MINING NEWS Today

Minera IRL Reports Year-End 2014 Financial Results and Announces Notice of Annual General Meeting

noreply@blogger.com (MINING NEWS Today) — Wed, 24 Jun 2015 23:50:00 +0000

LIMA, PERU--(Marketwired - Jun 23, 2015) - Minera IRL Limited ("Minera IRL", or the "Company") (IRL.TO)(MIRL.L)(MIRL.L), has reported its financial results for the year ended 31 December 2014. The Company has also provided an update on its outlook for 2015 and announces the filing of its notice of annual general meeting.

2014 Highlights:

Financial

Gold sales of 23,654 ounces for revenues of $29.9 million.
Gross profit of $6.8 million.
Loss before tax from continuing operations of $7.0 million, which excludes the impact of the investment in the Don Nicolás joint venture.
After tax loss from continuing operations of $8.9 million.
After tax loss including discontinued operation of $43.4 million, or $0.19 per share.
Includes loss of $32.1 million on the sale of the Company's remaining interest in the Don Nicolás joint venture.
Cash balance of $3.8 million as at 31 December 2014.
Subsequent to year-end, entered into a $70 million bridge loan agreement with a Peruvian state-owned development and promotion bank, Corporación Financiera de Desarrollo S.A. ("COFIDE").

Operational Performance

Corihuarmi, Peru

Gold production from the Corihuarmi Gold Mine of 23,321 ounces.
Site cash operating costs of $705 per ounce produced.
Total cash operating costs of $874 per ounce sold.

Ollachea, Peru

Completed a mining optimization of the 2012 Ollachea Definitive Feasibility Study that reduced the estimated initial capital cost to $164.7 million from $177.5 million.
Received the Construction Permit, the final major government approval required to commence construction.
In June 2015, secured a $70 million Bridge Loan with COFIDE, the proceeds of which were used to repay the Macquarie Bank debt facility, make the final property payment due to Rio Tinto and will be used to advance initial aspects of the development of Ollachea.
The Company also signed a Mandate Letter with COFIDE to structure up to $240 million in debt to be used to replace the Bridge Loan and finance construction of Ollachea.

Don Nicolás, Argentina

The Company sold its remaining interest in the Don Nicolás joint venture for $10 million.

A summary of the key operating and financial measures for the three and twelve-month periods ended 31 December 2014 and 2013 is provided in Table 1 near the end of this press release.

Commenting on the 2014 financial results, Daryl Hodges, Minera IRL Limited's Executive Chairman, stated: "2014 presented a number of challenges that required important strategic decisions. The Company is now in a stronger position, significantly with the backing of COFIDE through the Bridge Loan and $240 million mandate, and we will work on advancing Minera IRL's key projects in an effort to create future shareholder value."

This press release should be read in conjunction with the Company's full Report & Accounts, including the Management's Discussion and Analysis ("MD&A") for the year ended 31 December 2014, which are available from the Company's website (www.minera-irl.com) and on SEDAR (www.sedar.com).

Outlook

During 2014, the Company completed 2,816m of exploration drilling in 45 drill holes at the Corihuarmi mine. The exploration program has defined additional material at the Laura and Cayhua zones. As a result of the exploration activities and evaluation, the Corihuarmi life of mine has been extended until early 2017 (from late 2015 at the beginning of 2014, prior to the exploration drilling). In 2015, the Company is forecasting gold production of 22,000 ounces (up from 20,000 ounces). Production is expected to come from the Laura and Cayhua zones, along with continued production from Susan, Diana, the Diana extension, plus nearby Scree Slope material, or claims acquired in January of 2015.

The 2015 Corihuarmi capital budget is $3.8 million, including $3.5 million for a heap leach pad and waste dump expansion that has already commenced. This expansion is to accommodate all of the material that is scheduled to be mined and stacked from late-2015 until early 2017 when mining operations are currently scheduled to cease. Exploration activities at Corihuarmi are expected to continue in 2015 to further extend the Corihuarmi mine life.

At 31 December 2014, the Company had a negative working capital balance of $26,919,000. Working capital being defined as current assets less current liabilities. Subsequent to 31 December 2014, the Company announced that it had secured a $70 million Bridge Loan with COFIDE. The Bridge Loan is expected to be the first component of a senior debt facility of up to $240 million to be led by COFIDE to develop the Company's Ollachea Gold Project.

The net proceeds from the Bridge Loan have been applied towards the repayment of the $30 million Macquarie Bank debt facility and the payment of $12 million of the $14.2 million outstanding to Rio Tinto under the Ollachea Mining Rights Transfer Contract, along with the $744,000 Share Hold Incentive Payment and accrued interest. The remaining $2.2 million outstanding has been converted into an unsecured promissory note payable by 31 December 2015, accruing interest at a rate of 7% per annum. The Company has the option of settling the $2.2 million promissory note with the issuance of Minera IRL ordinary shares or with cash. The issuance of ordinary shares to Rio Tinto for the settlement of some or all of the promissory note will require shareholder approval at the annual general meeting scheduled to be held on 27 August 2015.

The net proceeds from the Bridge Loan, after the payment of existing debt and financing fees, totalled $22.3 million, and will be used to advance many of the initial aspects of project development needed to commence major site construction on the Ollachea Gold Project once the senior debt facility is in place. This includes commencing the detailed engineering and design, recommencement of underground drilling at the Minapampa East zone, maintaining social and environmental programs and for general working capital purposes.

The Company has signed a letter of mandate with COFIDE to structure a senior debt facility for up to $240 million, under which the Bridge Loan is expected to be refinanced. The senior debt facility is expected to be in place by the end of 2015; however, the availability of the senior debt facility is not guaranteed and its terms, including the facility's size, are still to be negotiated. If the Company is not able to secure the senior debt facility it will not have the funds available to develop the Ollachea Gold Project and will be required to delay, scale back or eliminate various programs related to the Project. Additionally, an equity offering is expected to be required to supplement the senior debt facility in funding the development of the Ollachea Gold Project and for corporate and working capital purposes.

Additional information on the COFIDE Bridge Loan and mandate and other commitments and contingent liabilities that the Company has can be found in note 20, "Capital Commitments and Contingent Liabilities" and note 22, "Subsequent Events" in the Company financial statements for the year ended 31 December 2014.

Notice of Annual General Meeting

The Annual Meeting will commence at 11 am BST at Ordnance House, 31 Pier Road, St Helier, Jersey on Thursday, 27 August 2015. The Company had previously filed a Form 9A - Request for Extension for Financial Reporting/Annual Meeting with the Toronto Stock Exchange (the "TSX"), which has been approved by the TSX.

The record date for determining the holders of the Company's ordinary shares whom are entitled to notice of, and to vote at, the Annual Meeting will be 15 July 2015. The Notice of Meeting, Information Circular and Form of Proxy (the "AGM Materials") will be posted to shareholders by 22 July 2015. The AGM Materials are also available on SEDAR and the Company's website at www.minera-irl.com.

About Minera IRL Limited

Minera IRL Limited is an AIM, TSX and BVL listed precious metals mining and exploration company with operations in Latin America. Minera IRL is led by a management team with extensive operating experience in South America. In Peru, the Company operates the Corihuarmi Gold Mine, which continues to add cash flow and has untested potential, and with the financings described in this press release, is now poised to advance its flagship Ollachea Gold Project towards production.

For more information please visit www.minera-irl.com.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

Cautionary Statement on Forward-Looking Information

Certain information in this news release, including information about the Company's financial or operating performance and other statements expressing management's expectations or estimates of future events, performance and exploration and development programs or plans constitute "forward-looking statements". Forward-looking statements often, but not always, are identified by words such as "seek", "believe", "expect", "do not expect", "will", "will not", "intend", "estimate", "anticipate", "plan", "schedule" and similar expressions of a conditional or future oriented nature identify forward-looking statements. Forward-looking statements are, necessarily, based upon a number of estimates and assumptions. While considered by management to be reasonable in the context in which they are made, forward-looking statements are inherently subject to political, legal, regulatory, business and economic risks and competitive uncertainties and contingencies.

The Company cautions readers that forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Minera IRL's actual financial results, future performance and results of exploration and development programs and plans to be materially different than those expected or estimated future results, performance or achievements and that forward-looking statements are not guarantees of future performance, results or achievements.

Forward-looking statements are made as of the date of this news release and Minera IRL assumes no obligation, except as may be required by law, to update or revise them to reflect new events or circumstances. Risks, uncertainties and contingencies and other factors that might cause actual performance to differ from forward-looking statements include, but are not limited to, any failure to obtain or complete project financing for the Ollachea Gold Project (including the Senior Debt Facility), changes in the price of precious metals and commodities, changes in the relative exchange rates of the US dollar against the Peruvian nuevo sol, interest rates, legislative, political, social or economic developments both within the countries in which the Company operates and in general, contests over title to property, the speculative nature of mineral exploration and development, operating or technical difficulties in connection with the Company's development or exploration programs, increasing costs as a result of inflation or scarcity of human resources and input materials or equipment. Known and unknown risks inherent in the mining business include potential uncertainties related to the title of mineral claims, the accuracy of mineral reserve and resource estimates, metallurgical recoveries, capital and operating costs and the future demand for minerals. For additional information, please consult the Company's most recently filed MD&A and Annual Information Form.

Qualified Persons

The preparation of the technical information contained herein was supervised by A.E. Olson, Consultant, FAusIMM, who is recognized as a Qualified Person for the purposes of National Instrument 43-101, and who has reviewed and approved the technical information in this press release.

The preparation of the technical resource information contained herein was supervised by Donald McIver, VP Exploration of the Company, MSc Exploration and Economic Geology, a Fellow of the Australian Institute of Mining and Metallurgy (FAusIMM), as well as the Society of Economic Geologists (FSEG), who is recognized as a Qualified Person for the purposes of National Instrument 43-101, and who has reviewed and approved the resource information in this press release.

Non-IFRS Measures

"Site operating cash costs" and "total cash costs" are non-IFRS measures that do not have a standardized meaning prescribed by GAAP or IFRS and may not be comparable to other similarly titled measures of other gold mining companies.

