08/02/2008
www.insidemetals.com
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Vol
3, Issue 14 |
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In
This Edition...
Precious
Metals Market Update Geopolitical View
Gold
Producer News
Website Updates
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| Dear
Subscriber, |
The
newsletter will be published next on August 23,
2008
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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 gold
possibly testing $1,000 once again, production,
pricing and news, as well as precious metals
trends, gold producer news and recent website
updates.
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| 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 |
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PRECIOUS
METALS MARKET UPDATE
|
 Gold
closed at $918.00/oz (London Fix) on July 31,
2008. This is 2.3% lower than the $939.50/oz
(London Fix) closing price on July 10, 2008, when
data for the previous newsletter was gathered.
Silver
closed at $17.48/oz (London Fix) on July 31, 2008.
This is a 3.8% decrease from the $18.17/oz (London
Fix) closing price on July 10, 2008.
Platinum
closed at $1758.00/oz (London Fix) on July 31,
2008. This is a 12.1% drop from the $1999.00/oz
(London Fix) opening price on July 10, 2008.
Palladium
closed at $382.00/oz (London Fix) on July 31,
2008. This price is 14.7% lower than the
$448.00/oz (London Fix) closing price on July 10,
2008.
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GEO
POLITICAL VIEW
|
 GOLD
PRICES TO SOON TEST $1,000 AN OUNCE
At their annual meeting in Toronto, during a
question and answer session on May 20, 2008, Kevin
McArthur, President and CEO of Goldcorp stated
that he was certain that investors would soon see
4-digit gold prices again (as gold prices climbed
above $1,000 per ounce in March). In the last
month there have been several articles written
that have predicted a strong rise in the price of
gold, even though in the last couple of weeks
there has been a decline in the price of gold.
Since mid-July gold has declined from $986 per
ounce (London Fix) to close the month at $918 per
ounce, a decline of $68 per ounce (7 %).
In their recent Gold Commodity Update, Citigroup's
metals analysts John H. Hill and Graham Wark
predicted that gold is likely to again exceed
$1,000 per ounce at the end of 2008, and to climb
even higher through 2009-2010. These analysts
stated that supply and demand factors favor gold
during the second half of 2008.
On July 14, 2008, investment bank, USB reported
that it raised its short-term gold price forecast
as a result of renewed financial market turmoil
over the health of U.S. mortgage companies Fannie
Mae and Freddie Mac and the appeal of gold as a
safe haven. USB said it sees the average price of
gold over $1,000 an ounce over the next month. The
bank also forecast that gold would reach $1050 an
ounce over the next 3 quarters.
Gold prices have been easing in the second half of
July as oil prices have declined and the U.S.
dollar has strengthened. On July 30, 2008, there
was a broad decline in commodities as a result of
a strong U.S. dollar. Most commodities are priced
and traded in U.S. dollars. On Tuesday, July 29,
2008, oil tumbled to a 7-week low on demand
worries and gains in the dollar. Oil has now
fallen more than $25 per barrel from its high of
$147.27 reached on July 11, 2008.
At what point might the rise in gold prices
resume? Refer to the chart below which reflects
the one year relationship between the price of
gold (London Fix) and the value of the euro with
respect to the U.S. dollar. This chart shows a
strong upward movement in the price of gold from
approximately $660 an ounce at the beginning of
August 2007, to over $1,000 an ounce in late March
2008. During this powerful movement in the price
of gold the value of the dollar with respect to
the euro declined until late November 2007 when
the U.S. dollar held its value (1.43 to 1.48
dollars per euro, represented by the heavy
horizontal line) for a period of approximately
10-weeks, until mid-February 2008, while there
were concerns of a recession in the U.S.
With a resumption of a weakening U.S. dollar from
mid-February 2008 thru mid-April 2008, the price
of gold climbed to a record high in March 2008 of
$1033 an ounce. For the last several months gold
bullion and the U.S. dollar have been trading in a
relatively flat consolidating pattern (1.60 to
1.54 dollars per euro, represented by the second
heavy horizontal line). Since May 2008, gold has
been more volatile than the U.S. dollar and has
been gradually trending upward. We expect the
price of gold bullion to soon spike upward on
weakness in the U.S. dollar and if oil prices
return to their recent highs.
