| 05/10/2008
www.insidemetals.com |
Vol
3, Issue 9 |
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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 May 24, 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
investing at the bottom of consolidation (and not
the list), as well as precious metals trends, gold
producer news and recent website updates, which
includes updates on 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 |
 Gold
closed at $877.00/oz (London Fix) on May 8, 2008.
This is 2.0% lower than the $895.50/oz (London Fix)
closing price on April 24, 2008, when data for the
previous newsletter was gathered.
Silver
closed at $16.58/oz (London Fix) on May 8, 2008.
This is a 3.0% decrease from the $17.09/oz (London
Fix) closing price on April 24, 2008.
Platinum
closed at $2002.00/oz (London Fix) on May 8, 2008.
This is less than 1% higher than the $1993.00/oz
(London Fix) closing price on April 24, 2008.
Palladium
closed at $431.00/oz (London Fix) on May 8, 2008.
This price is less than 1% lower than the $440.00/oz
(London Fix) closing price on April 24, 2008.
ONE
YEAR GOLD vs. EURO/US$ CHART
The above chart shows that gold bullion and the
ratio of the euro to the U.S. dollar has tracked
closely through the last year except for a couple of
times (July thru August, and November thru December)
when gold compared to currency declined. After each
one of these periods of sideways gold consolidation,
the price of gold increased strongly for several
months.
The recent drop in the price of gold from its high
that occurred on March 20, 2008, to test the $850
per ounce level represents the most significant
decline in the price of gold seen in the last couple
of years. At the same time the stock price of many
of the InsideMetals' Gold Producer Stocks declined
with the price of gold.
Many of these stocks dropped to very attractive
prices in the last couple of weeks, and are now
recovering as the price of gold starts back up.
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Ounces of American History |
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| GEO
POLITICAL VIEW |
 INVEST
AT THE BOTTOM OF CONSOLIDATION. . . NOT THE LIST
Shareholders of Crystallex International Corporation
are undoubtedly chagrined that they bought into
Crystallex in the last two years above $2.00 per
share based on reports of significant gold reserves
at Las Cristinas in Venezuela. At year end 2007,
Crystallex reported estimated Proven and Probable
Reserves of 16.86 million ounces of gold and
estimated Measured and Indicated Resources of 20.76
million ounces.
As recently as February 28, 2008, Gordon Thompson,
President and Chief Executive Officer reported to
shareholders that during 2007, their partner, the
Corporacion Venezolana de Guayana (CVG) was formally
notified by the Ministry of the Environment and
Natural Resources of Venezuela that all requirements
for the issuance of the Las Cristinas Environmental
permit had been fulfilled.
On April 30, 2008, Crystallex reported that they
became aware that the Director General of the
Administrative Office of Permits at the Ministry of
the Environment and Natural Resources issued a
communication to the CVG, the owner of the Las
Cristinas concession that denied their request to
carry out exploration activities in the mining area
of Las Cristinas. The communication appears to be in
conflict with the Las Cristinas EIS approval, and
the Construction Compliance Bond Request and
Environmental Tax request posted and satisfied by
Crystallex as per the request of the Ministry. Upon
news of this permit denial, the stock price of
Crystallex dropped from $1.68 per share (previous
day's closing price) to $0.91 per share on a volume
of 18,500,000 shares on April 30, 2008.
In issuing the communication, the Director General
cites sensitivities surrounding indigenous peoples,
the small miners and the environment in the areas
generally known as the Imataca Forest Reserve, which
contains a number of mining projects, which like
those of Crystallex, are seeking permits to continue
their development and exploration.
Crystallex indicated they are committed to defending
their legal rights in the project
Investors in Crystallex, and would-be investors in
gold mining stocks should use the crystal ball that
is available to them: the Frazier Institute (www.
fraserinstitue.org). The Fraser Institute is an
independent non-profit research and educational
organization. Since 1997 the institute has conducted
annual surveys of metal and mining and exploration
companies to assess favorable regions of the world
for mining in terms of mineral potential and public
policy in terms of taxes, regulation and
infrastructure that would affect investment in the
region.
The 2005/2006 Fraser Institute Annual Survey of
Mining Companies ranked Venezuela as the least
favorable country for investment. The 2007/2008
Survey which ranked 68 jurisdictions (which includes
States and Provinces in the United States, Canada,
and Australia) also ranked Venezuela again in the
bottom 10 jurisdictions). The bottom 10, ranked from
worst to better include Honduras, Zimbabwe, Ecuador,
Panama, Bolivia, India, Indonesia, Mongolia,
Philippines, and Venezuela, number ten.
Several of these countries have recently taken
actions that are devaluing the stock price of
companies that have been developing or operating
mines within the boundaries of these countries with
unfavorable investment policies.
Ecuador recently imposed a moratorium on metals
mining for 180 days and revoked hundreds of mining
concessions until new contracts are negotiated.
InsideMetals' Gold Producer Stock Iamgold Corp was
immediately hit with an approximate 15% decline in
their stock as shareholders became concerned over
the status of its Quimsacocha project which contains
a gold resource of approximately 3.5 million ounces
of gold.
