InsideMetals Newsletter - 05/25/2010 | Volume 5, Number 9 - Precious Metals Market Trends, Geopolitical View, Gold Producer News and Website Updates

April 27, 2010: Barrick Gold Corp. (ABX) reported that the first quarter earnings of African Barrick Gold (ABG) jumped 143% in its first results since being spun off from its parent. Earnings before interest, tax depreciation and amortization increased to $100 million from $41 million a year-earlier. ABG has four gold-producing mines in Tanzania and seven main exploration prospects. Output for the quarter rose 40% to 177,095 ounces, helped by the start of production at Buzwagi, and an increase of almost 5% at Bulyanhulu, its biggest mine. ABG produced 716,000 attributable ounces of gold in 2009, and plans to boost annual output to over 1 million ounces within four years. ABG plans to spend $20 million on exploration this year.

April 27, 2010: Hecla Mining Company (HL) reported record quarterly production of 12,181 tons of lead as well as 22,212 tons of zinc, the second highest zinc production in the company's history. Silver production for the quarter declined from 2,863,151 ounces in Q1'09 to 2,483,734 ounces in Q1'10. Gold production for Q1'10 was 16,862 ounces down from 18,049 ounces in Q1'09. HL is maintaining its guidance of between 10 million to 11 million ounces of silver with cash costs in the range of $1.90 to $2.25 per ounce. For the quarter HL reported net income of $18.4 million, a substantial increase from $3.9 million reported in Q1'09.

April 27, 2010: Kinross Gold Corp. (KGC) reported that it has successfully acquired Underwood Resources in a friendly takeover bid. Underwood shareholders will receive 0.141 of a KGC common share plus C$0.01 in cash for each common share of Underwood tendered. KGC owned 81.6% of Underwood shares as of April 26, 2010. The transaction values the fully-diluted share capital of Underwood at C$139.2 million. Underwood's main asset is the White Gold project in Tintina gold belt, located 95 km south of Dawson City in the Yukon Territory. Holes drilled during 2008 and 2009 exploration programs revealed 1,004,570 indicated ounces of gold at a grade of 3.2 grams/tonne gold in an open pit resource at the Gold Saddle deposit.

April 27, 2010: Newmont Mining Corp. (NEM) could agree to review its investment agreement with the government of Ghana, although it has a firm contract in place. The current government, which took power at the end of 2009, has said it wants to review all mining industry deals. The current investment agreement was entered into before development of Ahafo began, and also includes Akyem. The deal provides NEM with protection against changes in tax levels or structures, and upward changes in royalties, but the new government has indicated a desire to review the NEM agreement.

April 27, 2010: Newmont Mining Corp. (NEM) reported for the first quarter of 2010 adjusted net income of $408 million, up 105% from the year earlier quarter. Equity gold production for the quarter was 1.3 million ounces of gold and 90 million pounds of copper. The average realized price received for gold was $1,106 per ounce and $3.33 per pound of copper. For the quarter costs applicable to gold sales is $480 per ounce and $0.78 per pound of copper on a co-product basis. The applicable cost for gold sales in the first quarter of 2010 increased 11% over costs in the year earlier quarter of 2009 due to higher mining and milling costs and lower production in Nevada and at Yanacochoa in Peru. For the full year 2010, NEM is maintaining its outlook for gold production of 5.3 to 5.5 million ounces, costs applicable to sales of between $450 and $480 per ounce on a co-product basis, and capital expenditures of between $1.4 and $1.6 billion with 30% to be invested in North America and 30% in Asia and the remaining 40% at other locations.

April 27, 2010: Newmont Mining Corp. (NEM). Brian Hill, executive vice president said in a conference call with analysts that gold grades at its new Boddington mine in Australia are trailing the company's expectations while copper grades are exceeding estimates. He also said that the company will need a couple more quarters of operations to come back with some more definitive answers. Boddington helped NEM to more than double its first quarter profits and boost sales for the quarter by 46% to $2.24 billion.

April 27, 2010: Compania de Minas Buenaventura SA (BVN) reported a first quarter 2010 net profit of $155.2 million, up more than 50% from the year earlier on higher gold prices. BVN owns 43.7% of Yanacocha and 18.7% of Cerro Verde, one of Peru's largest copper pits.

