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| 10/25/2008
www.insidemetals.com |
Vol
3, Issue 19 |
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In
This Edition...
Precious
Metals Market Update
Gold & Silver ETF's
Geopolitical View
Gold
Producer News
Website Updates
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|
| Dear
Subscriber, |
The
newsletter will be published next on
November 8, 2008
|
| IN
THIS EDITION OF INSIDEMETALS |
|
In this edition of the
InsideMetals Newsletter, we'll take
a look at gold & silver ETF's,
production, pricing and news, as
well as precious metals trends, gold
producer news and recent website
updates.
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|
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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 |
|
| PRECIOUS
METALS MARKET UPDATE |
 Gold
closed at $720.00/oz (London Fix) on
October 23, 2008. This is an 18.5%
drop from the $883.50/oz (London
Fix) closing price on October 9,
2008, when data for the previous
newsletter was gathered.
Silver
closed at $9.34/oz (London Fix) on
October 23, 2008. This is a 19.8%
drop from the $11.64/oz (London Fix)
closing price on October 9, 2008.
Platinum
closed at $790.00/oz (London Fix) on
October 23, 2008. This is 23.1%
lower than the $1027.00/oz (London
Fix) closing price on October 9,
2008.
Palladium
closed at $171.00/oz (London Fix) on
October 23, 2008. This price is
15.8% lower than the $203.00/oz
(London Fix) closing price on
October 9, 2008.
YEAR
TO DATE GOLD vs. EURO/U.S. DOLLAR
CHART
The year-to-date Gold vs.
Euro/U.S. dollar chart shows a
decline in the price of gold as
the U.S. dollar strengthens. The
U.S. dollar index has recently
risen to a two year high against
a basket of 6 currencies. The
strength in the U.S. dollar has
dampened investor interest in
holding gold as a safe haven.
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| Gold
& Silver ETF's |
The SPDR Gold Trust (GLD) controls
over 24,000,000 ounces of gold. In
the last month there has been a
significant accumulation of ounces
held even as the price of gold has
declined. On October 1, 2008, the
GLD held 24,282,494 ounces of
gold. On October 13, the GLD held
a record 24,776,938 ounces.
Current holding as of October 23
have declined to 24,018,829
ounces.
The accumulation of silver by the
iShares Silver Trust (SLV) is
beginning to level off as silver
prices decline below $10.00 per
ounce. Silver holdings have been
building since August in spite of
declining prices. On October 1,
2008, the SLV controlled
220,304,639 ounces of silver. As
of October 23, these holdings have
increased to 221,698,064 ounces.
|
| 2007
Silver Nevada Miner Bar -
99.9% Pure 5 Troy Ounces of American
History |
|
|
| GEO
POLITICAL VIEW |
 SPEND
YOUR EXPLORATION DOLLARS IN NEVADA
In August 2008, the Nevada Division
of Minerals (NDOM) published their
annual survey on mineral exploration
undertaken in the State of Nevada.
This was the fourteenth consecutive
year that the survey has been
conducted. The purpose of the
survey, Nevada Exploration Survey
2007 is to determine the level of
current and projected exploration
activity, and to determine what
factors are influencing exploration
activity.
What influences exploration in
Nevada, especially, gold exploration
is important because the State of
Nevada is one of the leading gold
producing regions of the world. In
2007 Nevada produced 6.04 million
ounces of gold and 8.43 million
ounces of silver. Nevada ranks as
the leading gold producing state in
the U.S. and the U.S. ranks as the
fourth leading gold producing nation
in the world, following China and
South Africa, and Australia. Refer
to the Table 1: below: Four Leading
Gold Producing Countries.
Table
1: Four Leading Gold Producing
Countries
NDOM sent out 108 questionnaires and
received back 31 responses Companies
that respond tend to be the larger,
more successful gold
exploration/mining companies. The
responding companies reported
spending $167.9 million on Nevada
exploration in 2007, which included
$102.6 million on expansions, and
$65.3 million on grass-roots
efforts. Reported 2008 exploration
budgets were $197.1 million.
The same respondents reported 2007
worldwide exploration spending in
2007 of $756.7 million, and 2008
worldwide exploration budgets of
$800.9 million; thus it can be seen
that spending in Nevada in 2007 by
these 31 companies accounted for 22%
of their worldwide spending, and 25%
of their 2008 budgets.
