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| 11/22/2008
www.insidemetals.com |
Vol
3, Issue 21 |
|
 |
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 December 6, 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.
|
|
 |
| 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 $738.00/oz (London
Fix) on November 20, 2008. This
is a 2.1% decrease from the
$754.50/oz (London Fix) closing
price on November 6, 2008, when
data for the previous newsletter
was gathered.
Silver closed at $9.39/oz
(London Fix) on November 20,
2008. This is a 9.8% drop from
the $10.41/oz (London Fix)
closing price on November 6,
2008.
Platinum closed at $797.00/oz
(London Fix) on November 20,
2008. This is 7.5% lower than
the $862.00/oz (London Fix)
closing price on November 6,
2008.
Palladium closed at $179.00/oz
(London Fix) on November 20,
2008. This price is a 23.2%
decrease over the $233.00/oz
(London Fix) closing price on
November 6, 2008.
YEAR
TO DATE GOLD vs. EURO/U.S.
DOLLAR CHART
The year-to-date Gold vs.
Euro/U.S. dollar chart shows
an increase in the price of
gold while 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 reflects investor return
to safety.
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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 November 6, 2008, the GLD
held 24,087,741 ounces of
gold. Current holding as of
November 20, 2006 have
increased to 24,177,465
ounces.
.
The accumulation of silver by
the iShares Silver Trust (SLV)
is beginning to level off as
silver prices have decline to
less than $10.00 per ounce.
Silver holdings have been
building since August in spite
of declining prices. On
November 6, 2008, the SLV
controlled 216,958,481 ounces
of silver. As of November 20,
2006 these holdings have
declined to 214,983,945
ounces.
|
2007
Silver Nevada Miner Bar -
99.9% Pure 5 Troy Ounces of
American History
|
|
|
GEO POLITICAL
VIEW
|
 COMMODITY
DECLINE MAY DERAIL SOCIALISTIC
AGENDA
In the midst of the global
recession that has depressed
commodity prices, governments
with socialistic agendas have
proceeded with untimely actions
that will accelerate the decline
of mining and investment in
their respective countries. Some
of these actions revolve around
broad tax and royalty issues;
and actions directed against
select companies such as
Crystallex International Corp.
(KRY) and Gold Reserve Inc. in
Venezuela.
Crystallex International is a
Canadian based gold producer
with significant mine operations
and exploration projects in
Venezuela. Crystallex's
principal asset, the Las
Cristinas property, in Bolivar
State, is currently under
development and contains an
estimated 17 million ounces of
gold. In September 2002,
Crystallex entered into a mining
contract with Corporacion
Venezolana de Guyana (CVG) to
develop and mine Las Cristinas.
In June 2007, CVG was formally
notified by the Ministry of
Environmental and Natural
Resources (MinAmb) that all
requirements had been fulfilled
for the issuance of the
Authorization to Affect Natural
Resource (the Permit) which
allows construction of the mine
to begin.
Since June 2007 there have been
issues relating to environmental
compliance and permitting. On
April 30, 2008, the Director
General of the Administrative
Office of Permits, at MinAmb,
issued a letter to Corporacion
Venezolana de Guyana (CVG)
denying its request for the
Permits for the Las Critinas
project. On May 12, 2008,
Crystallex filed a legal
rebuttal to the action taken by
the Director General. On May 30,
2008 the Director General denied
the legal rebuttal and advised
Crystallex of its rights under
Venezuelan law to appeal
directly to the Minister of
MinAmb.
Crystallex has appealed and has
numerous meetings with MinAmb
officials. Crystallex has not
been notified by MinAmb or any
other government entity of any
change to control of the
project. Since the April 30th
letter from the Director
General, the shares of
Crystallex had declined over
50%, from approximately
$2.00/share to approximately
$1.00/share. The stock price has
subsequently declined to a
current price of $0.20/share,
based on developing news.
On November 5, 2008, Crystallex
announced that it will continue
to comply with its obligations
and press its case for the
issuance of the Environmental
Permit so the project can
advance.
On Thursday, November 6, 2008,
it was reported by Reuters that
Mining Minister Rodolfo Sanz
told a Russian delegation that a
memorandum of understanding will
soon be signed with Canadian
gold mining company Rusoro to
jointly operate the Las
Cristinas and Brisas projects
with the government. Rusoro,
which has been identified as a
"Russian" company due
to the acquisition of Grupo
Agapov, a Russian mining
company, said that the
Venezuelan government has
identified them as a preferred
partner.
