01/26/2008
www.insidemetals.com
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Vol
3, Issue 2 |
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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 February 9, 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 at the world market dropping on the
recession threat, precious metals trends, Geopolitical
issues, gold producer news and recent website updates,
which includes an introduction to our InsideMetals
Quarterly Gold Stocks ScoreCard.
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PRECIOUS
METALS MARKET UPDATE
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Gold
closed at $909.25/oz (London Fix) on January
24, 2008. This is 5.9% higher than the $858.85/oz
(London Fix) closing price on January 3, 2008, when
data for the previous newsletter was gathered.
Silver closed
at $16.35/oz (London Fix) on January 24, 2008. This is
a 5.3% increase from the $15.38/oz (London Fix)
closing price on December 13, 2007.
Platinum closed
at $1591.00/oz (London Fix) on January 24, 2008. This
is a 6.3% increase from the $1535.00/oz (London Fix)
closing price on January 3, 2008.
Palladium
closed at $370.00/oz (London Fix) January 24, 2008.
This price is no different than the $370.00/oz (London
Fix) closing price on January 3, 2008.
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GEO
POLITICAL VIEW
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 WORLD
MARKETS DROP ON RECESSION THREAT
The Federal Reserve unexpectedly slashed a key
interest rate by 0.75% on Tuesday, January 22, 2008 in
response to a crash in world markets reacting to fear
that the U.S. economy is approaching a recession. On
Friday, January 18, 2008, investors sold their
positions ahead of the Monday, Martin Luther King
holiday, and following President Bush's call for a
$150 billion stimulant package.
Last week Standard & Poor's broad-based index
recorded its biggest weekly fall since July 2002. The
Dow Jones industrial index has fallen 9% this year.
The Nikkei gave up 4% on Monday to close at a two year
low, and is down 13% for the year. At the same time
the benchmark India stock index dropped 7.4%, while
the Hang Seng, Hong Kong's blue chip index plummeted
5.5%, and is now down 14% for the year. China's
Shanghai index has dropped 6.6% since the beginning of
the year, and nearly 20% from its all-time high
reached in mid-October.
The cut by the Fed to a 3.5% interest rate didn't
prevent a rash of selling when Wall Street opened.
Within minutes of the open, the Dow plunged more than
400 points. The cut by the Fed came a week ahead of
their regular scheduled meeting, and was the biggest
cut in more than 20 years.
The surprise interest rate cut did nothing to boost
commodity prices. Spot copper prices fell to a three
week low. Nickel, zinc, and lead also fell. Gold also
dropped but bounced back after earlier losses. On
Friday, January 18, 2008, gold declined in the morning
to $872.75 per ounce (London Fix AM), and closed up at
$882.00 (London Fix PM). Gold continued to decline on
the 21st and 22nd, reaching a low of $862.00 per ounce
(London Fix AM) before rebounding to close at $875.00
per ounce (London Fix PM).
The Dow Jones Industrials continued to decline on
Wednesday, the 23rd, and was down as much as 323
points as investors continued to have angst about the
prospect of a recession as disappointing earnings and
guidance from technology stocks Apple Inc. and
Motorola seemingly diminished the Feds action.
Mining giant Freeport McMoRan (FCX) also reported a
4th quarter 2007 decline in earnings as one-time
charges, higher costs, and 2008 guidance dragged down
4th quarter earnings by 3%. FCX now expects to mine
4.3 billion pounds of copper and 1.3 million ounces of
gold in 2008, which is down slightly from a previous
estimate of 4.4 billion pounds of copper and 1.4
million ounces of gold.
On Thursday, January 24th, after dropping early on bad
news about bond insurers, economic data that the job
market hasn't deteriorated, as the number of people
seeking employment continued to drop for the fourth
straight week, the Dow staged the largest single-day
reversal in five years by rising 632 points from the
day's low.
On Friday, January 25, news was released that the
South African government, as a result of electrical
supply problems in the country, suspended mine
production. This action drove U.S. platinum and gold
futures to record highs. Announcements regarding the
power problems by Gold Field Ltd. (GFI), Harmony Gold
Mining Ltd. (HMY), and AngloGold Ashanti Ltd. (AU)
propelled gold prices to a record high of $923.73 per
ounce and platinum hit a record $1,701 per ounce.