The gold stocks that should benefit from an
up-turn in the price of gold are New York Stock
Exchange gold producers Goldcorp Inc, and Barrick
Gold Corp. based on recently reported 2008 second
quarter earnings.
During Q2'08 Goldcorp began the quarter trading at
a stock price of $38.75 per share, and reached a
high of $51.06 per share on July 14, 2008, an
increase of 32%. Goldcorp has since declined by
27% to close the quarter at $37.35 per share.
Goldcorp is currently trading at approximately
$36.50 per share. At the close of the quarter
Goldcorp reported adjusted net earnings of $83.2
million on gold sales of 556,200 ounces. A
non-cash foreign exchange loss on the evaluation
of future income tax liabilities led to a reported
net loss of $9.2 million for the quarter. While
gold production was approximately 10% lower than
expected in the quarter, production guidance for
2008 has been revised to 2.3 to 2.4 million ounces
of gold at a total cash cost less than $300 per
ounce compared to an initial 2008 production
forecast of 2.6 million ounces at total cash cost
of $250 per ounce..
The share price of Goldcorp should rise on the
strong quarterly results and strong margins based
on rising gold prices and a low $300 per ounce
total cash cost.
During Q2'08 Barrick began the quarter trading at
a stock price of $41.92 per share, and reached a
high of $50.39 per share on July 14, 2008, an
increase of 32%. Goldcorp has since declined by
16% to close the quarter at $42.35 per share.
Barrick is currently trading at approximately
$40.58 per share. At the close of the quarter
Barrick reported a net income rise increase of 22%
to $485 million on gold sales of 1.866 million
ounces. Barrick is on track to meet the low range
of its 2008 forecast of 7.6 to 8.4 million ounces
of gold. Total cash costs for the year have been
revised upward to a range of $425 to $445 per
ounce.
The share price of Barrick should rise on the
strong quarterly results and strong margins based
on rising gold prices and a slight increase in
their Q2'08, $417 per ounce total cash cost.
Another company that we expect to do well when
gold turns upward is Yamana Gold Inc. The company
will report its Q2'08 earnings after close of
business on August 6, 2008. During Q2'08, Yamana
began the quarter trading at a stock price of
$14.04 per share, and reached a high of $16.57 per
share on June 27, 2008, an increase of 8%. Yamana
has since declined <1% to close the quarter at
$16.54 per share. Yamana is currently trading at
approximately $12.25 per share. At the close of
the quarter Yamana produced 260,000 gold
equivalent ounces which comprise 205,000 ounces of
gold, 2.8 million ounces of silver, and 36.6
million pounds of copper. Yamana expects to
produce 610,000 to 685,000 gold equivalent ounces
in 2008.
The above noted companies will benefit from higher
gold prices. The average price of gold (London
Fix) for the second quarter was $896 per ounce.
The average price of gold for the month of July is
$940 per ounce. A continuation of high gold prices
as forecast will result in improved earnings for
Barrick, Goldcorp, and Yamana.
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NYSE
GOLD PRODUCER NEWS
|
 July
16, 2008: Harmony Gold Mining Ltd (HMY)
announced that the Government of Papua/New Guinea
has approved a joint venture between HMY and
Newcrest Mining Ltd. The approval is the start of
formalities between the two companies and the
development of the joint venture interests in
Papua New Guinea. These include the Hidden Valley
gold mine which is expected to commence production
mid-2009 and the Wafi Golpu copper/gold deposit.
July 21, 2008:
Barrick Gold Corp (ABX) has entered into a support
agreement with Cadence Energy Inc for the all cash
offer of $6.75 per share submitted to the Board of
Cadence on July 17, 2008. The Cadence Board of
Directors has advised shareholders to accept the
offer from ABX. The agreement gives ABX the right
to match any superior proposal and includes
customary non-solicitation covenants. Under
certain circumstances, if ABX's offer is not
successfully completed, Cadence will be required
to pay a termination fee of $11.4 million.