April 28, 2010: Barrick Gold Corp. (ABX) announced that its Q1'10 profit more than doubled to $758 million, up from $371 million in the year-earlier quarter. Revenue for the quarter rose to $2.56 billion from $1.78 billion in the year-earlier quarter as realized gold prices jumped to $1,114 per ounce from $915 per ounce. Gold production in Q1'10 rose by 18.7%, to 2.08 million ounces, from 1.76 million ounces produced in Q1'09. ABX reported that its Pascua Lama and Pueblo Viejo development projects were proceeding on time and on budget. ABX said its on track to produce between 7.6 million and 8 million ounces in 2010 at a cash cost in the range of $425 to $455 per ounce. The company has also forecast full-year copper production of 340 million to 365 million pounds of copper at a cash cost of $1.10 to $1.20 per pound.

April 28, 2010: Goldcorp Inc. (GG) reported that its adjusted profit for Q1'10 slipped by 3.1% as the timing of sales and the stronger Canadian dollar raised costs and offset the impact of higher gold prices. On a net basis GG reported a loss of $52.3 million as it took a non-cash foreign exchange charge of $211.8 million on a translation of future income tax liabilities. Stripping out the charge, the adjusted profit was $162.7 million, down from $169.3 million in the year-earlier quarter. The strong year-over-year gains by the Canadian dollar and the Mexican peso stripped a total of $25.9 million from the bottom line. Results were also hurt by delayed sales at Red Lake and a port strike that delayed gold and copper sales at the Alumbrera mine in Argentina. The delays dropped gold sales by 6.4% to 569,100 ounces in the quarter while production was up by 1.4% to 625,000 ounces. Revenue for the quarter rose 20% to $750.3 million as the realized price of gold rose 21.7% to $1,110 per ounce. The cash cost climbed to $325 per ounce from $288 in the year-earlier quarter when using by-product metal production as a cost offset. GG expects to produce 2.6 million ounces of gold for the full-year 2010.

April 30, 2010: Agnico-Eagle Mines Ltd. (AEM) reported that an $8.9 million foreign currency exchange loss and a $17.3 million stock compensation charge trimmed net profit for the first quarter of 2010. On a net basis AEM earned $22.3 million in Q1'10, down from $54.3 million earned in Q1'09 when the bottom line was boosted by a $38.6 million tax recovery. Revenue from mining rose to $237.6 million from $105.8 million as realized gold price climbed 14.7% to $1,111 per ounce while production nearly doubled to 188,232 ounces. Cash cost climbed to $443 per ounce from $312 per ounce mainly due to higher expenses at the Kittila mine in Finland and the Meadowbank mine in Nunavut, Canada, which reached commercial production in March. AEM reiterated its 2010 production forecast of 1.0 to 1.1 million ounces of gold.

April 30, 2010: Gold Fields Ltd. (GFI) announced that it will boost production by 20% per year at its Damang mine in Ghana after installing a new secondary crushing plant. The crushing plant would help boost gold production to 240,000 ounces from 200,000 ounces. GFI aims to extend the life of the mine by at least 15 years. The company expects to increase its attributable production in its West Africa Region to 1,000,000 ounces over the next five years.

May 3, 2010: Goldcorp. Inc. (GG) declared its fifth monthly dividend payment for 2010 of $0.015 per share payable to shareholders of record on Thursday, May 13, 2010. Payment will be made on May 21, 2010.

May 3, 2010: Goldcorp. Inc. (GG) reported that it has agreed to sell its Escobal Silver deposit in Guatemala to Tahoe Resource Inc., a private company headed by former GG President & Chief Executive Officer Kevin McArthur. Under the agreement GG will receive total consideration of $505 million, consisting of Tahoe shares representing a 40% ownership in Tahoe following its proposed initial public offering of common shares in Canada, and the balance in cash of at least $230 million depending on the final results of the offering. The closing of the transaction is expected to take place on or about June 8, 2010. Escobal contains an indicated resource of 130.1 million ounces of silver at an average grade of 580 g/t and an additional inferred resource of 187.5 ounces of silver at an average grade of 443 g/t.

