InsideMetals Newsletter - 04/24/2010 | Volume 5, Number 8 - Precious Metals Market Trends, Geopolitical View, Gold Producer News and Website Updates

April 5, 2010: Agnico-Eagle Mines Ltd. (AEM) reported that it expects production from its Meliadine gold project in Nunavut to begin in 2015 at a cost likely to be 5 to 10 percent lower than its Meadowbank mine which is also located in the northern Canadian territory. AEM will acquire the Meliadine gold project for $570 million by purchasing Comaplex Minerals, and then spinning out Comaplex's other assets into a new asset. AEM owned 13% of Comaplex before this acquisition of Meliadine was announced.

April 7, 2010: Kinross Gold Corp. (KGC) reported that it purchased another 841,042 shares in explorer Millrock Resources, taking its total holdings to 6.4% of the junior company. KGC paid C$250,000, reflecting the 20-day moving average of Millrock's price on March 31, 2010 (C$0.2975/share). The purchase is related to a joint venture agreement on Millrock's Council gold property in Western Alaska. Millrock has been exploring for gold deposits and copper/gold porphyries, and has eight active exploration projects in Alaska and three in Arizona.

April 8, 2010: Coeur d'Alene Mines (CDE) reported that the company will begin production in July at its controversial Kensington gold mine in Alaska after several years of legal battles over environmental issues. First year production is expected to be 50,000 ounces thanks to a mild winter which allowed construction activities to remain on schedule and budget. The mine is expected to produce annually 120,000 ounces once planned output is reached.

April 9, 2010: Goldcorp Inc. (GG) reported that its Penasquito mine in Mexico is on track to reach commercial production in the third quarter of 2010. GG will go ahead with an in pit crushing and conveying system that should reduce capital and operating costs compared with conventional truck haulage. The in pit system will require about $155 million in up front capital, and should be completed by 2013. Lead and zinc concentrate grade and quality are meeting or exceeding expectations and mill throughput from the first sulfide process line is ramping up. The second sulfide process line will be mechanically complete in the third quarter. The operation is on track to ramp up to design capacity of 130,000 tons/day early next year. Penasquito will become Mexico's largest open pit mine and is expected to produce about 500,000 oz/year gold, 28 million oz/year silver, 450 million lbs/year zinc and 200 million lbs/year lead, over a 22 year mine life. First quarter gold production reached 30,700 ounces (11,400 ounces from sulfide ore and 19,300 ounces from the heap leached oxide cap), 2.1 million ounces of silver, 17.46 million pounds of lead and 11.79 million pounds of zinc.

April 12, 2010: Barrick Gold Corp. (ABX) reported that African Barrick Gold suspended operations at its Nyabigena mining site at the North Mara Gold Mine in the Tarime District due to shortages of gold resources.

April 12, 2010: Barrick Gold Corp. (ABX) reported that production at its David Bell mine, located 350 km east of Thunder Bay, Ontario, will extend the mine's life as a result of the purchase of the nearby past-producing Golden Giant mine owned by Newmont Mining Corp. The David Bell, an underground operation was due to close, but resources at the Golden Giant will allow production to continue at the David Bell for another four years or so. The David Bell, the Golden Giant, and the Willams were three mines in the Hemlo area within two miles of one another on the same orebody. Recently ABX bought the 50% interest it didn't already own in the David Bell and the Willaims from Teck Resources last year for C$65 million. The three mines are already connected underground and most additional costs will be driven by rehabilitating the workings at Golden Giant, which lies directly between the David Bell and Williams mines. ABX bought the property in exchange for a sliding-scale royalty on future production.

April 12, 2010: Gammon Gold Inc. (GRS) reported that Q1 gold production fell about 23% to 28,431 ounces from the year earlier quarter, as a result of some operational problems at its Ocampo mine in Mexico. Silver production fell to about 1.28 million ounces from about 1.35 million ounces. Using the company's long-term silver-to gold ratio of 55:1, total cash costs per gold equivalent ounce were expected to be $488 to $498, up from $411 a year ago.

