| 12/06/2008
www.insidemetals.com |
Vol
3, Issue 22 |
|
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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 December 20, 2008.
|
IN
THIS EDITION OF INSIDEMETALS
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|
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 $773.25/oz (London
Fix) on December 4, 2008. This
is a 4.8% increase from the
$738.00/oz (London Fix)
closing price on November 20,
2008, when data for the
previous newsletter was
gathered.
Silver closed at $9.58/oz
(London Fix) on December 4,
2008. This is a 2.0% increase
from the $9.39/oz (London Fix)
closing price on November 20,
2008.
Platinum closed at $794.00/oz
(London Fix) on December 4,
2008. This is 0.4% lower than
the $797.00/oz (London Fix)
closing price on November 20,
2008.
Palladium closed at $171.00/oz
(London Fix) on December 4,
2008. This price is a 4.5%
decrease over the $179.00/oz
(London Fix) closing price on
November 20, 2008.
YEAR
TO DATE GOLD vs. EURO/U.S.
DOLLAR CHART
The
One Year Gold vs.
Euro/U.S. dollar chart
shows an increase in the
price of gold while the
U.S. dollar consolidates
since the newsletter was
last published.
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 reflects investor
flight 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 20, 2008,
the GLD held 24,087,741
ounces of gold. Current
holding as of December 4,
2008 have increased to
24,366,840 ounces.
.
The
accumulation of silver by
the iShares Silver Trust
(SLV) is beginning to
decline as silver prices are
consolidating near the
$10.00 per ounce level.
Silver holdings had been
building since August in
spite of declining prices.
On November 20, 2008, the
SLV controlled 216,958,481
ounces of silver. As of
December 4, 2008 these
holdings have declined to
213,860,066 ounces.
|
| 2007
Silver Nevada Miner Bar
- 99.9% Pure 5 Troy Ounces of
American History |
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| GEO
POLITICAL VIEW |
 WHILE
COPPER CORODES, GOLD RETAINS
ITS GLINT
What a difference a
year makes. On November 12,
2007, the DOW was at 12,988
and copper (COMEX High Grade)
was trading at approximately
$3.00/lb. Copper in 2007 had
risen from approximately
$2.60/lb. to approximately
$3.30/lb. by November 2007.
During the same period gold
rose from $639.75/oz at the
beginning of January 2007, and
closed at $803.50/oz on
November 12, 2007. Crude oil
(Nymex) at the beginning of
January 2007 was $55.70/bbl.
and closed at $94.62 on
November 12, 2007.
The commodity bubble was
inflating and would burst
within a year.
On December 4, 2008, the DOW
closed at 8,376, copper was at
approximately $1.50/lb., crude
oil had declined to
$43.70/bbl, and the spot price
of gold was $773.25/oz.
As of result of the global
financial crisis there has
been a 4,612 point decline in
the DOW (36%) and significant
declines in the above
commodities except for gold
which has retained its value
measured from November 12,
2007, in spite of a 23%
decline from the price the
yellow metal reached in March
2008, when it peaked at
$1,006.75 /oz. (London Fix
close).
The strong increase in copper
prices in 2007 prompted BHP
Billiton (BHP) to initiate the
largest takeover in history.
BHP made an offer of
approximately $140 billion to
acquire Rio Tinto plc (RTP)
for stock. Completion of the
acquisition would combine the
world's largest mining
company, BHP, with RTP, the
third largest mining company
in the world.
The merger of these mining
giants would create a company
with a market value of $350
billion, and the combined
company would rank as the
third largest company on the
DOW Jones Global Titan list.
When the offer was made RTP
shares surged 25% and closed
at $440.20/share. At its peak,
the all-share offer valued Rio
at approximately $193 billion.
The management of RTP was not
enamored with the offer and
felt the proposal didn't
reflect the value of RTP's
assets.
The combined companies would
have accounted for
approximately 39% of global
iron ore sales, and would have
created a company that could
have weakened the clout of the
Chinese government which
controlled the world's fastest
growing economy which had a
ravenous demand for raw
materials.
Both BHP and RTP had large
coal producing operations and
produce significant amounts of
base metals including copper.
On November 25, 2008, BHP
abandoned its bid for RTP,
citing sliding metal prices
and the threat of global
recession. BHP said the risk
of taking on RTP's $39 billion
net debt and the low prices it
would receive from the forced
sale of assets by European
Union regulators required for
approval of the merger.