May 3, 2010: Iamgold Corp. (IAG) reported that it is ahead of schedule on its $443 million Essakane gold mine in Burkino Faso, and will start processing ore through the mill as soon as next month. IAG owns 90% of the Essakane project and the government of Burkino Faso holds the balance. The mine is expected to produce more than 500,000 ounces of gold from start-up until the end of 2011. Cash costs are forecast at an average of $400 per ounce to $410 per ounce over the life-of-mine.

May 4, 2010: Kinross Gold Corp. (KGC) reported Q1'10 adjusted net earnings of $97.4 million compared to adjusted net earnings of $70.7 million in Q1'09, an increase of 38%. Revenue for the quarter was $657.6 million compared with $523.7 million in Q1'09, an increase of 23%. The average realized gold price for the quarter was $1,065 per ounce sold compared with $897 per ounce sold in Q1'09. Production during the quarter was 544,134 gold equivalent ounces, an increase of 3% over the year-earlier quarter. Cost of sales per gold equivalent ounce in Q1'10 was $461 per ounce a 10% increase over Q1'09 costs. Cost of sales per gold equivalent ounce is expected to be approximately $460 to $490 per ounce for 2010. KGC remains on track to produce approximately 2.2 million gold equivalent ounces in 2010.

May 5, 2010: Kinross Gold Corp. (KGC) in a private placement has subscribed to 24 million common shares of Red Back Mining for a 9.4% interest in the West African gold miner. The aggregate total purchase price is C$600 million (C$25.00 per share).

May 5, 2010: Yamana Gold Inc. (AUY) reported net earnings of $79.5 million for Q1'10, a decline from $86 million for Q1'09. AUY produced 239,838 gold equivalent ounces (GEO) during Q1'10, down from 271,482 GEO reported in Q1'09. Gold production for the full-year is expected to be in the range of 1,030,000 to 1,145,000 GEO. Copper production for Q1'10 was 41.5 million pounds, down from 45.2 million pounds produced in Q1'09. Copper production is expected to be in excess of 150 million pounds in 2010. Capital expenditures for projects in Brazil and Chile are expected to be $515 million for 2010 and 455 million for 2011.

May 7, 2010: AngloGold Ashanti Ltd. (AU) posted adjusted headline earnings of $463 million compared to the last quarter's earnings of $1.706 billion. AU attributes this decline to seasonally weak production at South African operations following the December holiday shutdown. Operations in Brazil and Argentina had a strong quarter and turnaround progress in the US and Tanzania was very encouraging. The Brasil Mineracao operation saw a cost reduction of 12% to $369 per ounce and the company approved a $195 million investment to develop its Corrego de Sitio mine in Brazil which is expected to reach its commercial annual production rate of 140,000 ounces by 2013. The company anticipated a second quarter similar to the first with total cash costs of $650 per ounce and full year production guidance is maintained at 4.6 million to 4.7 million ounces.

May 7, 2010: Eldorado Gold Corp. (EGO) announced that the company's strong performance in Q1'10 has prompted them to expand its production guidance of 550,000 to 600,000 ounces of gold to 575,000 to 625,000 ounces of gold for the full year. EGO had record quarterly production of 164,928 ounces of gold at a cash operating cost of $371 per ounce. Revenue for the Q1'10 increased by 249% to $182.15 million over the year earlier quarter based on the sale of 164,446 ounces of gold at a realized price of $1,110 per ounce. Net quarterly income increased by 304% to $52.8 million. Cash generated from operating activities increased by 290% to $80.8 million. EGO has budgeted $35 million for exploration in 2010 which includes 125,000 meters of drilling.

May 7, 2010: Iamgold Corp. (IAG) reported that Q1'10 profit rose 12% on higher gold prices. IAG reported earnings of $58.8 million for the quarter ended March 31, 2010, which compares to $52.5 million for the year earlier quarter. Revenue rose 27% to $240.1 million on increased ounces of gold sold and kilograms of niobium. IAG reiterated its gold production forecast of 940,000 to 1,000,000 ounces for the year at a cash cost of $490 to $510 per ounce.

May 10, 2010: Harmony Gold Mining Company Ltd. (HMY) missed market consensus and reported a headline loss per share in the March quarter due to lower gold production and higher production costs. Gold production was 10% lower at 333,276 ounces with total cash costs up about 4% to $829 per ounce. South African gold producers which sell their gold in US dollars and pay their costs in rand saw little benefit from a record gold price after the rand gold price gained 1% to 267,000 rand per kilogram from 264,500 rand per kilogram. Gold production was lower as a result of numerous work stoppages as a result of safety issues and fatalities.