All of the above named companies are InsideMetals.com
Gold Producer Stocks. Paid subscribers to
InsideMetals.com can review the Business Summaries for
each of these companies to view what percentage of the
company's precious metals production is from mines in
South Africa.
The power problems in South African will add to the
upward pressure to sustain high precious metals
prices.
Accompanying gains in the Dow, the dollar dropped in
value to the euro, and gold prices soared. Refer to Figure
1 (Gold vs. Euro/US$) below.
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NYSE
GOLD PRODUCER NEWS
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 January
14, 2008: AngloGold Ashanti Ltd (AU) has agreed
to acquire Golden Cycle Gold Corp. in an all-stock
transaction worth $149 million. AU's main interest in
Golden Cycle is to acquire its stake in the
Colorado-based Cripple Creek & Victor Gold Mining
Co. (CC&V). CC&V is majority owned and
operated by AU. Each Golden Cycle share will be
converted into one AU American Depositary Share (ADS)
at a ratio of 29 AU ADS per 100 shares of Golden
Cycle. Based on AU's closing price of $49.59 per share
on Friday January 11, 2008, the offer equates to
$14.38 per share of Golden Cycle.
January 16, 2007:
Stillwater Mining Co (SWC) has named Greg R. Struble
Executive Vice President and Chief Operating Officer
with responsibility for the Company's operations.
January 18, 2008:
Newmont Mining Corp (NEM) acquired all of the
outstanding common shares of Miramar Mining
Corporation on January 18, 2008. As of expiration of
the offer, NEM accepted for payment an additional
5,957,442 common shares of Miramar, together with the
189,399,621 common shares previously acquired under
the offer, and the 18,500,000 common shares already
indirectly owned by NEM. Approximately 96% of
the outstanding common shares of Miramar have been
acquired by NEM.
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AMEX
GOLD PRODUCER NEWS
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 January
8, 2008: Richmont Mining Inc (RIC) has
completed an evaluation and has committed $3 million
towards their joint venture with the Golden Wonder
Mine. RIC exercised their option to acquire a 50%
joint venture interest in the project. RIC will be
required to invest $3 million prior to September 1,
2008. This amount includes various exploration,
development and project related costs. Once RIC
completes its investment obligation, it will have the
option to proceed with a formal joint venture in which
they can earn a 50% interest in the Golden Wonder Mine
with an investment of $15 million over a 56-month
period. RIC expects to be able to reach a decision by
September 2008.
January 10, 2008:
Apollo Gold Corp (AGT) provided an update for its
Black Fox project. During the 4th quarter of 2007, AGT
completed an infill drill program that consisted of a
total of 16 holes, with assays ranging from 0.1 oz/ton
to 13.0 oz/ton of gold. This drilling program was a
follow up to their August 13, 2007 press release
announcing a NI 43-101 filing announcing proven and
probable reserves of 1,002,000 ounces of gold.
January 11, 2008:
Golden Star Resources (GSS) received an updated
resource model for the Bondaye and Tuapim deposits
located in the Prestea South area of GSS's
Bogoso/Prestea operations. The drill results yield a
new total Mineral Indicated Resource of 525,000 ounces
of gold. This corresponds to a net increase of 409,000
ounces of gold in unconstrained Indicated Mineral
Resources.
January 15, 2008:
Endeavour Silver Corp (EXK) announced silver
production from its two operating silver mines in
Mexico, Guanacevi and Bolanitos, which produced a
combine record 636,866 oz in the 4th quarter of 2007.
This was an increase of 10% over the 3rd quarter of
2007 and 72% over 4th quarter of 2006. The 4th quarter
production increased EXK's output to 2.14 million oz
of silver in 2007, beating their forecast of 2.0
million ounces. Gold production amounted to 2100 oz in
the 4th quarter, up 15% from the 3rd quarter, and up
387% from the 4th quarter of 2006.
January 16, 2008:
Central Sun Mining Inc (SMC) has started diamond
drilling exploration in the Limon Mine area in
Nicaragua. A second drill rig has arrived in Nicaragua
and is expected to be drilling on targets in the Orosi
Mine area next week. A third drill also has been
confirmed for April 2008. As previously reported, the
exploration program for 2008 is budgeted at $7 million
and will include 25,000+ meters of diamond drilling.
