

Mining stocks are cheap but Brent’s not calling the bottom yet. “If you buy something in this market, be prepared to buy the same number of shares at half the price and have enough money to do that again, assuming your thesis holds together,” he told us.

Brent is optimistic for the good projects, however: 100 of the 1800 TSX-V companies are undervalued, he believes. Eventually, larger mining companies will need to acquire their deposits. He sees acquisitions picking up in the next 6 to 24 months.

Continue reading . . .

Crazy, but we believe in gold stocks

By Adam Hamilton & Scott Wright
The Bull (Australia) 

Gold mining is a very tough business. Not only is it highly capital-intensive and chock-full of environmental risks, its revenues are entirely at the mercy of a volatile commodity. It requires some serious mettle to succeed mining gold.

But despite super-high barriers to entry and the countless risk factors that come with mining, the world needs gold, and somebody’s got to produce it. And believe it or not, a lot of money can be made in this business.

At a high level gold mining is like any other business. Produce your product at costs less than what you sell it for, and you ought to prosper. And the wider that spread, the more you prosper.  But unlike most other business, the “what you sell it for” is an uncontrollable variable that can violently move in either direction.

Continue reading . . .

Aurcana’s Shafter Mine Welcomes Academia

By Jeffrey A. Baker
University of Texas at El Paso

While the shareholders of Aurcana Corporation (TSX VENTURE: AUN) anxiously awaited a 1 for 8 share-consolidation, I was preparing to return to the only perceivable source of problems either currently or in the foreseeable future for the Company. Sixteen of us headed out on a Society of Economic Geologists UTEP Student Chapter trip to visit Aurcana’s Shafter project as part of an effort to foster the growth of the Geologic Sciences in the area, and subsequent excursion to TRER (Texas Rare Earth Resources) April 26-28, 2013

On arrival to the little town of Marfa, Texas the enchantment of the desert southwest had filled the air; it was early in the evening on Friday April, 26 2013, and the landscape was beginning to relax after the relentless pounding of the Sun that happens in these parts of South Texas. Geologic history predominantly marks this region within structural controls; each serving as a library of knowledge about the events that created them, faults and veins waiting to be read like a book. The evidence of the faulting activity and volcanism that mineral deposits source from is prevalent in front of us, adding to the eager anticipation of the next morning where the Society of Economic Geologists UTEP Student Chapter had been invited to the site out at Shafter to attend a “hands on” tour of the operations provided by contributions from both Aurcana Corporation and the UTEP student chapter of SEG.

Continue reading . . .

Miners could gain by gold, silver shortage

By Jeb Handwerger
ETF Daily News 

When it looks as though things couldn’t get worse for precious metal mining equities, that may be just the time to buy for contrarians. Not only are the junior miners sloping to historic decade lows, but gold bullion which has held up considerably well in comparison has been hit hard recently by short selling, bearish bank reports and margin calls.

Now after this recent decline there is a palpable sense of panic and fear throughout the resource markets. This is the biggest decline since 2008 and 2003 when all the bad weather bears sold and missed out on 200% reversal moves in the mining indices.

Don’t make a similar mistake now. As I stated before, we should see a bounce. Hold on and add as we may be approaching a major bottom. I wrote recently that we may see a very powerful rebound as short covering and record investment demand returns to the precious metal sector.

Continue reading . . .