Wednesday, February 22, 2006

Yamana Gold to buy Desert Sun Mining in 5.47 cad/share

LONDON (AFX) - AIM-listed Canadian Yamana Gold Inc said it will acquire all shares in peer Desert Sun Mining Corp (DSM) in a recommended 5.47 cad per share deal.

DSM owns the long-life Jacobina gold mine in Bahia, Brazil near Yamana's Fazenda Brasileiro mine and its C1 Santa Luz pre-feasibility project.

DSM shareholders will receive 0.6 of a Yamana common share for each DSM common share held.

Based on the 5-day weighted average of Yamana's share price, the transaction price represents a premium of 21.1 pct over the average price of DSM's shares.

The transaction results in Yamana becoming a leading intermediate gold producer with an estimated annualized gold production of 450,000 ounces in 2006 increasing to 700,000 ounces in 2007 and to more than 800,000 ounces in 2008 from operating mines and mines under construction.

Yamana president and chief executive Peter Marrone said the company's stated goal in late 2005 was to produce 750,000 ounces of gold by 2008.

"With this acquisition, we will exceed that goal. As a result of this increased production profile and with the advancement of our development-stage or near development-stage assets, we are now targeting production of 1.0 million ounces by 2008," he said.

The enlarged company will have a total resource base of approximately 11.6 mln ounces of measured and indicated gold resources - of which 7.6 mln proven and probable - plus inferred resources of approximately 6.1 mln ounces.


Yamana Gold

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Tuesday, February 21, 2006

Cambior Inc. AMEX : CBJ

Cambior posts record profit in 2005
Feb. 20, 2006. 06:35 PM

MONTREAL — Gold miner Cambior Inc. (TSX: CBJ) produced record net earnings in 2005 of $20.2 million (U.S.), a major reversal from the $73.8 million net loss incurred in 2004.

The results, reported in U.S. dollars on Monday, amounted to seven cents per share for the year versus a loss of 30 cents the previous year.

Revenues increased to $368.5 million in comparison to $300.9 million the year before, mainly as a result of higher gold prices and increased revenues from non-gold operations.

The 2005 results include a gain of $12.5 million on the sale of the Carlota project in December 2005, while in 2004, it recorded an impairment charge of $73.1 million for the Doyon mine.

Operating costs were negatively affected by the strength of the Canadian dollar and higher costs for fuel and other consumables such as steel, chemicals and lubricants, as compared to costs prevailing in 2004.

Total gold production reached of 638,400 ounces, produced at a mine operating cost of $285 per ounce. Cambior's gold production target for 2006 is 529,000 ounces at an estimated mine operating cost of $294 per ounce.

For the fourth quarter ended Dec. 31, Cambior realized net earnings of $19.8 million, or seven cents per share, compared to a net loss of $76.7 million, or 28 cents per share, for the same period in 2004.

Revenues for the quarter reached $97.4 million compared to $81.9 million a year earlier. A higher gold price and stronger non-gold revenues more than offset lower gold output.

Gold production for the quarter totalled 141,600 ounces at a mine operating cost of $286 per ounce compared to 175,100 ounces at a mine operating cost of $251 per ounce for the corresponding quarter in 2004. The cost increase is mainly due to higher energy costs.

Chief executive Louis Gignac said the yearly turnaround was fuelled by the new Rosebel mine in Suriname, which increased its production by 25 per cent in 2005, its second year in operation.

This allowed Cambior to surpass the 2005 gold production target by three per cent, despite the closure in September of the depleted Omai gold mine in neighbouring Guyana.

The company's total estimated reserves increased by 42 per cent to reach five million ounces of gold.

Cambior shares closed Monday up three cents to $3.46, before the results were released. source

Click on the chart to enlarge:
Cambior Inc. AMEX : CBJ


Cambior is the sixth largest Canadian gold producer and employs 2,700 talented people at six mines in North and South America. In 2005, we attained gold production of 638,400 ounces, and our 2006 targeted gold production of 529,000 ounces is almost fully exposed to the gold price. The decrease in production planned for 2006 is a result of the termination of production at the Omai mine in September of 2005. In 2006, we will aggressively invest $29 million in the exploration and development of our promising properties in an effort to grow our reserve base. Our mid-term objective is to reach annual gold production of 800,000 ounces and a reserve base of 8 million ounces.

Cambior's shares trade on the Toronto (TSX) and American (AMEX) stock exchanges under the symbol "CBJ". Our warrants (CBJ.WT.C and CBJ.WT.D) trade on the TSX.


Monday, February 20, 2006

Placer hit by hedging losses

By Bernard Simon in Toronto
Monday, February 20, 2006
Posted: 01:25 PM EST (18:25 London)

Placer Dome (NYSE:PDG) , the Canada-based gold and copper miner in the throes of being acquired by Barrick Gold (NYSE:ABX) , was hit in the final quarter of its independent existence by sizeable hedging losses and a jump in gold operating costs.

