02/09/2008
www.insidemetals.com
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Vol
3, Issue 3 |
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In
This Edition...
Precious
Metals Market Update Geopolitical View
Gold
Producer News
Website Updates
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| Dear
Subscriber, |
This
newsletter will be published next on February 23,
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
power crisis that's propelling the platinum price,
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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| 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 |
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PRECIOUS
METALS MARKET UPDATE
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Gold
closed at $899.75oz (London Fix) on February 8, 2008.
This is 1.0% lower than the $909.25/oz (London Fix)
closing price on January 24, 2008, when data for the
previous newsletter was gathered.
Silver closed
at $16.70/oz (London Fix) on February 8, 2008. This is
a 2.1% increase from the $16.35/oz (London Fix)
closing price on January 24, 2007.
Platinum
closed at $1827.00/oz (London Fix) on February 8,
2008. This is a 14.8% increase from the $1591.00/oz
(London Fix) closing price on January 24, 2008.
Palladium
closed at $421.00/oz (London Fix) February 8, 2008.
This price is 13.8% higher than the $370.00/oz
(London Fix) closing price on January 24, 2008.
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2007
Silver Nevada Miner Bar - 99.9% Pure 5 Troy
Ounces of American History
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GEO
POLITICAL VIEW
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 POWER
CRISIS PROPELS PLATINUM PRICE
Power cuts ordered in South Africa stopped mine
production on Friday, January 25, 2008. The cuts
affected many of the world's biggest gold and platinum
mines, and sent gold and especially platinum to record
highs, as South Africa is the world's leading platinum
producer. Spot gold hit a record high of $923.40 an
ounce, and platinum a historic high of $1,697 an ounce
following the news.
South African President, Thabo Mbek's government
called it a national emergency as the electrical
outages curtailed mine production, the mainstay of the
economy.
The power outages have resulted from years of
inadequate investment in power generation for the
growing post-apartheid economy despite warnings from
Eskom, the state utility.
The cuts by Eskom brought precious metals production
to a near standstill, and cut ferro-alloy and coal
production and exports. Eskom informed mining
companies on Thursday, January 24th they could not
guarantee supply as the gap between power demand and
supply capacity had reached 4,000 megawatts. Eskom had
been issuing warnings of the looming crisis for years.
Eskom plans to invest 300 billion rand in power
generation and infrastructure over the next five
years. Eskom had not conformed to the international
standard benchmark of a 15% power reserve, and only
had a reserve margin of 4%.This suggests poor planning
on part of Eskom and the South African government.
One of the main problems was a shortage of coal. Eskom
relies on coal-fired power stations for 90% of its
total electricity generation. The Eskom cuts also
affect other countries as they export 5% of their
electricity to Zimbabwe, Zambia, Botswana, Mozambique,
and Namibia.
On Thursday, January 25th the country's top 3 gold
miners, InsideMetals.com Gold Producer Stocks
AngloGold Ashanti (AU), Gold Fields Ltd. (GFI), and
Harmony Gold Mining Ltd. (HMY) all reported a
cessation of mining. Anglo Platinum, the world's
leading platinum producer and Impala Platinum, also a
major platinum producer both reported they shutdown
all their production.
Since South Africa is the world's leading supplier of
platinum, the production cuts have resulted in soaring
platinum prices. South Africa accounts for more than
75% of global platinum production. In 2007 the
platinum supply had a deficit of 265,000 ounces. The
current crisis may result in a shortage that could
increase to 300,000 to 400,000 ounces.
As the mines eased back into production after seeing
electrical power come back to 90% of normal levels,
platinum spiked to $1,850 per ounce on February 7,
2008, after rising for 6 days in a row over concerns
on the impact on platinum supply.
Refer to Figure 1
(1-Year Platinum London Fix) to see a graph showing
platinum's price increase.
The Eskom power problems will also impact the gold
mining companies. On February 7, 2008, Mark
Cutifani, CEO of AngloGold Ashanti Ltd. (AU)
reported that power outages and reductions have
already cost the company 200,000 ounces of lost
production in January, and if operations continue
thru the remainder of 2008, at 90% of normal power
supply, AU would lose an additional 200,000
ounces.
Other InsideMetals.com Gold Producer Stocks, GFI
and HMY will also be affected. Paid Subscribers to
InsideMetals.com can refer to the Business
Profiles of these companies to refer to quarterly
updates regarding the company's finances and
operations.