Rusoro operates the Choco 10
mine in Venezuela, which it
purchased from Gold Fields Ltd.
in December 2007. Rusoro also
purchased the Isidora gold
deposit and La Camorra mill from
Hecla Mining Company in June
2008. Rusor also made an offer
to purchase the Brisas project
from Gold Reserve on August 27,
2008. The offer according to
Doug Belanger, President of Gold
Reserve was highly conditional
and only attributed a $90
million value to Gold Reserve's
equity. The Gold Reserve board
determined it was inadequate
based on the 10.2 million ounces
of gold and 1.4 billion pounds
of copper reserves on the Brisas
project.
It appears as though Venezuelan
President Hugo Chavez favors
Rusoro which has Russian
directors and shareholders.
Chavez has been increasing his
country's ties with Russia on
minerals, energy, and military
equipment.
Recent changes in windfall tax
rates has made doing business in
Ecuador unprofitable. Brazil's
state oil firm Petrobras has
returned an oil concession to
Ecuador because of the windfall
profits tax.
Ecuador, President Rafael Correa
announced on November 11, 2008
that he will send changes to a
mining bill to the new 76-member
legislative committee. President
Correa would change the 3% - 8%
royalty to a minimum 5% royalty
and require a contract between
the mining company and the
government which would determine
through negotiations the actual
royalty. Passage of the bill
would end the current six-month
government ban on mining in
Ecuador which had also revoked
80% of the country's mining
concessions and suspended the
other 20% for 180 days. The
revoked concessions will be
offered in a public auction.
The bill will give mining
companies 8 years to explore for
minerals in a concession and
will allow an additional two
years to evaluate the economics
of a discovery before requesting
a mining permit.
The proposed changes also
include a windfall tax when
extraordinary revenue is
generated from high metal
prices. The tax would be levied
on the difference between the
sales price for the metals
produced and the fixed mixed
metal price established in the
contract. The fixed or base
metal price would not be lower
than the international metals
market price when the contract
was executed.
Companies operating in Ecuador
include Kinross Gold Corp. which
had recently purchased the Fruta
del Norte mine, owned by
Aurelian Resources Inc., and
Corriente Resources Inc. which
is developing the Mirador
copper-gold deposit.
Fruta del Norte mine contains an
inferred gold resource of 13.7
million ounces and 22.4 million
ounces of silver.
The Mirador copper-gold deposit
has completed a feasibility
report to develop a 181 million
tonne mine over 17 years. Based
on a 30,000 tonnes per day
milling rate and an 8% discount
rate the after tax, the IRR will
be 17.7% and the NPV will be
$265 million. On October 28,
2008, Corriente reported that
the Ministry of Environment in
Ecuador approved the
Environmental license for the
project.
The mining bill is expected to
be approved in January 2009. The
bills ambiguous language and a
new tax scheme could further
delay an industry already hit by
a global credit crunch and
falling metal prices.
Evo Morales became president of
Bolivia with an electoral
mandate to reclaim state control
over the nation's natural
resources. Morales efforts began
in October 2006 to reinsert the
state into the mining sector,
include his May Day presidential
decree giving state institutions
such as the mining company
COMIBOL, greater control.
Morales also seeks to increase
the state's share of the
earnings generated by rising
metal prices from silver, gold,
tin, and zinc.
Morales actions also triggered
Bolivia's cooperative mining
union FENCOMIN to demonstrate
its formidable political power
which forced the administration
to guarantee union members the
right to mine, and to allow
access to more favorable mining
areas.
The Morales administration is
also proposing a new tax plan
which seeks to maintain foreign
investment while giving the
state a larger slice of the
earnings. The tax plan is based
on a 50:50 split on the profits
(up from 35%) and the
elimination of a sales tax
credit that companies can
currently apply to their income
tax.
In July 2007, an executive with
Apex Silver Mines Ltd. stated
that Apex is committed to the
San Cristobal mine and the large
investment made, but is fearful
that it might be required to pay
up to 70% - 90% of their profits
if additional surtaxes are
enforced when earnings reach
windfall levels.
The San Cristobal mine located
in the historic Potosi mining
district in southwestern Bolivia
contains a 231 million tonne,
open pittable mine, 450 million
ounces of silver, 8 billion
pounds of zinc, and 3 billion
pounds of lead. Apex had sold
35% of the project to Japan's
Sumitomo Corp. for development
funding of $224 million.
On November 17, 2008, Sumitomo
announced that it had reached an
agreement with Apex Silver to
buy its interest in the San
Cristobal mine for $22.5
million. The agreement was
facilitated by the plunge in
Apex's share price and falling
metal prices. Apex's share price
has been on a relatively
constant decline since November
2007, when it was valued at
$20/share. Its current share
price is approximately
$0.50/share. During this period
silver prices have dropped from
approximately $14.70/oz to
$9.40/oz; zinc prices have
dropped from approximately
$1.00/lb. to $0.55/lb.; and lead
prices dropped from
approximately $1.40/lb. to
40.55/lb.
