InsideMetals Newsletter - 08/22/2009 | Volume 4, Number 16 - Precious Metals Market Trends, Geopolitical View, Gold Producer News and Website Updates

August 10, 2009: Goldcorp Inc. (GG) announced that it has acquired 8,462,500 common shares of Osisko Mining Corp. and 4,271,500 common share purchase warrants. Each warrant is exercisable for one common share of Osisko for $5.40 per share until November 17, 2009. The securities acquired by GG represent 3.2% of the outstanding common shares of Osisko. GG now beneficially owns 33,842,500 common shares, 12.9% of the outstanding common shares of Osisko and 4,271,500 warrants.

August 11, 2009: Kinross Gold Corp. (KGC) has finalized its Exploration Alliance Agreement with Laurentian Goldfields Ltd. (LGF). This agreement requires a C$500,000 generative exploration program in the Uchi Geological Subprovince of Ontario and Manitoba (Uchi Alliance) over a period of one year. The Uchi Alliance will target the highly prospective Red Lake, Rice Lake and Pickle Lake greenstone belts for orogenic gold deposits. Under terms of the Uchi Alliance, KGC and LGF will invest C$400,000 and C$100,000 respectively, to fund early stage exploration to identify new gold exploration projects. KGC may elect to form a joint venture with LGF on a 50/50 basis in any of the projects identified and acquired as a result of the Uchi Alliance. KGC can increase its interest to 75% on each joint venture property by funding an additional $1.5 million in exploration over a two year period from the date of the joint venture.

August 12, 2009: Kinross Gold Corp. (KGC) in the last 12 months has been one the most active of the large mining companies pursuing acquisitions. KGC purchased Aurelian Resources for its Fruta del Norte project last year and agreed in early 2009 to acquire the Lobo-Marte property in Chile from Teck Resources. KGC's CEO, Tye Burt said on Thursday that the company's projects will be able to sustain growth and production over the next 5 to 6 years. In 2009, KGC completed the building of two mines, Kupol, in Russia, and Buckhorn, in the US. The company also expanded capacity at the Paracutu mine in Brazil, and is currently adding a heap-leach facility at Fort Knox in Alaska, which will extend the operations life to 2018 and double the life-of-mine production to 2.9 million ounces. Both Paracutu and Fort Knox will produce at their new levels for the full year in 2010 which will boost KGC's overall production and offset declines from some of its more mature mines. Lobo-Marte should start trucking ore to the company's La Coipa mill in 2012, followed by full start up in 2013. Fruta del Norte could also start up in 2013. KGC and Barrick Gold have committed to complete a final feasibility study on Cerro Casale in the third quarter. A construction decision could lead to production from the huge Cerro Casale mine in Chile in 2014, which could contribute 430,000 ounces of gold and 118 million pounds of copper annually.

August 12, 2009: Newmont Mining Corp. (NEM) reported that the government of Indonesia will buy nearly $500 million worth of PT Newmont Nusa Tenggara shares as per the divestiture agreement which calls for foreign investors in PT Newmont Nusa Tenggara to sell 51% of the company to local investors. PT Newmont Nusa Tenggara runs the Batu Hijau copper and gold mine in Sumbawa Island.

August 13, 2009: Gammon Gold Inc. (GRS) reported for the second quarter of 2009, a net loss of $7.6 million, compared with net earnings of $4.8 million for the year-earlier quarter, as gold production fell 28% to 31,115 ounces, and silver production declined 25% to 1.1 million ounces. Production was down as a result of labor issues. Revenue from mining fell to $43.3 million from $64.6 million in the second quarter of 2008. Revenue was affected by metal prices as the average realized price of silver dropped to $13.71 per ounce from $17.44 and gold rose to $920 per ounce from $897 per ounce. Total cash cost per gold-equivalent ounce fell to $453 from $501. GRS also reported a $7 million foreign exchange loss from strengthening of the Mexican peso and the Canadian dollar against the U.S. dollar.

August 13, 2009: Goldcorp Inc. (GG) announced that its Marlin mine in Guatemala has become the first mining operation in Central America to be fully certified under the International Cyanide Management Code for Manufacture, Transport, and Use of Cyanide in the Production of Gold. Marlin is GG's third gold mine to receive this certification.