May 10, 2010: Harmony Gold Mining Company Ltd. (HMY) announced that it may spin off its Evander mines through a separate listing as part of a restructuring of the South African Group. During the June quarter HMY started closing down operations at three shafts - Harmony 2 and the Merriespruit 1 and 3 shafts - all of which are at Virginia in the Free State. The geological resource of Evander is variable and demands strict management philosophies and capital to develop the remaining abundant resource. Evander's cash operating cost of R256,013/kg for the March quarter was among the highest recorded in the group, and compares to an average underground cost of R204,514/kg for the group. HMY had a cash operating profit of R633.6 million for the quarter, but reported a total comprehensive loss of R322 million after amortization, impairment, exploration and restructuring costs.

May 12, 2010: Coeur d'Alene Mines Corp. (CDE) reported a first quarter 2010 net loss of $8 million compared to net income of $6.1 million for the year-earlier quarter even as gold production soared from newly opened mines. Silver production for the quarter was 3.4 million ounces, which was consistent with the first quarter of 2009. First quarter cash operating costs were $7.41 per silver ounce. For the full year CDE expects to produce 17.3 million ounces of silver. CDE reported gold production for the quarter totaled 25,782 ounces compared with 3,791 ounces in the first quarter of 2009. Gold production at its Palmarejo mine in Mexico which opened in April 2009 totaled 22,577 ounces is expected to reach 109,000 ounces in the mines first full year of production. CDE expects to open its Kensington gold mine in Juneau, Alaska in July. The company reported that the mine is expected to produce about 125,000 ounces of gold annually and will increase the company's annual gold production.

May 12, 2010: Eldorado Gold Corp. (EGO) has agreed to purchase gold explorer Brazauro Resources Corp. in an all-stock deal worth about C$122 million. This will expand EGO's asset base in Brazil. EGO will pay 0.0675 of an Eldorado share for each Brazauro share acquired based on the day's EGO closing price. The deal values each Brazauro share at C$1.22 per share. Following the closing of this transaction EGO will spin out a new Brazauro that will contain certain exploration properties currently owned by Brazauro. EGO already owns 14.3 million shares of Brazauro and 4.3 million warrants.

May 12, 2010: Silver Wheaton Corp. (SLW) reported that Q1'10 net earnings almost tripled to $44.6 million compared to $15.1 million in Q1'09. Sales in Q1'10 reached $88.94 million compared to $37.52 million in Q1'09. SLW reported that it benefitted from attributed silver equivalent production of 5.5 million ounces (4.9 million ounces of silver and 7,700 ounces of gold), representing an increase of 68% over Q1'09 production. For Q1'10 SLW reported silver equivalent sales of 5.0 million ounces (4.4 million ounces of silver and 8,600 ounces of gold), representing a 58% increase over Q1'09. SLW's reported its total cash cost was $4.04 per silver equivalent ounce. SLW forecast that its expects to receive 22.2 million silver ounces and 20,000 gold ounces as a result of full-year 2010 attributable ounces from its purchase agreements from mine owners.

May 13, 2010: Gammon Gold Inc. (GRS) reported Q1'10 net earnings of $1.8 million, compared to net earnings of $2.5 million in Q1'09. Revenue for Q1'10 was $54.7 million compared to $47.3 million in Q1'09. During the quarter GRS realized an average gold and silver price of $1,107 per gold ounce and $16.81 per silver ounce. In 2009 GRS realized $903 per gold ounce and $12.63 per silver ounce. GRS produced 28,431 gold ounces and 1,284,071 silver ounces at a cash cost of $490 per gold equivalent ounce. GRS has launched a $26 - $30 million strategic company-wide exploration program to increase reserve growth and to explore previously identified targets.

May 14, 2010: Yamana Gold Inc. (AUY) announced that it has received and now owns and controls an additional 13,859,533 common shares of Aura Minerals Inc. at a value of C$3.90 based on an April 29, 2010 closing price on the Toronto Stock Exchange. AUY now holds a total of 23,344,261 common shares of Aura.