While Ecuador's President Correa has assured many of
the foreign companies mining and exploring in
Ecuador that responsible mining will be allowed, he
stressed that "communities" will have to
become shareholders in the projects. At what cost?
Bolivia is also under going political rumblings that
could affect silver producers, Apex Silver Mines
Ltd., Coeur d'Alene Mines Inc., and Pan American
Silver Corp. Bolivia's leftist president, Evo
Morales signed a law on February 29, 2008 that makes
May 4, 2008 the date for a national referendum on a
controversial draft constitution. The proposed
charter approved in a congress dominated by Morales
seeks to give more power and resources to Bolivia's
poor indigenous majority. At the same time, Morales
is having to deal with another political crisis, as
the wealthy Province of Santa Cruz has also
scheduled a referendum vote on May 4, 2008 for
autonomy. The referendum generates a statute that
would give Santa Cruz the ability to elect its own
legislature, create its own policy force and raise
new taxes and allow the province to negotiate its
own royalty agreement with energy and mining
companies.
If the Santa Cruz referendum passes it is likely
that the same outcome will take place in the June,
in the Provinces of Beni, Pando, and Tarija which
also have scheduled similar votes as the countries
wealthiest provinces will secede from Morales'
Indian majority government.
On Monday, May 5, 2008, the Province of Santa Cruz
claimed victory as the referendum for autonomy
passed. Morales described the referendum as
illegitimate, but he left the door open for
discussions.
Unrest is also taking place in Zimbabwe as a
consequence of the countries new tax rates becoming
effective April 1, 2008, and the Economic
Empowerment Act which requires 51% indigenous
ownership in every public company and business.
The new tax is a 15% variable profit tax on taxable
income above 8% and a minimum 25% windfall profit
tax. It raised the effective tax rate on miners to
47% from 31%, despite objections that the government
is reneging on tax exemption deals signed with
foreign investors. Zimbabwe President Robert Mugabe
set the date of enforcement of the Act to be April
17, 2008.
So much for investing in companies operating in
countries that make up the bottom of the Fraser
Institute Mineral Survey.
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| NYSE
GOLD PRODUCER NEWS |
 April
30, 2008: Silver Wheaton Corp (SLW) announced
it had purchased 45% of the Rosemont Copper
Project's payable silver production from Augusta
Resources for an upfront payment of $165 million.
The upfront payment will be made on a drawdown basis
as construction milestones are achieved. The
Rosemont project is located in Pima County, Arizona,
and is expected to annually produce 220 million
pounds of copper, 4.5 million pounds of molybdenum,
2.7 million ounces of silver and 15,000 ounces of
gold over the over the estimated 18 year mine life.
Both parties expect to complete the definitive
agreement for this transaction by the end of June
2008, and the deal must meet other requirements.
May 5, 2008:
Coeur d'Alene mines (CDE) resumed operations faster
than expected at their Cerro Bayo Mine in Chile. On
April 8, 2008, CDE reported that the mine would be
shutdown for about 6 weeks to upgrade the electrical
infrastructure. The shutdown was projected to cut
the output by 180,000 ounces of silver and 4,000
ounces of gold.
May 5, 2008:
Goldcorp Inc (GG) stated their first quarter profit
jumped 84% to $229.5 million compared to $124.9
million for the year earlier quarter. GG's profit
increase was due to a record realized gold price of
$932 per ounce for the quarter, even though gold
sales were nearly 10,000 ounces lower. Revenue rose
32% to $626.7 million, from $474.2 million last
year.
May 6, 2008:
AngloGold Ashanti Ltd (AU) released significant
results at the 100% owned La Colosa Project in
Colombia. Initial inferred resources are estimated
at 519 million tons at 0.025 oz/ton gold totaling
12.9 million ounces. The project is the second
significant greensfield discovery in Colombia.
May 6, 2008:
Barrick Gold Corp (ABX) announced its Board of
Directors increased its June dividend to $0.20 cents
per share from $0.15 cents per share. The dividend
is payable on June 16, 2008 to shareholders of
record at the close of business on May 30, 2008.
May 7, 2008:
Yamana Gold Inc (AUY) announced its first quarter
profit more than doubled due to higher production
and gold prices. AUY's net earnings rose to $63.1
million from $27.4 million in the year-earlier
quarter while production rose 97% and realized gold
prices averaged $927 per ounce for the quarter.
May 6, 2008:
Iamgold Corp (IAG) reported continued success at its
Westwood Project in the Abitibi region of Northern
Quebec. Since November 2007, the drilling focus at
Westwood has been mineralization at depth and
massive sulfide mineralization on the eastern side
of the Bousquet fault. To date inferred resources
are estimated at more than 3.3 million ounces. In
April 2008, a 49,200 foot surface exploration
drilling program was initiated with 2 drills to test
the possible extension of 3 identified mineralized
zones within 3,000 ft. of the surface. Also a 6,550
ft. exploration shaft condemnation hole was started
in March 2008 to facilitate location of the shaft.