"Site operating cash costs" include costs such as mining, processing and administration, but are exclusive of royalties, workers' profit participation cost, depreciation, amortization, reclamation, capital, development, exploration and other non-site costs (transport and refining of metals, and community and environmental).These costs are then divided by ounces produced to arrive at "site cash operating costs per ounce".

"Total cash costs" includes "site operating cash costs" and reflects the cash operating costs allocated from in-process and doré inventory associated with ounce of gold in the period, plus applicable royalties, workers' profit participation cost, and other non-site costs (transport and refining of metals, and community and environmental). These costs are then divided by the ounces sold to arrive at "total cash costs per ounce sold".

These measures may vary from one period to another due to operating efficiencies, waste-to-ore ratios, grade of ore processed and gold recovery rates in the period.

Management believes this information is useful to investors because these measures are considered to be key indicators of a company's ability to generate operating earnings and cash flow from its mining operations. These measures are furnished to provide additional information and are non-GAAP and non-IFRS measures that do not have any standardized meaning prescribed by GAAP or IFRS. They should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS, and are not necessarily indicative of operating costs presented under IFRS.

Table 1: Summary of Key Operational and Financial Measures

Data			Three Month Period Ended 31 December				Twelve Month Period Ended 31 December
Data			2014		2013		2014		2013
Corihuarmi
	Waste (tonnes)		77,228		76,034		291,609		286,588
	Ore mined & stacked on heaps (tonnes)		656,387		633,495		2,660,039		2,375,630
	Ore grade, mined and stacked (g/t gold)		0.34		0.39		0.32		0.45
	Gold produced (ounces)		6,114		6,446		23,321		25,223
	Gold sold (ounces)		6,166		6,184		23,654		25,220
	Realized gold price ($ per ounce)		1,194		1,266		1,260		1,412
	Site operating cash costs ($ per ounce) ¹		638		684		705		677
	Total cash costs ($ per ounce) ¹		831		951		874		904

Financial
	Revenue ($'000)		7,390		7,862		29,866		35,706
	Gross profit ($'000)		1,688		612		6,765		7,402
	Loss from continuing operations ($'000)		(3,439	)	(16,058	)	(8,925	)	(18,114	)
	Loss after-tax ($'000)		(4,844	)	(18,590	)	(43,363	)	(33,834	)
	Comprehensive loss ($'000)		(4,844	)	(18,590	)	(43,363	)	(34,085	)

	Loss per share
		Continuing operations (cents)	(1.5	)	(8.8	)	(3.9	)	(10.4	)
		Discontinued operations (cents)	(0.6	)	(1.4	)	(15.2	)	(9.1	)

1	- Refer to the Cautionary Non-GAAP and Non-IFRS Statements earlier in this release.

Table 2: Reconciliation of Non-IFRS Measures

			Three Month Period Ended 31 December					Year Ended 31 December
			2014		2013			2014		2013
Cost of sales		$	5,702	$	7,250		$	23,101	$	28,304
Less:
	Depreciation		576		1,369			2,418		5,496
Total cash costs		$	5,126	$	5,881		$	20,683	$	22,808
Ounces of gold sold			6,166		6,184			23,654		25,220
Total cash costs per ounce sold		$	831/oz	$	951/oz		$	874/oz	$	904/oz
Total cash costs		$	5,126	$	5,881		$	20,683	$	22,808
Less:
	Workers' profit participation		83		(243	)		125		102
	Royalties and Special Mining Tax		294		313			1,192		1,573
	Community and environmental costs		708		1,279			2,602		3,513
	Other costs - Provisions, transport & refinery, inventory adjustment		142		120			322		534
Adjusted site cash operating costs		$	3,899	$	4,412		$	16,442	$	17,086
Ounces of gold produced			6,114		6,446			23,321		25,223
Site cash operating costs per ounce		$	638/oz	$	684/oz		$	705/oz	$	677/oz

Minera IRL Announces US$70 Million Bridge Loan and Mandate Letter for Up to US$240 Million for Ollachea Project Financing

noreply@blogger.com (MINING NEWS Today) — Mon, 08 Jun 2015 20:34:00 +0000

LIMA, PERU--(Marketwired - Jun 8, 2015) - Minera IRL Limited ("Minera IRL", or the "Company") (IRL.TO)(MIRL.L)(MIRL.L), announces that it has arranged a US$70 million secured finance facility (the "Bridge Loan") structured by the Peruvian state-owned development and promotion bank, Corporación Financiera de Desarrollo S.A. ("COFIDE") and syndicated through Goldman Sachs Bank USA. The Bridge Loan is expected to be the first step towards a senior project credit finance facility of up to US$240 million, described in a Mandate Letter signed by COFIDE and Minera IRL ("Senior Project Debt Facility"). The Senior Project Debt Facility will be structured by COFIDE, in conjunction with Minera IRL, to build the Company's Ollachea gold project in the Puno Region, southern Peru ("Ollachea", or the "Ollachea Gold Project"). The Company has agreed to COFIDE's participation on the Minera IRL board of directors, subject to the required approvals.

Highlights:

The key terms of the Bridge Loan:
- Interest rate: LIBOR plus 6.17%, payable quarterly in arrears
- Term: 24 months
- Structuring and Disbursement Commission of 2.25% along with a US$300,000 upfront fee, paid on the disbursement of the Bridge Loan
- The Bridge Loan is expected to be repaid from the follow-on Senior Project Debt Facility, but is repayable at any point, subject to a 0.75% fee
The Company is applying the Bridge Loan funds towards consolidating debt and will apply net proceeds towards advancing the development of Ollachea as well as funding a limited resource expansion drilling campaign. Use of proceeds are expected to include:
- Repayment of the Macquarie Bank debt facility
- Final property payment to Rio Tinto
- Commencing the detailed engineering and design of the Ollachea plant
- Pre-construction project development work
- Resource expansion drilling at the Minapampa Far East Zone at Ollachea
- Continue its commitment to social and environmental programs
- Financing and advisory expenses
- General corporate expenses and working capital
The Company has signed a Mandate Letter with COFIDE to structure a Senior Project Debt Facility for up to US$240 million which includes retirement of the Bridge Loan.
Minera IRL expects to seek equity participants to reduce the amount of debt and leverage on the project to what the Company determines to be an acceptable level, and will include input from COFIDE and potential debt and equity providers.
It is expected that one or more financial institutions will be invited to participate in the Senior Project Debt Facility.
Although there can be no guarantee on the timing and terms, it is the intent of COFIDE and Minera IRL to have the Senior Project Debt Facility in place prior to the end of 2015.
The Bridge Loan is secured by the Ollachea Gold Project's assets, mining reserves, mining concessions and rights, guarantees from Minera IRL S.A., and a pledge of the shares of the Company's subsidiary Compañía Minera Kuri Kullu S.A., which owns 100% of the Ollachea Gold Project.
Specifics of the Macquarie debt repayment and Rio Tinto property payment include:
- Repayment of US$30 million Macquarie Bank debt facility (plus accrued interest) and release of associated security.
- Payment of US$12.9 million of the US$15.1 million outstanding to Rio Tinto, under the Ollachea Mining Rights Transfer Contract, and release of associated security. The remaining US$2.2 million outstanding has been be converted into an unsecured promissory note, accruing interest at a rate of 7% per annum, payable by 31 December 2015, either in cash or ordinary shares of Minera IRL, at the discretion of the Company (the "Agreement Regarding Payment").

Transaction Considerations

In addition to the Structuring and Disbursement commissions outlined above, Minera IRL has committed payments totalling US$2.6 million for services relating to legal assessment, technical and financial advisory. Likewise, the Company has granted 11.6 million options (exercisable for a year following the commencement of commercial production from the Ollachea Gold Project at an exercise price of C$0.20) and a 0.9% net smelter return over the Ollachea Gold Project. The Company has a right of first refusal on the sale of the royalty and can repurchase the royalty, at its option, up until the date that Minera announces final commissioning of the project.

Related Party Transaction

Under the AIM Rules, Rio Tinto is deemed to be a related party of Minera IRL due to its substantial shareholdings in the Company. As such, the Agreement Regarding Payment is deemed to be a related party transaction under the AIM Rules. The directors of Minera IRL consider, having consulted with the Company's Nominated Adviser, Canaccord Genuity Limited, that the terms of the Agreement Regarding Payment is fair and reasonable insofar as shareholders are concerned.

Commenting on the Ollachea financing package, Daryl Hodges, Minera IRL's Executive Chairman, stated, "This transaction is an important first step for Minera IRL and is the culmination of efforts of the Minera IRL team, working closely with COFIDE and its advisors. Minera IRL can now focus on taking final steps toward financing its flagship project to production. With support from COFIDE, the Company is in a much better position to arrange financing for Ollachea, build the project, deliver on its commitments to the local community to create jobs, wealth for the benefit of the region, and create new opportunity for its shareholders. We cannot neglect to mention that this was the dream of Courtney Chamberlain, whose untimely passing was felt by all."

Dr. Diego Benavides, Minera IRL's Interim CEO and Executive President of Minera IRL S.A., continued, "The financial backing from COFIDE is the result of over 18 months of discussions, comprehensive project evaluation, and due diligence by independent consultants. The support of COFIDE is an endorsement of the technical quality of our Ollachea Gold Project and its importance to the Ollachea Community and the Puno region. We now have the opportunity to focus on working with the Ollachea community, our true long-term partners, in developing an outstanding modern mining operation providing key economic benefits to the Puno region and, indeed, to Peru."

Mr. Jorge Ramos, General Manager of COFIDE, commented, "We are very pleased to be able to offer this financing package to Minera IRL. Ollachea represents an economically robust gold project and this is an excellent opportunity for COFIDE's first mine project financing. We have confidence that the Minera IRL team will ensure that the Ollachea Gold Project will be a great success, which will have important benefits for the Ollachea community and Peru."

Mr. Juan Luis Valeriano, President of the Community of Ollachea, stated, "After eight years of working in partnership with Minera IRL, indeed sharing a close friendship, we are glad that COFIDE, an institution of the Peruvian Government, is providing the financing for the development of the Ollachea mine. The new mine will provide long-term benefits to our local economy, especially towards job creation, social projects, and spin-off business opportunities for many of our citizens. Ollachea will also be Peru's first 'Partner Community' with a mining company with the community holding a 5% shareholding in the project."

