| 06/28/2008
www.insidemetals.com |
Vol
3, Issue 12 |
|
 |
In
This Edition...
Precious
Metals Market Update Geopolitical View
Gold
Producer News
Website Updates
|
|
| |
| Dear
Subscriber, |
| The
newsletter will be published next on July 12, 2008 |
| IN
THIS EDITION OF INSIDEMETALS |
|
In this edition of the
InsideMetals Newsletter, we'll take a look at gold
prices outpacing rising mining costs, as well as
precious metals trends, gold producer news and recent
website updates.
|
|
 |
| In
This Issue |
| Precious
Metals Markets Update |
| 2007
Silver Nevada Miner Bar |
| Geopolitical
View |
| Whitney
& Whitney Inc. |
| NYSE
Gold Producer News |
| AMEX
Gold Producer News |
| NASD
Gold Producer News |
| InsideMetals.com
Website Updates |
|
| |
| PRECIOUS
METALS MARKET UPDATE |
 Gold
closed at $909.50/oz (London Fix) on June 26, 2008.
This is 3.5% higher than the $878.50/oz (London Fix)
closing price on June 5, 2008, when data for the
previous newsletter was gathered.
Silver closed
at $16.88/oz (London Fix) on June 26, 2008. This is a
1.4% increase from the $16.65/oz (London Fix) closing
price on June 5, 2008.
Platinum
closed at $2068.00/oz (London Fix) on June 26, 2008.
This is a 4.8% rise from the $1974.00/oz (London Fix)
opening price on June 5, 2008
Palladium
closed at $465.00/oz (London Fix) on June 26, 2008.
This price is 10.5% higher than the $421.00/oz (London
Fix) closing price on June 5, 2008.
|
| Advertise
to a world-wide targeted audience |
|
| 2007
Silver Nevada Miner Bar - 99.9% Pure 5 Troy
Ounces of American History |
|
|
| GEO
POLITICAL VIEW |
 GOLD
PRICES OUTPACE RISING MINING COSTS
As developing nations modernize there will be
continued long term demand for commodities. Commodity
prices will remain volatile, as noted with the oil
prices that have recently pushed gasoline prices in
the U.S. to over $4.00/gallon at the pumps.
Anyone who drives a car or buys anything is aware of
higher prices.
A yard-stick that can be used to measure price
increases in commodities is the Goldman Sachs
Commodity Index (S&P GSCITM). The S&P GSCITM
has been designed to provide investors with a reliable
and publicly available benchmark for investment
performance in commodity markets comparable to the
S&P 500. The performance of the S&P GSCITM
reflects the change in commodity prices, and is a
composite index of un-leveraged, long-only investment
in broadly diversified commodity futures.
In April 2008, the S&P GSCITM increased 7.96% as a
result of high energy prices. The S&P GSCI Energy
Index was the leading sector, adding 11.32% for the
month, resulting in YTD total return of 23.47%. The
second leading sector was the S&P GSCI Livestock
Index which had a 6.82% increase in April. During the
month the S&P GSCI Precious Metals Index declined
5.84%. This was after a decline of 6.77% in March
after gold rose above $1,000 an ounce which incited
profit taking that dropped gold prices from a closing
high of $1011.25 per ounce (London Fix) on March 17,
2008, to a recent low of $853.00 per ounce (London
Fix) on May 1, 2008.
On June 25, 2008, BMO Global Commodity Strategist,
Bart Melek suggested that rising food and energy
prices, and uncertainty in equity markets, and a
continued weakness in the U.S. dollar will renew the
interest in gold.
Many analysts are concerned about the increased cost
of mining as fuel and materials costs have exploded.
In reality, over the last year the price of gold has
continued to outpace the rise in prices.
Insidemetals.com, a website for investors interested
in the stocks of U.S. listed precious metals gold
producers has reviewed its data base on the 35
producing gold companies that it reports on, and is
able to report some supporting statistics concerning
the spread between realized gold prices per ounce and
the cash cost of production per ounce. This spread is
reflective of a company's profitability on operations.
