01/23/2010                                    www.insidemetals.com Vol 5, Issue 2
In This Edition...

Precious Metals Market Update
Gold & Silver ETF's
Geopolitical View

Gold Producer News
Website Updates

 
Dear Subscriber,
The newsletter will be published next on February 6, 2010.
IN THIS EDITION OF INSIDEMETALS

In this edition of the InsideMetals Newsletter, we'll take a look at gold & silver ETF's, production, pricing and news, as well as precious metals trends, gold producer news and recent website updates, which includes our new Advertising and Media Kit information.

In This Issue
Precious Metals Markets Update
Geopolitical View
Whitney & Whitney Inc.
NYSE Gold Producer News
AMEX Gold Producer News
NASD Gold Producer News
InsideMetals.com Website Updates
PRECIOUS METALS MARKET UPDATE

PRECIOUS METALS MARKET UPDATEGold closed at $1108.25/oz (London Fix) on January 21, 2010, a 1.9% decrease from the $1130.25/oz (London Fix) closing price on January 7, 2010, when data for the previous newsletter was gathered.

 

Silver closed at $17.68/oz (London Fix) on January 21, 2010, a 2.3% decrease from the $18.09/oz (London Fix) closing price on January 7, 2010.

 

Platinum closed at $1612.00/oz (London Fix) on January 21, 2010, a 4.1% increase from the $1548.00/oz (London Fix) closing price on January 7, 2010.

 

Palladium closed at $462.00/oz (London Fix) on January 21, 2010, an 8.5% increase from the $426.00/oz (London Fix) closing price on January 7, 2010.
GOLD vs. EURO/U.S. DOLLAR CHART
 
 
 
The gold price has dropped to $1,108.25 per ounce after establishing a record high close of $1212.50 (London Fix on December 2, 2009). Gold has been steadily rising since the October 2008 lows, and closed above $1,000 per ounce in September 2009, and then sky-rocketed to record levels. During this rise in the bullion price, there was a steady decline in the value of the U.S. Dollar, until December 4, 2009, when the Euro/$ was 1.5068, and then the dollar started to increase in value. The Euro/$ value on January 21, 2009 was 1.4064.
 
The above chart reflects the expected parallel movement in the price of gold and the value of the U.S. Dollar. In the last week there has been a slight divergence in the lines as the dollar has strengthened.

 

 

 

 

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Gold & Silver ETF's
 

The SPDR Gold Trust (GLD) now controls over 35,749,401 ounces of gold. The gold holdings that have been steadily increasing since October 2008 have been recently consolidating as gold prices have risen from $925 in July 2009 to current levels above $1,100 per ounce. The GLD reached a record 36,450,190 ounces of gold on June 1, 2009. GLD holdings were 36,121,731 ounces when this newsletter was last issued. 

 
The accumulation of silver by the iShares Silver Trust (SLV) has been steadily increasing since early 2008, in spite of declining silver prices beginning in August 2008 through October 2008. SLV silver holdings and the price of silver moved upward in mid-January. Silver prices and SLV silver holdings have been steadily rising since July 2009. SLV silver holdings reached a record 305,893,368 ounces on December 3, 2009, when the price of silver closed above $19.00 per ounce (London Fix).
 
The SLV currently holds 300,261,860 ounces of silver h
oldings in both the GLD and SLV have been steadily increasing as the price of both gold and silver has been rising. Both the GLD and SLV are maintaining their positions in spite of a recent sharp decline in gold and silver prices. This suggests that investors continue to believe in the long term prospects for gold and silver.
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GEO POLITICAL VIEW
GEOPOLITICAL VIEW
PALLADIUM - GOLD OF ANOTHER COLOR
 
The surge in gold prices to record levels dominated the commodity news in 2009. No one has been immune from advice and urgings to buy gold, but the best performer in the precious metals sector has been palladium. While gold prices rose approximately 50% in 2009 from just above $800 per oz. to a record close of $1212.50 per oz (both London Fix), palladium prices have climbed by approximately 117% for the year, from $181 per oz to $393 per oz.
 