Why Ricardo Carrión And Alberto Arispe Are Optimistic About Mining In Peru

noreply@blogger.com (MINING NEWS Today) — Tue, 26 May 2015 08:46:00 +0000

By Kevin Michael Grace of The Gold Report

Despite headlines about deadly protests and the collapse of funding for juniors, Ricardo Carrión and Alberto Arispe of Kallpa Securities in Lima remain steadfastly optimistic about the future of mining in Peru. In this interview with The Gold Report, Arispe and Carrión highlight the mining-friendly government, the new production from many sources and point to several juicy projects that lack only the means to further unlock Peru's mineral riches.

The Gold Report: Canadian and Australian miners have realized a 25–30% premium due to the strong U.S. dollar. How has the U.S. dollar affected Peruvian miners?

Ricardo Carrión: Peruvian miners have realized a similar benefit due to currency exchange. This factor has resulted in lower costs for the Peruvian industry. In addition, miners have also benefited from lower prices in oil. But the question is has this cost reduction offset lower metal prices, and the answer is no. Lots of companies are still struggling with current market conditions.

TGR: How has the mining industry fared since President Ollanta Humala was elected in 2011?

Alberto Arispe: Humala ran in 2011 on a radical, antimarket platform. Presidential elections in Peru use the runoff system, so in order to win a majority in the second round of voting, he had to moderate his tone and make alliances with more moderate parties.

He then raised royalties and taxes on the mining industry. These were modest increases, however, made after much consultation with the industry. Given how radical Humala seemed at first, the industry was relieved. Since 2013, Humala's administration has become openly market friendly and has worked to solve the problems faced by, for instance, Newmont Mining Corp. (NMC:TSX; NEM:NYSE) over its Conga project.

TGR: The Peruvian government is more mining friendly, but what about the Peruvian people? Last month, several protestors were wounded and one was killed in the dispute over Southern Copper Corp.'s (SCCO:NYSE) Tia Maria mine.

AA: This is not a national problem. It is a more localized problem fomented by some NGOs, radicals and some politicians. Two or three big projects are having local difficulties, but many big projects are moving quickly to production without these difficulties. HudBay Minerals Inc.'s (HBM:TSX; HBM:NYSE) $1.8 billion ($1.8B) Constancia mine is almost finished. Next door, Las Bambas, a $5.2B project that MMG Ltd. (1208:HKSE) bought from Xstrata Plc (XTA:LSE), should be producing in 2016. Freeport-McMorRan Copper & Gold Inc.'s (FCX:NYSE) Cerro Verde copper mine is basically doubling its capacity. Peru's copper production will soon double from what it was in 2014.

TGR: President Humala is not eligible to run again in 2016. Is this a cause for concern?

AA: It's too early to worry about that. Let's see what the polls are saying at the start of next year. Right now, the leading candidates are very market friendly.

The main worries that Peruvian mining faces are lower gold, silver and copper prices and the collapse of financing for projects owned by juniors.

TGR: Will the dearth of financing lead to an increase in mergers and acquisitions?

RC: I already mentioned the Las Bambas takeover. It is rumored that Southern Peru Copper will make a move on Anglo American Plc's (AAUK:NASDAQ) large Quellaveco project. But this is only a rumor that was later denied by Southern Peru Copper.

Among the juniors, Indico Resources Ltd. (IDI:TSX.V) just got into an agreement for 70% of its Ocaña copper project to a private concern, Aruntani S.A.C., for $18.6 million ($18.6M). This is an interesting deal, which we have valued at about $0.10 per pound ($0.10/lb) of copper, which is high given current market conditions.

TGR: Which Canadian juniors are having legal problems with the Peruvian government?

RC: Bear Creek Mining Corp. (BCM:TSX.V) is running an arbitration process with the government of Peru over the license to operate the Santa Ana project, its 47 million ounce (47 Moz) silver project. Just to clarify, the government did not expropriate the project but revoked the license to operate in a border zone. All foreign companies need this permit to start a project. Barring a resolution, this dispute will be adjudicated in Washington, D.C., in September 2016. The legal experts will testify in favor of Bear Creek, but the decision to seize Santa Ana was a political one, and a decision to give it back would have political consequences.

I expect a good result for Bear Creek, perhaps by the end of 2015, which would be a good omen for the mining community in Peru. Santa Ana is an excellent project, with an after-tax net present value (NPV) of $80.2M and an internal rate of return (IRR) of 24.9%. Its capital expenditure (capex) is low, only $70.8M, and can start production very quickly.

TGR: How much of an overhang does Bear Creek suffer as a result of Santa Ana?

RC: When you analyze junior companies, you give higher valuations to those with good assets ready to start construction. In late 2010, Bear Creek shares were trading around $12. After the expropriation and the market crisis, shares fell to $1.05. Obviously the collapse in the silver price also affected Bear Creak heavily, along with many other companies in the industry.

TGR: Bear Creek has another Peruvian silver project, Corani. When will we get a feasibility study of that?

RC: Real soon. This will be an update of the 2011 feasibility. That showed a resource of 270 Moz silver, 3.1 billion pounds lead and 1.7 billion pounds zinc. It showed an initial capex of $574M, an after-tax NPV of $463 and a 17.6% IRR. The updated feasibility will adapt Corani to current market conditions and lower the capex.

TGR: Will Corani get financing?

RC: Bear Creek is talking to several parties and examining several strategies. There are various alternatives: streaming and offtake agreements, joint ventures (JVs). I'm pretty sure a combination of these will finance Corani.

TGR: Bear Creek's market cap is $112M. Is it a takeover target?

RC: Any small company with well-advanced projects—meaning good assets—could face hostile takeover attempts. Bear Creek is one example, Panoro Minerals Ltd. (PML:TSX.V: PZM:FSE; PML:BVL) is another.

TGR: Explain how the Peruvian government has regulated artisanal mining.

RC: There are two types of artisanal mining in Peru. There is flat-out illegal mining, which is often harmful to the environment. And there is also "informal" mining, which refers to miners seeking to fully regularize. The government has worked diligently to eliminate illegal mining and establish a process whereby all ore is processed by regulated mills. Progress is being made, but this will take some time.

TGR: Assuming that all or most of artisanal mining was regularized, how much bigger would the official mining industry become?

RC: We don't know exactly how large artisanal mining is, but it is big. I'll give you an example. Peru's main gold producer is not a company. It's a region called Madre de Dios where most of the gold produced comes from illegal and informal mining.

TGR: Has this new regulatory regime resulted in many companies processing artisanal ore on a tolling basis?

RC: Toll mining is growing everywhere in the world, not just in Peru. Mining companies are seeking lower risk, and processing ore presents lower risks than exploration and mining. Here in Peru, we have five or six TSX Venture-listed companies in tolling. Dynacor Gold Mines Inc. (DNG:TSX) has been doing this for a while, and it has been doing pretty well. The company has a market cap of $77M and processes in the range of 250–350 tons per day (250-350 tpd). Dynacor has one plant at Huanca and another on the way at Chala.

TGR: How much bigger will its operations be after Chala goes online?

RC: Dynacor is seeking to achieve 1,000 tpd and will become a very important player.

TGR: Dynacor also has a copper-gold exploration project, Tumipampa.

RC: When a tolling company reaches 1,000 tpd, it needs to secure a consistent supply of ore. This is Dynacor's plan for Tumipampa.

TGR: What are the margins for toll miners in Peru?

RC: It depends on where you are in Peru and what the grade is. Also, in order to keep the ore coming, toll miners must be fair with small miners. The industry standard is about 40–50% now, but that will probably fall over time to 35–40%.

TGR: What can you tell us about the other Peruvian toll miners?

RC: Inca One Gold Corp. (IO:TSX.V) has a good model and has built a 100 tpd plant. Equity financing was a problem, so the company elected to go with debentures and notes. It has $7–8M in debt, which it should be able to restructure in the near future. Inca One is in the middle now of a $1.5M convertible-loan financing, which will give it working capital. This is crucial for toll miners, because in order to build market share with small miners, you need to pay them quickly.

Standard Tolling Co. (TON:TSX.V) plans to achieve production in June with a plant processing 100–150 tpd. The company is fully financed and progressing very well. This story is similar to Inca One.

Anthem United Inc. (AFY:TSX.V) plans to begin processing this year. Its plant will cost around $10M. It's a big project, and the company intends to go immediately to 350 tpd. Processing above that level requires additional permitting. Anthem is also financing with debt.

Montan Mining Corp. (MNY:TSX.V) has an agreement to buy an already producing 150 tpd plant. It's a manageable deal in a nice location. Unlike its rivals, this company will have the capacity to process copper as well. This could be an excellent play.

Duran Ventures Inc. (DRV:TSX.V; DRV:BVL) has a location and basic permits but needs to invest $1–1.5M to build its plant from scratch. Construction is five to eight months away.

TGR: Duran has five exploration projects. Are they all on the back burner?

RC: Duran's long-term plan is to develop these projects, but first it needs cash flow, which is why it is going into tolling. Once cash flow is achieved, that money can be leveraged to pay for exploration.

TGR: Which Peruvian zinc producers are your favorites?

RC: There are two. The first is Trevali Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX). It has the producing Santander mine in Peru and advanced-stage projects, Caribou and Stratmat, in New Brunswick in Canada. This is the only publicly traded zinc junior.

Caribou will begin production this quarter. Stepout assays from this project released in April included 5.08% zinc, 1.76% lead, 0.37% copper, 59 grams per ton (59 g/t) silver and 1.63 g/t gold over 50.9 meters. Canada will reveal Trevali's real value. In Peru, Trevali has an offtake agreement with Glencore International Plc (GLEN:LSE) but no such obligations in Canada.

TGR: And what is the other Peruvian zinc play you like?

RC: Sierra Metals Inc. (SMT:TSX) has Yauricocha in Peru, an extremely nice asset generating good cash flow. The company has two very good prospects in Mexico. Sierra has been flying under the radar because of liquidity problems, but I'm pretty sure the company will solve those problems. It published Mexico silver assays over 300 g/t in December, but few investors noticed that. It's hard to buy Sierra Metal shares, but it has good properties and also pays a divided.