Costs related to the Barrick takeover also contributed to pushing Placer's net fourth-quarter earnings down to $22m, or five cents a share, from $39m, or nine cents, a year earlier.

Barrick is set to move ahead early next month with decisions on the staffing and structure of the enlarged company. One of its challenges is to imbue Placer's operations with a more entrepreneurial culture and a greater sense of urgency.

Source : FT


Monday, February 13, 2006

Glamis Gold NYSE:GLG

Glamis rides gold rush to higher profits
Last Updated Mon, 13 Feb 2006 16:16:28 EST
CBC News
Glamis Gold reported sharply higher revenues and profit in the fourth quarter, driven by higher gold prices and a big increase in production.

Glamis (TSX:GLG) said its net income more than doubled to $15.1 million US (12 cents a share) in Q4, compared to $6.1 million US (5 cents a share) in the same period a year earlier.

Nevada-based Glamis reports in U.S. dollars. The stock lists on both the New York and Toronto Stock Exchanges.

Production in the quarter rose 67 per cent to a record 140,377 ounces at a total cash cost of $181 per ounce.

Revenues in the final quarter of 2005 more than doubled to $70.7 million.

"Contrary to the prevailing gold industry trend, our cost profile is expected to decline significantly in the year ahead, while our gold production is projected to increase by more than 50 per cent over the same period," Glamis Gold CEO Kevin McArthur said in a release.

Click on the chart below to enlarge :

Glamis Gold  NYSE:GLG


Sunday, February 12, 2006

AngloGold Ashanti under reserves pressure

Bullish for the Price of Gold (POG) :

AngloGold Ashanti under reserves pressure
Brendan Ryan
Posted: Fri, 10 Feb 2006
[] -- Like Harmony and Gold Fields before it, AngloGold Ashanti has reported a drop in its ore reserves which have fallen 19,8% to 63,3Moz at the end of December from 78,9Moz a year previously.

The development underscores the continuing pressure on the world’s gold majors to find the ounces necessary to replace the huge volumes of gold they are mining out annually which amounted to 6,2Moz for AngloGold Ashanti during 2005.

AngloGold Ashanti CEO Bobby Godsell is predicting a drop in annual production to between 5,8Moz and 6M0z for 2006 after which he expects the group’s output to recover to between 6,3Moz and 6,5Moz during 2007. read more...


Gold Hedgers - Be carefull !

AngloGold's loss trebles as bullion bets go awry
February 12, 2006

AngloGold Ashanti said its fourth-quarter loss more than trebled as bets on bullion prices went awry.

The company's net loss widened to R1.46 billion, or R5.51 a share, in the three months to December 31, from R415 million, or R1.56, in the third quarter, the company said in a statement to the JSE on Friday.

AngloGold entered contracts to sell 10.84 million ounces of gold at preset prices, much of it below the current market price. To buy back those contracts would have cost $1.94 billion (R12 billion) on December 31, compared with $1.35 billion three months earlier as the price of gold climbed 10 percent. With gold averaging $553.60 an ounce so far this year, losses on gold contracts are set to widen.

The losses "in the next quarter, if the gold price stays where it is, are going to be huge", said Wayne McCurrie, who oversees the equivalent of $6 billion at Advantage Asset Management in London. "It's a very large amount of money."


HUI - The Amex Gold BUGS Index

The Amex Gold BUGS (Basket of Unhedged Gold Stocks) Index is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index is designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years. The HUI Index was developed with a base value of 200.00 as of March 15, 1996. Adjustments are made quarterly after the close of trading on the third Friday of March, June, September, and December so that each component stock represents its assigned weight in the index.

HUI - Amex Gold BUGS Index
(source: AMEX)

Click to enlarge a weekly HUI annotated chart including initial price targets:

HUI - Amex Gold BUGS Index

Click to enlarge HUI full history chart:

HUI - Amex Gold BUGS Index


Friday, February 10, 2006

Indonesia seeks revised Freeport-McMoRan profit-sharing deal

JAKARTA (MarketWatch) -- Soaring mineral prices on the global market justify a revision of the government's profit-sharing agreement with U.S. mining giant Freeport-McMoRan Copper & Gold Inc. (FCX), Indonesia's Vice President Jusuf Kalla said Friday.

"Prices of gold and nickel are currently high, (and) based on this, profit sharing should be increased by two-to-three times from the previous figures," Kalla told reporters, without elaborating on the terms of the government's current profit sharing deal.

Kalla said his desire to gain a bigger slice of the profits from Freeport-McMoRan's massive Grasberg mine in remote Papua province was motivated by concern for Papuan residents rather a bid to boost desperately-needed government revenues.