January 17, 2008:
Pacific Rim Mining Corp (PMU) has updated their
estimate of gold and silver resources at the El Dorado
gold project in El Salvador. The update reports a
total measured and indicated resource estimate of 1.43
million gold equivalent ounces, plus an additional
282,000 gold equivalent inferred resource ounces. The
update includes indicated resources at the Balsamo
deposit, where an estimated 209,000 gold equivalent
ounces plus an additional 80,000 gold equivalent
inferred resource ounces have been identified.
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| NASDAQ
GOLD PRODUCER NEWS |
 January
23, 2008: Lihir Gold Ltd (LIHR) announced that
its Ballarat underground gold mine has been reopened
following the successful restoration of the main
access decline. The decline has been closed since
November 19, 2007.
January 23, 2008: Kinross
Gold Corp (KGC) has entered into agreements with a
group of initial purchasers to issue and sell $420
million of its senior unsecured Convertible Notes due
March 15, 2028 ($460 million if the over allotment
option granted to the initial purchasers is exercised
in full). The Convertible Notes are being offered and
sold at 100% of their face value and will bear
interest at a rate of approximately 1.75% per year.
Kinross expects to receive net proceeds of
approximately US$410 million from the offering of
Convertible Notes, after payment of the commissions of
the initial purchasers and expenses of the offering.
Kinross expects to use a portion of the net proceeds
to repay outstanding indebtedness under its term loan
facility, with the balance of the net proceeds to be
used to fund capital expenditures and for general
corporate purposes.
January 24, 2008:
Royal Gold Inc (RGLD) has agreed to acquire three
royalties from AngloGold Ashanti (USA) Exploration
Inc., a subsidiary of AngloGold Ashanti (AU), for
$13.75 million. The first royalty is a 2.0% net
smelter return royalty on the Marigold mine, located
along the Battle Mountain- Eureka trend in Nevada, and
operated by Goldcorp Inc (GG). The other two royalties
are a 2.0-4.0% sliding-scale NSR royalty and a 10.0%
net profits interest royalty, each on the El Chanate
mine, located in Sonora, Mexico and operated by
Capital Gold, Inc. The transaction is subject to
completion of due diligence and is expected to close
by the end of the first calendar quarter.
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INSIDEMETALS.COM
WEBSITE UPDATES
|
 InsideMetals
Quarterly Gold Stocks ScoreCard: Coming soon,
precious metals investors will be able to purchase an
InsideMetals compilation which presents a Summary of
3rd Quarter 2007 Operating & Financial results as
a PDF file that will be e-mailed to you. This Gold
Stocks Scorecard for the 3rd quarter presents in a
concise manner revenue, earnings, ounces produced,
ounces sold during the quarter, and a forecast of
ounces produced in the 4th quarter based on company
forecasts or calculated by InsideMetals based on
company guidance for 2007 and actual reported 2007
quarterly results.
The data for the 35 Gold Producer Stocks is presented
as in the example below for Aurizon
Mines Ltd. Compiling this data for all 35
companies represents a significant number of hours and
can be purchased for only $49.95
Companies that were profitable in the 3rd quarter
should report profits in the 4th quarter since the
average price of gold in the 4th quarter (London Fix)
was $106 per ounce higher than the average price of
gold in the 3rd quarter (London Fix).
At the beginning of the 3rd quarter AZK could have
been purchased for ~$3.30 per share, and could have
been sold at year end for ~$3.75 per share. This would
have resulted in a 13.6% gain. AZK has forecast that
its 4th quarter production will exceed its 3rd quarter
production. There are several other companies
identified in the in the Quarterly Gold Stocks
ScoreCard that should produce better returns based on
4th quarter production forecasts.
Purchase the Quarterly Gold Stocks ScoreCard now
before the 4th quarter operating and financial results
are reported by the companies to the public and before
the strong performers rise as a result of their
quarterly results and the current rise in gold prices.