TGR: Let's talk about other junior gold producers in the region.

RC: Luna Gold Corp. (LGC:TSX; LGC:BVL) has its asset in Brazil, but has many Peruvian investors. It was forced to suspend its Aurizona gold mine in Brazil because it was running out of mixed soft and hard saprolite ore. On May 8, the company announced a $30M financing with a fund called Pacific Road Resources, $20M debt, $10M equity. Luna also renegotiated its contract with Sandstorm Gold Ltd. (SSL:TSX.V), which previously held a streaming contract for the life of the mine: 17% of production at $400 per ounce ($400/oz). This has been replaced with a 3–5% net smelter royalty (NSR).

This is an excellent deal for the company as this will trigger more exploration work to improve the reserve calculation and restart the plant. There's still a big challenge to finance the expansion of the plant, but it is important to understand that there is already a sunk cost and it is only a matter of finding the necessary funding to have Luna up and running again—under a much better financial structure: the new deal with Sandstorm, a solid equity position and a debt with a better structure.

TGR: Which near-term junior gold producer do you follow?

RC: Lupaka Gold Corp. (LPK:TSX.V; LPK:BVL). It has the Invicta project, which is ready to produce gold at 10–15 g/t. This is a well-known asset in an excellent location near Lima. Lupaka does need a mill, however. It makes sense for it to get an agreement with an existing plant to process its ore while evaluating the construction of its own plant.

TGR: Let's discuss some other companies you follow.

RC: Minera IRL Ltd. (IRL:TSX; MIRL:LSE) invested over $40M in a project in Argentina. The company sold it for $10M, but given the conditions in Argentina, this was the best of a bad deal. In Peru, it has the 1 Moz Ollachea project. It's ready, but the capex is $164.7M, and that will be tough to raise for a company with a market cap of $20M. Doing it with equity would result in a tremendous dilution. Several financial institutions have told me they like Ollachea, so perhaps it will go ahead with a combination of equity, plus debt, plus a JV.

Panoro Minerals released a preliminary economic assessment (PEA) for its Cotabambas project last month. It forecasts annual production over 19 years of 143 Mlb copper, 88,000 oz (88 Koz) gold and 967 Koz silver at a cost of $1.26/lb copper, with credits. The after-tax NPV is $627.5M, and the initial capex is $1.38B. What is interesting about this is that there are nine targets, but the PEA focused on only one. I think this was a wise decision. From here on in, Cotabambas can only look better. But this is another company with a small market cap: $34M. This project needs about $40–50M to get to bankable feasibility.

TGR: Does it make sense for Panoro to bring on a JV partner or partners?

RC: It's a matter of valuation. It makes sense to bring in a JV partner based on the value of Cotabambas, not on Panoro's current market cap. It also matters who the JV partner is. If it's a well-known company with sufficient funding to develop a $1.38B project, that would be good.

TGR: What's the final company you wanted to discuss?

RC: Candente Copper Corp. (DNT:TSX; DNT:BVL) has the Cañariaco Norte deposit. This is another example of a company that is fighting with the market. Cañariaco is one of the most advanced junior copper projects in Peru. It's a big project, with a capex of $1.6B. Candente ran out of cash a year ago and is stuck in the middle of the feasibility study. The challenge for it is to go to the market to get $10M to complete it. I think the best way forward is to find a JV partner or sign a streaming contract. This project has faced social problems in the past, but we know that this region is not as difficult as it once was. Cañariaco is a nice project.

TGR: Despite the current financing problems for juniors, are you optimistic about their prospects in Peru for the rest of the decade?

RC: Absolutely. We are near the end of a cycle. I believe we will see a real recovery in the market starting in 2016.

TGR: Ricardo and Alberto, thank you for your time and your insights.

Ricardo Carrión is the managing director for capital markets and corporate finance for Kallpa Securities in Lima, Peru. He served as a senior analyst of Banco de Credito in the areas of corporate banking, corporate finance and capital markets and was an adviser to Lima's Stock Exchange. Carrión holds a bachelor's degree in business administration from Universidad de Lima with specialization in finance and capital markets.

Alberto Arispe is CEO of Kallpa Securities SAB, a Peruvian brokerage and boutique investment house. Previously, he was a vice president of emerging markets institutional equity sales at Fox-Pitt Kelton. Arispe has more than 18 years of experience in capital markets. He has a Master of Business Administration from the Stern School of Business at New York University and a bachelor's degree in economics from the Universidad Catolica del Peru. He is a professor of finance at Universidad de Lima.

Precious metals rally consolidates

noreply@blogger.com (MINING NEWS Today) — Tue, 26 May 2015 07:36:00 +0000

Gold and silver rallied strongly last Friday and into Monday’s overnight trading (UK time) before spending the rest of the week drifting lower from initial highs to consolidate above notional support at $1200 and $17 respectively. As of first thing this morning, UK time in US dollars gold is now up 2.2% and silver 10.2% on the year.

From observing price action, there appears to be continuing underlying physical demand, and on Wednesday the Russian Central Bank confirmed that it had taken the opportunity of sub-$1200 prices to add 300,000 ounces of gold to their official reserves last month. It is also reasonable to suggest that in times of increasing economic and systemic tensions in the Eurozone, some central banks will swap euros for gold to rebalance their reserves.

The Fed released April’s Open Market Committee minutes on Wednesday, which on balance was little more than another holding operation on interest rates, not bringing them forward to June or putting them off to next year. Apart from some minor volatility on their release there has been little effect on precious metal prices.

The next chart is of the gold price in the other three major currencies since 31 December 2014

In terms of gold prices, the best performance has been in weakening euros with gold up 11.4% so far this year. The European central Bank announced it would look to accelerate its bond purchases in the short-term, leading currency markets to conclude that economic conditions in the Eurozone are weaker than expected, and with the deteriorating Greek situation euro weakness should come as no surprise.

Finally, it is worth drawing attention to developments on the Hong Kong Stock Exchange, where first Hanergy Thin Film fell 47% on Wednesday, wiping $18.6bn off its capitalisation before trading was suspended. This was followed yesterday by a similar collapse in share price for Goldin Financial (Hanergy’s broker) and Goldin Properties, together wiping out a further $16.6bn.

These events are typical ahead of a speculative blow-off in markets, and while Hong Kong’s Hang Seng Index appears to have risen broadly in line with major equity markets, other smaller markets in the region reflect excessive speculation. For example, on the Shenzen Market equities are trading at an average of 67 times earnings, having risen by 12% this week alone, and there are instances of new listings rising more than ten or twenty times in less than a month of trading.

Therefore, there is a growing risk that Hong Kong and Chinese equities could become a financially destabilising risk in the region and possibly further afield, adversely affecting other markets and potentially precious metal demand.

Source: GoldMoney

Struggling Argentina expects US$14 billion in mining exports

noreply@blogger.com (MINING NEWS Today) — Fri, 22 May 2015 11:17:00 +0000

Argentina, the poster child of nations that default on their loans, is trying hard to pull itself back up by leaning in one of its once key sectors: the mining industry.

According to Buenos Aires-based Quevedo Law Firm Principal, Ignacio Celorrio, the country’s recovering mining industry could generate exports worth more than US$14 billion within five years, as Argentina emerges from several years of declining resource deals and sales.

Speaking in Sydney during the second day of the Paydirt 2015 Latin America Down Under Conference, Celorrio said the export target was a realistic horizon considering the country’s projects pipeline.

The return to higher exports would be driven in part by at least 16 major projects now likely to go into production within the next few years

“The return to higher exports would be driven in part by at least 16 major projects now likely to go into production within the next few years,” he said.

The reactivation of such ventures, which have a current capital value of over US$28 billion, will be a welcome boom for Argentina’s mining industry, according to the expert.

Celorrio acknowledged that any resurgence would not be without its challenges.

“The current drop in internal commodity prices, limited access to project capital, and internal Argentinian economic issues, have delayed good development projects,” he said.

Signs of life

While Argentina’s economy is projected to show little or negative growth this year, its stock market is rallying and investors are buying the countries' debt.

The nation’s s Merval stock market is up 45% so far this year, more than Europe's stellar performance and way more than the S&P 500.

Yesterday JPMorgan Chase & Co. announced it wants to make Buenos Aires its regional hub by tripling its staff on expectations of a more stable monetary outlook, Bloomberg reported.

Even citizens, battered by rising food prices and electric bills, seem to be feeling better lately. The country's consumer confidence index is up over 40% from a year ago, according to Torcuato di Tella University, a private university in Buenos Aires.

(Source: Torcuato di Tella University)

There is also light at the end of the tunnel provided by the upcoming presidential elections in October, analysts agree.

“The anticipated move to a more pro-investment national administration will help deliver returns to the first new players in the country’s mining future,” said Celorrio.

“The country is well past the ‘hectic learning period’ it experienced in the 1990s and now has a very attractive and protective regulatory mining framework for private owners of mineral rights,” he added.

Official figures show that an improved project start-up had the potential to boost Argentina’s mineral exports 150% by 2021. This has the potential to generate 70,000 mining jobs and another 62,000 indirect jobs among suppliers.

Minera IRL Limited: Appointment of Interim CEO and Non-Executive Director and Update on Filing of 31 December 2014 Financial Statements

noreply@blogger.com (MINING NEWS Today) — Fri, 22 May 2015 10:50:00 +0000

LIMA, PERU--(Marketwired – - May 5, 2015) - Minera IRL Limited ("Minera IRL" or the "Company") (IRL.TO) (MIRL.L) (MIRL.L) is pleased to announce the appointment of Dr Diego Benavides as interim CEO and Mr Robin Fryer as an independent non-executive director of the Company with immediate effect.

Dr Benavides is a founding executive of the Company and has to-date held the following positions in the Company's subsidiaries: Executive President/General Manager of Minera IRL S.A. (Peru) and Compañía Minera Kuri Kullu S.A (Peru); Chairman of the Board of Minera IRL Argentina S.A. and Minera IRL Chile S.A. He is a lawyer by training with extensive experience in the Latin American mining industry.