May 18, 2010: Barrick Gold Corp. (AEM) announced that through its subsidiary PNG Exploration Ltd., diamond core drilling will commence on its Nakru 1 prospect joint venture with Coppermoly Ltd. The first drill hole will test for copper mineralization related to a part of the geophysical anomaly that was previously identified by Coppermoly. Previous drilling determined that there is a positive correlation between the southwestern portion of the anomaly and copper mineralization.

May 18, 2010: Newmont Mining Corp (NEM) and Compania de Minas Buenaventura SA (BVN) are evaluating the possibility of investing up to $3 billion in the Minas Conga project. Conga would be operated by the jointly owned Peruvian Yanacocha operation, the largest gold mine in South America. Minas Conga is 51.3% owned by NEM and 43.7% by BVN.

May 19, 2010: Gold Field Ltd. (GFI) expects its Q2'10 gold production to rise to 900,000 ounces, and the company expects its current operations and brownfields development to increase output which would encourage GFI to increase its investment in Chile and Peru, especially if the Australian government proceeds with increasing taxes on mining.

May 20, 2010: Gold Field Ltd. (GFI) announced a substantial increase in the mineral resource at Hamlet, an emerging gold deposit in the Argo-Athena camp at St. Ives Gold Mine in Western Australia. Drilling over the past year has led to an indicated and inferred mineral resource of 1.03 million ounces contained within 6.62 million tonnes grading 4.86 g/t. GFI has also entered into four new exploration joint ventures with Clancy Exploration based on expansion of the partnership announced in April 2009. GFI has until the end of June to exercise the option. GFI can acquire an 80% interest in each project. GFI has committed to spend A$4.0 million in total on the four projects.

April 26, 2010: Apollo Gold Corp. (AGT) has unwound its Canadian dollar currency hedges that were originally entered into in connection with their $70 million Black Fox Project Facility Agreement. As a result of this action, gross proceeds to Apollo were approximately $8.2 million which will be used to reduce the debt outstanding under the agreement. Following this repayment, AGT's indebtedness will be reduced to approximately $51.8 million. AGT also announced that the merger between AGT and Linear Gold Corp. will be completed by the end of the second quarter, and upon completing the merger, the combined company will further repay $10 million to the project lenders.

May 5, 2010: Minefinders Corporation Inc. (MFN) reported first Q1'10 revenue of $26.4 million, its first ever reported revenue. For the quarter the company had a net loss of $0.3 million compared to a net loss $6.2 million for the year-earlier quarter. Gold production in Q1'10 was 18,778 ounces compared to 14,169 ounces produced in the first quarter of 2009. Silver production in Q1'10 was 245,086 ounces compared to 282,429 ounces in Q1'09. For Q1'10 MFN reported an averaged realized gold price of $1,118/ozs and an average realized silver price of $16.88/oz while the total cash cost per gold equivalent ounce sold was $643/oz.

May 6, 2010: New Gold Inc. (NGD) reported gold sales of 80,020 ounces in Q1'10, up from 55,397 ounces in the year-earlier quarter. Net earnings from continuing operations increased to $17.2 million from $12.1 million in the year-earlier period as total cash cost decreased 8% to $472 per ounce, net of by-product sales, from $513 per ounce for the same period in 2009. NGD reiterated its 2010 full-year production guidance of 330,000 to 360,000 gold ounces at total cash cost of $445 to $465 per ounce, net of by-product sales. The Mesquite and Peak mines were producing gold at targeted rates and at lower than forecast costs. The Cerro San Pedro mine resumed operations after delays in receiving explosive permits. New Afton continued its strong progress with a fifth straight quarter of increased underground development. NGD's 70% joint venture partner on the El Morro project, Goldcorp Inc., continues to work through the permit review process for the project to begin construction in early 2011.

May 7, 2010: Richmont Mines Inc. (RIC) reported profits for Q1'10 rose 29% on net income of C$1.8 million as compared to C$1.4 million for the year earlier quarter. Revenue for the quarter rose marginally to C$20 million as the company sold 15,841 ounces of gold at an average realized price of $1,105 per ounce compared to gold sales of 16,614 ounces at an average realized gold price of $990 in the prior quarter.