July 23, 2008:
Iamgold Corp (IAG) has acquired a royalty on the
Doyon/Westwood property in Quebec from Barrick
Gold Corp (ABX) for $13 million in cash. This
eliminates the royalty obligation on the Doyon
mine, which is 24.75% of the gold price above $375
per ounce. Based on current gold prices, the
change immediately reduces cash costs at Doyon by
$140 per ounce. For the Doyon Division which
includes the Doyon and Mouska mines, the reduction
in cash costs for the rest of the year is
estimated at $80 per ounce at current gold prices.
July 24, 2008:
Iamgold Corp (IAG) announced an increase in the
mineral resources at the Buckreef Project, located
in northern Tanzania. Buckreef is an advanced
exploration gold project containing 1 million
ounces of gold in 17.7 million tons of measured
and indicated resources at an average grade of
0.058 ounces per ton gold. An additional 86,000
ounces of gold have been added to the inferred
resource category at an average grade of 0.082
ounces per ton gold.
July 24, 2008:
Kinross Gold Corp (KGC) will acquire Canada-based
Aurelian Resources Inc. for approximately $1.18
billion in an effort to increase reserves. KGC
will pay 0.317 KGC shares, plus 0.1429 of a
warrant, for each Aurelian share. The warrant will
have an exercise price of $32 per KGC share, and
will expire within five years. The $1.18 billion
deal gives KGC control over Aurelian's gold,
silver and base metals reserves in Ecuador's
Cordillera del Condor region.
July 24, 2008:
Yamana Gold Inc (AUY) released resource estimates
and updates for La Pepa, Jeronimo and Amancaya.
The La Pepa project is located in Chile's prolific
Maricunga gold belt and this first resources
estimate on the Cavanche area includes 1.985
million gold ounces of measured and indicated
resources as well as 561,000 gold ounces of
inferred resources. The Jeronimo project also
located in Chile is a Joint Venture with
Corporacion Nacional del Cobre de Chile (Codelco),
with AUY holding a 57% interest. Indicated
resources at the Jeronimo project are estimated to
contain 627,000 ounces of gold and 1.53 million
ounces of gold in the Inferred category. The
Amancaya project is also located in Chile near
AUY's El Penon mine and contains an inferred
resource estimate of 407,000 gold equivalent
ounces.
July 29, 2008: Iamgold
Corp (IAG) released results of the Pre-Feasibility
Study for the Quimsacocha Gold Project in Ecuador.
The study shows that during the first three years
of production, Quimsacocha will produce on average
224,000 ounces of gold per year at an average
grade of 0.207 oz/ton Au with cash costs averaging
$214 per ounce before royalties and profit
sharing. The operation will generate, over the
first three years, a pre-tax cash flow of $352
million. Over a projected mine life of 7.5 years,
the current deposit will produce an average of
202,000 ounces of gold per year at an average cash
cost of $272 per ounce, generating a pre-tax
operating cash flow of $669 million. The Study
shows an Internal Rate of Return, using
undiscounted cash flow, of 21.3% and has an
estimated payback within 35 months.
July 31, 2008: AngloGold
Ashanti LTD (AU) has entered an agreement with
Eldorado Gold Corporation (EGO) to acquire 100% of
EGO's Sao Bento Mine for AU shares worth $70. The
Sao Bento Mine is located in Brazil and was closed
down by EGO a year and a half ago. The Sao Bento
mine is in the area of AU's Corrego do Sitio
operation. Au is looking at the viability of
exploring the sulfide ore resource potential at
Sao Bento. Prior to the acquisition of Sao Bento,
AU expected that Corrego do Sitio could produce
100,000 ounces of gold per year over a 14 year
life with production scheduled to start in
mid-2011. Sao Bento could double the scale of the
Corrego do Sitio operation.
July 31, 2008:
Goldcorp Inc (GG) has made an agreement with Gold
Eagle Mines Inc to acquire all of the outstanding
shares of Gold Eagle for $1.5 billion. Gold
Eagle's principal asset is the world class Bruce
Channel gold discovery situated along the prolific
Red Lake Trend adjacent to GG's Red Lake gold
mine. Each common share of Gold Eagle will be
exchanged for CDN$6.80 and 0.146 shares of GG.