Mr Fryer had a long and distinguished career with Deloitte LLP where he led the global mining and metals industry practice. He is a chartered accountant and US certified public accountant, and is an independent non-executive director and chair of the audit committee of Shanta Gold Limited.

Further details on Dr Benavides and Mr Fryer are set out in the Appendix to this release.

Commenting on the appointments, Mr. Hodges, Executive Chairman of Minera IRL, stated: "This has been a difficult period for Minera IRL, and challenges remain, however with these appointments, we are moving forward to continue building towards the future.

The board is pleased that Diego has agreed to assume the role of interim CEO and looks forward to working with him in this new capacity, and on behalf of all of the directors we are delighted to welcome Robin to Minera IRL. We are fortunate to have secured someone with Robin's financial experience, which importantly includes an understanding of mining operations in South America."

Updated notice of its results for the financial year ended 31 December 2014

The Company expects to announce its audited results for the financial year ended 31 December 2014 within the required filing deadline of 30 June 2015 (previously announced the end of April 2015). Minera IRL is considered a "designated foreign issuer" as such term is defined by Canadian Securities Regulators in National Instrument 71-102 - Continuous Disclosure and Other Exemptions Relating to Foreign Issuers, and as such is subject to the foreign regulatory requirements of the AIM market of the London Stock Exchange plc ("AIM"). Under the AIM Rules for Companies, the Company is required to publish its annual audited accounts which must be sent to shareholders within six months of its financial year end.

Appendix: Diego Francisco Helge Pablo Christian Benavides Norlander

Related Quotes

IRL.TO0.10+11.11%

Minera IRL Limited Watchlist

0.10+0.01(+11.11%)

TorontoThu, May 21, 2015 3:30 PM EDT

In terms of the appointment of Dr Diego Francisco Helge Pablo Christian Benavides Norlander (aged 62) to the Board, there is no further information that is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules for Companies, save for the following:

Current directorships/partnerships:

Ingeniería y Tecnología Minero Metalúrgica S.A.

Past directorships/partnerships:

None

Under Peruvian law, all assets earned during a marriage, with a few exceptions, are commonly held in a legal entity separate from the two people within the marriage (the "Marriage"). On 25 April 2000, the Marriage of Diego Pablo Francisco Helge Christian Benavides Norlander and his then wife (from whom he was subsequently divorced) was declared insolvent under Peruvian law. That situation has been addressed by Mr. Benavides, who paid all the creditors in full. Therefore Mr. Benavides has never personally been declared insolvent and is completely able, without any limitations, to exercise fully his powers and rights under Peruvian law, including acting as officer, executive or director of companies.

Dr Benavides currently holds 1,782,600 shares and 1,100,000 options in Minera IRL Limited.

Appendix: Robin Anthony Fryer

In terms of the appointment of Mr Robin Anthony Fryer (aged 68) to the Board, there is no further information that is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules for Companies, save for the following:

Current directorships/partnerships:

Shanta Gold Limited

Past directorships/partnerships:

Partner of Deloitte LLP until 31 May 2009

About Minera IRL Limited

Minera IRL Limited is an AIM, TSX and BVL listed precious metals mining and exploration company with operations in Latin America. Minera IRL is led by a management team with extensive operating experience in South America. In Peru, the Company operates the Corihuarmi Gold Mine and is advancing its flagship Ollachea Gold Project towards production. For more information, please visit www.minera-irl.com.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

Stocks & Offerings

Contact:

Minera IRL
Daryl Hodges (Executive Chairman)
+1 (647) 271-3817
Minera IRL
Diego Benavides (Interim CEO)
+ (511) 418-1230
Minera IRL
Brad Boland (CFO)
+1 (416) 907-7363
Canaccord Genuity Limited
(Nominated Adviser & Broker, London)
Henry Fitzgerald-O'Connor
Chris Fincken
+ 44 (0)20 7523 8000
Buchanan (Financial PR, London)
Bobby Morse
Gordon Poole
+44 (0)20 7466 5000

Minera IRL receives approval to build gold mine Ollachea

noreply@blogger.com (MINING NEWS Today) — Sat, 02 May 2015 04:53:00 +0000

Minera IRL Limited is the TSX, AIM and BVL (TSX:IRL)(AIM:MIRL)(BVLAC:MIRL), Lima listed holding company of precious metals mining and exploration companies focused in Latin America. Minera IRL is led by an experienced senior management team with extensive industry experience, particularly in operating in South America. The Group operates the Corihuarmi Gold Mine and the emerging Ollachea Gold Project in Peru as well as the Don Nicolas Project in Argentina.

Peru approved the construction IRL gold gold mine Ollachea, giving the last authorization required for the start of the project in which it plans to invest about 180 million dollars, said Monday that focuses mining production in Latin America.

The mine, located in the southern region of Puno in Peru, the sixth largest producer of gold-, would produce between 100,000 and 115,000 ounces of gold annually in the first years of operation, the company said.

The building permit from the Peruvian Government will let you start the project, "which will be implemented after obtaining the necessary financing for the second quarter of 2015," IRL said in a statement.

According to the latest data from the company, the Ollachea mine has probable reserves of 9.2 million tonnes grading 3.4 grams of gold per tonne of material.
The mine is scheduled to produce 930,000 ounces during the first nine years of life, an average operating cost of about $ 507 per ounce of gold produced, the company said.

The right of use of the site is for 30 years.

The IRL mining, which is listed on the Lima, London and Toronto, operates the small Corihuarmi mine in southern Peru and takes the gold plan folder Don Nicolas in Argentina.

The mine, located in Puno, would produce between 100,000 and 115,000 ounces of gold annually in the first years of operation, the company said.

http://www.minera-irl.com

Gold price falls back into red for 2015

noreply@blogger.com (MINING NEWS Today) — Wed, 01 Apr 2015 07:13:00 +0000

A surge on US stock markets and the dollar coupled with renewed weakness in crude oil saw the gold price begin to lose sight of the psychologically important $1,200 an ounce level on Monday.

Gold for delivery in June – the most active futures contract – fell $18.32 or 1.5% hitting $1,182.38 in heavy midday trade in New York giving up all of last week's gains.

Last week nervous investors piled into gold after Saudi-Arabia launched airstrikes in Yemen against Iranian-backed militias that had taken over large swathes of the country with the price climbing to a three-week high above $1,220 an ounce.

The rally saw gold recover from its 2015 nadir of $1,148.20 an ounce hit the week before, but the change in sentiment is proving short lived as safe-haven buyers exit the market.

On Monday attention shifted to the looming announcement of a framework agreement between western powers and Iran about its nuclear program, which could reshape the crude market in the Middle-East if and when sanctions are lifted against the world's sixth largest oil producer, just behind Canada. Oil lost more than 1% on Monday, to back below $50 a barrel.

Monday's weakness also wiped out the metal's gains for the year and gold is now trading down more than $120 below its the 2015 high above $1,300 reached in January.

Gold was also put under pressure by a stronger dollar which gained to within shouting distance of fresh 12-year highs. The dollar was aided by comments from US Federal Reserve Chair Jane Yellen on Friday that a rise in the benchmark rate "may well be warranted later this year."

As it is not income producing gold is negative correlated with interest rates and bond yields. Gold and the dollar also usually move in opposite directions. The US Dollar Index is up 21.6% compared to this time last year and the past year has been the greenback's strongest run on a rolling 12-month period since 1973.

A new report by the World Gold Council that examines the complex relationship between the gold price and the world's reserve currency showed gold prices rise twice as much during weak dollar periods than they fall when the dollar strengthens which helps to explain some of the recent volatility in the price.

Gold Market Report - Thurs 19 Dec

noreply@blogger.com (MINING NEWS Today) — Thu, 19 Dec 2013 23:21:00 +0000

Fed Tapering Whacks Gold, Spooks China, "Normalization" Challenged by US Earnings

WHOLESALE London gold sank against all currencies Thursday morning, falling 1.9% vs. the Dollar to hit 6-month lows after initially trading flat overnight despite the US Fed finally reducing its $85 billion per month in asset purchases.

Cutting next month's quantitative easing of US mortgage and longer-term government bond rates to $75bn, the Fed pointed to "growing underlying strength in the broader economy."

US stockmarket indices the S&P500 and the Dow surged to new all-time closing highs, while Treasury bonds fell and spot gold fell through this week's previous low at $1230.

Besides the taper, however, the Fed revised its policy on short-term interest rates, saying it will hold the federal funds rate at zero "well past the time" that the US jobless rate falls to 6.5%, its previous line in the sand.

Overnight in Asia, Japanese shares rose but Chinese stocks fell as the People's Bank of China broke its own rules and took to Weibo, the equivalent of Twitter, to announce a "short-term liquidity operation" after Shanghai's interbank lending rate jump above 10%.

The PBoC usually waits a month before reporting such moves, says the Financial Times.

"It's very clear they want to calm down market fears," the FT quotes ANZ analyst Zhou Hao, noting the previous spike in Chinese interest rates in June, when US Fed chairman Ben Bernanke spoke about possible QE tapering.

Shanghai gold today fell 0.8% in Yuan but increased its premium over international prices from $6 to $11 per ounce.

Amongst Western investors, "More sensible minds realise," says a note from David Govett at brokers Marex, "that on the whole [the Fed news] is not a good move for the precious complex.

"With further tapering probably to come over the course of next year, the outlook remains muted. However, I don't subscribe to the theory that it's all over for the bullion market [and] would be a buyer of dips if we do manage to break below $1200."

Bids in London's wholesale market briefly dropped below that level Thursday morning, hitting a 6-month low of $1199.75 per ounce.

Priced in Sterling and Euros, wholesale gold bullion fell to its lowest since spring 2010, down 29% and 31% respectively from the start of 2013.

Silver tracked gold in Dollars, briefly falling below $19.30 per ounce – a "key level" according to technical analysts at one bullion bank.

Fed tapering "highlights the overall positive sentiment towards the macro economy," reckons UBS analyst Joni Teves.

"Equities are in fierce competition with gold for investor dollars, and this year's trend of rotation away from gold into growth assets is expected to continue into 2014."

"This is another sign of increasing normalisation for the world economy," agrees Matthew Turner at Macquarie Bank. "Gold's insurance function is less desirable in that environment."