May 11, 2010: Apollo Gold Corp. (AGT) reported net income of approximately $6.45 million in Q1'10 compared to a net loss of $28.42 million in Q1'09. Revenue from the sale of gold in Q1'10 was $17.63 million. Production for Q1'10 was 14,175 ounces, and gold sold totaled 15,796 ounces at a total cash cost of $631 per ounce, all of which were delivered into AGT's gold forward sales contracts at a realized gold price of $875 per ounce. During the quarter the company conducted exploration drilling in the Contact Zone of the Grey Fox and Pike River properties which identified gold bearing rocks similar to those at Black Fox. AGT also entered into an agreement to merge with Linear Gold Corp which will be completed by the end of the second quarter and will result in the renaming of the combined companies as Brigus Gold Corp.

May 11, 2010: North American Palladium Ltd. (PAL) reported a net loss of $14.6 million for the quarter ended March 31, 2010, compared to a net income loss of $0.3 million for the year-earlier quarter. PAL restarted mining at its Lac des Iles (LDI) palladium mine in Ontario, which is forecast to produce 140,000 ounces of palladium annually. LDI reached its targeted production rate in May 2010, and has started development of the Offset Zone at LDI by commencing construction of a 1,500 meter ramp to a depth of 200 meters below the Roby Underground mine. Exploration drilling is ongoing at the Sleeping Giant gold mine and has nearly doubled the mineral resource and the mine continues to ramp-up and expects to achieve steady-state production in mid-2010 at a milling rate of 15,000 tonnes per month. On April 28, 2010 the company reported it completed a $100 million, 20 million unit offering at $5.00 per unit.

May 12, 2010: Claude Resources Inc. (CGR) reported that winter drilling results, as well as historic drill data demonstrates the bulk mineable potential of the Amisk Gold Project in Saskatchewan, Canada. The 12,000 hectare property is located 20 km southwest of Flin Flon, Manitoba and hosts the Amisk-Laurel Gold Deposit. The project is a joint venture between Claude (65%) and St. Eugene Mining Corp. (35%). CGR holds a 16.3% interest in St. Eugene's issued and outstanding common shares as of May 12, 2010. A first phase, 11-hole drilling program had positive results including an 86.7 meter interval that contained 1.03 g/tonne gold. These drill results in conjunction with the historic drilling data outline an extensive, potentially bulk mineable gold system. The system is exposed at the surface and remains open at depth as well as on strike to the west and southeast.

May 12, 2010: Aurizon Mines Ltd. (AZK) reported net earnings of $2.2 million for Q1'10 compared to net earnings of $5.1 million in Q1'09. Gold production for the quarter was 35,188 ounces at a total cash cost of $538 per ounce compared to 38,966 ounces in the year-earlier quarter. AZK is on track to produce between 145,000 to 155,000 ounces in 2010. First quarter 2010 revenue from Casa Berardi operations was $38.8 million from the sale of 34,423 ounces of gold at an average realized price of $1,101. This compares to the sale of 37,400 ounces in Q1'09 at a realized price of $888 per ounce. In the quarter AZK spent $2.2 million ($2.0 million spent at Joanna) on exploration compared to $1.2 million in the year-earlier quarter.

May 14, 2010: Claude Resources Inc. (CGR) reported Q1'10 production of 9,221 ounces of gold, a 13% decrease from 10,613 ounces produced in Q1'09. For the quarter CGR reported a net loss of $0.2 million compared to a net loss of 1.0 million in Q1'09. CGR realized $1,103 per ounce for gold sold in Q1'10 compared to $920 per ounce for gold sold in the year-earlier quarter. The cash cost for gold produced in Q1'10 was $818 per ounce compared to $617 per ounce for gold produced in Q1'09. Management maintains its production forecast of 46,000 to 50,000 ounces for 2010. CGR continues its aggressive exploration and development at Madsen Lake, Seabee and Amisk.

May 18, 2010: Richmont Mines Inc. (RIC) announced that it has entered into an Acquisition Agreement and Amalgamation Agreement with Louvem Mines Inc. RIC will acquire all of the issued and outstanding shares of Louvem not currently owned. RIC currently owns approximately 70% of Louvem. The shareholders of Louvem will receive one share of RIC for every 5.4 shares of Louvem held. RIC expects to issue approximately 1.4 million shares if the transaction is completed and approved by the TSX Venture Exchange and the NYSE Amex.