Investors interested in purchasing the Quarterly Gold
Stocks ScoreCard and receiving the PDF by e-mail can
check the Home Page of the InsideMetals.com website
for a Shopping Cart link, which will soon be
established. Investor's who wish to order the PDF with
their credit card by telephone can call 775 689-7650
in Reno, Nevada
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Gold & Mineral Exploration Shopping Mall: Since
the last newsletter, InsideMetals.com announced that
it added 12 Junior Gold Companies to its Gold and
Mineral Exploration Shopping Mall. The companies are
listed by their stage of development (Prospector,
Explorer, and Developer) and by stock exchange(s)
where they are traded (NASDAQ, American Stock
Exchange, Over-the-Counter Bulletin Board, Toronto
Exchange, and Toronto Venture Exchange).
The companies added
include:
Gold
Explorers
Guyana
Goldfields Inc., listed on the Toronto
Stock Exchange. On December 21, 2007, Guyana
announced, subject to regulatory approval, that it may
purchase during the 12 months beginning December 31,
2007, up to 1,025,712 common shares of its stock.
SilverCrest
Mines Inc. is listed on the Toronto Venture
Exchange. On January 15, 2008, SilverCrest Mines
announced that it has filed on SEDAR, a new Santa
Elena, Mexico, NI 43-101 Technical report and resource
estimate that was previously announced on November 15,
2007.
Gold
Prospector
Klondike
Silver Corp. is listed on the Toronto Venture
Exchange. On December 10, 2007, Klondike Silver
announced successful completion of its exploration
program at the Connaught silver-lead-gold property in
the Yukon.
Latin
American Minerals Inc., listed on the Toronto
Stock Exchange. On January 18, 2008, Latin American
announced that it received significant gold assay
results from 9 diamond drill holes completed at Paso
Yobai in Paraguay.
Luna
Gold Corp., listed on the Toronto Venture
Exchange. On January 10, 2008, Luna Gold announced
intervals of 63.8 m assaying 2.54 g/t, and 6.50 m
assaying 15.82 g/t gold from its 4,000 meter drilling
program at the Aurizona Gold Project in Brazil.
Mag
Silver Corp. is listed on both the American and
the Toronto Stock Exchanges. On December 21, 2007, Mag
Silver and Industrias Penoles S.A.B., the large
Mexican silver miner announced the formation of Minera
Juanicpio S.A. DE C.V. to explore and develop the
Juancipio JV.
Sacre-Coeur
Minerals Ltd., listed on both the Toronto
Venture Exchange and the Frankfurt Exchange. On
January 3, 2008, Sacre-Coeur announced that drilling
continues to expand the gold resource at Million
Mountain in Guyana.
Southern
Silver Exploration Corp. is listed on the
Toronto Venture Exchange and the Frankfurt Exchange.
On December 6, 2007, Southern Silver reported that
permits have been received and crews have been
mobilized for the start of its 5,000 meter diamond
drilling program at its Southern Arizona and New
Mexico silver-gold-copper projects.
Mineral
Prospector:
Uranium
Energy Corp.: is listed on the American Stock
Exchange, and both the Frankfurt and Berlin Stock
Exchanges. On December 13, 2007, Uranium Energy
reported the closing of its previously announced
private placement for gross proceeds of $6,750,000.
Mineral
Explorers:
Energy
Fuels Inc.: is listed on the Toronto
Stock Exchange. Energy Fuels announced the selection
of CH2M Hill, on October 30, 2007, to join its team to
advance the construction of the Pinion Ridge uranium
mill near Naturita, Colorado.
Ur-Energy
Inc.: is listed on the Toronto Stock Exchange.
On January 7, 2008, Ur-Energy announced its intention
to file an application to list its common shares with
the American Stock Exchange.
Mega
Uranium Ltd.: is listed on the Toronto Stock
Exchange. On December 21, 2007 Mega Uranium releases
its audited financial results for the year ended
September 30, 2007, which noted the raising of $47
million through financings.
The Gold & Mineral Exploration Shopping Mall 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 Exploration Shopping Mall contains the names
of 121 exploration companies and links to each
company's website. The companies are categorized as to
whether they are exploring for "Gold"
(precious metals) or "Other" (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 are also listed and linked for
easy access.
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 February 9,
2008
Until next time!!!,
InsideMetals
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