InsideMetals Newsletter - 1/09/2010 | Volume 5, Number 1 - Precious Metals Market Trends, Geopolitical View, Gold Producer News and Website Updates

December 18, 2009: Agnico-Eagle Mines Ltd. (AEM) warned analysts on December 17, 2009, that although gold production would double next year to between 1.0 million to 1.1 million ounces of gold, cash costs would rise to nearly $400 per ounce of gold. The news on rising costs prompted an 8% decline in the price of AEM common stock over concerns that the company may have to raise additional debt or equity funding in 2010, if gold price drops below $1,000 an ounce. Agnico's CEO, Sean Boyd, assured analysts the company can add an additional 150,000 ounces of gold production annually without capital expansions. AEM plans to produce 1,057,200 ounces of gold in 2010 at an average cost of $399 per ounce. AEM has record reserves of 18.1 million ounces of gold in which 4 of 6 deposits may ultimately exceed 5 million ounces. AEM also has 113,926 tons of copper reserves, 643,537 tons of zinc reserves, and 59,443 tons of lead reserves. AEM hopes to expand reserves to 20 million to 21 million ounces by the end of 2010.

December 22, 2009: AngloGold Ashanti Ltd. (AEM) and Randgold Resources Ltd. (GOLD) concluded their deal to acquire an additional 20% in the Kibali Gold Project for approximately $113.4 million. These partners now own a 90% interest in the mine.

December 22, 2009: Barrick Gold Corp. (ABX) reported that it will have 4,000 workers next year at its Pueblo Viejo mine in the Dominican Republic. Presently 3200 people from the nearby towns of Cotui and Maimon work on the project. Approximately 800 workers will be added in 2010 with the commencement of construction of a power line.

December 22, 2009: IAMGOLD Corp. (IAG) expects its Westwood project in Quebec to cost $401 million, including money already spent. IAG has completed an updated preliminary assessment for the project, and confirmed that it expects to start production at Westwood early in 2013. Westwood is expected to produce 186,000 ounces of gold annually at an average cash cost of $358 per ounce over a 16 year mine life. Mining costs have increased from the $298 per ounce determined in the 2008 preliminary assessment mainly as a result of foreign exchange movements. The first 5 years of production is estimated at 191,000 ounces annually at $352 per ounce. IAG expects 2009 spending on the project to come in at $86 million and has forecast capital spending of $102 million next year.

December 22, 2009: Kinross Gold Corp. (KGR) announced that its Kupol mine in the Far East Region of the Russian Federation has been certified under the International Cyanide Management Code. Kupol is the first mine in Russia to obtain this certification, which is awarded following an independent third-party audit. The Cyanide Management Code is a voluntary code that focuses on the safe manufacture, transportation, storage, use and decommissioning of cyanide and associated facilities used for the production of gold.

December 23, 2009: Goldcorp Inc. (GG) is considering a hike in its bid to acquire Canplats Resources Corp. after a rival bid was made by Minera Penmont, a joint venture owned by Fresnillo Plc, the giant Mexican silver producer, and Newmont Gold Corp. Minera Penmont offered to acquire all of the Canplats issued an outstanding shares for a cash consideration of $3.99 per share plus shares of a newly formed company with a notional value of $0.19 per share. Canplats told GG that the Penmont share price was superior to GG's November bid which is valued at $228 million. Under terms of the Goldcorp-Canplats deal, GG has the right for 5 business days to match the financial terms of the Penmont proposal. If GG matches the Penmont offer, Canplats must accept the GG offer.

December 23, 2009: Newmont Gold Corp. (NEM) and Fresnillo Plc, a joint venture, offered to buy Canplats Resources Corp. for $240 million. This offer exceeded last month's $225.9 million acquisition offer made by Goldcorp Inc. (GG). Canplats shareholders will receive C$4.20 in cash and one share worth 20 cents in a new exploration company for each Canplats share held.

December 29, 2009: AngloGold Ashanti Ltd. (AU) and IAMGOLD Corp. (IAG) announced the joint purchase of the 6% stake in the Sadiola mine, in Mali, owned by International Finance Corp. (IFC). Each company will pay an initial $6 million for their respective 3%, to be followed by contingent payments in 2010, 2011, and 2012, of $250,000 for each year in which the average gold price is higher than $900 per ounce, or $500,000 if the average gold price exceeds $1,000 per ounce. The companies will also pay another $500,000 if and when a decision is made to go ahead with the Sadiola deep sulfide project. AU and IAG have increased their stakes in the project to 41% each. The Mali government currently owns a 19.5% interest in the project. AU and IAG have offered to sell to the government a 1.2% interest in Sadiola, on terms proportionately the same as the IFC transaction.

December 29, 2009: AngloGold Ashanti Ltd. (AU) agreed to purchase Chalice Gold Mines interest in the Wilga joint venture to AngloGold Ashanti Australia (AGAA) for $20,000. Chalice will retain a 1.5% Net Smelter Royalty Return interest in possible future production (capped at $1.5 million). The Wilga Joint Venture covers exploration License 39/1003 and Prospecting License 39/4890 in the Eastern Goldfields of Western Australia approximately 34 miles south of Laverton and 6 miles southeast of AGAA's Sunrise Dam gold Mine. Despite extensive exploration conducted on these properties, no significant mineralization was found, however, substantial water has been found during drilling that would be of value in developing the Sunrise Dam operation.