"But if the economy is accelerating as people think," counters Albert Edwards in his latest Global Strategy Weekly for clients of French investment and London bullion bank Societe Generale, "how come Thomson Reuters has just reported the fastest pace of US earnings downgrades on record?

"If we are set for a profits-driven economic slowdown, then the low rate of core inflation will start to become a key concern. Deflationary forces are in fact stronger than even the latest [official data] suggests."

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

AngloGold says power cut to cost it 20 000 oz of production

noreply@blogger.com (MINING NEWS Today) — Mon, 18 Mar 2013 22:54:00 +0000

Gold miner AngloGold Ashanti on Monday warned that the fire at a substation in the West Wits region, which cut power to its Tau Tona and Mponeng operations, last week, would result in its first-quarter production being about 20 000 oz lower.

State-owned power utility Eskom reported last Thursday that a fire at a substation had resulted in supply being cut off to the Klerksdorp and Carletonville areas on Wednesday night.

All main power supply to the Tau Tona and Mponeng operations were interrupted between March 13 and 15.

While emergency procedures enabled the safe and prompt evacuation of all underground work areas, continued disruption of power to the mines, owing to the unplanned interruption of the main Eskom electricity supply, halted all but essential water pumping services on the two operations.

“There was insufficient power to run ventilation and cooling plants, hoisting infrastructure or metallurgical plants and other associated production activities,” AngloGold stated.

Eskom had partially restored power until the transformer could be repaired.

Tau Tona resumed underground mining activities on March 15, while the Mponeng operation resumed most of its operations on Monday; however, certain project and hoisting activities did not resume, to enable the gold miner to operate within current electricity supply constraints.

Edited by: Chanel de Bruyn

Gold Market Report 18 March

noreply@blogger.com (MINING NEWS Today) — Mon, 18 Mar 2013 21:44:00 +0000

Gold Jumps Over $1600 as Cyprus Bail-Out Hits Bank Savers, Global Equities Fall

WHOLESALE GOLD leapt 1% against the Dollar and 2.3% against the Euro at the start of Asian trade Monday, as global shares sank and major-government bonds rose following the Cyprus bail-out deal announced by European politicians at the weekend.

"[German negotiators] were hand in hand with Finns," says an unnamed official quoted by the Financial Times, "who were much more dogmatic" in forcing a levy worth €7 billion on ordinary bank depositors as part of the €17bn deal.

"Scenes of Cypriots lining up at cash machines raised the specter of capital flight elsewhere," says Bloomberg, while Reuters claims that today's Bank Holiday may be followed by a forced shutdown on Tuesday to allow parliament to discuss and vote on the depositor levy, priced at 9.9% of savings accounts over €100,000 and 6.7% below.

"It's as if the Europeans are holding up a neon sign," writes economist Paul Krugman in his New York Times blog, "saying 'Time to stage a run on your banks!'..."

"[This is] the first example of deposit hair-cuts during the entire Euro crisis," says forex strategist Jens Nordvig at Nomura.

The Cyprus deal "has potential to make depositors in Portugal, Spain and Italy nervous, despite likely assurances from policymakers," he writes.

Weaker Eurozone government bonds fell hard Monday morning, driving Greek interest rates half-a-percentage point higher, while base metals dropped alongside crude oil.

First hitting a 13-session high above $1608 per ounce, Dollar prices to buy gold then slipped back as European stock markets followed Asia in dropping over 1%.

The gold price in Euros jumped 2.3% at the start of Asian trade, hitting 5-week highs above €1240 per ounce as the single currency hit new 3-month lows vs. the Dollar.

Gold priced in Sterling held flat, however, as the British Pound surged nearly 2 cents to $1.51 on the foreign exchange market.

"One of the reasons gold has been coming off," says UBS analyst Tom Price, "is that there has been a view that the risk in Europe was limited and most of their financial market issues were resolved.

"This uncertainty could provide a brand new support for gold for days or even weeks."

Further ahead, "Global liquidity is rising," says London market-maker HSBC, trimming its 2013 average gold forecast from $1730 per ounce to $1700 but noting that "the Bank of Japan has joined the QE party and the Fed shows no let-up.

"Inflation tolerance and currency wars are supportive [of gold]. We expect stronger jewelry and coin demand, lower scrap supply [and] an end to ETF liquidation."

Investors in gold-backed trust funds led by the $63-billion SPDR Gold Shares cut their holdings last week for the 5th week running, reducing overall exchange-traded gold fund holdings to a new 6-month low of around 2,500 tonnes.

On the futures market, however, speculative traders grew their exposure to rising prices as a group in the week-ending last Tuesday. Latest data from US regulator the CFTC says the net long position of bullish minus bearish bets rose 7.4% from early March's 54-month low, the fastest jump since September.

"To sustain gold prices at $2000 by 2016", says analysis from investment bank Merrill Lynch, investors would need to buy gold in quantities equal only to 2008 – almost 50% below 2011's record 1,700 tonnes – thanks to "steady increases of spending on non-essential items like jewelry in more affluent emerging markets."

Adrian Ash

Peru’s gold, silver and copper output fall in January 2013—Mining Ministry

noreply@blogger.com (MINING NEWS Today) — Tue, 12 Mar 2013 16:21:00 +0000

Peru’s Ministry of Energy and Mines reported increased production of iron, lead and zinc in the first month of this year.

Author: Dorothy Kosich

Peru’s Ministry of Energy and Mines reported Monday the country’s gold production plunged 25.12% in January, as total silver production declined 7.27% and total copper output dipped 4.41% during the same period.

However, the ministry also noted that iron ore production was up nearly 13%, while zinc output increased 8.83% and lead was up 6.15% during the first month of this year.

In the first month of this year, Peru’s gold production was 11,762,163 grams (378,162 troy ounces), down from 15,708,384 grams (505,036 troy ounces) in January 2012. Minera Yanacocha reported a 25% decrease in gold production in January 2013.

The country’s silver production was 266,981 kilograms (8,583,638 troy ounces) during the first month of the year, 7.27% lower than the 287,918 kilograms (9,256,778 ounces) of silver production reported in January 2012.

Peru’s copper production was reported at 93,469 metric tons in January of this year, a 4.41% drop from the same period of 2012.

The Directorate of Mining Promotion of the ministry’s mining department noted that zinc production in January 2013 was 111,308 metric tons, up 8.83% from 102,280 metric tons of zinc output in January 2012.

Peru’s lead production was 19,837 metric tons in January 2013, a 6.15% increase compared to January 2012 lead output total of 18,689 metric tons.

The ministry reported that the country’s iron ore production for the first month of this year was 589,902 long tons, up 12.91% from 522,433 long tons for January 2012.

Source: Miniweb

Vale suspends $6 billion Argentine potash project

noreply@blogger.com (MINING NEWS Today) — Tue, 12 Mar 2013 16:19:00 +0000

The Brazilian miner has put its Rio Colorado potash project in Argentina’s Mendoza province under review for suspension in December

Brazilian miner Vale SA said on Monday it has suspended a $6 billion potash project in neighboring Argentina that has been plagued by cost overruns, a decision that could renew trade tensions between South America's two largest economies.

Vale said its Rio Colorado potash project in Mendoza province was no longer "in line with Vale's commitment to discipline in capital allocation". The company had put the project under review for suspension in December.

Vale left the door open to restarting the project, however, if terms were to improve. It said more than 4,000 of the project employees would have preference in rehiring "if construction resumed," setting the stage for more negotiations with Buenos Aires over terms that would make it viable.

Vale has invested $2.2 billion in Rio Colorado to date, one of the biggest foreign capital investments in Argentina, and has completed work on 40 percent of the mine, railway and port.

If Vale eventually exits Rio Colorado, it would be a blow to Argentina's president, Cristina Fernandez, during a legislative election year. The project would have made Argentina one of the world's leading suppliers of potash, an essential fertilizer component in food production.

Argentina's government said in a statement it "regretted Vale's unilateral decision to abandon (the project) despite the efforts of the government and provincial and municipal authorities to guarantee the project's continuation."

The government said Vale was demanding a series of concessions including advance rebates of value-added tax, export tax waivers and a reduction in investment commitments that would have cost the state some $3 billion over the course of two years.

TRADE TENSIONS

The failure to find middle ground on the project complicates relations between Brazil and Argentina at a time when growth in global trade is slowing and tension between the two countries is already growing.

New barriers in Brazil chilled the regional trade in auto parts last year, contributing to a contraction in Argentina's auto industry. The two countries also exchanged accusations over trade obstructions after Argentina started slowing its import process, helping to prop up local industry and its trade balance.

Brazil's state-run oil company Petrobras is in talks to sell off some $400 million worth of Argentine refineries and other assets, Reuters reported last month.

If Rio Colorado does not go ahead, the farm sectors in Brazil and Argentina will remain dependent on potash imports from a small cartel of global suppliers in Canada, Russia and Jordan. Brazil imports 90 percent of its potash.

STAKES

Analysts said Rio Colorado likely will not have a major financial impact on Vale, no matter whether the project is sold or resumed, considering that 90 percent of the company's revenues and much of its investments are still in iron ore.

"This change was already well-defined," said Aluisio Lemos, an analyst at Agora Corretora in Rio de Janeiro. "The tone set by the current management has already been about prioritizing certain projects and exiting others that are not considered strategic."

Vale posted its first quarterly loss in 10 years last month, taking a $5.7 billion hit from money-losing operations. Though the world's second largest mining company says it remains committed to the fertilizer sector, it is part of a broader shift among miners away from less profitable assets in the face of lackluster metals prices.

Preferred shares of Vale reversed losses in Sao Paulo trading after the announcement, to gain 1.4 percent at close.

Brazil's Folha de S.Paulo newspaper reported over the weekend without naming sources that Rio Colorado's cost overruns had jumped 86 percent since the initial estimate to $11 billion.

Part of the problem has been inflation in Argentina, which according to private estimates has surpassed 25 percent per year and driven up labor and materials costs.

Vale said in response to questions about the Folha report that it was seeking no changes to Argentine labor or tax law.

In his last call with analysts in February, Vale Chief Executive Murilo Ferreira said the project "needs to remain attractive and have a foreseeable cash flow," adding that the company was still open to talks with the Argentine government.

