| 11/08/2008
www.insidemetals.com |
Vol
3, Issue 20 |
|
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In
This Edition...
Precious
Metals Market Update
Gold & Silver ETF's
Geopolitical View
Gold
Producer News
Website Updates
|
|
| Dear
Subscriber, |
| The
newsletter will be published next
on November 22, 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 $754.50/oz (London Fix)
on November 6, 2008. This is a
4.8% increase from the $720.00/oz
(London Fix) closing price on
October 23, 2008, when data for
the previous newsletter was
gathered.
Silver
closed at $10.41/oz (London Fix)
on November 6, 2008. This is an
11.5% rise from a $9.34/oz (London
Fix) closing price on October 23,
2008.
Platinum
closed at $862.00/oz (London Fix)
on November 6, 2008. This is 9.1%
higher than the $790.00/oz (London
Fix) closing price on October 23,
2008.
Palladium
closed at $233.00/oz (London Fix)
on November 6, 2008. This price is
a 36.3% increase over the
$171.00/oz (London Fix) closing
price on October 23, 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.
Note the identification of the
3rd quarter gold price
movement, as discussions on
this will follow in the
Geopolitical View section
below.
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| Gold
& Silver ETF's |
The SPDR Gold Trust (GLD)
controls over 24,000,000 ounces
of gold. On October 13, the GLD
held a record 24,776,938 ounces.
When this newsletter was
published last on October 25,
2008, the GLD held 24,018,829
ounces of gold. Current holding
as of November 6, 2006 have
increased to 24,087,741 ounces.
.
The accumulation of silver by
the iShares Silver Trust (SLV)
is beginning to level off as
silver prices have decline to
approximately $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 November 6, 2006 these
holdings have declined to
216,958,480 ounces.
|
| 2007
Silver Nevada Miner Bar -
99.9% Pure 5 Troy Ounces of
American History |
|
|
| GEO
POLITICAL VIEW |
 COMPARISON
OF RECENT GOLD PRICE TO GOLD STOCK
PRICES
The gold price in the 3rd quarter
dropped 5.65% from $937.50 per
ounce to $884.50 per ounce; and
has subsequently dropped another
14.7% as of this date, to $754.50
per ounce. Needless to say the
stock prices of mining stocks have
also collapsed. During the 3rd
quarter of 2008, the 35 Gold
Producer Stocks included in the
InsideMetals.com website, for
investors who follow precious
metals producing mining companies,
all had significant stock price
losses. The 16 InsideMetals' Gold
Producer Stocks traded on the New
York Stock Exchange (NYSE) dropped
on average 35.8%. The 14
InsideMetals' Gold Producer Stocks
trading on the American Stock
Exchange (AMEX) dropped on average
48.3%; and the 5 InsideMetals'
Gold Producer Stocks that trade on
the NASDAQ declined 24.8%.
During the period from the
beginning of the 4th quarter to
date the Gold Producer Stocks
continued to decline. The NYSE
stocks declined on average another
41.1%; the AMEX stocks declined on
average another 38.3%; and the
NASDAQ stocks also declined on
average another 30.0%.
The stock prices of these mining
companies realized losses much
greater than the price decline in
bullion over the same period. In a
review of all 35 companies since
the beginning of the 3rd quarter
(July 1), only one company
sustained a stock price decline of
less than 13%. Over 20 companies
had stock price declines greater
than 60%, and 3 companies had
stock price declines greater than
80%.
The company that sustained the 13%
decline was Royal Gold Inc. which
operates on a business model that
is different from the other 34
Gold Producer Stocks. Royal Gold
is the leading precious metals
royalty company. Royal Gold owns
and manages royalties, most which
contain gold and silver deposits.
The company's business model
provides investors the opportunity
to participate in the precious
metals sector without incurring
many of the risks associated with
mine operations such as capital
costs, operating costs, and
environmental liabilities. Royal
Gold owns a large portfolio of
royalties on active, producing
mines, and royalty interests in
numerous development and
exploration stage properties.
The stock price decline in mining
stocks has been on the surface
attributed to ever increasing
production costs. Tier 1 companies
that have reported 3rd quarter
earnings include select companies
in the tables below which reflect
stock price declines through the
3rd quarter to date, and
comparative, select 3rd quarter
production statistics.
Other factors that contributed to
earnings and stock price declines
include the decline in base metal
prices that contribute by-product
credits to reduce the cash cost of
production.