Palladium prices which had surged to over $550 per oz in the first quarter 2008, collapsed in the second half of the year, and closed 2008 at $183 per ounce.
 
A survey conducted by Dow Jones (as reported by Devon Maylie, The Wall Street Journal, January 14, 2010) asked 41 analysts at investment banks, brokerage firms, and research organizations to forecast metal prices in 2010 and 2011. The survey indicated that analysts expect palladium to average $418 per oz in 2010, up 58% from its 2009 average of approximately $265 per oz.
 
A factor in the expected rise in palladium prices is a pick up in industrial demand, and uncertainty about Russian stock piles. Russia is the world's largest palladium producer. If Russian palladium sales don't materialize, there will be a palladium shortage.
 
Palladium is a metal with multiple uses. In 2008, 7.741 million ounces of palladium was used. The main use of palladium is in catalytic converters for automobiles where 49% of the supply was used. Approximately 30% of the palladium supply was used in the electronic industry, dentistry, and jewelry.
 
The palladium supply in 2008 was 8.100 million ounces, a decline of 4% from 2007 levels. The decline was largely driven by the reduction in South African production. 2009 refined palladium production is forecast to be 7.50 million ounces.
 
Palladium prices just closed at $462 per oz. An opportunity for precious metals investors is North American Palladium (PAL), a palladium producer which will be re-opening its Lac des Iles palladium mine in Ontario, in the second quarter of the year. The stock price of PAL has in the month of January risen from $3.65 per share to a high of $4.62 per share on January 21, 2010, based on recent press releases regarding the re-opening of the Lac des Iles mine, and the initiation of commercial production at its Sleeping Giant gold mine in Quebec (refer to press releases below under AMEX COMPANIES).The Lac des Iles mine had been placed on care and maintenance when palladium prices had collapsed and should produce 140,000 ounces of palladium this year, and could reach 250,000 ounces in 2012 following planned development.
 
PAL shares just closed down at $4.09 per share following the recent market decline. This could be a golden opportunity.
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NYSE GOLD PRODUCER NEWS
NYSE
January 10, 2010: Barrick Gold Corporation's (ABX) joint venture with Chilean copper miner Antofagasta, in Pakistan has been threatened by a provincial government's plans to cancel the $3 billion copper-gold project. The two companies are partners in the Tethyan Copper Company (TCC) joint venture which holds a 75% interest in the Reko Diq project located in the southwestern province of Baluchistan. The provincial government holds the remaining 25%. The deposit holds more than 11 billion pounds of copper and 9 million ounces of gold. The threat of cancellation in this province was meant to ease the anger of the poor regarding exploitation of the natural resources in the province by outsiders.
 

January 11, 2010: Newmont Mining Corp. (NEM) and Fresnillo Plc announced that their Joint Venture Pentmont has conceded and they will take no further action to out bid Goldcorp Inc. for Canplats Resources. Canplats main asset is the Camino Rojo gold-silver deposit in Mexico which has a measured and indicated resource of 3.44 million ounces of gold and 60.7 million ounces of silver, and an inferred resource of 0.55 million ounces of gold and 7.6 million ounces of silver hosted within the Represa deposit.

January 12, 2010: Eldorado Gold Corp. (EGO) announced that it will resume operations at its White Mountain gold mine in the Jilin Province of China, which had been shut down because of a dispute over alleged water contamination. EGO acquired the property through its acquisition of Sino Gold in December 2009. EGO owns 95% of the mine which began commercial production in January 2009. The mine is expected to produce an average of 65,000 ounces of gold annually.