It is also important to report that there are distinct
differences in the financial character of the
companies based on the stock exchange where they
trade. These differences have important investment
ramifications as they reflect the impact of rising
costs over the respective companies.
InsideMetals reports on 15 companies listed on the New
York Stock Exchange (NYSE). These 15 companies have a
total market capitalization of $172 billion. The
current average price of these stocks is $26.54 per
share. At the end of the first quarter of 2007, the
cash cost of production from the 11 gold producers on
the NYSE was $261 per ounce (doesn't include the
silver producers, the platinum-palladium producer
Stillwater Mining Co., and Peruvian based Buenaventura
which doesn't report gold cash costs). The average
realized gold price for these companies in Q1'07 was
$617 per ounce. Thus the spread (the difference)
between the average for Q1'07 realized gold prices and
cash costs was $356 per ounce. In Q1'08 the average
cash cost for the same 11 companies was $332 per ounce
while the realized gold price was $925 per ounce. The
spread of the averages for Q1'08 was $593, an increase
of $261 an ounce over the spread for Q1'07.
InsideMetals reports on 15 companies listed on the
American Stock Exchange (AMEX). These 15 companies
have a total market capitalization of $8.16 billion.
The current average price of these stocks is $3.82 per
share. At the end of the first quarter of 2007, the
cash cost of production from 10 gold producers on the
AMEX was $432 per ounce (doesn't include the silver
producers, Apex Silver Mines Ltd. and Endeavor Silver
Corp., the platinum-palladium producer, North American
Palladium Ltd., and Western Goldfields Inc. which was
just starting commercial production in early 2008).
The average realized gold price for these companies in
Q1'07 was $651 per ounce. Thus the spread of the
averages for Q1'07 was $219 per ounce. In Q1'08 the
average cash cost for the same 10 companies was $512
per ounce while the realized gold price was $906 per
ounce. The spread of the averages for Q1'08 was $394,
an increase of $168 an ounce over the spread for
Q1'07.
InsideMetals reports on 5 companies listed on the
NASDAQ. These 5 companies have a total market
capitalization of $13.75 billion. The current average
price of these stocks is $29.21 per share. At the end
of the first quarter of 2007, the cash cost of
production from 3 gold producers on the NASDAQ was
$429 per ounce (doesn't include the silver producer,
Pan American Silver Corp., and royalty owner Royal
Gold Inc. which doesn't operate any of its mining
interests. The average realized gold price for these
companies in Q1'07 was $595 per ounce. Thus the spread
of the averages for Q1'07 was $166 per ounce. In Q1'08
the average cash cost for the same 3 companies was
$523 per ounce while the realized gold price was $904
per ounce. The spread of the averages for Q1'08 was
$381, an increase of $215 an ounce over the spread for
Q1'07.
The rise in realized gold prices is out pacing the
cash cost of mining, and should continue over the
balance of 2008.
From the above analysis of the financial character of
each of the above stock exchanges with respect to
their listed gold producers, it can be observed that
the much larger companies on the NYSE are less
affected by rising costs than either the companies on
the AMEX or the NASDAQ as evident from their much
lower cash costs. There are several reasons for this.
The NYSE companies have greater financial resources,
which allow them to get preferred financing. These
NYSE companies also have experienced managements which
have successfully built numerous mines in diverse
regions of the world which include prolific mining
districts where having existing adjacent
infrastructure greatly reduces costs.
Many of the AMEX and NASDAQ listed companies are
single-mine companies and some of them are located in
politically unstable countries.