"This is for the sake of Papuan people, because 70% of profit sharing (from Freeport-McMoRan's operations) will be given to the Papuan people," he said, without elaborating.

A Freeport-McMoRan spokesperson could not immediately be reached for comment.

Kalla said the government would seek to review the contracts of large foreign investment projects, including Freeport-McMoRan's Grasberg, every five years, without elaborating.

Copper and gold prices on the world market hit record highs earlier this month as fund managers entered the market en masse as a result of strong demand expectations from the Asian economic powerhouses of China and India.
Read more

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Royal Gold Inc. NASDAQ : RGLD


Royal Gold, Inc. is the leading publicly traded precious metals royalty company. Royal Gold owns and manages royalties on precious metals mines and through its royalty portfolio, the Company provides investors with a unique opportunity to capture value in the precious metals sector.

Royal Gold holds royalties in a number of properties without incurring the ongoing capital or operating costs associated with an operating mining company. Additionally, Royal Gold provides investors with valuable leverage to improving gold prices with sliding-scale royalties, while lowering its risk from decreasing gold prices through fixed rate royalties and floors on its sliding-scale royalties.

Through its dividend policy and business strategy, Royal Gold strives to provide shareholders with a premium precious metals investment vehicle. The Company’s royalty portfolio offers high rewards through its direct exposure to precious metals prices and the growth potential of world class ore deposits. At the same time, Royal Gold’s royalty-based business model, which involves quality operators and diversification of its royalty revenue stream, reduces the operational risks usually associated with mining.

Click on the chart below enlarge:
Royal Gold Inc. NASDAQ : RGLD

Royal Gold Inc. NASDAQ : RGLD


Thursday, February 09, 2006

Special risks when investing in a mining company

In addition to the usual risks involved when investing in a stock of given company like: mismanagement, corporation frauds, dilutions, Etc. Investing in a mining company carries specific additional risks:

1) Mining is depleting business, the more you mine the less reserves you have, unless you explore and find new reserves fast enough.

2) The revenues are completely dependent on the market price of the metal and the mining company is a price taker.

3) Hedging, some mining companies have sold some of their future production through the futures and derivatives market. They have sold in much lower prices, so higher metals prices do not always translate to higher revenues and higher profits.

4) Geo political risk, as the prices of metals are going up it is tempting for government to increase mining taxes. Under some circumstances mining licenses could be frozen or canceled.

The conclusions are: the price of some gold and silver mining stocks could outperform and give better appreciation then the price of gold and silver, but the risk is also higher. Be sure to do a good research before putting good money into any stock and don’t place all your eggs in one basket – diversify.
If a gold or silver company has only one mine or no production at all the situation is even more risky as is the case with exploration companies.

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Wednesday, February 08, 2006

Pan American Silver Corp. NASDAQ : PAAS


Pan American Silver Corp. was founded in 1994 upon a single mission: to be the best vehicle for equity investors wanting real exposure to higher silver prices. Today, the Company produces more than 13 million ounces of silver annually from 6 operations in 3 countries, it has its seventh mine under construction in Mexico, and an additional silver project undergoing a feasibility study in Argentina. Pan American Silver expects to become the largest primary silver producer in the world with annual silver production growing to 23 million ounces in 2008.

Click on the charts below to enlarge:

Pan American Silver Corp. NASDAQ : PAAS

Pan American Silver Corp. NASDAQ : PAAS


Newmont Mining Corporation daily candle chart

I have annotated a daily candle chart of NEM with Fibonacci retracement levels and Elliot waves count. Click on the chart below to enlarge:

Newmont Mining Corporation

Please visit:
Gold global perspective

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Tuesday, February 07, 2006

Newmont Mining Corporation NYSE : NEM


Founded in 1921 and publicly traded on the NYSE since 1925, Newmont is the largest gold company in the world. Headquartered in Denver, Colorado, the company employs approximately 14,000 people, the majority of whom work at Newmont's mines sites in the United States, Australia, Peru, Indonesia, Canada, Uzbekistan, Bolivia, New Zealand and Mexico.

Newmont is also advancing two development projects in Ghana which will become the company's next core operating district and at year-end 2004, had a combined 16 million ounces of reserves.

Newmont's global land position of approximately 51,500 square miles and its world-class exploration team enables the company to explore and acquire gold properties in the world's best gold districts. Newmont is also the only S&P 500 listed stock, espouses a no gold hedging philosophy, and as of year end of 2004, reported record industry gold reserves of 92.2 million equity ounces.

With unsurpassed financial strength and flexibility, project development and operational expertise, and portfolio management and investment skills, Newmont is "The Gold Company" of choice for investors.

Newmont is also committed to high standards and leadership in the areas of environmental management, health and safety for its employees and neighboring communities.

Click on the chart below to enlarge:
Newmont Mining Corporation NYSE : NEM

I will post a daily chart of NEM soon...