InsideMetals Newsletter - 03/06/2010 | Volume 5, Number 5 - Precious Metals Market Trends, Geopolitical View, Gold Producer News and Website Updates

February 19, 2010: AngloGold Ashanti Ltd. (AU) suspended operations at the Iduapriem mine in Ghana to find a new storage facility for environmentally harmful mine tailings after discussions with the Environmental Protection Agency of Ghana (EPA). In conjunction with the EPA, an interim site has been located and AU will work with the EPA to get the site approved and operational. AU is working to fast track the commissioning of a new storage facility water treatment plant by early 2011. The Iduapriem produced 190,000 ounces of gold in 2009, which is about 4% of AU's total gold output.

February 26, 2010: Barrick Gold Corp. (ABX) reported that it expects production at its two mines in Peru to decline in 2010 as lower grade ore is mined. ABX expects production at Lagunas Norte to decline from 1,007,000 ounces produced in 2009 to 850,000 ounces; and production at Pierina is expected to drop from 271,000 ounces to 220,000 in 2010. Successful infill drilling at Pierina will result in extension of the mine's life by two years to 2013, from a previously expected closure in 2011.

February 26, 2010: Harmony Gold Mining Ltd. (HMY) expects it Elandsrand gold mine in South Africa to increase its FY 2010 gold production by 15% to 200,000 ounces in 2010, and reach production of 280,000 ounces annually by 2012. Elandsrand will become the company's single largest producer by 2013 with a peak output of 310,000 ounces in 2013 following a $143.7 million expansion.

February 26, 2010: Newmont Mining Corp. (NEM) reported that its Canadian mining subsidiary bought a minority interest in Loncor Resources Inc. for $4.8 million by acquiring 4 million units of Loncor through a private placement for $1.2 per unit. Each unit includes one common share, and one warrant for another share exercisable at $1.39 per share for two years. NEM could end up with a 13% interest in Loncor if all its warrants are exercised, and no one else exercises their convertible securities.

February 22, 2010: Harmony Gold Mining Ltd. (HMY) expects that its Free State asset bought from Pamodzi Gold to produce 100,000 ounces over the next 12 months. In the second 12 months 150,000 ounces of production is expected from the Steyn 1, Steyn 2 and Lorraine 3 shafts.

February 23, 2010: Barrick Gold Corp. (ABX) will retain a 75% stake in African Barrick Gold (ABG), a spin-off of its Tanzanian gold assets. ABG will be listed on the London Stock Exchange and has initiated a $1 billion public offering (IPO). Upon successfully raising the $1 billion, the new company will be valued at about $4 billion. ABG will be the world's 16th biggest gold miner with an estimated 26 million ounces of reserves. These Tanzanian properties produced 716,000 ounces of gold last year at its four mines.

February 23, 2010: Compania de Minas Buenaventura S.A. (BVN) reported that workers at its mines in Peru plan to resume their strike on March 4, 2010. Workers had walked off the job on February 13, 2010 and returned a week later. The walk out was over issues pertaining to BVN's reporting of earnings subject to profit sharing during the years 2005 to 2008, and for 2009.

February 23, 2010: Gold Fields Ltd. (GFI) revised downward its already reduced 850,000 ounces for the March quarter by an additional 5%. GFI had produced 900,000 ounces in the December quarter at a cash cost of $613 per ounce. The total cash cost outlook in early February was $650 per ounce. Gold production for March is now estimated to be 807,500 ounces. The reason for the decline in production was a result of a decision made to advance the replacement of a corroded water pump column in the main shaft at Kloof.

February 24, 2010: AngloGold Ashanti (AU) announced that Tito Mboweni has been appointed as chairman of the board, to be effective on June 1, 2010. Mboweni was labor minister for South Africa from 1994 to 1998, and was considered the architect of South Africa's post-apartheid labor legislation. For the past 10 years he has served as a Central Bank governor.

February 25, 2010: Newmont Mining Corp. (NEM) reported that its fourth quarter 2009 earnings surged to $558 million from year earlier earnings of $4 million. The surge was primarily as a result of higher gold and copper prices. Newmont's averaged realized gold price was $1,102 per ounce, while the average realized copper price was $3.24 per pound. For the quarter NEM reported equity gold sales of 1.5 million ounces at costs applicable to sales of $413 per ounce during the quarter. NEM also reported equity copper sales of 72 million pounds at costs applicable to sales of $0.64 per pound. For the year NEM reported a profit of $1.3 billion compared to $831 million in 2008. NEM expects to produce between 5.3 and 5.5 million equity ounces in 2010.

February 26, 2010: Compania de Minas Buenaventura S.A. (BVN) reported that it expects its directly owned gold production to inch higher in 2010 to 430,000 ounces, up 2.6% from 2009. BVN also owns several mines in Peru and also has a minority owned stake in the vast Yanacocha gold mine and Cerro Verde copper pit which produced 419,000 ounces last year in its wholly owned operations.

February 26, 2010: Coeur d'Alene Mines Corp. (CDE) reported that despite a net loss of $31.9 million for 2009, the company reported a record annual silver production of 17.7 million ounces of silver and the largest proven and probable silver reserves in its history, a 16% increase to 269 million ounces, and a 26% increase in proven and probable gold reserves to 2.9 million ounces. Two new mines, San Bartolome in Bolivia produced 7.5 million ounces of silver in its full year of production, and Palmarejo in Mexico produced 3 million ounces of silver and 54,740 ounces of gold.