January 12, 2010: Gold Fields Ltd. (GFI), through its Gold Fields Horsefly Exploration Corporation subsidiary, reported drilling results to the Woodjam Joint Venture made up of Cariboo Rose Resources Ltd. (40% interest) and Fjordland Exploration Inc (60% interest). Woodjam is located approximately 28 miles east of Williams Lake in central British Columbia. GFI has an option to earn up to 70% in the property by spending $19 million in exploration over the next 7 years. GFI tested two areas with the completion of 11 core holes totaling 8,525 feet in the Takom Zone and 3 core holes totaling 3,260 feet in the Deerhorn Zone. Most of the holes in the recently completed drilling program intersected copper-gold mineralization. Assay highlights include 328 feet grading 0.017 oz/t gold and 0.43% copper at Takom, and 293.5 feet grading 0.034 oz/t gold and 0.26% copper at Deerhorn. Further drilling will be undertaken. Refer to the press release for assay details.

January 12, 2010: Goldcorp Inc. (GG) announced record gold production in 2009 of over 2.4 million ounces of gold, which exceeded previous guidance of 2.3 million ounces. Fourth quarter gold production was 601,000 ounces. GG's year-end financial statements are expected to be released on Thursday, March 11, 2010. The calculation of 2009 operating costs have not been completed, but total cash costs are expected to be approximately $295 per ounce on a gold by-product basis and approximately $390 per ounce on a co-product basis. GG expects to produce approximately 2.6 million ounces of gold in 2010, at a total cash cost of approximately $350 per ounce on a by-product basis and $450 per ounce on a co-product basis (assuming gold at $1,000/oz, silver at $16/oz, and copper at $2.75/lb.).

January 12, 2010: Stillwater Mining Company (SWC) produced 102,800 PGM ounces, in the 4th quarter of 2009, up 11.5% over the year-earlier quarter. PGM production for the entire year was 529,900 ounces, an increase of 12.7% over 2008 production, which exceeded 2009 guidance of 515,000 PGM ounces. 2009 production consisted of 122,900 ounces of platinum and 407,000 ounces of palladium. 2010 guidance remains at 515,000 PGM ounces. SWC's realized average prices received in 2009 for mined platinum and palladium was down 18.0% and 11.0% respectively from their 2008 averages. PGM prices in 2009 have been steadily increasing, and the company's total recycling volumes have gradually recovered in 2009 as PGM prices have increased and supply arrangements have been adjusted. The average realized price for mined ounces of platinum and palladium sold in the 4th quarter was respectively, $1,296 per ounce for platinum, and $374 per ounce for palladium.

January 12, 2010: Yamana Gold Inc. (AUY) provided its outlook for 2010 and 2011 operations. AUY expects production from continuing operations to be in the range of 1.03 million to 1.145 million gold equivalent ounces (GEO) in 2010, and 1.045 million to 1.150 million GEO in 2011, representing an overall increase of 12% in production from continuing operations in 2009. Production from discontinued operations is expected to be approximately 40,000 GEO in the first quarter of 2010. Refer to the press release for production and cost details from specific operations.

January 14, 2010: Kinross Gold Corp. (KGC) provided preliminary operating results for the full year 2009 and its outlook for 2010. For the full year production is expected to be approximately 2.23 million gold equivalent ounces (GEO), which is in line with previous guidance, and approximately 21% above 2008 production. The average cost of sales per GEO is expected to be in line with the previous guidance range of $435 to $450 per GEO. Full year 2010 production is expected to be approximately 2.2 million GEO. The average cash cost of sales per GEO in 2010 is expected to be in the range of $460 to $490. Capital expenditures for 2010 are forecast to be approximately $550 million, which includes $225 million for mine development, $90 million for a new ball mill at Paracatu, and $48 million for new project expenditures. Refer to the press release for details on operations.

January 18, 2010: Gold Fields Ltd. (GFI) has provided written notice to the Woodjam Joint Venture that it intends to exercise its right of first refusal with respect to the Woodjam South Copper-Gold property, as a response to notice that another international mining company has made an offer to acquire the Woodjam South copper-gold project. Pursuant to the offer, GFI can earn a 51% interest in the property by spending $7 million on exploration over 42 months and the purchase of a total ofC$500,000 of common shares of the Woodjam Joint Venture proportionate to owner's respective interests.