Since the offer was made, RTP
stock has declined from
$440.20/share to a December
4th closing price of
$64.93/share, a significant
85% decline. At the same time
BHP shares have declined 50%
from a post-offer $71.00/share
to a current $35.23/share
price.
BHP will write off
approximately $450 million in
bid costs, mostly tied to a
$55 billion debt facility to
refinance RTP's debt and $2.1
billion in pretax write-downs
on nickel assets.
RTP may end up having to sell
assets to reduce its $40
billion in debt. RTP took on
$38 billion in debt to finance
its acquisition of Alcan
Aluminum
RTP management may now regret
their opposition to the BHP
offer, and shareholders and
speculators certainly do. BHP
may end up bidding on prized
RTP assets at bargain prices.
The global decline of commerce
in 2008 as illustrated by the
above travails of mining
giants BHP and RTP and the red
metal, copper, points out how
investment in industrial
materials doesn't provide the
same downside protection as
gold which has maintained its
traditional role as a safe
haven for investors. Even the
precious metal platinum which
was selling for over
$2,000/oz. in 2008 has dropped
in to $794/oz --- now
comparable to gold.
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| NYSE
GOLD PRODUCER NEWS |
 November
24, 2008: AngloGold
Ashanti (AU) reported that it
has secured a $1 billion loan
that will increase its debt
burden, but will save it from
being forced to sell assets
immediately to refinance a
convertible bond that will
expire in February. The
interest rate is at least
4.25% above LIBOR interbank
rates, but will allow AU to
maintain high liquidity
levels. As the market changes
AU can restructure its
finances. AU will seek to sell
non-core assets when market
conditions are right.
November
24, 2008: Gammon Gold
Inc (GRS) confirmed that the
Company continues to meet 4th
quarter production and cash
cost guidance. GRS has
forecast production in the 4th
quarter of 39,000 to 49,000
ounces of gold and 1,800,000
to 2,200,000 ounces of silver.
Total cash cost is expected to
be under $499 per gold
equivalent ounce.
November
25, 2008: Harmony Gold
Mining Co (HMY) CEO Graham
Briggs reported at the annual
shareholder meeting that HMY
is bullish on gold mining and
has raised production targets
to benefit from higher rand
prices and lower mining costs.
The impact of lower mining
costs is not expected to be
realized until the first
quarter of next year.
December
1, 2008: Barrick Gold
Corp (ABX) has initiated a
6,000 foot, 2 drill hole,
reverse circulation drilling
program on the Utah Clipper
project that it's exploring
pursuant to a joint venture
agreement with Columbus Gold
Corp. The property is adjacent
to ABX's Pipeline-Gold Acres
gold mine complex in the
Cortez-Pipeline sector of the
Battle Mountain Gold Trend in
Nevada. ABX can earn an
initial 60% interest by
undertaking phased annual
exploration expenditures
totaling $6 million over a six
year period.
December
2, 2008: Harmony Gold
Mining Ltd. (HMY) reported its
capital expenditures would
decline 22% to R2.8 billion in
this year ending June 30,
2009. The joint venture with
Newcrest Mining which will
contribute A$300 million
(approximately R2 billion)
toward the Hidden Valley
project in Papua New Guinea
will offset HMY's contribution
by this amount. Graham Biggs,
Harmony CEO said the decline
in South African (SA) gold
production would continue for
the foreseeable future because
of ongoing electricity
constraints and mine closures,
and has resulted 7,390 jobs
cuts largely through voluntary
severance packages. HMY has
expanded its SA drilling
programs.
December
3, 2008: Barrick Gold
Corp (ABX) reported during an
investment conference
presented by CFO Jamie
Sokalsky that the Company is
looking at making
acquisitions, but it will take
a cautious approach. ABX had a
cash position of $1.7 billion
as of September 30, 2008, and
has had recent success in the
credit markets with a $1.25
billion bond offering.
December
3, 2008: Yamana Gold
Inc. (AUY), CEO Peter Marrone,
stated at an investment
conference that he expects
widening profit margins over
the next year as declining
production costs will likely
outpace any retreat in gold
prices. Lower costs for oil
and steel combined with weaker
currencies in countries where
AUY operates will be positive
factors.
