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Update: Alamos Gold Receives Approval For The Agi Dagi Project
- Alamos Gold recently received approval for its Agi Dagi project which shows the Turkish government is still mining friendly.
- This means that we believe there is a good chance the company's legal issues surrounding the more important Kirazli project will also be settled.
- Investors looking to front-run the anticipated fourth quarter decision may want to acquire shares now because we believe the Turkish government will not unduly hold up the Kirazli project.
What It Really Costs To Mine Gold: The Iamgold Second Quarter Edition
- Iamgold’s costs on both a core and a core non-tax basis have continued to fall on a sequential basis.
- Iamgold's core non-tax costs though are still elevated compared to FY2012 and FY2013 which tells us taxes are higher on a per dollar basis.
- The company's debt load is something for investors to monitor as liquidity is sufficient for the next 1-2 years but it is high relative to market capitalization.
- Westwood production is forecast to increase significantly in the second half of the year and this may significantly reduce costs and surprise investors.
What It Really Costs To Mine Gold: The Kinross Gold Second Quarter Edition
- Kinross’s costs on both a core and a core non-tax basis have continued to fall significantly on a year-over year basis.
- Sequentially though the second quarter saw Kinross's cost rise from the surprisingly good first quarter numbers.
- While Kinross's silver production was down due to the closure of La Coipa operations, gold production has been rising.
- Investors should also monitor the company's ability to service its debt as at current gold prices it is essentially breaking even.
What It Really Costs To Mine Gold: The Randgold Second Quarter Edition
- Randgold's costs on both a core and a core non-tax basis have continued to fall on a year-over year basis.
- The company also continues to increase production and is on pace to produce the most annual gold in its history.
- Investors need to monitor the Ebola outbreak in Africa as a spread of the disease to Mali would be a large risk for the company's current operations.
What It Really Costs To Mine Gold: The Allied Nevada Gold Second Quarter Edition
- Allied Nevada's costs on both a core and a core non-tax basis have continued to rise on a year-over year and sequential basis.
- Management expects cash costs to continue to rise in the second half of the year because of higher stripping so that the company can access more ore in 2015.
- With costs above the current gold price and a high debt load, investors need to be extremely careful with their Allied Nevada investment.
What It Really Costs To Mine Gold: The Alamos Gold Second Quarter Edition
- Alamos’s costs on both a core and a core non-tax basis have risen significantly compared to its first quarter costs.
- The company's gold production continues to drop from its Mulatos mine and it is one pace for its third year of declining production.
- The company needs to increase production by either improving Mulatos results or through development of its Turkish properties.
What It Really Costs To Mine Gold: The Eldorado Gold Second Quarter Edition
- Eldorado Gold’s costs on both a core and a core non-tax basis have continued to fall significantly on a year-over year basis.
- While some of the reduction in costs per ounce is due to increased production, management has also shown it has worked hard to cut expenditures.
- Eldorado's low costs per ounce puts it at the top of all the mid-tier and major gold producers we've covered s far in the second quarter.
- Investors should monitor cash flows because even though costs were low expenditures made cash flows negative for the quarter due to CAPEX investments.
USGS Report Confirms That U.S. Gold Production Is Dropping Fast
- The US is the world's third largest miner of gold and production has continued to fall over the last 10 years.
- 2014 is looking to be the lowest year of gold production for the US since the beginning of the bull market in gold.
- Gold investors should be reassured by this data as it strengthens the view that current production of gold is unsustainable at current prices.
What It Really Costs To Mine Gold: The Agnico-Eagle Mines Second Quarter Edition
- Agnico-Eagle’s costs on both a core and a core non-tax basis have continued to fall significantly on a year-over-year basis.
- The company also continues to increase production and is on pace to produce the most annual gold in its history.
- The company’s production did fall on a sequential basis as Meadowbank production dropped significantly and is expected to drop further in the second half of the year.
What It Really Costs To Mine Gold: The Barrick Gold Second Quarter Edition
- Barrick's production numbers continue to decline on both a year-over-year and sequential basis and this is something important for investors to note.
- Barrick's true all-in and core non-tax costs are also rising sequentially and the company is merely treading water at $1300 gold.
- Management turnover at the company leads us to think the chances of a Newmont and Barrick merger are probably higher than the industry thinks.
What It Really Costs To Mine Gold: The Yamana Gold Second Quarter Edition
- Yamana's core costs dropped on both a year-over-year and sequential basis which is positive for the company.
- Investors should also pay attention to core non-tax costs which actually rose as this quarter saw a large tax refund.
- The company has more work to do to lower costs to reach its low-cost competitors.
- Too early for investors to accurately evaluate costs as the Malartic mine acquisition significantly changes the company's production profile.
Update: Pretium Drill Results
- Recently released drill results confirm deep mineralization under the Valley of the Kings resource.
- Though mineralization is positive, we see nothing exciting about these results that would add value to the existing resources.
- Deep drilling will resume in September with results probably to be released later in the fourth quarter so no real catalysts for the company until then.