April 13, 2010: Newmont Mining Corp. (NEM) announced that Newmont Ghana has compensated the Ministry of Environment, Science and Technology (MES&T) for the accidental overflow of process solution at the Ahafo mine during October 2009. The compensation paid was approximately $4.93 million. According to the Ministerial Panel appointed by the MES&T, 45% of the compensation will be used to meet some of the development needs of the affected communities, 40% will be paid to the Environmental Protection Agency, and the remaining 15% to the Inspectorate Division of the Minerals Commission.

April 14, 2010: Barrick Gold Corp. (ABX) reported that an April 13, 2010, U.S District Court decision will allow ABX to continue its operations at Cortez Hills Mine while the Bureau of Land Management (BLM) completes a study on three aspects of the project identified in a 2009 ruling by the U.S. 9th Circuit Court of Appeals. ABX began construction on the project in late 2008 following BLM approval of the company's plan of operations. Soon after, a coalition of three environmental groups and two Western Shoshone Tribes asked the District Court to stop the project. A subsequent appeal to the 9th Circuit resulted in a 2009 opinion that remanded the case back to the District Court. The District Courts order preserves hundreds of Nevada mining jobs and the many benefits to local community derived from continuing operations. As a condition to continue operations, ABX has agreed not to ship a portion of Cortez Hills' ore off site for processing while the Supplemental Environmental Impact Statement ordered by the 9th Circuit is prepared and made available to the public.

April 16, 2010: Barrick Gold Corp. (ABX) will sell to JSE listed Platmin, ABX's 10% interest in the Sedibelo platinum project, which is located on the western limb of South Africa's Bushveld Complex for $15 million. Platmin will also acquire a number of long-lead items required for the development of the project from ABX for up to $45 million.

April 16, 2010: Harmony Gold Mining Company Ltd. (HMY) shut down three under-performing operations and put the jobs of 3700 of its employees at risk. HMY decided to close its Harmony 2, Merriespruit 1, and Merriespruit 3 shafts at its Virginia operations after a performance review. It was determined that these shafts had no remaining payable reserves. These shafts had been in existence for over 60 years. Efforts would be made to transfer skilled workers and initiate early retirements for qualified workers.

April 20, 2010: AngloGold Ashanti Ltd. (AU) announced that it could invest $2.5 billion to 3 billion to build the La Colosa gold mine in Colombia if a feasibility study indicated that the project is viable. The government has granted a partial permit to advance exploration. AU is still waiting for a water permit from local authorities. AU expects to invest $250 million in exploring the deposit in the period 2010-2012. If AU obtains the water permit, exploration needed to conclude the feasibility study can be completed in late 2012. If the feasibility study is positive, construction could commence in 2014, and be completed by 2016. Gold production could begin in 2016 or 2017. The project could support 4,000 jobs in the town of Cajamarca during a 20-year mine life to extract the current estimated 12.3 million ounces of unproven resources if they are confirmed and the project goes forward.

April 20, 2010: Barrick Gold Corp (ABX) and Newmont Mining Corp. (NEM). Australia's largest gold mine, Kalgoorlies Super Pit, jointly owned by ABX & NEM re-opened late on Tuesday after it was evacuated and closed due to a 5.5 magnitude earthquake. Emergency services received no reports of major damage to mines in the area.

April 20, 2010: Newmont Mining Corp. (NEM) is holding preliminary discussions with advisors regarding a potential takeover of Lihir Gold Ltd. (LIHR), following LIHR's rejection of the $8.5 billion offer from Newcrest Mining.

April 21, 2010: Agnico-Eagle Mines Ltd. (AEM) announced that drilling has commenced on its Summit Property that is a joint venture with Columbus Gold Corp. AEM is earning an initial 51% by undertaking staged annual exploration expenditures and by making payments to Columbus. The current drilling program consists of 4,000 feet of reverse circulation drilling in two holes. The holes will test for the northeast strike extension of the Long Canyon deposit being developed by AuEx Ventures Inc. and Fronteer Development Group Inc. Mineralized outcrops in the central portion of the Long Canyon deposit plunges shallowly to the northeast towards Columbus Gold's Summit Property. In March 2009, AuEx Ventures reported an indicated resource of 363,000 ounces of gold from 4,808,000 tonnes averaging 2.35 g/t and an inferred resource of 459,000 ounces of gold from 8,780,000 tonnes averaging 1.63 g/t, and reported the completion of a positive initial Preliminary Economic Assessment.

