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What It Really Costs To Mine Gold: The SilverCrest 4th Quarter Edition
- SilverCrest's costs on both a core and a core non-tax basis have risen in 2014.
- This is to be expected as the company is transitioning to higher cost underground operations.
- Investors need to pay close attention to the company's remaining Santa Elena reserves that should be issued by the end of the first quarter.
McEwen Mining Has Potential, But It Needs To Execute Much Better To Appeal To Investors
- McEwen Mining's core and core non-tax costs for 2014 were both extremely high compared to industry competitors.
- The company has potential, as its 2015 costs are expected to fall and grades at El Gallo are expected to jump.
- The company needs to show investors it can execute and produce gold at much lower prices to make it appealing compared to other junior miners.
The Latest Commitment Of Traders Data On Gold Shows Something Very Surprising
- Despite the large weekly rise in the gold price speculative traders increased their short positions.
- Current Managed Money short positions are at all-time nominal highs at over 84,000 short contracts outstanding.
- This rise in short after a large rise in the gold price is unusual and suggests that the latest rise in gold was not due to COT short covering.
- We take a contrarian view and think gold may have much more short-term upside.
A Young Commander Making His Mark In The Middle East May Be Trouble For Markets And Bullish For Gold
- The recent conflict in Yemen brings the possibility of a much bigger war as it may be a proxy for the Sunni-Shiite struggle.
- Investors need to understand that the new Saudi Defense minister is young, inexperienced and seems ready to stretch his muscles.
- Debt and Equity markets are at all-time highs despite lukewarm economic data, which suggests significant underlying instability.
- Gold remains the only safe-haven investment not at all-time highs, and that may lead money out of equities and debt and into gold in the case of a crisis.
Novo Resources: Upcoming Drilling Results Provide An Opportunity For Educated Speculation
- The volatility within Novo Resources shares shouldnt concern investors as it is expected with the company's low share count and limited float.
- The company should release drill results in the upcoming few weeks and we expect them to be good considering the proximity to previous good drill-holes.
- If the company is successful in expanding the gold-bearing reef with some of its further out western holes, it would significantly help the feasibility study.
What It Really Costs To Mine Gold: The Argonaut 4th Quarter Edition
- Argonaut's costs on both a core and core non-tax basis were a bit better than average in the fourth quarter.
- Looking forward, the company expects cash costs to decline in 2015 and we expect those declines will also mean lower core costs moving forward.
- Since much of the company's value is related to its undeveloped Magino project, investors should stay tuned to upcoming drilling results (Q2) and the updated PEA (Q4).
What It Really Costs To Mine Gold: The Timmins Gold 4th Quarter Edition
- Timmins Gold had a sub-par fourth quarter as core and core non-tax costs rose to the highest levels of 2014.
- The newly discovered high-grade mineralization at its San Francisco mine may help raise production grades and lower costs.
- The big driver for Timmins moving forward will be the progress of its acquisitions, especially Ana Paula.
The Last Time Gold Miners Did This Was... Never
- The Philadelphia Gold and Silver Index has never been down four consecutive years in its 30 plus year history until 2014.
- So far in 2015, the index is down again for the fifth consecutive year.
- These streaks of consecutive down years are showing that sentiment has never been lower.
- Busts have always been followed by booms, and we think investors that are patient can position themselves for the future boom in gold miners.
What It Really Costs To Mine Gold: The Richmont Mines Fourth Quarter Edition
- Richmont’s costs on both a core and a core non-tax basis have continued to fall significantly during the fourth quarter.
- Richmont has transitioned from one of the highest cost producers to one of the industry's lowest over the past two years.
- Moving forward in FY2015 expect costs to rise and production to drop as the company focuses on developing its Island Gold Deep mine.
Investors Got It Wrong: The Latest Jobs Report And Rising Interest Rates Are Reasons To Own Gold
- Markets are concerned that the latest good jobs report will make the Fed raise rates earlier than expected.
- While this would be bad for both stock and bond markets, it may be of great benefit to gold markets as money seeks a safe haven.
- Friday's gold dump provides an opportunity as raising rates will be a big mistake for the Fed.
What It Really Costs To Mine Gold: The Goldfields Fourth Quarter Edition
- Core and core non-tax costs continued to show a declining trend for Goldfields as management continues to push efficient production.
- While declining costs are positive, Goldfelds still is producing gold at little to no profit in the current gold environment.
- Based on FY2015 guidance of relatively flat production, Goldfields needs to lower costs further or hope for a higher gold price to offer investors good profits.
What It Really Costs To Mine Gold: The Eldorado Gold Fourth Quarter Edition
- Eldorado's core and core non-tax costs for the fourth quarter and FY2014 have once again placed it amongst the lowest cost producers we cover.