Table
1: Stock Price Changes: 3rd
Quarter to Date
Table 2 below includes the 3rd
quarter comparisons for 2007 and
2008 for the noted companies. The
average realized gold price for
these companies for 2007 was
$677.75 per ounce and the average
realized gold price for them in
2008 was $870.36 per ounce. The
average difference of the realized
prices between the two quarters
was $192.61 per ounce.
Table
2: Q3'08 - Q3'07 Comparison
Earnings for Q3'07 was $382.2
million, and earnings for Q3'08
was $766.4 million. The difference
in earnings between the quarters
is $384.2 million.
Total gold sales for these
companies in Q3'07 were 3,172,890
ounces, and for Q3'08 the total
was 3,039,700 ounces. The
difference in gold sales for the
two quarters is 143,890 ounces.
When gold sales for the included
companies are weight-averaged by
the cash cost including by-product
metal credits over the comparable
third quarters the per ounce cash
cost of gold sold in the Q3'07 was
$333.26 per ounce while the cash
cost of gold sold in Q3'08 was
$452.75 per ounce. The big
difference in spite of a similar
number of ounces sold at much
higher realized gold price in
Q3'08 was the significant drop in
base metals prices that had
contributed significant credits
that resulted in reported negative
cash costs for AEM and AUY. At the
beginning of Q3'08, copper was
approximately $3.90/lb. and rose
to over $4.00/lb. As of November
6, 2008 copper is approximately
$1.95/lb. At the beginning of
Q3'08 zinc was $0.85/lb. and is
now approximately $0.515/lb.
Also, companies that had
significant silver sales have seen
their cash costs rise as silver
has dropped approximately 40.7%
from $17.56/oz at the beginning of
the 3rd quarter to $10.41/oz to
date.
In spite of the general decline in
the stock prices of Gold Producer
Stocks there have been
opportunities for stock pickers to
have made recent gains. Table 3
below shows gains that have been
made since the most recent lows
recorded by each of these
companies as gold closed at its
most recent low of $712.50 per
ounce (London Fix) on October 24,
2008.
Table
3: Recent Stock Price Gains
The above noted stock price gains
suggest that even in a market that
is declining that investors can
pick entry points to purchase Gold
Producer Stock when gold prices
start to resume upward movements
in concert with a weakening U.S.
dollar. Investors can also factor
into their investment decisions
increases in base metals price for
those companies that produce
significant amounts of base
metals.
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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
24, 2008: Iamgold Corp
(IAG) announced the cash bid to
acquire all the outstanding shares
of Euro Ressources S.A. for
EUR1.20 per share will close on
November 21, 2008. The offer
represents a premium of 30% based
on the closing price of Euro
shares on Euronext on August 28,
2008, which was the last trading
day of Euro prior to the filing of
the draft tender.
October
27, 2008: Newmont Mining
Corp (NEM) announced that
production at the Yanacocha mine
in Peru, one of Latin America's
largest gold mines, grew 20% from
a year ago to 449,000 ounces in
the third quarter of 2008. The
increase in production was
attributed to a new gold mill.
Sales forecasts for the mine
remain between 1.7 and 1.8 million
ounces.
October
29, 2008: Newmont Mining
Corp (NEM) has delayed the start
of the biggest gold mine in
Australia due to costs about 20%
higher than forecasted. Originally
the Boddington mine was expected
to cost between $1.4 and $1.6
billion and now is expected to
cost between $1.7 and $1.9. The
mine is 85% complete and was
expected to open in mid 2009. NEM
is now expecting the mine to open
in late 2009. The mine has
reserves of 11.1 million ounces of
gold and a mine life of 20 plus
years.
November
4, 2008: Gammon Gold Inc.
(GRS) announced that despite the
rainy season in Mexico and
expected lower production in the
heap leach facility which is
generally impacted by rain, the
Q3'08 gold production at Ocampo
increased by 29% to 34,096 ounces,
silver production increased by 23%
to 1,372,123 ounces. GRS also
announced the discovery of a new
underground vein at Ocampo in 2
holes intercepting grades ranging
from 0.875 to 2.33 opt Au and
19.87 to 62 opt Ag over intervals
that ranged from 8.2 to 11.5 feet.
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| AMEX
GOLD PRODUCER NEWS |
 October
24, 2008: Apollo Gold Corp
(AGT) has prepaid $1,952,000 of
the $4,789,000 balance under the
facilities agreement with RMB
Australia Holding Limited with
proceeds from unwinding part of
its hedge position.