Gold Eagle shareholders will have the ability to
receive cash, GG shares or any combination of the
two. The deal is expected to close in September
2008.
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AMEX
GOLD PRODUCER NEWS
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 July
16, 2008: Eldorado Gold Corp (EGO) has
taken up and accepted for payment an additional
4.9 million common shares of Frontier Pacific
Mining Corporation that were offered since its
July 2, 2008 offer to purchase all of the
outstanding common shares of Frontier. The offer
expired as of 5:00 pm on July 15, 2008. Together
with the 162.2 million common shares of Frontier
taken up by EGO on July 3, 2008 and the 4,871,300
held by EGO prior to its making the offer, EGO
will own approximately 167.2 million common shares
of Frontier, representing over 95% of Frontier's
outstanding common shares. Since the offer has
been accepted by more than 90% of Frontier
shareholders, EGO intends to exercise its right to
acquire the remaining approximately 8.8 million
outstanding common shares of Frontier.
July 17, 2008:
Northgate Minerals Corp (NXG) has released
additional drilling results from the
Young-Davidson project. Highlights from the
drilling include 4 previously established resource
zones form a near continuous gold system of
overlapping lenses cut by numerous post mineral
dikes. In addition, a new mineralized zone has
been found. Highlights include drill holes 75 and
75A, which respectively, intersected 0.122 oz/ton
of gold over 405 feet and 0.120 oz/ton gold over
1,150 feet.
July 17, 2008:
Crystallex International Corp (KRY) filed a
rebuttal with the Minister of the Environment and
Natural Resources of Venezuela. The appeal is in
response to the denial of KRY's first appeal to
the Director General of Permitting Regarding the
Las Cristinas project. KRY filed an appeal on May
12, 2008 to the Director General in response to
his communication denying the request for the
permit to affect natural resources for the Las
Cristinas project. The Director General denied the
initial appeal and advised Crystallex of its
rights under Venezuelan law to appeal directly to
the Minister of MinAmb. The Minister has, under
statute, 90 business days in which to issue a
decision on the appeal.
July 21, 2008: Claude
Resources Inc (CGR) announced that dewatering of
the shaft at the Madsen mine at Red Lake, Ontario
passed the 11th Level on July 14, 2008. The
dewatering process remains on track to enable CGR
to start underground drilling from the 12th Level.
July 24, 2008:
Apollo Gold Corp (AGT) raised $20,401,375 as they
completed its previously announced offering of
units. AGT sold 40,806,500 units, with each unit
representing one share of stock plus one-half of
one common share purchase warrant, for 49.5 cents
each. AGT will use the proceeds to fund its
proposed acquisition of the St. Andrew Goldfields
mill complex in Timmins, Ontario, the development
of the Black Fox project, and for working capital
and general corporate purposes.
July 24, 2008:
Crystallex International Corp (KRY) attended a
meeting with the Venezuelan Government on July 18,
2008 regarding permitting for the Las Cristinas
project. The Venezuelan government has advised the
Ministry of Environment, the department in charge
of permitting, to reconsider issuing a permit for
the Las Cristinas project if KRY would make
modifications to the project. KRY has also been
told they have the support of the Venezuelan
Ministry of Mines.
July 28, 2008:
Apollo Gold Corp (AGT) has closed its previously
announced acquisition of the Stock Mill complex
from St Andrew Goldfields Ltd. The acquisition
includes its mill and related equipment,
infrastructure, laboratory and tailings
facilities, located near Timmins, Ontario, for a
purchase price of CDN$20 million. The final
payment of CDN$14.6 million was made on July 28,
2008. The acquisition also includes an obligation
of AGT to refund approximately CDN$1.2 million to
St Andrew for its bonding commitment at the Stock
Mine.
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| NASDAQ
GOLD PRODUCER NEWS |
 July
21, 2008: Pan American Silver Corp (PAAS)
reported commissioning of its newest silver mine,
Manantial Espejo, in Argentina will be delayed
approximately 90 days due to equipment deliveries
and theft. The construction schedule had called
for initial silver production in late August, but
PAAS now believes that pre-production will start
in October, with initial silver production in
November.