The important factor is that 2008
budgets show increased spending,
which tends to indicate that the
responding companies believe that
gold prices will remain high. A
summary of exploration spending over
the last ten years is shown in Table
2 below: Ten Years of Exploration
Spending.
Table
2: Ten Years of Exploration
Spending.
The data in the above table shows
that over the last ten years, as the
price of gold has increased,
spending in the following year has
increased. Note the
significant increase in 2008
spending.
The respondents spent 65.5% of their
budgets on actual exploration costs,
12.2 % on land holding costs, and
9.1% on permitting and compliance
costs.
As in previous surveys, the
respondents were asked to rank the
factors influencing their level of
exploration activity. The composite
of all of the respondent's rankings
of these factors is listed below in
order of decreasing importance:
1. Existence of
favorable geology
2. Commodity
prices
3. Actual length
of permitting time
4. Announcements
of new discoveries
5. Uncertainty of
permitting time frames
6. Uncertainty
over mining law reform
7. Federal claim
maintenance fees
8. Land exchanges
/ withdrawals
9. Wilderness
study areas
10. Change in
foreign mining laws
The ranking of these factors is
similar to previous years, and the
most significant factor is the
existence of favorable geology. The
presence of favorable geology and a
favorable political environment is
the reason companies are willing to
spend money in Nevada on
exploration. Exploration in Nevada
has a good prospect of success;
especially for the well-capitalized
companies.
In 2007, 20 of the 31 responding
companies had exploration budgets of
over $1 million. This compares to 21
companies with $1 million budgets in
2006, when 28 companies participated
in the survey. The following tables
3 & $, based on Nevada
exploration budgets (>=$1 million
and <$1 million) reflect that
over 7 years that producing
responders were able to replace
their reserves.
Table
3: Producing Responders with Nevada
Exploration Budgets >= $1
million. (Numbers refer to the
percentage of respondents who
answered "yes")
Table
4: Producing Responders with Nevada
Exploration Budgets < $1 million
(Numbers
refer to the percentage of
respondents who answered
"yes")
The above data indicates that
companies exploring in Nevada with
budgets >= $1 million have been
very successful in replacing their
reserves by exploring in Nevada; and
even companies with budgets < $1
million have had moderate success.
The existence of favorable geology
is reflected by the 2007 proven and
probable reserves present in the
State as reported by two of the
world's largest gold producers:
Barrick Gold Corp., with 31.7
million ounces of reserves in
Nevada; and Newmont Mining Corp.,
with 29.7 million ounces.
Both companies continue to explore
for gold in Nevada.
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to a world-wide targeted audience |
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| Whitney
& Whitney Inc. - A Nevada
Based Management Consulting Firm |
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|
| NYSE
GOLD PRODUCER NEWS |
 October
13, 2008: Coeur d'Alene Mines
Corp (CDE) has provided updates on
production activities at its San
Bartolome silver mine in Bolivia,
construction activities at its
Palmarejo silver and gold mine in
Mexico, and exploration and
operational activities at its Cerro
Bayo silver and gold mine in Chile.
CDE verified its production guidance
of approximately 13 million ounces
of silver for 2008, and based on
early results for the third quarter
of 2008, CDE expects lower revenue
and a net loss due to lower silver
prices and other factors at San
Bartolome and Cerro Bayo. CDE has
also completed a cost reduction
review, which includes a 50%
workforce reduction at CDE's Alaskan
subsidiary.
October
20, 2008: Barrick Gold Corp
(ABX) has signed a term sheet
With Midway Gold for an exploration
agreement and option to joint
venture the Spring Valley gold
project in Pershing County, Nevada.
ABX can earn a 60% interest in the
project by spending $30 million on
the project over a 5 year period.
ABX can earn an additional 10% by
spending and $8 million in the year
immediately after vesting at 60%.
ABX can also earn another 5% by
carrying Midway to a production
decision and arranging financing for
Midway's share of mine construction
expenses plus interest to be
recovered by ABX once production has
been established.
October
20, 2008: Coeur d'Alene Mines
Corp (CDE) sold $50 million in
senior secured floating rate
convertible notes under an effective
shelf registration statement on file
with the U.S. Securities and
Exchange Commission. CDE has also
sold to the buyer a warrant to
purchase up to an additional $25
million worth of notes. The notes
are convertible into shares of CDE
common stock at the option of the
holder at any time prior to the
maturity date. The initial
conversion price is $1.15 per share.