October
24, 2008: Golden Star
Resources Inc (GSS) announced the
pinion gear at one of Wassa's
Mills experienced a mechanical
failure in August and has been
repaired. The Mill is once again
operational. Testing of the Mill
started ahead of schedule on
October 20, 2008 with ore feed
resuming on October 21, 2008. The
Mill is now operating at 100%
capacity.
October
27, 2008: Apollo Gold Corp
(AGT) has received all necessary
permits and approvals required to
began mining operations at the
Black Fox Project. AGT is removing
glacial till material from the
open pit and the removal is
expected to be completed by May
2009. Mining in the open pit is
expected to start in March 2009
and produce over 1,500 tons per
day. Full details about the
project can be seen in AGT's press
release.
October
27, 2008: Aurizon Mines Ltd
(AZK) has released drill results
from 38 holes at their Joanna
property in Quebec. AZK so far has
drilled 397 holes totaling nearly
390,000 feet. Typical holes from
the drilling campaign have yielded
widths from 60 feet to 150 feet
with gold grades ranging from
0.023 oz/ton to 0.047 oz/ton.
Based on a preliminary assessment
of the drilling, AZK estimates
that total recoverable gold will
be 677,000 ounces based on a 77%
mill recovery.
October
29, 2008: Pacific Rim
Mining Corp (PMU) accepted an
offer from its Denton-Rawhide
joint venture partner Kennecott
Rawhide Mining Company to purchase
the 49% interest PMU holds in the
joint venture. PMU will receive
$3.1 million plus the free cash
flow from 49% of all gold and
silver production from the
Denton-Rawhide operation through
to December 31, 2008.
October
27, 2008: Richmont Mines
Inc (RIC) has entered an agreement
with Patricia Mining Corp where
RIC will acquire all of the
outstanding shares of Patricia
through a combination of cash and
stock. Patricia shareholders will
receive $0.15 in cash and 0.055
Richmont shares for each Patricia
share held. The total acquisition
cost is approximately $17 million,
including the assumption of
Patricia liabilities which total
approximately $5.8 million, which
includes $3.1 million currently
due to RIC. The transaction is
expected to close in mid-December
2008. Patricia will hold around 9%
of the outstanding shares of RIC.
RIC will own 100% of the Island
Gold mine.
November
4, 2008: Claude Resources
Inc (CGR) has entered a purchase
and sale agreement with a private
Canadian Corporation who has
agreed to purchase a majority of
the oil and natural gas assets
owned by CGR. The deal can be
worth up to $19.4 million if all
of the assets named in the
agreement are eventually sold.
|
| NASDAQ
GOLD PRODUCER NEWS |
 October
24, 2008: Randgold
Resources Ltd (GOLD) stated the
Yalea underground development
currently taking place at the
Loulo gold mining complex
continues to introduce additional
first-world technology to Mali.
Yalea is the first major
underground mine to be developed
in West Africa in many years. The
Yalea mine started production two
years ago with two open pit mines
while underground production
started earlier this year with
full production starting in early
2009. A second underground mine
has also been planned.
October
28, 2008: Lihir Gold Ltd
(LIHR) announced third quarter
gold production of 250,000 ounces
of gold at a cash cost of $412 per
ounce. Production during the third
quarter was 40% higher than the
previous year. LIHR remains on
track to produce around 850,000
ounces at a cash cost between
$400-$420 per ounce.
October
29, 2008: Lihir Gold Ltd
(LIHR) announced that it is
currently debt free and looking to
make acquisitions. LIHR did not
mention any potential targets for
acquisitions. LIHR still intends
on being a pure gold mining
company.
November
3, 2008: DrdGold Ltd
(DROOY) announced today that
currently no drilling and blasting
is taking place at the ERPM gold
mine at Boksburg on South Africa's
East Rand. On October 23, 2008
DROOY announced that it became
necessary to stop underground
drilling and blasting as a
consequence of the water pumping
from a shaft on October 6, 2008.
Pumping was ceased for safety
reasons, following the
asphyxiation of two employees
underground at the shaft on
September 19, 2008.
|
| INSIDEMETALS.COM
WEBSITE UPDATES |
 Gammon
Gold Inc. (GRS) now trades on the
NYSE and is now listed on the
website with 15 other NYSE Gold
Producer Stocks.
PAID
SUBSCRIBER RESOURCES: The
Business Summary for Eldorado Gold
Corp. (EGO) has been updated on
the website. The Business Summary
now reflects EGO'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 22, 2008
Until next time!!!,
InsideMetals
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