December
3, 2008: Barrick Gold
Corp (ABX) CFO Jamie Sokalsky
reported in a Toronto
investment conference that the
Company is making good
progress on negotiating a $1
billion loan to help finance
the development of its Pueblo
Viejo gold deposit in the
Dominican Republic. ABX and
Goldcorp Inc. (GG) jointly own
the 22-million ounce gold
deposit which will require an
estimated $2.7 billion to
develop. Production is
forecast for the second half
of 2011.
|
| AMEX
GOLD PRODUCER NEWS |
 November
29, 2008: Crystallex
International Corp (KRY)
reports that it is maintaining
a dialogue with Venezuelan
ministries and government
officials regarding the
Authorization to Affect
Natural Resources for the Las
Cristinas Gold Project and the
status of its Mine Operating
Contract. As part of its
dialogue, KRY has filed a writ
with the Ministry of
Environment and Natural
Resources on October 24, 2008.
It is KRY's intention to
settle the dispute amicably
within six months, or it will
submit the dispute to
international arbitration.
December
2, 2008: Endeavor
Silver Corp. (EXK) has
announced that exploration
drilling near its Bolanitos
mines at the Guanajuato Mines
project in Mexico has extended
high grade silver-gold
mineralization within three
recently discovered vein zones
(Bolanitos, Santa Maria, and
Lucero). Drilling highlights
include many intervals with
economic potential, including
4.84 ounces per ton silver and
0.16 ounce per ton gold over
19.7 ft., and 6.97 ounces per
ton silver and 0.33 ounces per
ton gold over 6.6 ft. in drill
hole BSV-3; and 29.6 ounces
per ton silver and 0.05 ounces
per ton gold over 3.0 ft. in
drill hole BUV-9.
December
3, 2008: Richmont
Mining Inc. (RIC) announced
that the Toronto Stock
Exchange (TSX) has accepted
the Company's notice of
intention to make a normal
course issue bid to purchase
some of its outstanding common
shares through the facilities
of the TSX for a period of 12
months ending December 4,
2009. Up to 1,188,000 common
shares representing
approximately 5% of the
23,778,653 common shares
issued and outstanding on
November 21, 2008 may be
purchased under the bid
(limited to 2,853 shares
daily, other than block
purchase exemptions).
December
4, 2008: Apollo Gold
Corp. (AGT) provided an update
on the financing and status of
project development at its
100% owned Black Fox Project
near Timmins, Ontario. AGT has
retained Macquarie Bank Ltd.
and RMB Resources Inc. as
joint arrangers and
underwriters for the project's
financing. The banks have
proposed a $15 million bridge
facility that should be
approved in mid-December. The
feasibility study published
pursuant to a NI-43-101 in
April 2008 supports both an
underground and open pit mine
with production commencing in
January 2009. The ore will be
processed at the nearby Stock
Mill that was purchased from
St. Andrew Goldfield in July
2008. Refer to the press
release for details.
|
| NASDAQ
GOLD PRODUCER NEWS |
 December
1, 2008: DRDGold Ltd
(DROOY) has devised a pumping
solution to check rising water
levels at its ERPM mine on the
East Rand that would address
environmental threats, but
would not be enough to enable
the mine to reopen. DRDGold is
looking into other solutions,
including selling the
underground operations to help
support the 1700 workers whose
jobs would be lost because of
the mines closure.
December
2, 2008: Randgold
Resources Ltd. (GOLD) reports
that it expects production to
increase from its two
operating mines in the 4th
quarter. Total 2008 production
from its Morilla joint venture
may come in slightly below its
430,000 ounce guidance, and
production from its 80% owned
Loulo mine should meet its
2008 guidance of 265,000
ounces.
|
| INSIDEMETALS.COM
WEBSITE UPDATES |
 NovaGold
Resources Inc. (NG),
which was reported to be in
production in the last
newsletter, has subsequently
suspended their Rock Creek
production in order to meet a
number of additional
environmental and operational
requirements. NG now has
significant cash concerns. NG
will not be added to the list
of InsideMetals' Gold Producer
Stocks until it resumes
production. The Company
currently has significant cash
concerns.
PAID
SUBSCRIBER RESOURCES: The
Business Summary for Kinross
Gold Corp. (KGC) has been
updated on the website. The
Business Summary now reflects
KGC'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
20, 2008.
Until next time!!!,
InsideMetals
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