InsideMetals Newsletter - 12/19/2009 | Volume 4, Number 23 - Precious Metals Market Trends, Geopolitical View, Gold Producer News and Website Updates

December 3, 2009: New Gold Inc. (NGD) announced that it has appealed suspension of its mining activities at its Cerro San Pedro Mine in Mexico. An appeal was filed on November 5, 2009 with the Third Federal District Court to over turn the Federal Fiscal Administration Court's ruling that orders SEMARNAT, the Mexican government's environmental protection agency, to cancel the project's Environmental Impact Statement. The court is waiting for SEMARNAT to file its response to this appeal before finalizing the date to commence a trial. In addition, NGD, through its wholly owned subsidiary Minera San Xavier filed a second separate appeal with the District Court in San Luis Potosi. The objective of the appeal is to overturn the order that required suspension of mining operations. NGD believes that claims the EIS is required to be in place to operate its Cerro San Pedro Mine have no legal basis. This most recent appeal includes a request to allow mining to continue while the appeal goes to trial and the court hears arguments in relation to the suspension order.

December 7, 2009: Pacific Rim Mining Corp. (PMU) reported fiscal Q2 2010 financial and operating results for the quarter ending October 31, 2009. For the quarter PMU reported a loss of $1.3 million, compared to a loss of $1.2 million for the year earlier quarter. Quarterly exploration expenditures were greatly reduced year over year, from $1.2 million in Q2 2009 to $0.4 million in Q2 2010. Although significant exploration work ceased at the company's El Salvador exploration project in July 2008 (Q1 2009), residual expenses and ongoing community relation programs continued into Q2 2009. G&A expenses were lower during Q2 2010 as a result of reduced activities. The reduction in activity by PMU is based on the need to file for international arbitration against the government under the Central American-Dominican Republic-United States of America Free Trade Agreement (CAFTA). PMU is claiming that the government's inaction and delays in issuing exploitation permits with respect to PMU's submission of required environmental impact reports and documentation of compliance with environmental issues has resulted in significant monetary damage, on the order of several hundred million dollars.

December 9, 2009: North American Palladium Ltd. (PAL) is targeting annual palladium production of 140,000 ounces over a two-year period at its flagship Lac des Iles mine located in northwestern Ontario. The mine was placed on care and maintenance in October 2008. Operations are now set to be restarted at the Roby Underground Zone as Palladium is approaching $400 per month. NAP believes that it will be able to mine precious metals via ramp access at a rate of approximately 84,350 tons per month. NAP will also commence development of the Offset Zone, which is located approximately 250 meters (about 820 feet) below the Roby Underground Zone. The first stage of resuming operations will require approximately $16 million to build a 1,500 meter (4,920 foot) ramp at a depth of 200 meters (656 feet). The ramp is expected to take approximately 12 months. NAP believes the Offset Zone to have the potential to add at least ten years of mine life at an annual production rate of at least 250,000 ounces of palladium at significantly lower cost and higher profitability.

December 10, 2009: Apollo Gold Corp. (AGT) announced that it has entered into a replacement Letter of Intent (LOI) with Elkhorn Goldfields LLC regarding the purchase of AGT's interest in Montana Tunnels Mining, Inc., an indirect wholly owned subsidiary of AGT, which includes the 50% interest held by Montana Tunnels in the joint venture agreement with Elkhorn, the Diamond Hill mine and mill and any an all ancillary assets. The original LOI provided for staged cash payments by Elkhorn. The second cash payment of $250,000 was due on November 25, 2009. In lieu of this second cash payment, and subsequent scheduled payments, AGT, in the New LOI has agreed to sell all of the capital stock of Montana Tunnels for (i) promissory notes held by Elkhorn and certain investors (Lenders) in Elkhorn or its affiliates from Calais Resources Inc. and Aardvark Agencies Inc. for $7,700,000, (ii) Elkhorn's and the Lender's rights with respect to an additional $1,382,091 loaned to Calais and (iii) a promissory note held by Elkhorn and the Lenders from Calais with an outstanding balance of $380,000. Refer to the press release for additional New LOI, options for AGT and Elkhorn to convert their interest in the notes into a joint venture with Calais on Colorado properties used to secure the notes by certain deeds of trust.

December 14, 2009: New Gold Inc. (NGD) announced that it has been granted an injunction related to the suspension of operations at its Cerro San Pedro mine in Mexico. The court ruling temporarily overturns the Mexican environmental enforcement agency's order to suspend operations at the mine. Mining operations will resume and will continue through the duration of the appeal trial. The court decision states that to grant the injunction would not prejudice the social interest or contravene the public order. Over 500 employees and contractors at the mine, and 1500 indirect jobs could have been impacted if the mine suspension was prolonged.

December 15, 2009: Claude Resources Inc. (CGR) announced that in response to strong investor demand, CGR has entered into an agreement to increase the size of its previously announced private placement of $10.0 million (8.7 million Special Warrants) to $13.8 million (12 million Special Warrants) at a price of $1.15 per Special Warrant. Each Special Warrant will be comprised of one common share of CGR and one-half of a common share purchase warrant. Each full Purchase Warrant will entitle its holder to acquire one Common Share of CGR at a price of $1.75 for a period of 24 months after the closing date of the offering, which is expected to be on or about December 30, 2009.

December 15, 2009: Minefinders Corporation Ltd. (MFN) is pleased to report the consolidation of all mineral rights and surface right necessary to drill and test the La Virginia gold/silver district in Sonora, Mexico. MFN has staked mineral right over more than 125 sq. miles of land and has also optioned an additional 8.1 sq. miles of mineral rights. More than 9.6 sq. miles of surface rights covering the main target area have been leased allowing for exploration and exploitation within the district. The La Virginia district has never been drilled and contains untested targets. Interest in the district was generated during MFN's 2007 helicopter reconnaissance program which produced favorable results. The geologic setting of the district's geology resembled the company's Dolores deposit located 100 km to the northeast.