Gold Market Report 12 March

noreply@blogger.com (MINING NEWS Today) — Tue, 12 Mar 2013 16:10:00 +0000

Gold Breaches $1590 after Weidmann Says "Eurozone Crisis Not Over", Chinese Physical Demand "Supporting Gold Right Now"

AFTER trading sideways for several sessions, gold bullion jumped above $1590 an ounce for the first time this month Tuesday morning in London, in what analysts called a "technical" move after gold broke through a key level following remarks from Bundesbank president Jens Weidmann.

"We see support at the bottom of the sideways range at $1561 and resistance at the top at $1586," said yesterday's technical analysis note from Scotiabank.

Gold rose above that level however shortly after Weidmann told reporters that the Eurozone crisis "is not over" and said that the Eurozone has "declining inflation risks".

Weidmann was presenting the German central bank's 2012 results, which show it more than doubled the amount it holds in reserve for what Weidmann called "risk provisioning".

Silver meantime rose to $29.25 an ounce this morning, still below last week's high, as other commodities were broadly flat on the day and US Treasuries gave up earlier gains.

European stock markets were also flat, a day after US markets rallied and the Dow Jones set another new record, having beaten its 2007 nominal peak last week.

Gold in Sterling meantime hit a five-week high above £1070 an ounce as the Pound fell this morning, while gold in Euros rose to a two-week high above €1225 an ounce.

"We still doubt a sustained rebound [in gold] is warranted at this point while the market is set to remain depressed," says Andrey Kryuchenkov, analyst at VTB Capital.

"Strong physical demand in China is the main reason behind gold's resilience," one trader in Beijing told newswire Reuters this morning.

"But the overall sentiment in prices is still weak. If demand from China weakens and we continue to see good US [economic] data and a stronger Dollar, gold has the chance to test $1500 this year."

On February 18, the first trading after Lunar New Year, volumes on the Shanghai Gold Exchange for its most popular gold contract, The Au9999, set a new record of just over 22 tonnes. Since then, daily Au9999 volumes have been more than double last year's average.

China was the world's second-biggest gold consuming nation in 2012, according to the latest data from the World Gold Council.

In world number one India meantime "there is no demand [for gold right now] due to financial year closing," according to Haresh Acharya at bullion wholesaler Parker Bullion in Ahmedabad.

Holdings of bullion backing gold exchange traded funds tracked by Bloomberg meantime continued to fall yesterday, the fifteenth straight day of net outflows.

In Washington, Congressman Paul Ryan is campaigning for the support of his fellow House of Representatives Republicans for his plan to balance the federal budget in a decade. Even if the plan is passed by House however it is not expected to win a vote in the Democrat-controlled Senate.

Senate Democrats meantime, who are expected to unveil an alternative budget plan this week, yesterday put forward plans to prevent a so-called government shutdown currently scheduled for 27 March, Reuters reports.

The bill contains adjustments to spending aimed at ensuring government agencies are funded to the end of September, but does not seek to make up for the $85 billion in government spending cuts known as the sequester that came into effect March 1 and was originally agreed as part of the 2011 debt ceiling deal.

Across the Atlantic, UK manufacturing production fell 3% in the year to January, more than analysts were expecting, according to official data published Tuesday.

"Unless we have a stellar performance from the services sector, we're almost certainly in a triple dip [recession]," says London-based Scotiabank economist Alan Clarke.

Sterling fell to a fresh low against the Dollar this morning, touching $1.4831, its lowest level since July 2010.

The Bank of England's Funding for Lending scheme, which seeks to lend to banks at low rates so that they can provide credit to small and medium enterprises, should be put "on steroids" according to Britain's deputy prime minister Nick Clegg.

Ben Traynor

New projects in Peru to add $3.6 billion to overall mining investment for 2013

noreply@blogger.com (MINING NEWS Today) — Thu, 28 Feb 2013 04:48:00 +0000

New mining projects in Peru will attract over $3.6 billion in investments this year, adding to the overall industry forecast of $10 billion, said Wednesday the president for the country’s National Society of Mining, Oil and Energy (SNMPE), Eva Arias.

The South American nation’s extractive sector, which accounts for some 60% of the economy, saw investments for $8.5 billion last year and is expected to bring $53 billion over the next decade, added Arias.

According to LPBnews (in Spanish), mining investment jumped 18% last year compared to 2011 despite large-scale protests against exploration and extraction activities that swept the country in 2012.

SNMPE warned in September last year that, as a result of non-stop anti-mining protests in different regions of the country, investors had started looking for greener pastures and so mining investment in the South American nation was expected to fall.

Although that didn’t happen, the body said Peru did fall to third place from second in the list of world’s top copper and silver producers.

Gold price drops below $1,600, continues worse monthly losing streak in 16 years

noreply@blogger.com (MINING NEWS Today) — Thu, 28 Feb 2013 04:44:00 +0000

The gold price fell by as much as $25 on Wednesday to touch a low of $1,591 and erasing much of the gains of the previous day.

Ben Bernanke's testimony in front of US Senate members praising the Fed's QE program and suggesting that it should stay in place into 2014 lifted gold yesterday.

But today's positive economic news in the US – better than expected housing data – had the opposite effect as it signaled that the Fed's ultra-accomodative monetary policy may end sooner rather than later.

QE, which floods markets with cheap money, increases gold's allure as a hedge against inflation amid currency depreciation.

In late afternoon trade gold for April delivery was off its lows changing hands for $1,594, still down $21 on the day.

Gold is down over 3% in February and is set for its fifth monthly drop in a row.

The last time that happened was in January 1997.

Holdings in gold-backed ETFs dropped to a 5-month low of 2,530 tonnes on Tuesday, data compiled by Bloomberg show, the worst performance since April 2008.

Source: Mining.com

Vale Q4 loss $2.65bn, twice as deep as forecast

noreply@blogger.com (MINING NEWS Today) — Thu, 28 Feb 2013 04:38:00 +0000

Brazilian mining giant Vale on Wednesday posted its first net loss in ten years in the fourth quarter after taking charges for tax judgments and underperforming mines, a loss twice as big as analysts' expectations.

Vale lost $2.65-billion in the three months ending December 31, compared with a profit of $4.67-billion a year earlier, according to a securities filing. It was the company's first quarterly loss since the third quarter of 2002.

The result was bigger than the $1.27-billion average loss estimate in a Reuters survey of analysts. Vale, the world's second-largest mining company, is the largest producer of iron-ore and second-largest producer of nickel.

Net sales, or sales minus sales taxes, fell 19% compared with a year earlier to $11.72-billion, close to the $11.30-billion net sales outlook in the survey.

Earnings before interest, taxes, depreciation and amortisation, fell 97% from a year earlier to $257-million.

Edited by: Creamer Media Reporter

Gold Market Report 27 February

noreply@blogger.com (MINING NEWS Today) — Thu, 28 Feb 2013 04:22:00 +0000

Fundamentals "Still Supporting Gold" as Bernanke Testimony "Shows QE Has Long Way to Go"

U.S. DOLLAR gold bullion prices fell slightly in Wednesday morning's London trading, but held above the $1600 per ounce level it rallied above yesterday after Federal Reserve chairman Ben Bernanke told Congress that that Fed's ongoing quantitative easing policy "is providing important support to the recovery" and that the benefits "are clear".

Stock markets also posted gains this morning, making up some ground lost yesterday, while commodities were broadly flat and longer-dated US Treasuries gained.

Like gold, silver eased lower this morning but held above $29 an ounce by lunchtime in London.

In his testimony to the Senate Committee on Banking, Housing and Urban Affairs, Bernanke added "inflation expectations appear well anchored" and that the Fed does not expect to see "the development of significant inflation pressures".

Bernanke also reiterated the importance of keeping the federal funds rate close to zero.

"Keeping long-term interest rates low has helped spark a recovery in the housing market and has led to increased sales and production of automobiles and other durable goods," he said.

On the New York Comex the number of gold put options, which rise in value as gold falls below a given strike price, rose to a record following the publication of the latest Fed policy meeting minutes last week, according to news agency Bloomberg.

Following Bernanke's testimony yesterday however "the market is a little less concerned about a premature exit of quantitative easing, which would be bad for gold," says Nick Trevethan, senior commodity strategist at ANZ.

"Don't forget that the Fed's focus is on jobs and inflation. The job market has stabilized, but we are not seeing efficient job growth to make the exit of QE look imminent. There is still a long way to go."

Britain's economy meantime grew by 0.3% in 2012, according to the second estimate of fourth quarter gross domestic product published by the Office for National Statistics Wednesday, which revised last year's growth estimate up from zero. The Q4 contraction of 0.3% reported in the first estimate however remains unchanged, while government spending rose 0.6% over the quarter and 2.6% over the year as a whole.

"Government spending can't be sustained at that level," says Deutsche Bank economist George Buckley, "so an important part of economic growth is actually going to be taken away and the risk is that exports remain negative and that consumption weakens because of higher inflation."

The Bank of England's Monetary Policy Committee has discussed the possibility of setting negative interest rates, MPC member and BoE deputy governor Paul Tucker told the Treasury Committee yesterday.

Holdings of bullion held to back gold exchange traded funds meantime are on course for their biggest calendar month drop since April 2008, according to data tracked by Bloomberg.

"The [gold] market has lost increasing support this year in line with other perceived 'safe havens' such as the Japanese Yen, Swiss Franc and US Treasuries," says a note from Deutsche Bank this morning.

"We expect gold returns will eventually recover although this will most likely require a moderation in growth expectations and with it a correction in global equity and interest rate markets."

"The fundamental background for gold remains reasonably supportive," adds a note from Credit Suisse.

"It is rather that potential gold investors consider other classes more attractive...investors have the tendency to buy less of the precious metal in an environment where growth is stabilizing."

Gold bullion imports worth $2.7 billion contributed to Thailand's record trade deficit last month, the country's Commerce Ministry revealed Wednesday. Over the whole of 2012 demand for gold from Thailand was worth $4.3 billion, according to latest World Gold Council figures.

The volume of gold imported by Thailand rose 133% year-on-year, Ministry figures show, although its report did not include figures for gold exports.