Zinc prices are currently weak
and have dropped about 70% since
hitting a record high in 2006 as
the demand for galvanized steel
has declined.
Apex will continue to manage the
project for Sumitomo.
Coeur d'Alene Mines Inc. has
been developing the San
Bartolome silver deposit in the
Potosi, Bolivia. San Bartolome
contains 150 million ounces of
probable silver reserves and has
produced 3.2 million ounces of
silver this year and is expected
to produce approximately 9
million ounces in 2009. As
production ramps up Coeur
expects its current high
operating costs to decline.
Coeur is also developing mines
in Mexico, southern Chile, and
Argentina.
The share price of Coeur has
been in a steady decline from
about $5.00/share since March
2008 to a current price of
approximately $0.50/share as
mining costs rose and silver
prices declined from a March
monthly average of $19.50/oz to
a current $9.39/oz price (a 52%
decline).
The drastic decline in metals
prices has placed the
advancement of many projects on
hold. In late October,
Coeur announced that it placed
mining activities at its Cerro
Bayo mine on standby rather then
sell its metal at low prices.
When metal prices and demand for
them is low, the strongest
companies with production
options will concentrate their
efforts in the regions that
provide them the best returns on
their money. Governments
desirous of continued mineral
investment need to maintain an
investment environment that
keeps encouraging the goose to
produce those golden eggs.
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Whitney
& Whitney Inc. -
A Nevada Based Management
Consulting Firm
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NYSE GOLD
PRODUCER NEWS
|
 November
11, 2008: Newmont
Mining Corp (NEM) will delay a
development decision on the
Minas Conga copper-gold project
in Peru until the first quarter
of 2009 because of the global
economic situation. Originally
NEM planned on making a decision
at the end of 2008. Minas Conga
project could be in production
in late 2011 or early 2012.
November
12, 2008: Barrick
Gold Corp (ABX) announced that
BLM has issued a Record of
Decision for the Cortez Hills
project in Nevada, thereby
approving the Environmental
Impact Statement. The Record of
Decision is effective as of
November 12, 2008. The Cortez
property is expected to start
production in the first half of
2010, with average annual
production increasing to about
1.0 million ounces of gold for
each of the first five years of
production. The Cortez Hills
project is on track with its
initial capital budget of about
$500 million.
November
18, 2008: Coeur
d'Alene Mines (CDE) has entered
an option agreement with Tara
Gold Resources Corporation and
its subsidiary Corporación
Amermín that will allow CDE to
earn a 100% interest in the La
Currita property. The La Currita
property is located near CDE's
Palmarejo project in Chihuahua,
Mexico. No exploration work has
been conducted at the property
since October 2007. The terms of
the agreement state CDE will
make an initial payment to Tara
Gold, and subsequent optional
payments over the next two years
totaling $3.0 million to gain a
100% interest in the La Currita
property. Tara will retain a
sliding scale net smelter return
(NSR) royalty based on the
market price of silver.
November
19, 2008: Gammon
Gold Inc (GRS) accepted a
commitment letter from its
current lending syndicate
comprised of the Bank of
Montreal and the Bank of Nova
Scotia. The letter revises and
extends the terms of its
existing credit facility, which
is set to expire on December 31,
2008. Under terms of the new
agreement GRS will have access
to a $50 million credit facility
comprised of a $30 million
non-revolving term loan and a
$20 million revolving line of
credit. The term loan facility
matures 19-months from the date
of closing while the revolving
line of credit matures one-year
from the date of closing and may
be renewed at the sole
discretion of the lenders.
Interest payable is based on
LIBOR plus a margin of 350 basis
points.
November
19, 2008: Agnico
Eagle Mines Ltd (AEM) announced
a private placement of 8 million
units of AEM for a price of
$31.50 per unit. Each unit will
consist of one common share of
AEM and one-half of one common
share purchase warrant. Each
whole warrant will entitle the
holder to purchase one common
share of the Company, at a price
of $47.25 per share, at any time
during the five-year term of the
warrant. AEM has also given the
underwriters the option to
purchase an additional 1.2
million units for $31.50 per
unit. The private placement will
total $252 million or $290 if
the option is exercised. AEM
plans to use the money for mine
development, related capital
expenditures and general
corporate purposes.
November
19, 2008: Stillwater
Mining Co (SWC) will be
restructuring its Montana PGM
mining and metallurgical
operations. The restructuring
will involve a 21% reduction in
the company's 1,770-person
workforce. SWC has also revised
its forecast to 490,000 PGM
ounces down from 515,000 to
525,000.