April 21, 2010: AngloGold Ashanti Ltd. (AU) and Gold Fields Ltd. (GFI) announced that the two companies have had informal discussions about a possible combination of their South African operations.

April 21, 2010: Gold Fields Ltd. (GFI) is pressing ahead with a depth extension to the South Deep ventilation shaft, the second of the two shafts that form the mines twin-shaft complex. South Deep's first shaft to 3,000 meters was completed in 2004. The twin shaft complex is currently hoisting rock at a rate of 175,000 tons/month (t/m). When the new ventilation shaft is completed, an additional 195,000 t/m can be hoisted. The combined 370,000 t/m hoisted will consist of 330,000 t/m of gold reef ore and 40,000 t/m waste. The mine is on track to be producing between 750,000 oz/year and 800,000 oz/year by 2014. The South Deep mine contains a reserve of 30 million ounces.

April 21, 2010: Gold Fields Ltd. (GFI). The Woodjam Joint Venture (WJV) comprised of Fjordland Exploration Inc. (60%) and Cariboo Rose Resources Inc. (40%) reported that Gold Fields Horsefly Exploration, a member of the Gold Fields Group forwarded the first results of the 2010 drilling program on the Woodjam North gold/copper property. The property is located 45 km east of Williams Lake in central British Columbia. Gold Fields reported that seven holes (2330 meters) of drilling in the Takom Zone found copper/gold mineralization over intervals ranging from 24 meters to 148 meters, with copper grades ranging from 0.10% to 0.41%; and gold grades ranging from 0.03 g/t to 0.82 g/t. The best intercept was 61.9 meters grading 0.82 g/t gold and 0.41% copper. Gold Fields has an option to earn up o a 70% in the Woodjam North property by spending $19 million in exploration over the next seven years.

April 22, 2010: Harmony Gold Mining Company Ltd. (HMY) announced a significant discovery in Papua New Guinea on its Golpu project, a deposit within the Morobe Joint Venture, a 50:50 JV with Newcrest Mining. The Morobe JV includes the Hidden Valley deposit which contains gold resources of 5.4 million ounces. New drill results at Golpu could lead to a deposit on the order of 13 million ounces of gold and 6.5 million tones of copper.

April 6, 2010: Claude Resources Inc. (CGR) reported highlights from its ongoing underground in-fill and exploration program from its 100% owned Seabee Mine in Saskatchewan conducted in December 2009, and completed as of February 28, 2010.

Highlights of gold assays include:

· 50 grams/tonne (g/t) over 1.1 meters true width in drill hole U10-610;
· 33.17 g/t over 2.0 meters true width in drill hole U09-393;
· 28.29 g/t over 2.0 meters true width in drill hole U09-395; and
· 28.89 g/t over 1.9 meters true width in drill hole U09-401

These high grades should improve economics of the Seabee Mine in 2010.

April 6, 2010: North American Palladium (PAL) released a mineral reserve and resource update for its Gold Division which includes the Sleeping Giant gold mine, as of December 31, 2009; a first time mineral resource estimate for its Flordin property, as of March 31, 2010; and for the Discovery project as of August 1, 2008. All three properties are located in the prolific-Abitibi gold district in Quebec. The reserve/resource estimates are as follows:

· Sleeping Giant:

Proven Reserves of 26,000 ounces
Probable Reserves of 30,000 ounces

Indicated Resources of 57,000 ounces
Inferred Resources of 101,000 ounces

· Floridin:

Measured Resources of 4,000 ounces
Indicated Resources of 649,000 ounces
Inferred Resources of 169,000 ounces

· Discovery:

Measured Resources of 900 ounces
Indicated Resources of 236,000 ounces
Inferred Resources of 294,000 ounces

In 2010, PAL will conduct additional drilling to increase reserves/resources This drilling will include 30,000 meters at Sleeping Giant; 10,000 meters at Floridin; and 4,200 meters at Discovery.