The net total to CDE was $40.8
million.
October
21, 2008: Barrick Gold Corp
(ABX) has been approved by Levon
Resources Ltd. and Coral Gold
Resources Ltd. to acquire up to a
75% interest in the Norma Sass
property in Nevada, consisting of 36
unpatented mining claims. ABX can
earn a 60% interest in Norma Sass by
spending at least $3 million per
year on exploration by December 31,
2014. By spending an additional $1.5
million by Dec. 31, 2015, ABX can
increase its stake to 70% and can
earn an additional 5% by carrying
Coral Gold and Levon through to
commercial production.
October
21, 2008: North American
Palladium (PAL) announced that due
to declining palladium and platinum
prices, PAL will temporarily place
the Lac des Iles Mine in Thunder
Bay, Ontario under care and
maintenance starting October 29,
2008. The closure will result in the
layoff of approximately 350
employees.
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| AMEX
GOLD PRODUCER NEWS |
 October
14, 2008: Endeavour Silver
Corp (EXK) announced a 21% increase
in 3rd quarter silver production to
625,924 ounces of silver compared to
the 2nd quarter. Gold production
also rose in the 3rd Quarter to
2,465 oz (up 40%) compared to the
2nd quarter. EXK had forecast 4th
quarter production growth but due to
low silver prices EXK plans to slow
its production growth in the 4th
quarter as it expects silver prices
to recover.
October
20, 2008: Central Sun Mining
Co (SMC) had previously entered into
a non-binding term sheet to borrow
$22.5 million in debt financing to
complete the Orosi Mine Expansion
Project. Due to the current global
financial situation, the banking
institution was unable to proceed
with the debt financing. SMC is now
in discussions with other financial
institutions to find financing for
the project. The Orosi Mine
expansion project has been
temporarily suspended and will make
other cost cutting decision
regarding other mines. SMC has spent
to date $31 million on the project.
October
22, 2008: Apollo Gold Corp
(AGT) announced that at the end of
November they will have completed
the mining of the ore from the
Montana Tunnels that was permitted.
AGT anticipates that they will have
2 million tons of stockpiled ore and
will be able to produce zinc-gold
and lead-gold concentrates for about
5 more months. AGT will also have to
cut the Montana Tunnels workforce in
half from 200 to 100 workers. AGT
has applied for a permit to expand
the current mining pit and will also
need to find $70 million in
financing to expand the pit.
October
23, 2008: Richmont Mining Inc
(RIC) has decided to not exercise
their option at the Golden Wonder
Mine in Colorado. New drill results
have failed to verify the continuity
of an ore zone. RIC has notified LKA
International Inc that RIC has
completed the initial drilling
commitment and will not participate
in a subsequent commitment per the
joint venture agreement. RIC plans
to improve the Island Gold project
and the Beaufor project.
|
| NASDAQ
GOLD PRODUCER NEWS |
 October
22, 2008: Randgold Resources
Inc (GOLD) announced the Morila gold
mine in Mali will start to
transition to a stockpile
retreatment operation towards the
middle of 2009. GOLD wants to
guarantee the maximum extraction
value from the stockpile while it is
brought to a close, and to leave
something of value in the form of a
sustainable regional agribusiness in
the place of the mine. GOLD
discovered and developed the Morial
mine which has produced 5 million
ounces of gold and contributed $492
million to the Malian economy in the
form of dividends, royalties, and
taxes.
October
23, 2008: DrdGold Ltd (DROOY)
announced gold production for the
quarter ended September 30, 2008 was
70,861 ounces. Revenue for the
quarter was 4% lower than the
previous quarter due to 4% lower
realized gold prices. DROOY recorded
a net loss of about $1.1 million
compared to a net loss of $5.7
million for the previous quarter.
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| INSIDEMETALS.COM
WEBSITE UPDATES |
 PAID
SUBSCRIBER RESOURCES: The Business
Summary for Stillwater Mining
Company (SWC) has been updated on
the website. The Business Summary
now reflects SWC's reported
operating and financial results for
the 2nd 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.
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We
hope you have enjoyed our
newsletter.
The newsletter will be published
next on November 8, 2008
Until next time!!!,
InsideMetals
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