Update: Premier Gold Mines' Acquisition Of Cove-McCoy Gold Properties
- Premier Gold fully consolidated its Cove-McCoy gold properties by purchasing 100% interest in it from Newmont Mining for $21 Million.
- In our opinion this shows a lot of confidence of management in the Nevada property as they are already developing their Canadian Hardrock property.
- This confirms and possibly adds to our earlier valuation of the company as we only considered the Hardrock property in the valuation.
What It Really Costs To Mine Gold: The Goldcorp Q2 Edition
- All-in costs continue to decline on a year-over-year and sequential basis as the company adjusts to the new gold price environment.
- Compared to competitor Newmont, Goldcorp offered investors a much better quarter with lower costs across the board.
- Investors may want to monitor production totals in future quarters as second quarter production was a bit lower on a sequential basis.
- Goldcorp continues to show that it is one of the lower cost major mining companies.
What It Really Costs To Mine Gold: The Newmont Mining Second Quarter Edition
- Newmont Mining showed a slight decrease in total gold-equivalent production.
- All-in costs continue to decline on a year-over-year comparative basis as the company adjusts to the new gold price environment.
- While the quarter's drop in costs was good, core non-tax costs actually rose on a sequential basis.
- Investors need to pay attention to earnings reports from other major miners to get a better context on Newmont's performance on a comparative basis.
Gold Investors Take Note That An Industry Report Shows Gold Production Dropping Precipitously
- Discoveries of gold resources and reserves have been falling and are not keeping up with gold production.
- The trend of falling gold discoveries has accelerated over the last decade.
- The time it takes to bring a discovery to production has increased substantially to close to twenty years.
- Gold investors should ignore the economic noise and concentrate on gold's fundamental supply picture.
Indian Silver Imports Surge In May, But Silver Investors Should Instead Monitor This Possible Catalyst
- Indian silver demand surged in May to 711 gross tonnes of silver.
- Indian silver demand is strong but it was similarly strong in 2013 and thus is only keeping a floor under the price of silver.
- The true catalyst for the silver price is Chinese demand which remains relatively low, but if it rises then we could see silver move up significantly.
When Mark Bristow Talks Gold Bugs Should Listen
- Mark Bristow, Randgold's CEO, is one of the few gold mining CEOs that predicted the 2011 gold drop and he emphasizes that $1300 gold is unsustainable for the industry.
- Thus gold offers investors a low-risk long-term opportunity regardless of the performance of the stock markets and the Fed's taper.
- Gold miners are bit more risky and investors should carefully select which miners they will own in their portfolios.
Bill Gross, Bondholders Battle The Fed, And Gold
- PIMCO believes that the Fed needs real rates to stay low to avoid a "financial earthquake" - this is what they term the "New Neutral".
- The consequences of financial repression force bondholders to fight the Fed and thus increase leverage in the financial system and force real rates even lower.
- Instead of investors leveraging themselves up to fight the Fed's financial repression, they should consider alternative assets that do well in leverage unwind situations like gold.
Pretium Resources: Updated Feasibility Study And New Drilling Provide Potential Catalysts
- New feasibility study shows that Brucejack is one of the few gold projects that would be profitable at gold prices under $1000 per ounce.
- CAPEX costs for development remain under $800 million and thus allow Pretium to develop Brucejack without waiting for an acquisition.
- Even though the company has a plan to move to permitting and construction, continued drilling show that management believes that there is significant potential to expand the resource base.
- Investors should pay particular attention to the results of holes SU-628 and SU-629 that would give clues into the potential of expanding the Valley of Kings at depth.
Investors Take Note That 2 Headwinds May Restrain Share Price Increases For Gold And Silver Miners
- Gold miners and explorers have seen 2014 gains that have significantly outdone even their traditional leverage on the upside over gold and silver prices.
- Many explorers and developers may be tempted to take advantage of the rise in share price to raise capital which may negatively impact investors.
- Rising energy prices also may hit at miner profit margins as margins drop despite an increasing gold and silver price.
- Investors may want to swap gold and silver mining shares for the underlying assets of gold and silver to find a better entry point.
Bank Of England's Quarterly Report: Are We Quietly Seeing Central Banks Repatriate Their Gold?
- Bank of England's Quarterly Report shows that the bank held 5485 tonnes of gold for 72 central bank customers.
- The gold holdings of the bank have dropped over 750 tonnes year-over-year with no reported central bank selling.
- This suggests that we may be seeing large amounts of gold repatriation, which is exactly what happened when Bretton Woods broke down.
Bear Creek Mining: The Market's Undervaluation Of Santa Ana Provides Investors With A Nice Upside
- Recent Peruvian court's decision on Santa Ana adds significantly to Bear Creek's potential.
- Market attached a $50 million value to Santa Ana where we think based on conservative comparables it should be closer to $80 million.
- Santa Ana has additional upside that is not included in the comparables including expansion of the resource at depth, additional silver recoveries, and the inclusion of 36 million silver resource.
