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What It Really Costs To Mine Gold: The Yamana 4th Quarter 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 Fourth Quarter 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.
Update: Goldcorp Strikes A Deal To Buy Probe Mines
- Goldcorp acquires Probe Mines and its Borden Gold project for around $440 million in an all-stock deal.
- The 49% premium paid was significant, and may be an example for future acquisitions in the gold space.
- The deal allows Goldcorp to improve Borden Gold's economics by processing ore at its nearby Porcupine operations.
- This acquisition confirms our Goldcorp acquisition expectations, and we now think the company is done with its near-term acquisitions, but other companies may be on the prowl.
Update: Alamos Gold Receives Government Injunction On Agi Dagi
- The company received a government injunction on its Turkish Agi Dagi project that will require further work before the EIA is approved.
- This is not unprecedented as it is the same thing that happened to the company's larger Kirazli project.
- It is a slight negative for the company and we think it may be prudent for investors to hold or take profits until a government decision on Kirazli is rendered.
Eldorado Gold: Has Political Risks Finally Caught Up With The Company?
- Eldorado has done a great job keeping production costs low while managing operations across 3 continents in some riskier jurisdictions.
- Upcoming Greek elections pose a major risk to the company as around 30% of gold reserves and resources are located in Greece.
- We believe it would be prudent for investors to reduce expectations as we expect the company to underperform by anywhere from 8-15% due to Greek risk.
The Swiss National Bank's Move And What It Means For Gold Investors
- The SNB decided to drop its currency peg in a sudden move that shocked markets.
- We think this means that an ECB QE program is imminent as the ECB meets next week.
- The implications for gold are mixed, but three out of four outcomes of the ECB meeting we think are positive for gold.
A 2014 Gold Investors Year In Review: Cracks In The International Order Appear
- We think 2014 will be remembered for major events that are breaking down the current international order.
- US and Russian relations hit their lowest point since the Cold War and there is no sign of improvement.
- In the Middle East, ISIS threatens the status quo even as oil plummets and savages oil-producer revenues.
- Populist groups in Europe are emerging, with the most notable event being the upcoming Greek elections that could break up the European Union.
- Despite gold not doing much in terms of price in 2014, investors will want to own gold in 2015 if we see further turmoil.
Update: Argonaut's 4th Quarter Production Totals Rise
- Argonaut's fourth quarter saw record production of 44,312 gold-equivalent ounces.
- Management's outlook for 2015 is 135,000-145,000 gold-equivalent ounces, which is slightly higher than 2014 production.
- Results are mixed as grades fell sequentially and investors need to pay close attention to what management expects in terms of grades over 2015.
What It Really Costs To Mine Gold: The Argonaut Gold Third Quarter Edition
- The company's core and core non-tax costs both fell on a sequential basis and were around the company's average costs for 2014.
- Despite this much of this rise was due to record rainfall in Mexico during the quarter.
- We think that the company could surprise with much better earnings in the fourth quarter as costs can drop due to normal rainfall and lower oil prices.
5 Of Our Favorite Gold And Silver Stocks For 2015
- Randgold meets the "best in class" standards with low costs, a clean balance sheet, and future gold growth which makes it one of our top picks.
- Tahoe Resources is one of the few silver producers prodcing silver at a profit at sub-$20 silver and is clearly an industry leader in terms of profit margins.
- Timmins Gold has a relatively clean balance sheet and has the possibility to re-rate much higher as invesotrs digest their Caballo Blanco acquistion.
- Exeter Resources owns one of the largest gold deposits in the world and offers acquirers a cheap target in an already popular mining district.
- Bear Creek Mining is another "best in class" developer that owns one of the largest silver deposits in the world that is practical at today's silver price.
Complete Third-Quarter Gold All-In Costs Show That Gold Investors Should Be Very Comfortable With Their Investment
- Our analysis of gold costs includes more than 25% of total world gold production and thus we're confident it can be extrapolated very accurately.
- Gold miners on a core cost basis are producing gold at a higher cost than the previous two quarters due to an increase in taxes.
- Gold miners on a core non-tax cost basis saw their costs drop sequentially, but are relatively flat on the year.
- Despite heavy cost cutting, most gold is produced at prices higher than the current gold price, and that is bullish for the gold price.
It Seems Like Hedge Funds Are Jumping Into The Gold Market
- The popular narrative is that the gold market is currently quiet and dead and there is very little investor interest.
- That is not supported by the large amounts of volume that we're seeing in the gold mining and leveraged gold mining ETFs.
- The volume has increased to the largest levels in history and it seems to be hedge funds who are getting into the market.
- Since most of the interest seems to be on the short side this may provide a good opportunity for patient gold mining investors.
Update: Timmins Gold Acquires Caballo Blanco Gold Project
- Timmins Gold announced the acquisition of the Caballo Blanco Gold project for $10 million in cash and 16 million in shares.
- This confirms our belief that the company expects to have a much better fourth quarter in terms of costs and cash flow.
- We also believe this acquisition will help re-rate the company's shares to higher levels as it is expected to increase production by 90,000 ounces per year.
- This is the second acquisition in the sector this week and the previous acquirer (Coeur Mining) rose the day afterwards based on broker upgrades which is positive for Timmins.
What It Really Costs To Mine Gold: The SilverCrest Mines Third-Quarter Edition
- The company's costs on a core and core non-tax basis continued to rise in the third quarter.
- This shouldn't be a surprise as the company is continuing its transition from open pit operations to underground mining and milling.
- Investors should pay particular attention to Santa Elena's capitalized costs in the fourth quarter report as any reduction will significantly lower SilverCrest's costs.
What It Really Costs To Mine Gold: The Timmins Gold Third Quarter Edition
- The company's core and core non-tax costs rose during the third quarter to the highest levels of 2014.
- Much of this rise was due to record rainfall in Mexico during the quarter which lowered production.
- Management expects cash costs to fall in the fourth quarter and we believe that investors can expect core costs to fall as well.
Is This The Reason European Central Banks Repatriating Their Gold?
- The Austrian central bank is the latest central bank to bring up repatriating gold reserves from abroad.
- Gold repatriations by European central banks suggest that maybe there are more problems with the Euro than investors think.
- The European political climate is a mess as populist and anti-Euro parties gain popularity and establishment politician poll numbers plummet.
- We are starting to see gold performing very well in Euro terms with gold nearing its highest levels of the year in Euros.
- If we are right we may start to see European central banks increase gold reserves.