12/01/2007
www.insidemetals.com
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Vol 2, Issue 23 |
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In This Edition...
Precious Metals Market Update Geopolitical
View
Gold Producer News
Website Updates
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Dear Subscriber, |
This newsletter will be published next on December
15, 2007.
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IN
THIS EDITION OF INSIDEMETALS
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In this edition of the InsideMetals Newsletter we'll
take a look at the impact of $800 gold on junior
exploration companies, precious metals trends,
Geopolitical issues, gold producer news and recent
website updates.
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PRECIOUS METALS MARKET UPDATE
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Gold closed
at $794.50/oz (London Fix) on November 29, 2007.
This is slightly higher than the $794.00/oz (London
Fix) closing price on November 15, 2007, when data
for the previous newsletter was gathered.
Silver
closed at $14.38/oz (London Fix) on November 29,
2007. This is a 2.6% decrease from the $14.82/oz
(London Fix) closing price on November 15, 2007.
Platinum
closed at $1443.00/oz (London Fix) on November 29,
2007. This is a 1.4% increase from the $1423.00/oz
(London Fix) closing price on November 15, 2007.
Palladium
closed at $343.50/oz (London Fix) November 29, 2007.
This price is 6.0% lower than the $365.50/oz (London
Fix) closing price on November 15, 2007. |
2007 Silver Nevada
Miner Bar - 99.9% Pure 5 Troy Ounces of
American History
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GEO POLITICAL VIEW
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 IMPACT
OF $800 GOLD ON JUNIOR EXPLORATION COMPANIES
In the newsletter published last January 12,
2007, under the Special Report section, we referred
to a Nevada Exploration Survey 2005 exploration
activity report (Sept. 2006), by the Nevada Division
of Mines (NDOM). The newsletter also referred to a
joint report by NDOM and the Nevada Bureau of Mines
& Geology, Update on Production & Exploration
Activity in Nevada, for 2006, which identified the
top 10 exploration projects in Nevada in 2006.
This report stated that an equal investment in the
stock of each company named as the project's owner
would have produced a total return of 34.8%. The
report, presented a table that identified the
companies and their top project, and the percent
gain, on each company's stock in 2006. All of the
identified companies were junior companies, except
for Newmont Mining Corp. In order to evaluate the
affect of $800 per ounce gold on junior exploration
companies, the project being explored by mining
giant Newmont was removed, and the data was
recalculated to show a 29.6% total return in 2006.
Refer to the table below for the 2006 Total Return.
In 2006, gold opened at $530 per ounce and closed
the year at $$632 per ounce. In 2007, gold open the
year at $640 per ounce, and closed on November 28,
2007 at $802 per ounce. Based on the 2007,
year-to-date results, the 2007 Total Return was
calculated as -3.5%.
All of the above companies are listed in the
InsideMetals.com Exploration Shopping Mall
The above data suggests that investors participating
in junior gold company investments need to be aware
of more than just high gold prices. All of the above
companies are still exploration stage companies and
are not yet in production; thus, they don't directly
benefit from these gold prices.
A review of the stock price charts for these junior
companies over 2007 indicates that stock price
fluctuations on the order of 20-30% are not uncommon
as profit-taking has taken place in response to
press releases, particularly those referring to
exploration results and financings. The stock price
performance of junior companies is very dependent on
news because they don't have earnings as a result of
precious metals sales.
In contrast to investing in junior exploration
companies, investing in companies that are actually
producing and selling gold in 2007 has produced
positive returns. The InsideMetals.com list of New
York Stock Exchange (NYSE) Gold Producer Stocks
includes 16 companies. Equal dollars invested in all
16 companies would have produced a return of 23.4%
in 2007. An equal dollar amount invested in the 14
companies ranked as positive by InsideMetals.com
would have produced a return of 28.5% in 2007,
year-to-date. In fact, an investment in all 16 of
these companies made in January 5, 2005, would have
produced a return of 121% over the period.
The stock price gains that have been made on the
Gold Producer Stocks of the NYSE are reflected in
the following chart which plots the 2007 compiled
returns of the InsideMetals' NYSE Gold Producer
Index and 2007 Gold Bullion (London Fix)
year-to-date.
This chart shows a good correlation in the rise of
the InsideMetals' NYSE Gold Producer Stock Index and
gold bullion starting in mid-2007, as gold prices
sharply increased from $665 per ounce.
Paid subscribers to InsideMetals.com have access to
the performance of all Gold Producer Stocks included
in InsideMetals.com, and they are organized
according to the stock exchange where they are
traded.
In general, the InsideMetals.com, NYSE Gold Producer
Stocks performed better than the 14 listed American
Stock Exchange (AMEX) Gold Producer Stocks, which
don't have a comparable number of mines, market
capitalization, and precious metals production as
the NYSE companies. The AMEX companies are more
impacted by development of new mines and start up
problems. An equal investment in all 14 of the AMEX
companies in 2007 would have resulted in a negative
2.8% return. An investment in the 5 positive ranked
AMEX Gold Producer Stocks would have produced a
+9.6% return in 2007, and a +27.5% return for an
equal investment in all 14 stocks since January 5,
2005.