The Most Important Takeaway From The ECB Meeting For Gold Investors: The ECB Won't Fail Like This Again
- Recent action by the ECB to take interest rates to negative levels are unprecedented but despite these extroardinary efforts the Euro rose.
- The ECB needs to bring the Euro to lower levels because the EU economies are struggling and anti-Euro parties are gaining popularity.
- The failure to drop the Euro means the ECB will have to take even greater steps in fture meetings.
- Gold stands to benefit from these currency wars as ECB easing will be increased and other central banks may fight to also lower their currencies to keep up.
Why We Are Now Selling Our Gold Positions For Silver Positions
- Silver's performance over the last three years has been especially weak, but we believe silver is about to start significantly outperforming gold.
- 2013 Silver Institute data shows that scrap silver supply has plummeted by more than 60 million ounces; 2014 should see even further drops as the silver price has fallen further.
- Primary silver miners didn't produce silver profitably in 2013, and may have challenges in 2014 mining silver profitably; and byproduct silver production may also see a drop.
- Analysts and investors are especially bearish on silver and are positioned accordingly; thus positive news may catch the market off-guard, and being long silver is truly a contrarian position.
- The annual silver market is very small at under $20 billion, and there is the potential for significant gains if even a moderate amount of money enters the silver market.
Seasonal Gold Moves: Is This The Catalyst That Gold Needs To Break Out Of Its Trading Range?
- Seasonal demand is a very relevant historical indicator for gold.
- Investors may want to initiate or increase gold positions if we see traditional summer price weakness.
- Seasonal physical demand may spur gold to break out of its trading range especially if we see no notable moves in early summer.
Russian Gold Reserves Increase By A Massive Amount In April: Could Russia Cause Chaos In The Gold Market?
- April's gold purchase is Russia's largest since 2010 and could be a harbinger of things to come.
- Russia's continuing diversification out of US Treasuries means that we could see much bigger purchases in the future.
- Russia's gold reserves as a percentage of foreign exchange reserves is low and it would have a long way to go before reaching parity with the US and EU.
A Forgotten Friend: Gold Investors Should Welcome The Bengal Tiger
- Narendra Modi victory in India offers a number of bullish catalysts for gold.
- An easing of Indian gold import duties and restrictions would ease current high Indian gold premiums and lead to a rise of gold imports.
- The business friendly policies of Mr. Modi would also mean a stronger Rupee, and thus increase citizen purchasing power of gold.
Exeter Resources: Investors Should Expect A Higher Share Price Or A Buyout
- Exeter's new PEA shows that Caspiche can be developed as a low-CAPEX mine with a fraction of the original water usage.
- Exeter's current share price is at levels that reflect its previously financially unfeasible, high-CAPEX Caspiche plan and Exeter could have a 30-50% upside to get to price levels that reflect.
- The newly demonstrated optionality of Caspiche offers potential acquirers two different ways to develop the project based on high or low gold prices.
- Kinross's nearby Maricunga mine is expected to leach its last ore in 2019 and Exeter would make a nice, cheap target to shift resources over in time for mine decommission.
- A new Chinese law to remove government approval for acquisitions under $1 billion may bring in Chinese acquirers as Chinese-Chilean trade relations are extremely strong.
Iamgold's First-Quarter Report May Offer A Positive Surprise For Investors As Cost-Cutting Efforts Pay Off
- Iamgold's core production costs should drop as CAPEX drops significantly from last year's levels, as we expect management to hit its guidance of 40% lower CAPEX costs than 2013.
- Looking forward, Westwood production should come online in late 2014 and ultimately increase gold production to around one million ounces by 2016.
- Expansion and development projects at Rosebel, Sadiola, and Cote will be put on hold, which should allow Iamgold to conserve more cash and lead to a better bottom line.
- Debt risks are overblown, because most of the debt isn't due for another 3-4 years and should allow plenty of time for the gold price to recover.
- Investors' expectations are set extremely low, and the upcoming earnings report should show significantly higher profitability due to CAPEX costs, exploration reduction, and expansion suspensions.
Weekly COMEX Gold Inventories Increase: Is That Bearish For Gold Investors?
- COMEX registered and eligible gold inventories have risen in recent weeks.
- Investors need to remember that inventory levels are still at historically low levels.
- Gold claims per registered ounce have dropped, but also remain at levels never seen before June 2013.
The Drums Of War Are Beating: Prepare Your Portfolio For An Escalation In Ukraine
- Friday's escalation in the Ukrainian conflict leads us to believe that additional sanctions (and counter-sanctions) will begin as soon as Monday.
- Gold and gold stocks stand to benefit from both Russian counter-sanctions aimed at the US Dollar and general financial market chaos that may result.
- Platinum and Palladium ETFs and equities would benefit from the reduction in Russian supplies as they are the second largest global producer of both metals.
- Fertilizer stocks stand to benefit as both Ukraine and Russia are major players in the global fertilizer market.