May 8, 2008:
Iamgold Corp (IAG) entered into an agreement to sell
its La Arena Peruvian copper and gold project to Rio
Alto Mining Limited for $47.55 million in cash and a
5.5% interest in Rio Alto. This transaction is
expected to close in the next couple months. The
project contains measured and indicated resources of
1.1 billion pounds of copper and 2.0 million ounces
of gold.
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| AMEX
GOLD PRODUCER NEWS |
 April
30, 2008: Central Sun Mining (SMC) has
released an update regarding their Limon Mine
exploration program. SMC has completed seven drill
holes totaling 9,813 feet of a planned 33,000 foot
program in the Limon Mine area. The first 3 holes
successfully intersected a major new mineralized
zone that significantly extends the down-dip, and on
strike mineralization. The other 4 holes intersected
low grade gold values and alteration. The Santa
Pancha orebody, which has the highest grade of the
Limon Mine area deposits, is currently being mined
on the 330-foot level at a reserve grade of
approximately 0.123 oz/ton.
May 1, 2008:
Eldorado Gold Corp (EGO) announced it produced
67,234 ounces of gold at a cash cost of $213 per
ounce, and sold 73,604 ounces at a realized price of
$933 per ounce during the first quarter of 2008. Net
earnings rose 64% to $20.7 million from $12.6
million the year earlier. On March 6, 2008
operations resumed at the Kisladag Mine in Turkey
and produced 27,228 ounces for the quarter.
May 7, 2008:
Gammon Gold Inc (GRS) announced for the first
quarter of 2008 that it produced a total of 57,946
gold equivalent ounces at a cash cost of $491 per
ounce. This represents a 20% increase in production
and a 27% reduction in cash costs. Net Earnings rose
to $8.5 million compared to a loss of $10.3 million
one year earlier.
May 7, 2008:
North American Palladium Ltd (PAL) released a
preliminary economic assessment of Lac des Iles Mine
in Ontario. The mine is expected to be able to
produce 250,000 ounces of palladium, 16,000 ounces
of platinum, 17,000 ounces of gold, 2 million lbs of
nickel and 4 million pounds of copper per year until
2018, plus by-products. The project will require and
initial investment of CDN$37 million and an
additional CDN$188 million funded by cash from the
mine. Operating costs are estimated at CDN$36.00 per
ton.
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| NASDAQ
GOLD PRODUCER NEWS |
 April
30, 2008: Lihir Gold Ltd (LIHR) produced
139,000 ounces of gold at a cash cost of $462 per
ounce with a realized price of $928 per ounces for
the first quarter of 2008. The scheduled shutdown of
the process plant at Lihir, for maintenance, reduced
production time during the quarter by 20%.
May 6, 2008:
Randgold Resources Ltd (GOLD) increased gold
reserves at its Tongon project in Ivory Coast by 52%
following successful exploration work. Randgold is
planning to start building a mine at Tongon at the
end of this year and plans to start production by
2010.
May 1, 2008:
Royal Gold Inc (GOLD) announced its fiscal 3rd
quarter 2008 royalty revenue has increased 74% to
$19.5 million from $11.2 million from the year
earlier quarter. Net income more than doubled from
the previous year from $3.4 million to $7.4 million.
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| INSIDEMETALS.COM
WEBSITE UPDATES |
 Paid
Subscriber's Resources: On May 8, 2008,
InsideMetals.com announced the addition of four
Potash producing companies to its list of Mineral
Producer Stocks. The newly featured companies are
described below as miners and manufactures of
fertilizer minerals and specialty chemicals.
Compass Mineral
International Inc. (CMP): listed on the New
York Stock Exchange is a leading producer of
industrial minerals, including salt, sulfate of
potash specialty fertilizer and magnesium chloride.
On May 1, 2008, Compass Minerals announced that it
intends to redeem $70 million in 12% Senior
Subordinated Discounted Notes, due 2013 for
approximately $74.3 million, plus accrued and unpaid
interest on June 2, 2008, the first call date under
the indenture.
Intrepid Potash
Inc. (IPI): listed on the New York Stock
Exchange is a producer of potash and salt products
for agriculture and industrial use. On April 29,
2008, 34.5 million shares of Intrepid were offered
in an initial public offering priced at $32.00 per
share.
Potash Corporation
of Saskatchewan (POT): listed on the New York
Stock Exchange produces phosphate and potash. On
April 24, 2008, Potash Corp. reported earning $1.74
a share for the first quarter 2008, up 181% from the
year earlier quarter. Potash has raised its 2008
earnings guidance.
The Mosaic Company
(MOS): listed on the New York Stock Exchange
produce phosphate and potash. On April 16, 2008,
Mosaic announced that Canpotex Ltd., the export
association of Saskatchewan potash producers reached
a potash supply agreement with Sinofert in China.
The new contract calls for the shipment of 1 million
tonnes of potash at $576 per tonne, FOB Vancouver.
This is a $400 per tonne increase over the price in
2007.
The Mineral Producer Stocks can be viewed by
clicking on the designated button below the member's
log-in area on the InsideMetals.com Home Page.
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We
hope you have enjoyed our newsletter.
The newsletter will be published next on May 24,
2008
Until next time!!!,
InsideMetals
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