- The big and obvious cloud hanging over the company is the future of its Skouries and Greek operations.
- We are not there yet, but this may make an excellent opportunity to buy one of the lowest cost producers after a drastic drop.
What It Really Costs To Mine Gold: The Iamgold Q4 Edition
- Iamgold’s costs on both a core and a core non-tax basis have risen significantly to make the company one of the highest producers that we cover.
- We will give the company a pass as there is significant restructuring going on, which includes the sale of its cash flow positive niobium operations.
- Moving forward, the company expects to increase production in 2015, but investors need to see significant core cost decreases that can make the company attractive at $1200 gold.
- Investors should keep track of how the company chooses to spend the $500 million from the sale of its niobium operations, with a quality acquisition being a major positive.
What It Really Costs To Mine Gold: The Alamos Q4 Edition
- Alamos Gold's costs on both a core and a core non-tax basis were a pleasant surprise for investors in the fourth quarter.
- A major contributing factor to this cost improvement was the ability of the company to process its highest average throughput of more than 18,000 tonnes per day.
- The key thing for investors to watch is the company's development projects in Turkey and Mexico as a lot of the company's value is tied to these projects.
- If Alamos can get the necessary permits and approvals for these projects the future is bright as they have significant cash on hand to develop both without additional financing.
What It Really Costs To Mine Gold: The Yamana Q4 Edition
- Yamana gold's core and core non-tax costs rose in the fourth quarter.
- While we aren't surprised by the rise since the company is ramping up gold production, we still would want to see lower costs as production rises.
- With a large debt load and slim profit margins, Yamana needs to continue to ramp up production and lower costs to be attractive in the current gold environment.
- On a positive note, at a higher gold price Yamana would provide nice leverage since profits would double with only a moderate increase in the gold price.
Year End Gold Reserves Plummet In 2014 Confirming A Drop In Future Production: Is There A Better Slam-Dunk Investment Than Gold?
- According to industry analysts, gold production will peak in 2015 and then drop drastically.
- Year end gold reserve reports confirm that miners are not replacing currently mined gold.
- Slashed exploration budgets signal that without a miraculous set of discoveries, there is no reason to believe that current reserves will be replaced in 2015.
- Without a higher gold price, future production will continue to fall as money-supply and the global population increase which makes gold very attractive even without a financial crisis.
What It Really Costs To Mine Gold: The Agnico Eagle Q4 Edition
- Agnico Eagle's core costs fell on both a sequential and year-over-year basis, but were on the higher end for the year.
- This isn't surprising as the company has been ramping up production.
- The key moving into 2015 will be if the company can lower prices as forecast and also increase production to the targeted 1.6 million ounces.
Is It Time To Invest In Platinum?
- The production cost of platinum is significantly higher than the current market price.
- The platinum market is also very concentrated, implying that a few cuts can have a major impact on global mine supply.
- Hidden stocks of platinum have kept the market supplied despite analyst calls.
- The price of platinum is too cheap to ignore and if investors can be patient, now is the time to be accumulating platinum.
What It Really Costs To Mine Gold: The Newmont Q4 Edition
- Newmont's fourth quarter costs were relatively stable on a core and core non-tax basis.
- For FY2014, Newmont continued to bring down its costs, though production also fell.
- One thing that gold investors should note is that Newmont, along with other companies, are not making enough money to sustain the industry at current gold prices.
What It Really Costs To Mine Gold: The Barrick Gold Q4 Edition
- Barrick's costs on a core non-tax basis were relatively flat on a sequential basis, which continues the company's push towards lower costs.
- Gold production continued to drop in 2014 and the outlook for 2015 suggests only minimal increases in gold production.
- The company's focus will be on cutting debt and minimizing overhead and administrative costs, but despite that still needs a higher gold price to really juice earnings.
What It Really Costs To Mine Gold: The Goldcorp Fourth Quarter Edition
- Goldcorp's core non-tax costs were relatively flat on a sequential and year-over-year basis.
- Investors thought Goldcorp's report was poor and sent the stock down 10%, but lower costs in 2015 and higher production should benefit the company.
- Once Eleonore and Cerro Negro production are fully commercial in Q1FY15, we expect Goldcorp to again become one of the lowest gold producers.
What It Really Costs To Mine Gold: The Kinross Gold Q4 Edition
- Kinross's core and core non-tax costs both rose to the highest levels of 2014.
- The company's production also did increase in 2014 which is a positive for investors.
- The company's outlook for 2015 suggests that production will drop from current levels.
- With Kinross's debt load, we think the company needs to start using its cash balance to make smart acquisitions to excite investors.