An equal investment in the InsideMetals.com 5 listed
NASDAQ Exchange Gold Producer Stocks produced a
return of 30.6% in 2007. An investment in the 4
positive ranked NASDAQ companies would have produced
a +30.6% return in 2007, and a +132.3% return for an
equal investment in all 5 companies since January 5,
2005. The NASDAQ listed companies are more
comparable to the NYSE companies as they have large
market capitalizations and produce significant
ounces of gold that benefits from the high gold
prices.
Precious metals investors, who wish to minimize risk
in their portfolios, while sustaining double digit
returns should consider making investments in the
positive ranked companies in both the
InsideMetals.com NYSE and NASDAQ Gold Producer
Stocks. Select companies in the AMEX based on new
discoveries, and new mines could produce attractive
results, but require appropriate due diligence. The
Business Summaries provided by InsideMetals.com and
available to paid subscribers are a good source of
information for performing due diligence
investigations.
A timely example as to what can happen to an
exploration company is the recent announced
suspension of the Galore Creek, BC mine
construction. Galore Creek is jointly owned by
successful explorer, NovaGold Resources (NG), and
multi-metal producer Teck Cominco Ltd. (TCK). The
stock of NG lost approximately 53% of its value as
it declined $10.76 per share on November 26, 2007 as
a result of the announcement by NG that capital
costs to develop Galore Creek had risen to $5
billion from the previously announced $2.2 billion.
There was no comparable drop in the share value of
producer TCK.
Galore Creek had been scheduled for production in
2012. Changes in the construction of a tailings dam
and water-flow structures accounted for a majority
of the cost hikes.
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Whitney & Whitney
Inc. - A Nevada Based Management Consulting
Firm
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NYSE GOLD PRODUCER NEWS
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 November
20, 2007: Agnico Eagle Mines Ltd (AEM)
announced that 6,875,819 share purchase warrants
were exercised prior to their expiration on November
14, 2007, for proceeds of $130,640,561. The warrants
were issued pursuant to a warrant indenture dated
November 14, 2002 with Computershare Trust Company
of Canada. Each warrant entitled the holder to
purchase one common share of Agnico-Eagle for
$19.00. Agnico-Eagle issued 6,875,819 common shares
upon the exercise of the warrants.
November 27, 2007:
Coeur d'Alene Mines (CDE) announced that PROXY
Governance Inc., a third party independent proxy
advisory firm, has recommended that CDE shareholders
vote for the proposals related to the acquisition of
Bolnisi Gold NL and Palmarejo Silver and Gold
Corporation at the Company's Special Meeting of
shareholders scheduled for Monday, December 3, 2007.
Proxy believes this acquisition will benefit CDE in
their long-term goals.
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AMEX GOLD PRODUCER NEWS
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 November
19, 2007: Canyon Resources Ltd (CAU) and Atna
Resources Ltd jointly announced a transaction where
Atna will acquire all of the issued and outstanding
shares of CAU common stock for a total value of
approximately CDN$25.3 million. Under the proposed
transaction, CAU shareholders will receive 0.32
common shares of Atna for each common share of CAU.
The consideration represents a premium of 44.9% to
Canyon's closing share price on November 16, 2007,
or a 42.1% premium based on the 20-day volume
weighted average share prices for both companies
from that date.
November 22, 2007:
Claude Resources Ltd (CGR) has completed the
non-brokered private placement offering announced on
October 30, 2007. The offering consisted of a total
of 3,783,784 shares, issued on a flow-through basis,
at a price of CDN$1.85 per share, for gross proceeds
of CDN$7,000,000. Net proceeds from the offering
will be used primarily for expenditures on the
company's Madsen property in Red Lake, Ontario.
November 27, 2007:
Apollo Gold Corp (AGT) has entered into a lease
agreement with the Schumacher Estate for the surface
and mineral rights on approximately 319 acres,
located in Hislop, Ontario, Canada. This property is
located to the southeast of AGT's Black Fox project
property. The lease requires that AGT invest a
minimum of CDN$250,000 for exploration in the first
year of the lease and a minimum of CDN$1,000,000 for
exploration in the first two years of the lease. The
initial term of the lease is for 20 years and AGT
may extend it for additional periods of 20 years.
There is a 3% royalty on net smelter returns on the
leased property. AGT has also purchased property
from the Jensen Estate, which is also located in
Hislop, Ontario. The Jensen Property consists of 153
acres contiguous to the northwest boundary of the
Black Fox project. The Jensen Property has not been
previously explored. However, AGT's drilling results
near the Jensen Property at Black Fox indicate that
there is potential for the fault system to continue
onto the Jensen Property. The Jensen Estate retains
a 3% NSR royalty on production from the property.
Apollo has the first right of refusal on transfers
by the Jensen Estate of the 3% royalty and also has
the option to purchase 1.5% of the NSR royalty at
any time in the future for CDN$1,000,000.