January 18, 2010: Newmont Mining Corp. (NEM) has temporarily halted mine operations at Batu Hijau mine in Indonesia after a deadly accident, but continues to process ore from stockpiles. PT Newmont Nusa Tenggara (NNT), the joint venture operator of the mine reported that a rock slide at the mine on Sumbawa Island, buried a dozer operator last Sunday. All pit operations have been stopped pending an investigation by the Department of Energy and Mineral Resources. Operations had been previously halted by a pit-wall rock slide that occurred on September 2009.

January 20, 2010: Kinross Gold Corp. (KGC) has agreed in principle to acquire the high-grade Dvoinoye deposit and the Vodorazdelnaya property, both located approximately 56 miles north of Kinross' Kupol operation in the Chukotka region of the Russian Far East. KGC plans to process ore from Dvoinoye at the Kupol mill, pursuant to an ore purchase agreement with Kinross' 75% owned Chukotka Mining and Geological Company, the owner of the Kupol mine. The total purchase price for these properties is $368 million, comprising $165 million in cash and approximately 10.56 million newly issued Kinross common shares with a market value of $203 million as of the close on January 19, 2010. The new Kinross shares will be subject to a four month holding period after closing. The Vodorazdelnaya property holds approximately 355 square miles with both an exploration and mining license, and identified targets for exploration. The Dvoinoye deposit hosts an open pit mine which operates six months per year at a throughput of approximately 275 tons per day. The deposit may contain 3.5 to 3.9 million tones of ore at an average grade of 0.5 to 0.55 oz/t gold (non NI 43-101 compliant).

January 20, 2010: Newmont Mining Corp. (NEM) reported in a regulatory filing that it will pay a fine tentatively set at $4.9 million for a water and cyanide solution spill at a mine in Ghana. A gauge malfunction caused about 75 cubic-meters of solution to spill over the top of a holding pond in October, killing 800 to 850 fish in a drainage area near the mine site.

January 21, 2010: Barrick Gold Corporation's (ABX) massive Pascua-Lama project will undergo a probe by Chilean environmental authorities. The Atacama region's environmental commission said the probe will look into a water source for the project. Protests from environmental groups charged that the project would contaminate nearby glaciers and threaten water supplies. The environmental probe could lead to fines or even a revoked concession. Pascua-Lama, which straddles the Chilean-Argentina border, contains approximately 18 million ounces of gold, 718 million ounces of silver, and 650 million pounds of copper.

January 21, 2010: IAMGOLD Corp. (IAG) announced that gold production for 2009 totaled 939,000 ounces, which was 7% above guidance. Cash costs for 2009 are expected to be in line within the latest guidance range of $460 to $470 per ounce of gold. Gold production for the 4th quarter is expected to come in at 234,000 ounces. IAG also produced 4.1 million kilograms of niobium with an operating margin which is expected to be in the range of $19 to $21 per kilogram. Gold production for 2010 is expected to be between 940,000 to 1,000,000 ounces of gold at an average cash cost of $490 to $510 per ounce. Commercial production at the Essakane project in Burkino Faso is on schedule for an August 2010 start with an estimated 480,000 to 490,000 ounces of production during the first 16 months through the end of 2011. At the 100% owned Westwood project in northwestern Quebec an updated Preliminary Assessment Study indicates a potential for the project to commence production in 2013 with an average annual production of 186,000 ounces for 16 years and an average cash cost of $358 per ounce. Capital expenditures of $102 million are expected for 2010 to advance development of the mine. Based on a preliminary unaudited assessment, IAG expects to post an impairment charge in its 2009, 4th quarter financial results, in the range of $85 to $100 million, primarily related to its Camp Caiman project in French Guiana.