April 8, 2010: Minefinders Corporation Ltd. (MFN) reported that it has received a positive assessment for a mill addition at its Dolores Mine in Mexico based on an assumed gold price of $825/oz and a silver price of $14/oz. Study highlights include:

· The addition of a 6,500 tonnes per day mill with anticipated production commencing in Q2 2012 which will benefit the current project which relies on an 18,000 tonnes per day heap leach operation
· Combined mill and heap leach production from the current open pit is 1,731,693 oz of gold and 74,239878 oz of silver over an 11 year mine life.
· Life of mine average cash cost (excluding royalties) is estimated at $348 per gold-equivalent oz
· Initial capital cost of $163.3 million with a total life of mine sustaining capital cost for both the mill and heap leach operation estimated at $42.5 million

April 12, 2010: Richmont Mines Inc. (RIC) announced preliminary assay results from surface drilling at its 100%-owned Cripple Creek property, located west of the Timmins gold Deposit in Ontario.

Highlights of the drilling include:
· 73.54 grams/tonne (g/t) over 7 meters at vertical depth of 250 meters
· 22.76 g/t over 0.5 meters at vertical depth of 130 meters
· 12.31 g/t over 0.8 meters at vertical depth of 300 meters

Surrounding these veins are altered rocks containing between 3%-10% pyrite. Additional drilling is planned to test these zones at depth.

April 13, 2010: Aurizon Mines Ltd. (AZK) announced that an exploration drilling program will commence on its 100% owned Kipawa Gold-Rare Earth project in northwest Quebec. The program calls for 6,500 meters of drilling in 26 planned holes on three exploration targets. Kipawa is an early stage exploration project located approximately 100 km south of Rouyn-Noranda, in the Temiskaming region. Planned drilling will test four gold soil anomalies that have a length of 1 to 3 km along magnetic anomalies. Sampling has also detected rare earth elements grab samples, and have been confirmed in drilling.

April 13, 2010: New Gold Inc. (NGD) announced the closing of its previously disclosed sale of its Brazilian subsidiary Mineracao Pedra Branca do Ampari Ltda., which holds the Ampari mine and related assets to Beadell Resources Ltd. NGD received $37 million in cash and $16 million in Beadell shares for total consideration of $53 million, which gives NGD approximately 19.5% of Beadell's outstanding shares.

April 13, 2010: Claude Resources Inc. (CGR) announced the completion of a Joint Venture Agreement with St. Eugene Mining Corp. on the Amisk Gold Project. CGR will be the project's operator for 2010 and will hold a 65% interest in the project, St. Eugene will hold the remaining 35% interest. The 120 square km property is located 20 km southwest of Flin Flon, Manitoba, and hosts the Amisk-Laurel Gold Deposit. Pursuant to the agreement, CGR will initiate a $1.1 million exploration program on the property with the goal of expanding the deposit and evaluating the bulk mining potential of the deposit. As a first stage, an eleven hole, 2,300 meter winter drilling program has been completed and results are pending. The property has seen intermittent exploration since 1910, and underground bulk sampling was conducted by Cameco Corp. in the late 1980's. Based on historical exploration and underground development, a 1988 prefeasibility study indicated mineable reserves in the East Zone of 185,000 tons at 0.44 oz/ton gold and 1.75 oz/ton silver to a depth of 130 meters. A 0.15 oz/ton gold cutoff was utilized in the calculations. As of April 1, 2010, CGR owned 17.3% interest in St. Eugene.

April 14, 2010: Aurizon Mines Ltd. (AZK) announced results from its infill drilling program to extend mineralization of the Hosco Zone pit at its Joanna project located 20 km from Rouyn-Noranda, in northwestern Quebec. Twenty-eight holes totaling 4,403 meters, on 50 meter spacing were drilled to increase resources to a depth of 100 meters at both the eastern and western extensions of the planned pit. Eleven of the holes returned at least one interval above 1.0 gram/tonne (g/t) gold over 15 meters (true thickness), including three holes with intervals above 1.5 g/t over 25 meters (true thickness). A Hosco Pre-feasibility Study has established diluted mineral reserves of 23.6 million tonnes at 1.3 g/t gold for a total 995,600 ounces of gold which is expected to support the production of approximately 110,000 ounces of gold annually over an initial eight year mine life. In addition, the Joanna project hosts measured and indicated mineral resources of 11.9 million tonnes at 1.5 g/t gold per tonne for 569,000 ounces and inferred mineral resources of 30.9 million tonnes at 1.4 g/t gold for 1,349,000 ounces.