July 31, 2008:
Royal Gold Inc (RGLD) has entered an agreement to
acquire a portfolio of royalties from Barrick Gold
Corporation (ABX) for a total of $150 million and
a restructuring of certain RGLD royalty positions
at ABX's Cortez Pipeline Mining Complex in Nevada.
The portfolio RGLD is buying consists of royalties
on 77 properties, including 8 producing royalties,
20 development and evaluation stage properties,
and 49 exploration projects. Over 75% of the
portfolio consists of precious metals royalties.
The purchase price for the acquisition will be
paid from cash on hand.
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INSIDEMETALS.COM
WEBSITE UPDATES
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 WEBSITE
UPDATES
PAID SUBSCRIBER
RESOURCES: The Business Summary for North
American Palladium Ltd. has been updated on the
website, and now reflects its reported operating
and financial results for the 1st quarter of 2008.
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.
New Ranking
Numbers & Financials: Year-end 2007
annual report and/or SEC 10-K' financial data has
been added to the InsideMetals.com website and new
Ranking Numbers have been compiled. The updated
financial data can be viewed by paid subscribers
by using the button bars on the left margin of the
Home Page and clicking under Gold Subscriber
Resources by Performance Table year that the
investor wants to view. Performance tables can
also be viewed by selecting the All Gold Stocks
button which will take you to an Index Page that
allows for Quick Navigation of the site.
InsideMetals.com has compiled annually the
performance of the Gold Producer Stocks it reports
on since 2005. Since 2005 several Gold Producer
Stocks have had stock price gains over 300%. The
best performing InsideMetals.com stock since 2005
is Randgold Resources Ltd. which has had a gain of
360%. Randgold is also one of the best performing
Gold Producer Stocks year-to-date.
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: Randgold has a positive Ranking
Number.
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."
For those newsletter subscribers who are not yet
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.
Junior Gold &
Minerals Stocks Shopping Mall: On July 10,
2008, InsideMetals.com announced the addition of
four Junior Gold Companies to its Gold and Mineral
Stocks Shopping Mall which 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
Stocks Shopping Mall contains the names of 129
exploration companies and links to each company's
website. The companies are categorized as to
whether they are exploring for "Gold"
(precious metals) or "Minerals" (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 companies
added include:
Explorers
Abacus Mining
& Exploration Corp.: is listed on the
TSX Venture Exchange. On July 2, 2008, Abacus
announced the appointment of Mr. Louis G.
Montpellier to its Board of Directors, and the
appointment of Mr.Thomas McKeever as executive
chairman of the Board of Directors. Mr.
Montpellier has been practicing law in Vancouver,
BC since 1981, and since 1983 has worked
exclusively in the capital markets as counsel to
emerging companies engaged in mineral exploration
and mining.
Cream Minerals
Ltd.: is listed on the TSX Venture
Exchange, the Frankfurt Exchange and the OTCBB. On
May 21, 2008, Cream announced that it initiated
its 2008 work program on its 100% owned Nuevo
Milenio project in Mexico, as recommended in the
Phase 1 and Phase 2 in the NI 43-101 compliant
report released on January 30, 2008.
Mountain Boy
Minerals Ltd.: is listed on the TSX Venture
Exchange. On June 16, 2008, Mountain Boy announced
that its 2008 drilling program has started on its
Silver Coin property in British Columbia. The
Silver coin is joint venture with Pinnacle Mines
Ltd. which has a 51% interest in the property.
Skygold Ventures
Ltd.: is listed on the TSX Venture
Exchange. On June 16, 2008, Skygold provided an
update on its on-going exploration program at its
Spanish Mountain project, in British Columbia.
Skygold had previously reported an initial NI
43-101 compliant resource estimate for a portion
of the Main Zone of gold mineralization at Spanish
Mountain.
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 projects
other than precious metals.
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We
hope you have enjoyed our newsletter.
The newsletter will be published next on August
23, 2008
Until next time!!!,
InsideMetals
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