Investors long on gold will be rewarded for their
investment in the NYSE gold producers.
|
| Advertise
to a world-wide targeted audience |
|
| Whitney
& Whitney Inc. - A Nevada Based Management
Consulting Firm |
|
|
| NYSE
GOLD PRODUCER NEWS |
 June
10, 2008: Coeur d'Alene Mines (CDE) has
released exploration results for the Palmarejo Silver
Project in Mexico. Reserves at Palmarejo have
increased total CDE reserves by 29% to 278.8 million
ounces of silver. Production, beginning in the first
half of 2009, is expected to increase companywide
silver production 28% next year to an estimated 23.6
million ounces. 2009 operating cash flow from
Palmarejo is expected to nearly double CDE's total
operating cash flow to $236.0 million, based on a
$17.00/oz silver price and $850/oz gold price.
June 12, 2008:
Iamgold Corp (IAG) announced positive results of an
internal scoping study on a near surface portion of
the Westwood project. This is an advanced exploration
project located adjacent to their Doyon mine in the
Abitibi region of Quebec. Production at the Westwood
project could begin in the second half of 2010. Based
on a revised resource estimate completed in April
2008, the measured and indicated resource were
estimated at 345,000 tons grading 0.201 oz/t gold,
1.575 oz/t silver, 0.2% copper and 4.5% zinc. The cost
of the project is expected to about $31 million.
June 17, 2008:
Barrick Gold Corp (ABX) announced that according to
the terms of the Placer Dome 2.75% Convertible Senior
Debentures due 2023, the Debentures may be surrendered
for conversion until September 30, 2008, at a
conversion rate of 40.1321 Common Shares per $1,000.00
principal amount of Debentures.
June 18, 2008: Coeur
d'Alene Mines (CDE) announced their San Bartolomé
mine, the world's largest pure silver mine, has poured
its first silver doré. The San Bartolomé is expected
to produce six million ounces of silver in 2008 and
nine million ounces in 2009. The mine contains an
estimated 153 million ounces of probable silver
reserves and 34 million ounces of measured and
indicated silver resources with an expected 14 year
mine life. The mine will enhance CDE's annual silver
production by 40%.
June 19, 2008:
Yamana Gold Inc (AUY) announced exploration updates
for its Gualcamyo project in Argentina, its El Penon
mine in Chile, its Pilar de Goias project in Brazil,
and Mercedes in Mexico. At Gualcamyo, drilling was
ongoing in the quarter with 2 underground and 2
surface drill rigs. This drilling produced positive
results. At El Penon, AUY reported that drilling of 14
holes may double the Bonanza North resource. Drilling
continued at Pilar de Goias with 4 drill rigs. A
resource estimate provided earlier shows an inferred
resource of 972,000 ounces of gold at an average grade
of 0.07 ounces per ton. Drilling continued at
Mercedes with 5 core rigs in the second quarter. Refer
to the press releases for details.
June 20, 2008:
Hecla Mining Co (HL) announced they are selling their
subsidiaries in Venezuela to Rusoro Mining Ltd. in a
deal worth $25 million. Rusoro will pay $20 million
and give up Rusoro stock worth $5 million to purchase
HL assets including leases for the Isidora gold mine
and La Camorra mining facility in southeastern
Venezuela.
June 24, 2008:
Silver Wheaton Corp (SLW) has filed a preliminary
prospectus in Canada and United States to qualify the
distribution of approximately 3 million new common
share purchase warrants to holders of two of its three
series of publicly-traded warrants. The New Warrants
are being offered to existing warrant holders to
exercise their Existing Warrants during a 20 business
day early exercise period starting August 8, 2008 and
ending September 5, 2008. If all of the warrants are
executed SLW will receive approximately CDN$136
million. SLW will issue approximately 3 million New
Warrants with an exercise price of US$20.00 per New
Warrant and the funds raised will be used to finance
growth.