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Whitney
& Whitney Inc. - A Nevada Based Management
Consulting Firm
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NYSE
GOLD PRODUCER NEWS
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 January
29, 2008: Kinross Gold Corp. (KGC) has
completed the previously announced offering to a group
of initial purchasers of unsecured senior convertible
notes due March 15, 2028. The over-allotment option
granted to the initial purchasers was exercised in
full, and net proceeds realized from the offering were
approximately $449 million, after underwriting
commissions and issue expenses. KGC 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 30, 2008:
Silver Wheaton Corp. (SLW) has recommended that
shareholders reject an offer made by TRC Capital
Corporation. TRC Capital has offered to purchase up to
2,000,000 shares, or approximately 0.89%, of the
outstanding common shares of SLW. The offer price of
C$16.00 per common share represents a 5.3% percent
discount to the C$16.89 closing price for SLW's common
shares on the Toronto Stock Exchange (TSX) on January
28, 2008, the day before the offer was made, and a
1.0% discount to the January 30, 2008 closing price
for SLW's common shares on the TSX, which was C$16.16
per share.
January 31, 2008:
Goldcorp Inc. (GG) announced they have entered into an
agreement with a syndicate of underwriters, where the
underwriters have agreed to purchase GG's 108,000,000
common shares of Silver Wheaton Corp. (SLW) at a price
of C$14.50 per Common Share for gross proceeds of
C$1,566,000,000. The offering represents the sale of
all of GG's remaining interest in SLW.
February 6, 2008:
Iamgold Corp. (IAG) approved an $18.4 million
expansion of the Rosebel Mill. The expansion allows
for an increase in mine production from approximately
275,000 ounces per year to 300,000 to 305,000 ounces
per year and a reduction in cash costs of
approximately $35 per ounce. This increases the mill
output from 8.82 million tons per year of ore to 9.8
million tons per year. The $26 million Rosebel Mill
optimization, announced in July 2007, will be
completed in November of 2008. This optimization
enables production rates to be maintained as more hard
rock is fed into the mill. In 2008, $15 million
remains to be spent on the optimization. The $18.4
million investment is planned for 2008, with results
having an impact on production and costs beginning in
2009.
February 7, 2008:
AngloGold Ashanti Ltd. (AU) reported 4th quarter
production of 1.37 million ounces of gold that was 5%
lower than the 3rd quarter, as a result of safety
interventions in South Africa and operational
difficulties experienced at the Geita gold mine in
Tanzania. Total cash costs were $404 per ounce. For
the year gold production totaled 5.5 million ounces at
a total cash cost of $357 per ounce.
February 7, 2008:
AngloGold Ashanti Ltd. (AU), the world's third biggest
gold producer said that it had reduced its hedgebook
in the 4th quarter to 10.39 million ounces from 10.58
million in the previous quarter.
February 7, 2008:
Newmont Mining Corp. (NEM) announced 2007 operating
and reserve results as well as the company's outlook
for 2008. For the 4th quarter NEM reported equity gold
sales of 1.4 million ounces at costs applicable to
sales of $384 per ounce. For the year, NEM reported
equity gold sales of 5.3 million ounces at costs
applicable to sales of $408 per ounce. NEM reported
year-end 2007 proven and probable reserves of 86.5
million equity ounces compared to a reserve of 93.9
million equity ounces at the end of 2006. NEM added
4.2 million equity ounces to the reserve in 2007. The
gold price basis for the 2007 reserve has increased to
$575 per ounce in 2007 from $500 per o unce in 2006.
February 7, 2008:
Barrick Gold Corp. (ABX) and NovaGold Resources Inc.
(NG) announced an increase in the measured and
indicated resources for the Donlin Creek, Alaska gold
project by 77%, to 29.4 million ounces of gold.
February 7, 2008:
Newmont Mining Corp. (NEM) forecast an increase in
costs for the Boddington gold mine in Western
Australia as a result of higher labor and materials
costs and a strong Australian dollar. NEM said that
its share of the development cost had increased to
$1.4 to $1.6 billion, up from its $900 million to $1.1
billion earlier estimate.
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AMEX
GOLD PRODUCER NEWS
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 January
21, 2008: Gammon Gold Inc. (GRS) increased
production in December with 6,802 ounces of gold and
251,072 ounces of silver. This increase was in spite
of a labor stoppage during the month. A total of 8,394
ounces of gold and 313,841 ounces of silver were sold
during December. GRS realized an average gold price of
$801/oz and an average silver price of $14.08/oz. for
the December sales. For Ocampo, total cash costs for
December were $525 per gold equivalent ounce, a
decrease of 36% as compared to Q3'07, and $538 per
gold equivalent ounce in Q4'07, a decrease of 35% as
compared to Q3'07.
January 23, 2008: Canyon
Resources Ltd. (CAU) set a meeting date of March 6,
2008, for shareholders to vote on the proposed merger
with Atna Resources.
