Colombia is one of the leading gold producers in South America but due to political unrest, the country has lagged behind others such as Brazil and Peru. Colombia has high grade gold (GLD) and is in dire need of extensive exploration work. Junior exploration firms to some of the biggest gold producers are eying the vast potentials of this small country. Problems related to law and order and lack of infrastructure still remain but the government has been working on solving these issues.

One of the emerging gold junior plays that is betting on Colombia is Continental Gold (CGOOF.PK). Besides this, the mid-tier company B2Gold Corp (BGLPF.PK), which is also eying growth in the emerging markets, particularly in Nicaragua and Philippines, is also operating in Colombia by partnering with major producer AngloGold Ashanti (AU).

In the World Bank's ease of doing business index (2012), Colombia was ranked 45th, which

Q1 2013 Earnings Call

May 13, 2013 9:00 am ET

Executives

Stewart Bailey

Srinivasan Venkatakrishnan - Chief Executive Officer, Chief Financial Officer, Director, Member of Investment Committee and Member of Risk & Information Integrity Committee

A. M. O'Neill - Executive Vice President of Business & Technical Development and Executive Director

Charles E. Carter - Executive Vice President – Colombia and Investor Relations

Analysts

Harry Mateer - Barclays Capital, Research Division

Terence Ortslan

David Haughton - BMO Capital Markets Canada

Daniel McConvey

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti First Quarter 2013 Results. [Operator Instructions] Please also note that this conference is being recorded. I would now like to hand the conference over to Stewart Bailey. Please go ahead, sir.

Stewart Bailey

Thanks, Dylan, and welcome, everybody, to our Q1 2013 results. You've got members of our executive team present, including our

Some exploration projects in Colombia are advancing to the mine definition stage, says Paul Harris, the Colombia-based editor and publisher of the Colombia Gold Letter, and with the government starting to provide the level of administration that the sector needs, the country is poised for great things. In this interview with The Gold Report, Harris discusses the implications of Colombia's 2001 mining code.

The Gold Report: What makes Colombia an appealing mining jurisdiction to investors?

Paul Harris: Colombia has gold and it's high grade. There hasn't been a great deal of modern exploration and so there are probably a lot of deposits yet to be found. In the past 10 or 15 years around 90 million ounces have been discovered here.

TGR: How are investors affected by the recent news that the mining code in Colombia might not change, as it was previously

Gold stocks, as represented by the Market Vectors Gold Miners ETF (GDX), have underperformed the price of gold that is down by about 12% in the last year. In comparison, the average gold stock is down by about 34% during the same period, and is off about 56% below the peak about 18 months ago. Furthermore, most gold stocks have broken below recent lows from last summer, and many are trading at levels last seen almost four-to-five years ago.

In this article, via an analysis based on the latest available Q4/2012 institutional 13-F filings, we identify the gold and silver mining companies that are being accumulated and those being distributed by legendary or guru fund managers, such as Warren Buffett, George Soros, Carl Icahn, Steven Cohen and Mario Gabelli, that are well-known for their savvy in picking winning stocks year after year. But first, let's review top guru picks in

Gold Resource Corporation (GORO) has recently slashed its dividend by 50%. The stock opened lower on the day of the news, but managed to gain 2.5% at the end of the day. This move from GORO raises two interesting questions. Is there a risk of dividend slashing in other gold stocks (GDX)? How would such possible dividend reductions affect stock prices?

Let us first examine the rationale behind the decrease in the dividend. Gold Resource Corporation's President, Mr. Jason Reid, stated: "Multiple factors contributed to the decision to decrease monthly dividend distributions." The first factor is the recent market pullback in the spot price of gold and silver, which may reduce GORO's future net revenues. This factor is common to all gold miners. Other factors that brought the decision to life are stock-specific. GORO wants more money to flow into the expansion of its El Aguila Mill. Also, the

An article at CNBC was recently run suggesting gold may have hit a floor, citing HSBC, which offers three reasons why that may be the case, including retail demand from India and China, slowdown in exchange-traded fund (ETF) gold liquidation, and continued acquisition of gold by central banks around the world.