August 13, 2009: Kinross Gold Corp. (KGC) reported gold production of 560,479 gold-equivalent ounces (GEO) in the second quarter of 2009, an increase of 38% over the 406,032 GEO produced in 2008. Second quarter 2009 earnings dropped from $26 million earned in the second quarter of 2008 to $19.3 million. For the first half of the year KGC reported net earnings of $95.8 million, down slightly from $96.9 million earned in the first half of 2008. For the second quarter of 2009, foreign exchange losses were $57.5 million compared to a loss of $12.5 million in the year-earlier quarter. KGC has slightly reduced its 2009 production guidance to 2.3 million to 2.4 million GEO from previously forecast 2.5 million GEO. For the full year, 2009, the cost of sales is expected to be $390 to $429 per GEO.

August 13, 2009: Newmont Mining Corp. (NEM) reported that its Boddington mine in Western Australia successfully produced its first gold and copper concentrate by processing approximately 110,253 tons (100,000 tonnes) of ore during the first two weeks of August.

August 14, 2009: AngloGold Ashanti Ltd. (AU) adjusted headline earnings for the second quarter rose to a record $167 million compared to $150 million for the first quarter. AU's production for the second quarter rose to 1.127 million ounces at a cash cost of $472 per ounce compared to 1.103 million ounces for the first quarter of 2009, at a cash cost of $445 per ounce. AU estimates that third quarter production will be approximately 1.2 million ounces at a cash of $535 per ounce at an exchange rate of R8.10 for the quarter. Hedge commitments were reduced by 1.4 million ounces in July to 4.4 million ounces, now less than one year's production. AU maintained an aggressive exploration program during the quarter which totaled $43 million: $23 million for brownfields projects and $20 million for greenfields projects. Refer to the press release for operations and exploration details.

August 14, 2009: Compania de Minas Buenaventura SA (BVN) announced that it has signed a letter of intent to buy 51% of a silver-gold project owned by Alturas Minerals Corp. (TSXv: ALT). BVN would earn this interest by investing $4 million on maintenance and exploration at the Ccaccapqui 1 project located approximately 286 miles southeast of Lima, Peru. The project is 150 acres located in a major high- and low-sulfidation epithermal gold-silver deposit similar to Orcopampa. BVN must spend $800,000 in the first year and would also be required to make payments to Alturas of $1.65 million over a four year period from the date of the agreement. BVN also has the option to gain an additional 19% by funding and delivering a feasibility study. If BVN decides not to do the feasibility study, Alturas could earn back a 21% interest by funding the feasibility study. The deal is scheduled to close on September 13, 2009.

August 14, 2009: Gold Fields Ltd. (GFI) reported that it is in dispute with Conquest Mining Ltd., its joint venture partner in Queensland, Australia. Conquest has initiated a dispute resolution process after rejecting GFI's request to increase its stake in the Mt. Carlton gold-silver-copper project. Conquest has also rebuffed GFI's call for an interest in the Silver Hill gold-silver project which is surrounded by the Mt. Carlton project. Conquest has alleged that GFI has not done enough exploration at Mt. Carlton under the existing JV agreement to earn a 51% in the project, subject to certain milestone obligations.

August 17, 2009: Coeur d'Alene Mines Corp. (CDE) reported that it had positive drilling results on its Joaquin project in Argentina which is a joint venture with Mirasol Resources Ltd. (TSXv: MRZ). CDE's exploration team completed a second phase of drilling at the La Morocha and La Negra zones. A total of 15 core holes were drilled (6,232 ft.) in this phase. All of these core holes encountered wide intervals of silver and gold mineralization. A third phase of drilling is planned for the third quarter. At La Negra, best true width intersections at a 30 g/t-silver cut-off (0.875 opt Ag cut-off) included 24.44 ft. that assayed 20.53 opt Ag and .004 opt Au; and 52.35 ft. of 5.83 opt Ag and .002 opt Au. At La Morocha, best true width intersections included 73.8 ft. which assayed 5.23 opt Ag and 30.83 ft. which assayed 14.61 opt Ag. CDE has the option to earn 61% of Joaquin by investing $6 million over four years by making staged cash payments to MRZ and by completing a feasibility study, and up to 71% by funding MRZ's percentage of development costs.

August 17, 2009: Harmony Gold Mining Ltd. (HMY) reported that it increased its gold production to 353,752 ounces in its fourth quarter which ended June 30, 2009. This production was 1.1% higher than the 349,801 ounces produced in the previous quarter. Each of the company's operations except for Tshepong, Virginia, Kalgold, and Evander reported production improvements during the quarter. Production for the full year was down by 8.7% to 1.46 million ounces of gold compared to 1.6 million ounces produced in the 2008 financial year. The company's cash operating profit declined by 36.8% in the fourth quarter to $88 million compared to $118 million in the previous quarter. The decline was a result of a lower average rand and a kilogram gold price received, which resulted in a higher dollar per ounce cash cost. For the full year 2009, HMY reported a net profit of $325 million compared to a net loss of $30 million for the financial year 2008.