January 24, 2008: Crystallex International Corp. (KRY)
announced they have filed a preliminary short form
prospectus with securities regulatory authorities in
Ontario, British Columbia, Alberta, Manitoba, Nova
Scotia, Newfoundland, and Labrador in respect to an
offering of units. Each unit consists of one common
share of KRY and one-half of one common share purchase
warrant. Each whole warrant entitles the holder to
purchase one common share of KRY for a period expiring
on the later of: (i) 18 months from the closing date
of the offering; and (ii) six months following the
permit date, where the permit date is the 45th day
following the receipt by KRY of the Permit to Impact
Natural Resources for their Las Cristinas Project in
Venezuela.
January 25, 2008:
Gammon Gold Inc. (GRS) announced the appointments of
Scott Perry, CPA, to the position of CFO effective
February and Mr. Russell Tremayne, as COO, effective
immediately.
January 29, 2008: Central
Sun Mining Inc. (SMC) completed the first two diamond
drill holes of a planned 32,000 foot exploration
program at the Limon Mine in Nicaragua. The first
target area being tested is the potential downdip and
on strike extensions of the Santa Pancha orebody. The
Santa Pancha orebody, which has the highest grade in
the Limon Mine area, is currently being mined on the
320-foot level at a reserve grade of approximately
0.163 oz/ton.
February 1, 2008:
Golden Star Resources Inc. (GSS) completed the sale of
1,869,020 common shares, worth approximately $5.8
million. The offering was carried out in support of
GSS's recent application to list its common shares on
the Ghana Stock Exchange. Trading on the Ghana Stock
Exchange is expected to commence on February 15, 2008.
February 5, 2008: Claude
Resources Inc. (CGR) released the results of an
extensive 2007 exploration drill program on the Santoy
8 and 8E deposits of the Seabee region in northern
Saskatchewan. The reported results have significantly
extended mineralization and prove continuity within
the Santoy 8 and 8E deposits. Full results can be seen
in CGR's press release.
February 6, 2008:
Canyon Resources Ltd. (CAU) provided results of a new
technical report that expands the underground mining
potential at its Biggs Mine in Inyo County,
California. The new study expands the underground
mineral reserve previously announced on February 6,
2007. The new reserve based on additional drilling on
the Goldtooth structure is 4,419,000 tons at a grade
of 0.034 ounces per ton gold containing 151,000
ounces. The new reserve does not include 142,200
ounces of in-place mineralized material at a grade of
0.113 ounces per ton gold that does not meet mineral
reserve criteria contained within the underground mine
design.
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GOLD PRODUCER NEWS |
 January
23, 2008: Lihir Gold Ltd. (LIHR) announced
their Ballarat underground gold mine reopened
following the restoration of the main access decline.
It had been closed since November 19th, when a rock
fall blocked access to the underground work areas. The
rock fall caused a three-month delay in the
development of the underground infrastructure. LIHR is
confident that the mine will start commercial
production by the end of 2008.
January 23, 2008: Pan
American Silver Corp. (PAAS) achieved record silver
production in 2007 of 17.1 million ounces. This is an
increase of 31% as compared to 2006 and surpassed the
PAAS's forecast. Silver production in the fourth
quarter of 2007 was also a new record at 5.1 million
ounces, an increase of 63% as compared to the fourth
quarter of 2006. Total cash costs for 2007 have been
estimated at $3.42 per ounce of silver produced, net
of byproduct credits. This was 16% higher than the
PAAS's forecast of $2.94 per ounce.
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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.
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). The same is true
for silver producing companies as the price of silver
was $1.52 an ounce higher in the 4th quarter. Silver
prices in the 3rd quarter averaged $12.70 an ounce
(London Fix) while silver in the 4th quarter averaged
$14.22 an ounce (London Fix).
The data for the 34 Gold Producer Stocks is presented
as in the example below for Pan American Silver Corp.
Compiling this data for all 34 companies represents a
significant number of hours and can
be purchased for only $49.95
At the beginning of the 3rd quarter PAAS could have
been purchased for ~$26.75 per share, and could have
been sold at year end for ~$35.00 per share. This
would have resulted in a 30.8% gain. On January 10th,
the share price of PAAS reached as high as $38.10. A
PAAS share price of $37.00 would amount to an
additional gain of $2.00 per share or an additional
7.4%. PAAS
had forecast that its 4th quarter production would
exceed its 3rd quarter production. PAAS has just
reported a record 4th quarter production of 5.1
million ounces of silver on January 23rd, and the
stock moved back up $37.58 before a month end sell
off. 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
Paid Subscriber's
Resources: The Business Summary for Goldcorp
Inc. (GG) has been updated on the website to reflect
its reported operating and financial results for 3rd
quarter 2007.
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.
Potential subscribers can learn more about the Reports
and the "Gold Company Quick Nav Bar" by
going to "Tutorials" and clicking on the
"About the Reports Bar." Clicking on the
"How to use InsideMetals" bar in the
Tutorials section will explain many of the useful
features that InsideMetals.com offers to both Free and
Paid Subscribers.
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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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