November 27, 2007:
Endeavour Silver Corp (EXK) announced the
acquisition of an option to purchase the El Milache
properties from Porvenir Mines. EXK can acquire a
100% interest in the El Milache properties by paying
$50,000 and issuing 30,000 shares upon signing the
option agreement and paying an additional $50,000
after 18 months. EXK plans to explore and drill the
Santa Cruz vein and San Pedro manto targets in 2008.
November 27, 2007:
North American Palladium Ltd (PAL) filed a
preliminary prospectus supplement with Canadian and
US securities regulators relating to a proposed
marketed unit offering of $100 million. Each unit
consists of one common share and one-half of a
common share purchase warrant of PAL. The company
intends use the proceeds received from the offering
to fund the growth and development of its
operations, particularly to advance the Offset High
Grade Zone at the Lac des lles mine in Ontario, the
Shebandowan West Project, located approximately 62
miles from the mine, and the Arctic Platinum Project
in Finland.
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NASDAQ GOLD PRODUCER NEWS |
 November
29, 2007: Randgold Resources Ltd (GOLD) will
sell 6 million new shares for $35.25 each as they
seek to raise new capital. The offering, if fully
subscribed, would raise $211.5 million. Randgold
plans to use the net proceeds for the exploration
and development of the Tongon project in Ivory
Coast.
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INSIDEMETALS.COM WEBSITE UPDATES
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 Paid
Subscriber's Resources: The Business Summary
for Newmont Mining Corp. (NEM), has been updated on
the website to reflect its recently reported
operating and financial results for the 3rd quarter
of 2007.
Paid subscribers can view this update by clicking
the "All Gold Stocks" button bar under the
"Subscribers Resource" area on the left margin of
the website. This will take the user to the Index of
listed gold companies where the subscriber can then
use the "Quick Nav Bar" on the Index Page and then
click on "B" to view the Business Summary for the
requested company.
Potential subscribers can learn more about the
Reports and the "Gold Company Quick Nav Bar" by
going to "Tutorials" and clicking on the "About the
Reports Bar." Clicking on the "How to use
InsideMetals" bar in the Tutorials section will
explain many of the useful features that
InsideMetals.com offers to both Free and Paid
Subscribers.
Gold & Mineral
Exploration Shopping Mall: On November 27,
2007, InsideMetals.com announced that it added 4
Junior Gold Companies to its Gold and Mineral
Exploration Shopping Mall. The companies are listed
by their stage of development (Prospector, Explorer,
and Developer) and by stock exchange(s) where they
are traded (NASDAQ, American Stock Exchange,
Over-the-Counter Bulletin Board, Toronto Exchange,
and Toronto Venture Exchange).
Gold Explorers
Grandview Gold
Inc.: listed on the Toronto Stock Exchange,
is actively exploring for Carlin type gold deposits
in Nevada, and for Red Lake-type gold mineralization
in Canada.
U.S. Gold Corp.:
listed on the American Stock Exchange and the
Toronto Stock Exchange, is actively exploring the
Cortez Gold Trend in Nevada. In October they
announced gold assay results from their Tonkin
Springs and Limo Projects.
Gateway Gold Corp.:
listed on the Toronto Stock Exchange, is actively
exploring for gold deposits in Nevada. Gateway
recently announced finding gold mineralization in
diamond drilling at its Lower Mac Ridge project
located in northeastern Nevada.
Gold Prospector
Victoria
Resources Corp.: listed on the Toronto
Venture Exchange, is actively exploring for gold
deposits in Nevada and announced in October that it
will begin drilling on its 100%-owned Black Canyon
project located in North-central Nevada.
The Gold & Mineral Exploration Shopping Mall is
available to all viewers of the website and can be
accessed by clicking on its icon located on the
right side of the website's Home Page. The Gold &
Mineral Exploration Shopping Mall contains the names
of 97 exploration companies and links to each
company's website. The companies are categorized as
to whether they are exploring for "Gold" (precious
metals) or "Other" (copper, lead, zinc, molybdenum,
and/or industrial minerals), and are classified as
Prospector, Explorer, or Developer to reflect the
stage of their project's progress toward becoming a
producing company. The exchanges where the companies
trade at are also listed and linked for easy access.
The grouping of companies by classification on the
website allows the user to easily compare companies
at comparable stages of development. Some companies
are listed more than once as they trade on multiple
exchanges or they have production other than
precious metals.
Addition of Stock
Prices: Stock prices in U.S. dollars will
soon be posted for all of the stocks included in the
Gold & Mineral Exploration Shopping Mall. The prices
shown will be on a 20-minute delay.
Quarterly Profile &
Operating Results Reports: InsideMetals.com
will soon be producing and selling Quarterly Profile
& Operating Results for listed precious metals
producers. These reports will discuss the company's
most recent quarterly results, and will show on
Excel charts trends based on the company's stock
price performance in relation to the price of gold,
and a trend based on the quarterly difference (the
"Net") between the Realized Price received for
selling their gold production and the cost of
producing the gold sold. Look for an example in a
future newsletter.
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We hope you have enjoyed our newsletter.
The next newsletter will be published on Decemeber
15, 2007.
Sincerely,
InsideMetals
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