December 29, 2009: Goldcorp Inc. (GG) reported that Canplats Resources Corp. is accepting GG's sweetened bid that matches Minera Penmont's cash bid of $4.20 per each share of Canplats plus shares in a new exploration company valued at $0.20 per share. The new company would hold Canplats exploration properties. The new GG offer values Canplats at about $254 million.

January 4, 2010: Goldcorp Inc. (GG) declared its first monthly dividend payment for 2010 of $0.015 per share. Shareholders of record at the close of business on January 14, 2010 will be entitled to receive payment of this dividend on January 22, 2010.

January 4, 2010: IAMGOLD Corp. (IAG) said its Chief Executive Joseph Conway has resigned and will leave the company effective January 15, 2010. Board member Peter Jones will be the acting CEO.

January 7, 2010: Goldcorp Inc. (GG) and New Gold Inc. (NGD) have entered into a structured deal whereby GG will acquire for $513 million Xstrata's (XTA.L) 70% interest in the El Morro copper-gold project in Chile. NGD has a 30% interest in El Morro. In October XTA, the Swiss-based mining giant agreed to sell its interest in the project to Barrick Gold Corp. (ABX) for $465 million, but NGD had the right of first refusal on the ABX offer until January 2010. GG will advance NGD $463 million to buy the XTA position, and will also pay NGD $50 million in cash upon closing the acquisition. GG has also agreed to amend certain terms of the El Morro shareholder agreement with respect to NGD's capital funding obligations. On closing GG will hold a 70% interest in El Morro, while NGD retains a 30% interest. El Morro is an advanced stage copper-gold project located in north central Chile with proven and probable reserves of 6.7 million ounces of gold and 5.7 billion pounds of copper.

January 7, 2010: Yamana Gold Inc. (AUY) provided an update of its 2009 exploration program and announced exploration objectives for 2010. Highlights from 2009 include:

· At Chapada a new gold mineralized zone (Suruca) was traced along strike for 1,650 ft. The zone had an average thickness of 230 ft., and the discovery hole returned 265 ft. at a grade of 0.035 oz/ton gold.

· A new mineralized zone (Lagoa do Gato) was discovered at Frazenda Brasileiro. Mineralization was traced along strike for approximately 3,950 ft. The zone is open in all directions with 3 separate gold zones with intervals ranging from 40 to 120 ft., and gold grades from 0.075 to 0.20 oz/ton.

· A new mineralized zone (Salamanca) was discovered within 6.2 miles of Gualcamayo. Drilling delineated mineralization along a strike of 825 ft., and is open along strike. Reported drilling includes intervals ranging in thickness from 100 ft. to 210 ft. with grades ranging from 0.03 oz/ton gold to 0.085 oz/ton gold.

AUY's exploration budget for 2010 is expected to be in the range of $75 to $80 million. Objectives of the program will be to expand the above newly discovered mineralization, and to follow up on other exploration successes in 2009. Refer to the press release for details.

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.

December 18, 2009: Apollo Gold Corp. (AGT) provided an update on the 2009 Grey Fox drilling program. Sixteen holes had been drilled in 2008. The 2009 drilling program was started on August 2009. To date 53 holes have been completed. Assay results were released on the first 17 drill holes (GF09-17 through GF09-34) in a previous release which reported gold mineralization in rocks similar to the host rocks at AGT's Black Fox mine. In this release AGT provides assays from six holes (GF09-35 through GF09-40) which continue to show continuity of mineralization in shallow, multiple zones, including 5.2 ft. grading 1.22 ounces per ton (GF09-35) and 17.4 ft grading 0.17 ounces per ton gold (GF09-36). AGT has assays pending for 30 completed drill holes.

December 23, 2009: New Gold Inc. (NGD) announced the sale of C$56.3 million of face value assets backed notes for cash proceeds of C$31.2 million.

December 30, 2009: Apollo Gold Corp. (AGT) announced that negotiations with Macquarie Bank Ltd. and RMB Australia Holdings have been successful, and will result in deferment of the first scheduled repayment of $9,300,000 that was due on September 30, 2009, and the second deferment repayment of $6,000,000 that was due on December 31, 2009, in accordance with the terms of the $70,000,000 Project Facility, and the requirement that the banks fund the associated Debt Service Reserve Account which requires a reserve amount equal to, at all times after funding, the greater of $5,000,000 or the aggregate repayment amount due on the next repayment date. The repayments will be due on the earlier to occur of (i) the completion of the Bank's technical review process on the Black Fox mine or (ii) February 28, 2010. The objective of the technical review is to reschedule repayments based on production expectations at Black Fox.

January 7, 2010: Richmont Mines Inc. (RIC) announced that it has posted an updated version of its new Investor Presentation entitled "Building the Next Generation of Gold" on its website. The presentation describes the company's top five corporate objectives and priorities for 2010.

· Complete one strategic acquisition

· Initiate a comprehensive investor relations campaign
· Pursue analysts coverage
· Reduce operating cash costs
· Achieve valuation parity with our peer group of junior Canadian gold producers