According to HSBC, the major reason that gold may have found support and should continue to rebound, is retail buying in India and China. Physical demand for gold is led by jewelry, which accounts for about 45 percent of overall total.

In the past I wouldn't have found that assertion too credible, as there has always been that jump in gold prices during the Indian wedding season, which soon afterwards drops back to normal price levels.

What Has Changed

What has changed and why it may be true this time around, is the high cost of gold has

The recent fall in precious metals prices has investors on edge. Many precious metals equities were hurting even before the latest precious metals drop. In this interview with The Gold Report, Peter Rose, head of mining research with Fox-Davies Capital Ltd. in London, provides a European perspective on mining and advises looking at under-appreciated jurisdictions [think Europe] and neglected metals like tin, lead and zinc.

The Gold Report: Peter, can you give us your long-term view of the eurozone as it lurches from bailout to bailout?

Peter Rose: Some major things have to happen in Europe and the sooner, the better. Unfortunately, I think it will get worse in the short term.

But from the mining industry perspective, these crises are bringing a lot of realism to certain governments. Greece has opposed mining, despite having quite good ore bodies, as do Portugal, Spain and Cyprus. Mining

Before I continue let me bypass all the conspiracy theories about gold (to which I do not subscribe) and let me also put aside the controversial issue of if gold (GLD) and silver (SLV) are money or not. In today's article I will concentrate on just one thing and that is, what might the price of gold be, based on the cost of production. Also, how low can gold possibly go, assuming maximum downside bearish market pressure.

Generally, the price of any mineral or precious metal is a function of the cost to get it out of the ground plus a markup for the nice people doing all the hard work (the mining company). If gold corrects below the cost of production, then miners will not make any money. And when miners don't make money -- because they cannot cover their cost -- they stop mining and production falls. And

I have long been a fan of holding gold (GLD) over the gold miners (GDX) as a means of gaining exposure to the precious metal. This largely stems from my belief that gold is a store of value, and that the miners are simply a derivative of a store of value. Additionally, an investor in the miners has to worry about things such as the costs of mining, profits, labor issues, and dealing with governments. Those are all thing I prefer to avoid.

Last year, however, as Newmont Mining (NEM) dipped into the low $40s on three different occasions, I built a small position (a couple of percentage points of my total gold exposure). I did so not as a call on Newmont's business, but instead because I think its enhanced dividend policy can turn the company's stock into a leveraged play on gold. Since I pay storage

Gold miners have had a horrible run during the past two quarters. The most popular ETF in this space is the Market Vectors Gold Miners ETF (GDX), and it has dropped more than 46% since October 2012, while the SPDR Gold Shares (GLD) has shed 12.33% during this time.

The closing bell on April 15th (2013) echoed as alarm bells among investors involved in the yellow metal, as spot gold suffered the largest single-day drop since 1983. The Dow lost 265 points and the S&P 500 dropped by 36 points or 2.30%, as news of a first quarter slowdown in China panicked investors towards the end of the session. Amidst this chaos, investors stuck with gold miner stocks are wondering what to do next.

Key Business Driven Challenges

Mining companies are facing challenges of rising production costs, reducing profit margins and decreasing cash flows.

1. Rising Production Costs

   One of the

Gold (GLD) bulls cant say I didn't warn them. In February, I said time was running out to sell gold and silver (please consider: Last Chance To Sell Gold And Silver). In fact, I have written many articles on why you should sell gold and gold stocks and all things gold. Just several days ago, I gave one last warning here.

I have repeatedly said that if gold takes out critical support levels, all sorts of forced selling would follow and gold and many gold stocks will correct to much lower levels. However, the question is, why would gold break those technical levels, if everyone has been so gung-ho on gold forever?

Well, Cyprus might have to sell some gold to get out of trouble, this will put some pressure on gold at the margin. Besides, Goldman Sachs thinks gold will go lower (link above). The Financial Times

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