November
20, 2008: Kinross
Gold Corp (KGC) has agreed to
buy a 60% interest in the Lobo
Morte Gold Project in Chile from
Teck Cominco and Anglo American
for $250 million in cash and
shares. Teck will sell its
interest for about 5.6 million
shares of KGC common stock, $40
million in cash and a 1.75% net
smelter return (NSR) on the 60%
of production. The NSR will only
kick in when the price of gold
is above $760. The deal with
Anglo is to acquire the other
40% interest in the property and
will cost KGC $140 million in
cash. The project has an
estimated 5.9 million ounces of
gold resources.
|
AMEX GOLD
PRODUCER NEWS
|
 November
17, 2008: Apex
Silver Corp (SIL) has reached a
basic agreement with Sumitomo
Corp (Japan's 3rd largest
trading house), to buy SIL's San
Cristobal mine in Bolivia in a
deal worth $22.5 million.
Sumitomo already has a 35%
interest in the mine and is
purchasing the other 65% from
SIL. Sumitomo will continue to
have SIL manage the mine.
November
17, 2008: Central
Sun Mining Inc (SMC) has
provided the final results from
its successful 2008 exploration
program at the Limon and Orosi
Mine areas and the Mestiza-La
India project in Nicaragua. SMC
stated they have achieved their
objectives from the project to
basically find new gold zones
which will become priority
exploration targets for 2009.
Full results from the
exploration program cans be seen
in SMC's press release.
November
18, 2008: Crystallex
International Corp (KRY) stated
they have received no indication
from the Venezuelan government
that it plans to take control of
the KRY's Las Cristinas gold
mine, but it's still awaiting
official confirmation. According
to KRY no one in the Venezuelan
government or associated with
them has indicated that the
current situation has changed.
KRY is still awaiting a permit
for the Las Cristinas project
from the Venezuelan government.
|
| NASDAQ GOLD
PRODUCER NEWS |
 November
17, 2008: Randgold
Resources Inc (GOLD) is looking
to buy assets from other African
miners that have been affected
by the current financial crisis
in an attempt to increase
reserves. GOLD said an ideal
target to buy would contain 3.0
million ounces of gold, and
provide an internal rate of
return of 20% if gold drops to
$650 an ounce. GOLD currently
has $260 million in cash and is
looking to expand on the African
continent.
November
19, 2008: DrdGold
Ltd (DROOY) has placed the ERPM
mine under care and maintenance.
DROOY stopped underground mining
at ERPM on October 31, 2008 when
the water-pumping infrastructure
could no longer cope with the
underground water levels. The
cost of installing new equipment
would be about $11.20 million
and take about 12 months. DROOY
said this is too expensive and
has been in talks with the 1,700
employees regarding the future
of the mine.
|
INSIDEMETALS.COM WEBSITE
UPDATES
|
 NovaGold
Resources Inc. (NG) and
Minefinders Corp Ltd. (MFN) have
recently announced they have
become gold producers. Both
companies are expected to reach
commercial gold production soon,
and will be added as
InsideMetals Gold Producer
Stocks.
Junior
Gold & Minerals Stocks
Shopping Mall: On
November 6, 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 140 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:
Developers
Lake
Shore Gold Corp.: is
listed on the Toronto Stock
Exchange. On October 23, 2008,
Lake Shore announced encouraging
results from its Phase 1 of its
2008 drill program at the Casa
Berardi optioned property in
Quebec. The results of the
program which include 12 diamond
drill holes include a best
intercept of 13.03 grams per
tonne over 6.45 meters
Explorers
Detour
Gold Corp. is
listed on the Toronto Stock
Exchange. On October 30, 2008,
Detour Gold announced that it
has exercised its option on the
Detour Lake project in northern
Ontario and has acquired
ownership of the Mine Option
property from Goldcorp Canada
Ltd. pursuant to the previously
announced agreement.
Northern
Star Resources Corp.: is
listed on the TSX Venture
Exchange. On October 28, 2008,
Northern Star announced diamond
drill results from the Chabela
zone at its Malartic-Midway
project in Quebec. Diamond drill
hole MC-08-123 intersected 47.9
ft. that assayed 6.94 g/t in a
mineralized gabbro.
Prospectors
Adventure
Gold Inc.: is
listed on the TSX Venture
Exchange. On October 31, 2008,
Adventure Gold announced the
closing of a non-brokered
flow-through private placement
with Minerals Fields Group for
gross proceeds of $550,000. The
offering consists of the
issuance of 3,928,570 units at a
price of $0.13 per unit. Each
unit is comprised of one
flow-through common share and
one-half of a non-flow-through
warrant. .Each whole warrant
entitles the subscriber to
purchase an additional common
share at an exercise price of
$0.25 for a period of 24 months.
PAID
SUBSCRIBER RESOURCES: The
Business Summary for Barrick
Gold Corp. (ABX) has been
updated on the website. The
Business Summary now reflects
ABX's reported operating and
financial results for the 3rd
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 December 6,
2008.
Until next time!!!,
InsideMetals
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