August 17, 2009: Harmony Gold Mining Ltd. (HMY) reported that it may spend approximately A$45 million to bring its Mount Magnet mine in Australia back into production if a buyer can't be found. The property has a resource of 2.7 million ounces, a 3.0 million ton processing plant as well as tenements covering 240 square miles and 166 licensed exploration blocks. HMY is conducting, exploration on the project and could, if no buyer is found, restart operations. The mine could generate between 100,000 to 150,000 ounces annually and would require approximately A$45 million to restart operations.

August 18, 2009: Barrick Gold Corp. (ABX) reported that its North Mara mine in northwest Tanzania is expected to increase production by as much as 24% this year. The mine produced 197,000 ounces at a total cash cost of $757 an ounce in 2008. ABX now projects that the mine will produce between 225,000 and 245,000 ounces of gold in 2009 at a much lower cash cost of $445 to $495 an ounce.

August 18, 2009: Harmony Gold Mining Ltd. (HMY) announced that it has acquired the previously liquidated Pamodzi Gold Free State resource for $2.00/ounce. HMY CEO Graham Briggs said that the company purchased the Pamodzi asset for R405 million. Briggs reported that at R9.33 to the US dollar, the R405 million translates into a purchase price of $43.3 million. For this price in dollars, HMY acquires Pamodzi 18.6 million resource ounces and its 1.82 million reserve ounces, which respectively works out to be $2.33 per resource ounce, and $24.00 per reserve ounce. HMY expects that because it controls the surrounding assets, there will be many synergies as a result of the acquisition of these assets which could easily result in increasing reserve ounces to 2.5 million to 3.0 million ounces. Pamodzi Gold is expected to add 150,000 ounces of gold per year to HMY's annual production.

August 19, 2009: Stillwater Mining Company (SWC) reported that it failed to persuade General Motors Co. to reinstate a cancelled platinum-palladium metals supply agreement. The supply agreement was cancelled by General Motors in July as part of the carmakers bankruptcy reorganization.

August 10, 2009: Gold Star Resources Ltd. (GSS) reported its unaudited second quarter results for 2009. Revenue for the quarter was $91.9 million, a 30% increase over the $70.43 million revenue for the second quarter of 2008. Net income for the quarter was $380,000 compared to a net loss of $6.654 million for the second quarter of 2008. In the second quarter, GSS sold 99,011 ounces of gold, a 26% increase over second quarter 2008. The second quarter 2009 quarterly cash operating cost was $558 per ounce, a 23% improvement over second quarter 2008. GSS expects to meet its guidance of producing 400,000 ounces of gold at a cash operating cost of $545 per ounce. For 2009 GSS has increased its exploration budget from $7.5 million to $9.8 million in order to expand reserves and resources and to evaluate other areas.

August 10, 2009: Northgate Minerals Corp. (NXG) reported for the second quarter of 2009 consolidated revenue of $130.3 million, compared to $138.9 million in the year earlier period. Net earnings for the quarter were $5.40 million with cash flow of approximately $50 million. These earnings compare to net earnings of $1.85 million for the second quarter of 2008. Total production for the second quarter of 2009 was 93,377 ounces of gold and 13.8 million pounds of copper, which is in line with forecasts. The average net cash cost of production was $465 per ounce of gold. NXG's production forecast for 2009 is 382,500 ounces of gold at a cash cost of $440 per ounce. Production forecasts for Fosterville and Kemess are in line with initial estimates. The forecast for Starwell has been reduced by approximately 10,000 ounces as a result of changes in the mine plan that was necessitated by geotechnical issues. These issues have been addressed and all these ounces remain in the reserves for future mining.

August 12, 2009: Eldorado Gold Corp. (EGO) announced the discovery of a new zone of gold mineralization at its Tanjianshan Mine in China. The mineralization has been found in drilling approximately 1.2 miles south of the Qinglongtan (QLT) open pit. The drilling was within the north end of a broad bedrock geochemical anomaly that is up to 1,640 ft. wide and 1.5 miles long. Rotary Air Blast drilling at the north of the geochemical anomaly to the surface sampling intersected multiple zones of gold mineralization up to 60 ft. with assays in the range of 0.058 to 0.175 ounces per ton gold.