What It Really Costs To Mine Gold: The Randgold Q4 Edition
- Randgold's costs on both a core and a core non-tax basis have continued on their downward trajectory.
- The company's production continues to increase as Kibali ramps up production.
- Randgold remains one of the lowest cost producers and consistently shows that it can produce gold on a core basis at under $1000 per ounce.
Latest Deutsche Bank Research Shows Gold Has A Lot To Gain From A Shift In Financial Assets
- Recent research by Deutsche Bank shows global financial assets grew to an all-time high of $294 trillion.
- Since 2007 most of this growth has come from government debt markets which have almost doubled over the past 7 years.
- We may not be seeing inflation in consumer goods but we are seeing it in financial markets.
- This growth is not sustainable and anything that spooks debt investors may cause a mass exodus in financial assets.
- A small shift of global assets due to a market panic would cause a big increase in the gold price and an even bigger one for gold miners.
The Drop In The Turkish Lira May Be An Opportunity For A Few Gold Miners
- The Turkish lira has dropped much faster than many other currencies versus the U.S. dollar.
- This drop in the lira provides some much needed cost savings to a few producers and developers with Turkish operations.
- Investors may see some nice positive surprises in these companies' cost structures as fourth-quarter earnings reports are released.
Tahoe Resources Acquisition Of Rio Alto Is An Excellent Move By The Company To Diversify Operations
- Tahoe's $1.1 billion dollar acquisition of Rio Alto offers investors important diversification.
- Tahoe's revenues will now originate from both Guatemala and Peru.
- Tahoe will now become much more attractive to institutional investors and funds as it no longer has a single point of failure.
- Tahoe will now have significant exposure to the gold price and will no longer be a silver-dependent producer.
- Rio Alto's Shahuindo mine offers the potential to add 90,000 gold-equivalent ounces at cash costs of a little over $500 per ounce by 2016.
Investors Have No Choice But To Own Gold After This Latest McKinsey Chart
- Global debt levels continue to rise despite record-low interest rates.
- Debt is also growing as a percentage of GDP which signals that economic growth is lagging behind debt growth.
- Based on the most recent numbers, the world is taking on the equivalent of the market capitalization of every S&P 500 company every 2.5 years.
- This is not sustainable and wise investors should seek out investments that are not correlated with public and private debt.
- Gold is the easiest and most obvious of these investments and investors should use short-term weakness to increase gold positions.
Update: Premier Gold Forms Joint Partnership To Advance Trans-Canada Project
- Premier Gold announces a 50/50 partnership with Centerra to advance its Trans-Canada property.
- Centerra will be putting the lion's share of the initial development money into bringing the project to production which will help Premier avoid shareholder dilution.
- This deal is a good deal for shareholders of both companies as it brings together Centerra's cash and Premier's property in a mutually beneficial partnership.
- Premier's shareholders should be pleased with this deal as it would have been difficult for the company to raise the cash on its own.
Pilot Gold: Halilaga Results Are Good But Very Copper Dependent
- The updated PEA results for Halilaga show a robust IRR, but are highly dependent on the copper price.
- The project is probably too small for a company like Teck at its current specifications.
- If Pilot Gold can show promising results at its nearby TV Tower project, then that paired with Halilaga may be an attractive acquisition.
Alamos Gold - An Opportunity To Buy A Company That Can Triple Near-Term Production
- Alamos Gold's shares have seen a recent 40% underperformance relative to the GDX due to a poor outlook on production and costs.
- The 2015 outlook may be an outlier as both production grades and strip ratios are below the mine plan and can return back to expected levels as grades/strip improve.
- The company has two near-term production projects that can be ramped up once approvals are received and could triple production by late 2016 or 2017.
- The company's current cash position is around 50% of total market capitalization and allows it to fund all projects internally without a need for external financing.
- Investors that can think long-term can be rewarded by Alamos as its production is expected to ramp-up just in time for world gold production to drop.
Update: New Greek Government Announces Opposition To Eldorado's Flagship Gold Mine
- In comments to the press, Greek Energy Minister Panagiotis Lafazanis announced his opposition to Eldorado's development of its Skouries mine.
- We expected that risk would be raised significantly with a new government, and this confirms our expectations and investors should be cautious about all Greek projects.
- The government has not taken any concrete steps against the project, but we think at this point investors should wait until management and the government clarify the situation.
Update: Bear Creek's Santa Ana Arbitration Schedule Published
- The ICSID's arbitration schedule for the resolution of the Santa Ana case has been publicly published.
- It looks like if arbitration goes the full schedule that it will be a bit longer than we have expected.
- The company is making progress in the case and we still expect that it will be settled.
- The ICSID has previously awarded large damage awards to claimants who have had rights violated, thus that is a positive for the company as it has a strong case.