AMEX GOLD PRODUCER NEWS
AMEX
January 11, 2010: Aurizon Mines Ltd. (AZK) reported that 2009 gold production for the year totaled 159,261 ounces from 757,085 tons of ore processed at its 100% owned Casa Berardi mine. The average grade of the ore was 0.227 oz/t gold. Ore processed in the 4th quarter of 2009 produced 36,459 ounces of gold from 191,117 tons of ore at an average grade of 0.210 oz/t. Casa Berardi will produce between 145,000 to 155,000 ounces of gold in 2010 at an average grade of 0.195 oz/t gold. At its Joanna project in Quebec, AZK will conduct a $3.4 million exploration program to continue to test targets to the north and south of its Hosco deposit; to perform in fill drilling on the Heva deposit; and to test for a potential satellite pit some 2,300 feet west of the proposed Hosco pit.
 
January 11, 2010:
Claude Resources Inc. (CGR) reported that it produced 14,300 ounces of gold in the fourth quarter of 2009 and 28,500 ounces in the second half of 2009. This production represents a12% increase in production compared to the second half of 2008. Total production for 2009 is approximately 46,800 ounces. In 2010, CGR plans to mine gold from its Seabee gold mine in Saskatchewan, and to initiate production on the nearby Santoy 8 deposit located in close proximity to the Seabee Mill.
 
January 19, 2010:
North American Palladium (PAL) announced that palladium production at the Roby deposit, at its Lac des Iles mine will remain at 140,000 ounces of palladium (Pd) for the foreseeable future. Underground production at the Roby deposit is scheduled to start up in the second quarter, and to continue for approximately two years until depleted. Production will remain flat until work begins on the high-grade Offset Zone in 2012. Once production commences from the Offset Zone, costs will decline rapidly and production could reach 250,000 ounces of Pd per year. Pd prices could reach $450 to $500 per ounce in 2010.
 
January 19, 2010:
Northgate Minerals Corp. (NXG) reported 4th quarter 2009 gold production of 81,098 ounces from its 3 operating mines (Fosterville, Starwell, and Kemess South), which brings full year production to a record of 362,743 ounces. Fosterville achieved the highest quarterly production in the mines history with 26,615 ounces of gold. Full year production reached 103,360 ounces, also a record. Starwell reached the mine's best quarterly production for the year by producing 23,566 ounces of gold. Kemess achieved its quarterly and annual production forecast with 4th quarter production of 30,917 ounces of gold, and annual production of 173,040 ounces of gold. Kemess also produced 11.7 million pounds of copper in the 4th quarter for a total of 52.5 million pounds of copper for the year. The estimated average net cash cost of gold for the 4th quarter was $529 per ounce, bringing the average cash cost for 2009 to $475 per ounce. NXG is forecasting that it will produce 316,000 ounces of gold from the above three mines in 2010. NXG also expects to spend $21 million on exploration in 2010 at Fosterville ($11.2 million), Starwell ($7.2 million), and Young-Davidson ($2.6 million). Refer to the press release for details on exploration and operations.
 
January 20, 2010:
Apollo Gold Corp. (AGT) announced additional positive results from six holes drilled at its Grey Fox Project, which continues to find multiple zones of shallow gold mineralization in rocks similar to the rocks which host gold mineralization at the their nearby Black Fox mine. Assay results are still pending from 23 holes that were part of a 53 drill hole, 32,600 foot drilling program. Highlights from the six assayed holes are:

· 9.5 feet at an average gold grade of 0.178 oz/t in drill hole GF09-45
· 10.2 feet grading 0.108 oz/t in drill hole GF09-42
 
January 20, 2010:
North American Palladium (PAL) has set a production target of 50,000 ounces of gold for its Sleeping Giant gold mine in the Abitibi region of northwestern Quebec. The mine recently reached commercial production on January 1, 2010. PAL spent $7.29 million to bring the mine back into production. The mine contains proven and probable gold reserves of 70,000 ounces and 82,000 ounces of measured and indicated gold reserves. PAL has commenced an exploration program at the mine to increase the reserves and resources at the mine.
 