April 14, 2010: Endeavour Silver Corp. (EXK) reported that silver production for Q1'10 from the company's two operating mines in Mexico produced 766,210 oz of silver, up 34% from Q1'09. Gold production also rose 62% to 3,775 oz compared to production in Q1'09. The Guanacevi Mine in Durango State accounted for 574,796 oz of silver, while the Guanajuato Mine in Guanajuato State produced 191,414 oz of silver. Production is expected to increase in the second half of 2010 as a third mine, Porvenir Cuatro, is going on line at Guanacevi. The crushing circuit should be completed on schedule, allowing the plant to increase throughput in the second half of the year to take advantage of the new Porvenir Cuatro mine.

April 14, 2010:

North American Palladium (PAL) announced that it will restart mining operations at its palladium mine, Lac des Iles (LDI), in northwestern Ontario. The restart is well timed to capitalize on the recent increase in palladium prices to over $540 per ounce. LDI is expected to produce 140,000 ounces of palladium per year. Ore production from the Roby Underground zone of the LDI mine is currently about 2,000 tonnes per day, and is expected to be increased to its target rate of 2,600 tonnes per day by the first of May. The company also renewed its smelting contract with Xstrata Nickel, a unit of Anglo-Swiss miner Xstrata Plc. A new feature of the contract entitles PAL to receive advance payments of 70% within 60 days following the month of concentrate delivery.

April 20, 2010: North American Palladium (PAL) announced that it has entered into a Letter of Intent to acquire the Vezza gold project in the Abitibi region in Quebec from Agnico-Eagle Mines Ltd. (AEM) for C$10 million comprised of C$3.5 million in cash and C$6.5 million in sharers. A recent resource estimate prepared by Scott Wilson Roscoe Postle Associated estimated that the property contains 288,000 ounces of gold in a measured and indicated resource category. Vezza is an advanced-stage exploration project located 80 km by paved road from PAL's Sleeping Giant gold mine. The project has power at the site, including a three compartment shaft with four underground levels down to a depth of 741 meters. The property has been tested by 85,000 meters of drilling, and an internal feasibility study was prepared by AEM in 1997, but the deposit was never put into production due to the absence of nearby milling facilities and low gold prices. Acquisition of Vezza will significantly enhance PAL's gold division whose project pipeline also includes Discovery, Floridin, and Dormex, which are all within trucking distance to the Sleeping Giant mill.

April 20, 2010: North American Palladium (PAL) announced that it has raised its bought-deal size by 16% to C$87 million by offering more units. On April 20, 2010 the company said it would raise C$75 million through a bought-deal financing. Underwriters, co-led by Cormack Securities Inc. and Haywood Securities Inc. agreed to buy an additional 2.4 million units bringing the total to 17.4 million at a price C$5.00 per unit. Each unit consists of one common share and half of one common share purchase warrant. Each whole warrant shall entitle the holder to acquire an additional common share at a price of C$6.50 during the holding period ending 18 month following the closing of the offering.

April 21, 2010: New Gold Inc. (NGD) announced Q1'10 gold sales of 80,020 oz at a total cash cost of $472/oz, net of by-product sales. This was an increase of 44% from 55,397 oz reported in Q1'09. Total cash costs decreased 8% to $472/oz, net of by-product sales, from $513/oz sold in Q1'09. Gold production in Q1'10 increased 41% to 77,215 oz from 54,938 oz in Q1'09. NGD expects full year 2010 production to range between 330,000 to 360,000 oz of gold at a total cash cost of $445 to $465 per oz sold. The Mesquite and Peak mines had strong operating quarters and achieved target gold production at lower forecasted cash costs. Mesquite produced 49,502 oz. and Peak produced 20,243 oz. At Cerro San Pedro gold production in Q1'10 of 12,938 oz compared to 20,583 oz produced in Q1'09 because of explosive permit renewal issues were resolved. Silver sales in Q1'10 were 193,506 oz compared to 372,219 oz in Q1'09. Development at New Afton remains on schedule and is expected to commence production in the second half of 2012.The project will be an underground mine and concentrator that will produce an annual estimated average of 85,000 oz of gold and 75 million pounds of copper. During the quarter NGD utilized funding from Goldcorp Inc. (GG), and exercised its first right of refusal to purchase Xstrata's interest in the El Morro Project in Chile. GG will be the operator and can acquire a 70% interest. Advanced exploration, permitting and development is planned for 2010, construction could begin in 2011.