February 26, 2010: Stillwater Mining Company (SWC) CEO, Frank McAllister said that the difference between platinum and palladium prices will likely continue to narrow. Both metals are primarily used in automobile emission-reducing autocatalysts, but platinum is currently trading above $1,500 per ounce while palladium is valued at about $421 per ounce. McAllister said that he doesn't expect parity between the two metals, but he suggested that palladium could easily rise to half the price of platinum. A price increase in palladium could be beneficial to SWC because it produces more palladium than platinum. SWC's 2009 production rose 6.2% year-on year to 625,000 ounces of platinum and palladium.

March 1, 2010: Silver Wheaton Corp. (SLW) plans to acquire silver production from Pan American Silver Corp. (PAAS). SLW will acquire about 12.5% of the life-of-mine silver production from the Loma del Plata zone of PAAS' Navidad project located in Argentina's Chubat province. The deal is expected to be finalized by the end of the year. SLW will acquire this silver by converting its debenture with PAAS into upfront cash payments totaling $32.4 million in cash installments plus the lesser of $4.00 per ounce or the prevailing market price of silver delivered. The silver resources within the Loma del Plata Zone, of which 12.5% would be attributable to SLW include 158.1 million indicated silver resource ounces, and 3.2 million inferred silver resource ounces.

March 1, 2010: Yamana Gold Inc. (AUY) provided a new optimization strategy and announced a discovery of a new very high grade vein system at its El Penon mine in Chile. At El Penon production is expected to exceed 400,000 gold equivalent ounces (GEO) as a plant upgrade was competed in late 2009 with plant capacity and throughput currently at 4,300 tonnes per day, and new exploration discoveries will lead to additional future production. AUY will increase its output capacity to 5,000 tonnes per day by 2012. A decision to transition to mining by owner from contactor will allow for more efficient mining of narrow veins by allowing the owner to match equipment with vein size; thus allowing AUY to increase production by 350 to 400 tonnes per day by mining thin veins. Additional production is anticipated from the upgrading of promising resources to reserves from Amancaya which is located 120 km southwest El Penon, and contains a low sulfidation epithermal vein system with an inferred 1.4 million tonnes of ore at a grade of 7.9 g/t of gold containing 351,000 ounces. Plant improvements to increase recovery are expected to be completed by the end of 2010. These improvements call for finer milling and longer residency time. A new high grade discovery at Pampa Augusta Victoria located 30 km north of El Penon, has geology and mineralization similar to El Penon could become a source of future significant production.

March 2, 2010: Gold Fields Ltd. (GFI) has informed the Woodjam Joint Venture (WJV) partners Cariboo Rose Resources Ltd. (CRB) with a 60% interest, and Fjordland Exploration Inc. (FEX), with a 40% interest that Gold Fields Horsefly Exploration Corp. (a member of the Gold Fields Ltd group of companies) has decided to increase its planned winter drilling program, which resumed February 10, 2010, to 7,000 meters. The 12 month program which began in July 2009 is budgeted at $3 million. GFI now plans to drill several additional holes to trace the northeasterly trending mineralization found on the Takom Zone.

March 3, 2010: AngloGold Ashanti Ltd. (AU) said that it will explore under the sea for precious metals as mining companies scramble to replace increasingly scarce reserves. AU has founded a marine exploration company with diamond producer De Beers, and will spend $40 million in the next 3 to 5 years. The venture has started exploration operations off New Zealand's coast, and may initiate exploration off the coasts of South America and Canada.

March 3, 2010: Gold Fields Ltd. (GFI) reported that union workers are threatening indefinite strikes at all of the company's South African mines unless a health and safety rule is revoked by the company. The National Union of Mineworkers has announced that the strikes will begin on Sunday, March 7, 2010. The strike is being undertaken after six months of negotiations over legislation that calls for employers in South Africa to require that all individuals working on mining operations meet the basic standards of fitness required to work safely in an underground situation. GFI's South Africa operations make up 60% of Gold Fields' output.

March 3, 2010: Goldcorp Inc. (GG) believes it could receive construction permits for the El Morro copper/gold project in Chile in 2010, and the company is working hard to advance its development plans. GG has acquired a 70% interest in the project after advancing New Gold Corp. funds to exercise its first right of refusal to acquire the 70% interest in El Morro owned by its partner, Xstrata. The construction permits were already applied for by Xstrata. GG has agreed to start construction on the project within 60 day of receiving all of the necessary approvals and permits. The El Morro project contains 6.7 million ounces of gold, and 5.7 billion pounds of copper reserves, plus 2.2 million ounces of gold and 1 billion pounds of copper resources in the measured and indicated categories.

March 3, 2010: Yamana Gold Corp. (AUY) reported that revenue for the fourth quarter of 2009 was $399.8 million, up three-fold from $87.83 million for the year earlier quarter primarily as a result of higher gold, silver, and copper prices. AUY's realized gold price for the quarter ended December 31, 2009 was $1,095 per ounce compared to $789 per ounce for the year earlier quarter. The average realized price for silver increased to $17.47 from $10.20 per ounce a year ago. Realized copper prices also climbed to $3.18 per pound from $1.59 per pound in the prior year. Despite the increased revenue from higher metal prices, fourth quarter net earnings plunged to $36.18 million from net earnings of $179.37 million in the prior year as the prior year was boosted as a result of significant foreign exchange gains as well as unrealized gains on derivatives. AUY reported fourth quarter 2009 production of 289,456 gold-equivalent ounces (GEO), and total 2009 production of 1,025,677 GEO. For 2009 AUY announced proven an probable reserves of 17.6 million ounces of gold, 161.8 million ounces of silver, and 11.2 billion pounds of copper. In 2010 AUY expects to produce between 1,030,000 and 1,145,000 gold-equivalent ounces. For production details for specific mines refer to the press release.