January 21, 2010:
Gold Star Resources Ltd. (GSS) announced that it sold a record 409,902 ounces of gold in 2009, an increase of 38.5% over 2008 gold sales. For 2009, the Wassa mine sold a total 223,848 ounces, an increase of 78.5% over gold sales in 2008. Gold sales at the Bogoso mine totaled 186,054 ounces, a 9.1% over 2008 gold sales. For 2010, GSS forecasts production of 400,000 ounces at a cash operating cost of $585 per ounce. In 2010, Bogoso/Prestea is expected to produce 200,000 ounces of gold, all from sulfide ore, at an average cash cost of $650 per ounce. Wassa is expected to produce 200,000 ounces at a cash operating cost of $520 per ounce in 2010.
 
January 21, 2010:
New Gold Inc. (NGD) provided an update on its Cerro San Pedro mine hearings related to appeals filed at various courts resulting from a Mexican Federal Court's September 21, 2009 ruling that nullified the Environmental Impact Statement (EIS) for the project. The court dates are as follows:
 
· January 28, 2010: hearing scheduled in the Third District Court in Mexico City that seeks to overturn the Mexican environmental enforcement agency's November 18, 2009 order to shutdown mining at Cerro San Pedro. New Gold on December 14, 2009 got an injunction that allowed mining to continue pending a court ruling.

 
· February 3, 2010:  hearing scheduled in the Third District Court in Mexico City related to New Gold's filing that seeks to overturn the ruling by the Mexican environmental protection agency that cancelled the company's EIS.
NASDAQ GOLD PRODUCER NEWS
NASD
January 18, 2010: DRDGOLD Ltd. (DROOY) reported that it is refining detailed terms of the sale of a 60% interest in its Blyvooruitzich Gold Mining Company, a wholly owned subsidiary. The stake is being sold to Aurora Employment Systems for R296.2 million. It was also reported that Aurora has purchased DRDGOLD's defunct ERPM mine for R20 million.
 
January 18, 2010: Lihr Gold Ltd. (LIHR) reported that it has received expressions of interest from potential bidders for its troubled Ballarat mine in Australia.
 
January 20, 2010: Randgold Resources Ltd. (GOLD) intends to invest $300 million in its West African, Massawa project located in Senegal. Massawa is located 435 miles southeast of Dakar, the capital of Senegal. The deposit contains 3 million ounces of gold. Randgold hopes to commence construction of the mine next year, and to start mining by 2013.
 
January 21, 2010: DRDGOLD Ltd. (DROOY) has agreed to buy the 50% interest in Ergo Mining from Mintails that it did not already own for R82 million. The purchase will be settled in three tranches. Ergo Mining had been created as a joint venture (50:50) between the companies in November 2007 to explore, evaluate and process up to 1.7 billion tons of surface gold, uranium, and sulphur-bearing tailings on South Africa's east and central Rand.
 
January 21, 2010: Lihr Gold Ltd. (LIHR) reported that its full year 2009 gold production rose approximately 27% to a record 1.12 million ounces, which is in line with previous issued guidance. LIHR expects 2010 production to be between 960,000 to 1.06 million ounces of gold as the company works on expansion plans to increase output to 1.3 million ounces a year by 2012.
 
January 21, 2010: Royal Gold Inc. (RGLD) announced that it has obtained a new $100 million secured term loan from HSBC Bank USA, National Association, which will be funded in conjunction with the closing of the Plan of Arrangement between RGLD and International Royalty Corp. (IRC), as announced on December 18, 2009, whereby RGLD would acquire all of the issued and outstanding shares of IRC). The loan will mature 18 months from the funding date with principal repayments scheduled to occur every three months.
INSIDEMETALS.COM WEBSITE UPDATES
INSIDEMETALS WEBSITE UPDATES
InsideMetals has added to the Home Page of its website, an Advertising & Marketing Guide link for readers who may be interested in advertising their business on the InsideMetals website, or in the newsletter. The website has been visited by readers from more than 184 countries.
 
The Advertising & Marketing Guide contains basic demographic information as to the regions in the world from which the website is viewed; information as to banner advertisements and placements in the website and in the newsletter; and special Gold and Silver Medallion Advertising Programs that are available to mining and exploration companies.
If interested, please visit the following links for more information:
 
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The newsletter will be published next on February 6, 2010.

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