June 26, 2008:
Gold Fields Ltd (GFI) has closed a shaft at the Kloof
Mine after there was a fatal accident killing two
workers. The accident was due to a seismic event,
which caused rocks to fall. The shutdown causes a loss
of over 700 ounces of gold per day.
|
| AMEX
GOLD PRODUCER NEWS |
 June
11, 2008: Apollo Gold Corp: (AGT) has entered a
purchase agreement with St Andrew Goldfields Ltd. to
purchase its Stock Mill complex located near Timmins,
Ontario for CDN$20 million. AGT made an initial
deposit of CDN$1.5 million and the balance is expected
to be paid by June 30, 2008. AGT has the right to
extend the closing date past June 30, 2008, but no
later than August 29, 2008. The consideration for the
acquisition also includes an obligation of AGT to
refund to St Andrew its bonding commitment at the
Stock Mine in the amount of approximately Cdn $1.2
million.
June 13, 2008:
Aurizon Mines Ltd (AZK) has announced results from its
2007 surface exploration program at its 100% owned
Kipawa Gold-Uranium-Rare Earth project in northwestern
Quebec. Assays received confirm the grade potential
for uranium (U3O8), yttrium (Y) and rare earths
elements (REE).
June 16, 2008:
Claude Resources Inc (CGR) has raised an additional
CDN$1,051,000 in the secondary closing of its
debenture offering for a total of CDN$17,395,000. Each
of the 17,395 debenture units, which are priced at
CDN$1,000, include 100 warrants. Each warrant entitles
the holder to acquire one common share in the capital
of Claude Resources, at an exercise price of CDN$1.60,
until May 22, 2013. The debentures, which mature on
May 23, 2013 and contain an early redemption feature,
pay interest at a rate of 12.0% per annum with
interest paid monthly and the principal paid on
maturity.
June 18, 2008:
Endeavour Silver Corp (EXK) announced that exploration
drilling on its San Pedro properties in the Guanacevi
silver district of Mexico has encountered several new
zones of high grade silver mineralization, including
195 oz/ton silver and 0.327 oz/ton gold over 3.8 feet.
Seven of the twelve holes drilled have encountered
potentially economic mineralization. Full results can
be seen in EXK's press release.
June 18, 2008:
Eldorado Gold Corp (EGO) has signed a definitive
support agreement with Frontier Pacific Mining
Corporation where Frontier's Board of Directors has
agreed to unanimously support EGO's revised offer to
acquire all of the outstanding common shares of
Frontier. In addition to the original offer,
consideration of 0.1220 EGO common shares and
CDN$0.0001 in cash, Frontier shareholders will also
receive one exchange receipt for each common share of
Frontier. Each Exchange Receipt will entitle its
holder to receive, without payment of additional
consideration, 0.008 common shares of EGO, conditional
upon a joint ministerial resolution being issued prior
to July 1, 2009. If the joint ministerial resolution
accepting the environmental terms of reference is not
received prior to July 1, 2009, the Exchange Receipts
will be cancelled.
June 23, 2008:
Gammon Gold Inc (GRS) advises that Q2 2008 forecasted
production and cash flow performance are expected to
outperform Q1 2008. The strength of the operating cash
flow continues to fund 100% of the expansion capital,
the new aggressive exploration program and allows GRS
to continue with its accelerated debt repayment
program. GRS anticipates production in Q2 will
increase to 68-72k gold equivalent ounces at total
cash costs of between $475 to $500 per gold equivalent
ounce, which represents a 44-53% increase over Q3
2007, and a 32-37% improvement over cash costs in Q3
2007.
June 24, 2008:
Crystallex International Corp (KRY) has been notified
by the Venezuelan Government that the Las Cristinas
gold project may still be able to be permitted if the
project makes some modifications. These modifications
include remediation of the environmental damage when
the mine closes, contributing to cleaning up the
damage already caused by illegal miners in the area
and creating more social projects in the area.
|
| NASDAQ
GOLD PRODUCER NEWS |
 June
12, 2008: Royal Gold Inc. (RGLD) reported that
its executive chairman, Stanley Dempsey sold 8,500
shares of common stock on June 10, 2008 under a
prearranged trading plan for $30.65 to $30.69 per
share.
|
| INSIDEMETALS.COM
WEBSITE UPDATES |
 New
Ranking Numbers & Financials: All of the
year-end 2007 annual reports and/or SEC 10-K'
financial reports have been filed by the
InsideMetals.com Gold Producer Stocks. Their financial
data has been compiled and will be posted to the
website next week. The updated financial data can be
viewed by GOLD Subscribers by using the "Quick
Nav Bar" on the Index Page and then by going to
the table that will link to the updated data.