August 12, 2009: North American Palladium Ltd. (PAL) CEO William J. Biggar reported that the company is encouraged about good progress made by the company in the second quarter at the Lac Des Iles (LDI) mine in Ontario. During the quarter PAL completed the acquisition of Cadiscor, and now owns the Sleeping Giant gold mine which is on track to resume production in the fourth quarter at a production rate of 50,000 ounces annually. PAL had a net loss of $9.8 million for the quarter. Production at LDI was halted in the second quarter and the mine was put on care and maintenance. Revenue for the quarter was a negative $1.2 million as there was no palladium produced in the quarter. Revenue for the second quarter of 2008 was $52.2 million. On June 25, 2009, the company announced the discovery of the Cowboy deposit while conducting infill drilling of the Offset zone. A new advanced preliminary economic assessment is now being produced by Nordmin to assess the Cowboy zone. This new PGM discovery has the potential to extend the mine's life The recent rise in Palladium prices and plans to streamline operations is expected to lead to a restart of mining within three months of a decision made to resume production.

August 13, 2009: Endeavour Silver Corp. (EXK) reported that silver production in the second quarter of 2009 rose 13% to 584,486 ounces and gold production jumped 62% to 2,768 ounces of gold. Mineral sales totaled $8.2 million in the second quarter, down 19% from $10.2 million in the year-earlier quarter. Cash cost of sales were $5.6 million, down from $6.4 million in the second quarter of 2008. Mine operating earnings fell to $0.2 million from $1.9 million in the second quarter of 2008, mainly due to lower metal prices and delayed revenues related to higher finished goods compared to the second quarter of 2008. EXK incurred a lower operating loss of $21.million in the second quarter of 2009 compared to $2.8 million in the year-earlier quarter. Cash operating costs were $6.95 per silver ounce produced in the quarter, down 28% from a cost of $9.62 per ounce in the second quarter of 2008. EXK forecasts that silver production will rise in the third quarter of 2009 with completion of mine development programs at both Guanacevi and Guanajuato in Mexico.

August 14, 2009: Aurizon Mines Ltd. (AZK) announced record second quarter 2009 revenue and cash flow. Revenue for the quarter was $44.2 million and adjusted earnings were $3.9 million. Adjusted earnings for the second quarter of 2008 were 1.1 million. Gold production for the quarter was 39,874 ounces which compares to 38,966 ounces produced in the second quarter of 2008. The total cash cost for the second quarter of 2009 was $386 per ounce, 11% lower than the $379 per ounce total cash cost of production for the year earlier quarter. As of June 30, 2009, AZK had a cash balance of $118.7 million. AZK has continued to advance its underground exploration at Casa Berardi and its Joanna gold project. At Casa Berardi the company has focused on completion of an exploration drift on the 810 meter level, east of Zone 113 and south of the Casa Berardi fault. This drift provides access to test at depth the extension of Zone 113, Zones 118 to 122, and the 123 South Zone. Drilling in the vicinity of Zone 113 has confirmed previous geological interpretation of the Zone and has extended the favorable gold trend 100 meters to the 950 meter level. At Joanna exploration in the first half of 2009 resulted in the discovery of two new mineralized trends adjacent to the main Heva-Hosco gold bearing trend. A pre-feasibility study is currently in progress on the Hosco Block which includes a measured and indicated resource of approximately 1.27 million ounces. The pre-feasibility study is expected to be completed in the fourth quarter of 2009.

August 18, 2009: North American Palladium Ltd. (PAL) plans to raise $50 million in order to advance two of its major PGM projects into production. PAL plans to sell 7% secured convertible notes, while also taking up an over-allotment option to place another $15 million worth of notes. PAL hopes to soon re-open its Lac de Iles palladium mine in Ontario, which has been on care and maintenance since October 2008 because of low palladium prices. In addition, PAL hopes to re-start its Sleeping Giant operation in Quebec. The notes are set to mature in four years from their date of issue and will be convertible at any point within the subsequent 90 days, while the private placement is expected to close next week.

August 19, 2009: Apollo Gold Corp. (AGT) announced that on August 10, 2009 it commenced drilling on its Grey Fox project. To date three holes have been completed. The project is located 2.2 miles southeast of AGT's Black Fox mine. The Grey Fox project, located in the Timmins Mining District, in Ontario, is adjacent to the Destor Porcupine Fault Zone (DPFZ). The district has produced over 70 million ounces of gold. The initial drilling at Grey Fox in 2008 was successful in intersecting gold mineralization in rocks similar to the host rocks of the Black Fox ore deposit on the DPFZ.

August 19, 2009: Claude Resources Inc. (CGR) reported highlights from its ongoing underground infill and exploration drilling from its Seabee Mine in Saskatchewan, Canada. Drilling continued to discover high grade gold mineralization which is locating ore shots in close proximity to existing development and infrastructure. The drilling has intercepted in six holes gold grades in the range of 0.19 to 0.62 ounces per ton over 11 to 18 feet.