For each company new Ranking Numbers have been
computed that reflect their financial performance in
2007. A positive ranking number indicates that the
company generated a profit. Companies with more
positive ranking numbers will tend to perform better
as investments than companies with less positive
ranking numbers. Companies with negative ranking
numbers should be carefully studied using the
InsideMetals.com Business Summaries. There may be
factors that have resulted in positive stock
performance in anticipation of future results.
The Ranking Numbers and financials can be viewed by
going to the Index Page and navigating as explained
below:
To view an individual company's 2007 financial data,
go to the large table listing "All Gold
Companies" and click on "F."
To view the 2007 financial data, compiled by Stock
Exchange, go to that table and click on the link to
the appropriate exchange or click on the link to
"All Gold Companies."
The financial performance of the gold producing
companies to date, based on their 2006 financial data
can viewed by stock exchange or a compilation of
"All Gold Companies" by clicking on the
link that will display the performance over the
required time period..
For those newsletter subscribers who are not yet GOLD
Subscribers to InsideMetals.com, the publication of
these ranking numbers in the website will assist
investors in identifying mining stocks that are
undervalued, especially as a result of the recent
decline in gold prices. Become a GOLD Subscribe to get
the benefit of these rankings.
Mineral Producer
Stocks: On June 17, 2008, InsideMetals.com
added 4 coal producers to its list of Mineral Producer
Stocks. The newly featured coal companies are
described below:
Arch Coal Inc.:
listed on the New York Stock Exchange engages in the
production of steam coal and metallurgical coal from
surface and underground mines. On June 5, 2008, Arch
Coal reported that Senior Vice President of coal
operations exercised options for 5,000 shares of
common stock under a prearranged trading plan,
according to a recent SEC filing.
Consol Energy Inc.:
listed on the New York Stock Exchange is a multi-fuel
energy producer, and supplier of electrical power
largely from its coal mining. Consol reported on June
9, 2008, that it spent $510,000 to lobby the federal
government on legislation to promote the development
of liquid fuel from coal.
James River Coal
Company: listed on the Nasdaq Exchange mines,
processes, and sells through its subsidiaries
bituminous, steam and industrial grade coal. On June
11, 2008, the shares of James River soared 7.8% as
prices for coal in the eastern U.S. climbed on strong
demand from its customers in Europe.
Peabody Energy Corp: listed
on the New York Stock Exchange engages through its
subsidiaries exploration, mining, and production of
coal worldwide. On June 5, 2008, Peabody announced
that it is implementing management changes to its U.S.
coal operations. Jane Hull becomes the new Group
Executive for the Powder River Basin Operations;
Charles Meintjes now becomes the Senior Vice President
of Engineering and Continuous Improvement; and Kemal
Willamson becomes Group Vice President of Operations.
The Mineral Producer Stocks can be viewed by clicking
on the designated icon on the InsideMetals.com Home
Page.
|
|
| |
 30
Day No Risk Offer to Our Premium Subscription
InsideMetals provides unique coverage of over 35 major
publicly traded gold producers across the NYSE,
NASDAQ and AMEX: everything from full business
summaries, financials, production and reserve reports,
news, tools and more.
Not only do you receive these great benefits, you get positive
and negative ranking numbers for each gold stock
that indicate investment potential... empowering you
to make educated and informed investment decisions.
Why not see for yourself how valuable InsideMetals is
by taking full advantage of our 30 Day No Risk Offer?
Get
your 30 Day No Risk Subscription Now! |
|
|
We
hope you have enjoyed our newsletter.
The newsletter will be published next on July 12, 2008
Until next time!!!,
InsideMetals
|
|
|