Last week India, the world's biggest source of private gold demand, banned imports of gold jewelry from Thailand unless the authorities can be satisfied that the work in making the jewelry had added at least 20% to its value over and above that of the bullion content.

India last month raised its import duty on gold to 6%, although a trade agreement with Thailand meant that gold imported from there was only subject to a duty of 1%.

Ben Traynor

Gold Market Report - 18 February

noreply@blogger.com (MINING NEWS Today) — Tue, 19 Feb 2013 07:18:00 +0000

Gold Fails to Hold Asian Gains, Next Large-Scale Devaluation "Could Be the Pound"

U.S. DOLLAR gold bullion prices failed to hold onto gains made in Monday's Asian session, falling to $1611 an ounce by lunchtime in London, just a few Dollars above Friday's six-month low, as the US Dollar extended recent gains.

Gold dropped 3.4% over the course of last week, including a sharp drop during Friday's US trading.

"The latest price slide was accompanied by significant outflows from gold ETFs," says today's commodities note from Commerzbank.

"Investors on the futures market are [also] largely to blame [for the price drop]."

The speculative net long position of gold futures and options traders on the Comex fell to its lowest reported level since August in the week ended last Tuesday, weekly data from the Commodity Futures Trading Commission show. The spec net long is calculated as the difference between 'bullish' long and 'bearish' short contracts held by Comex traders categorized as 'noncommercial'.

"Clearly, the market, which has been plagued by concerns over central banks' commitments to continued monetary accommodation, was concerned about the downside that would be opened up in the absence of Asian players that were celebrating Lunar New Year last week," says Marc Ground, commodities strategist at Standard Bank.

Trading volumes set a new record on the Shanghai Gold Exchange Monday, according to newswire Reuters, with more than 22 tonnes of the Au9999 contract (for bars of 99.99% purity) traded, as China's markets re-opened following last week's Lunar New Year holiday.

Silver meantime rallied back above $30 an ounce during Monday's Asian session, trading either side of that level during the morning in London.

European stock markets were little changed on the day by lunchtime, with volumes reported lower with US markets closed today for Presidents' Day.

Commodities were also broadly flat, with the exception of copper which was down more than 1.2% on the day by lunchtime in London.

On the currency markets, the US Dollar Index, which measures that currency's strength against a basket of other currencies, touched its highest level so far this year this morning.

Following a two-day meeting in Moscow, G20 finance ministers issued a joint communiqué over the weekend saying they will "refrain from competitive devaluation" of their currencies.

"We will not target our exchange rates for competitive purposes," the statement added.

"[The communiqué will] limit Japan's ability to provide verbal guidance on the Yen moving forward," reckons Adarsh Sinha, foreign exchange strategist at Bank of America Merrill Lynch.

"This likely takes away a key tool used by Japanese officials to weaken the yen at an unprecedented pace and shifts the burden of evidence to policy implementation."

The Yen however fell further against the Dollar this morning, extending Friday's drop and erasing most of the gains made last week ahead of the G20 meeting.

Following the onset of the financial crisis in 2007, the Yen rose by more than a third against the Dollar by mid-2011, though it has since weakened by more than 20%.

Elsewhere on the currency markets, Sterling fell to a seven-month low against the Dollar this morning, also edging lower against the Euro.

More money managers are shorting Sterling than buying it for the first time in five months, the Financial Times reports, citing the latest CFTC data.

"The Pound seems clearly at risk of following the Yen and suffering the next large-scale devaluation for a major currency," reckons Mansoor Mohi-Uddin, head of global currency strategy at UBS.

"It is possible that the full benefits of [Sterling's] 2007/8 depreciation are yet to be realized," said Bank of England Monetary Policy Committee member Martin Weale in a speech on Saturday, adding that "growth of exports and a shrinkage of imports would together be a helpful source of demand for UK output".

The Royal Mint plans to make its first gold coins in India since 1918, in partnership with refiner MMTC-PAMP, with a view to marketing the coins in the world's largest gold buying market, the Mint announced Monday.

The announcement comes as British prime minister David Cameron starts a three-day visit to India, where he is due to meet business representatives.

Ben Traynor

Gold ETFs in India touch 40 tonne (40,000 kilo)

noreply@blogger.com (MINING NEWS Today) — Fri, 08 Feb 2013 04:22:00 +0000

Continued investor demand and rising prices help ETF assets as well as reserves double from May 2011

Author: Shivom Seth

India's high gold imports are hurting the country's current account deficit. The government's import restrictions are hurting the populace. The only organisation not worried, as of now, are gold backed exchange traded funds.

Worried investors are veering towards the country’s 14 gold exchange traded funds (ETFs), which together have garnered 40,000 kilo of the precious metal.

The ETFs allow investors to trade in the metal in a non physical form and electronically on stock exchanges. Gold ETFs debuted in India about six years ago.

The first gold ETF launched in 2007 by Benchmark Mutual Fund (now Goldman Sachs) was followed by 13 others in quick succession. The 14 mutual fund houses present in this segment are managing gold assets worth nearly $2.2 billion (Rs 120 billion).

In terms of gold weight, Goldman Sachs Gold ETF manages 11,218 kilo, followed by RShares Gold ETF with nearly 9,800 kilo. Kotak Gold ETF and SBI Gold ETS hold about 4,500 kilo each.

Incidentally, comparatively smaller gold ETFs from UTI and HDFC fund houses manage gold weighing less than 3 tonne each.

While one might consider the gold stocked at the ETF a huge cache, it could also prove to be a bane for some. SBI chairman Pratip Chaudhuri was recently quoted by newswire agencies as saying that the bank was unable to profit from the two tonne of gold lying in the gold deposit scheme of the bank, or lend it out.

Recently, the Indian government allowed gold ETFs to deposit part of their gold holdings with banks in an effort to manage the demand for imported gold. The idea was to put the gold corpus of ETFs to productive use.

The SBI chairman, however, is not too hopeful. Gold ETF's have a tax rate of 10%, as compared to bank deposit interest tax rate at 30%. Investors would necessarily go to gold ETFs, rather than invest in bank deposits.

Incidentally, bank finance for purchases of gold bullion has been prohibited, though banks have been allowed to continue their role as nominated agencies in gold imports. The government had also strongly advocated the cause to unlock the value of idle or unproductive gold, which lays in vaults across the country.

The SBI chairman complained that the government was not making it conducive for investors to bring their gold to the bank.

If an investor buys gold from the bank, he cannot return the gold to the bank. This has limited many purchases, since the selling option does not exist with gold bought from banks across the country.

The chairman has suggested that the government ensure a two way opportunity, a buy and sell option, and have investors approach banks either to buy or to park their precious metal.

However, at 40 tonnes, India's total gold ETF holding is only about 10% of the 398 tonne of gold the country imported in the April-October 2012 period.

Source: Mineweb

Gold Market Report 7 February

noreply@blogger.com (MINING NEWS Today) — Fri, 08 Feb 2013 04:05:00 +0000

Gold & Silver "Trapped" in Tight Range, Volatility Near Half-Decade Lows, as PGMs Grab Attention

The GOLD PRICE eased $5 per ounce from a 2-day high in London trade Thursday morning, holding above $1676 as Asian stock markets closed lower but Europe held flat.

The Euro currency held onto a half-cent rise as the European Central Bank kept its key lending rate at a record low of 0.75% for the 15th month in a row.

Crude oil rose with other commodities, but silver bullion remained unchanged for the week so far at $31.80 per ounce.

Daily swings in the silver price haven't been as small as this week since spring 2007. Volatility in the US Dollar gold price has only been lower than yesterday on 15 days since mid-2005.

"The story in the precious metals market," says Commerzbank's commodities team, "continues to be the explosion in the price of platinum" – now 13% higher since the start of the year.

Palladium, which is also used primarily in the auto industry, is similarly "in a very bullish trend," they add, while "Gold and silver remain range-bound."

Technical analyst Russell Browne at bullion bank Scotia Mocatta calls the gold price "trapped" for the last month.

While the market may be "building a base" from which to rise higher, "We do not expect any speculative buying until the market can break 1695," he adds, "a level which has held since mid-December."

Commodity analysts at the World Bank forecast a 4% drop in the gold price by end-December, with a further 3% fall to $1550 over 2014.

"Most risks are on the downside," says the World Bank's latest Commodity Market Outlook, "as the pace of global recovery improves, including further easing of financial tensions in Europe."

The recent "high gold prices have [also] attracted considerable investment in the gold mining industry," the report adds, "not only to replace aging existing mines but also to develop new mines."

China's gold mining output rose in 2012 for the 6th year, Shanghai Securities News said today, confirming its world #1 position with a record 403 tonnes.

Together with China's gold imports through Hong Kong of 524 tonnes (net of exports), that figure takes China's domestic demand for last year to at least 926 tonnes.

Imports to India – the world's #1 consumer nation until 2012, but with no domestic mine output – fell one-third by value over the first 9 months of last year, perhaps taking full-year shipments below 650 tonnes.

"[The gold] market is slow these days," Reuters quotes a Mumbai bank dealer, "as overall sentiments are not so good because of [central bank] comments."

After gold import duties were hiked to 6% last month, the Reserve Bank of India on Wednesday proposed strict controls on import quantities, perhaps forcing wholesalers to re-export certain quantities and use recycled domestic metal instead, to try and cut the country's large trade deficit.

"If they come up with quota system," says the dealer quoted by Reuters, "then market will become very ugly."

The Rupee slipped back Thursday against the Dollar, but remained 5% above last month's multi-decade lows.

Sterling meantime whipped violently as first Mark Carney – who takes over as governor at the Bank of England this summer – spoke before lawmakers in London, and then the central bank held UK interest rates at 0.5% for the 48th month in succession.

"[Economic] risks are weighted to the downside..[but] inflation is likely to rise and may remain above the 2% target for the next two years," the Bank said as it also maintained its quantitative easing at £375 billion ($590bn).

It will now start recycling the cash from maturing government bonds, it said, into new purchases of public debt.

"Returns to QE have declined, particularly in the US, as the scale of programme has increased," said Mark Carney, currently head at the Bank of Canada, to the Treasury Select Committee this morning.

But "unquestionably" the UK economy's "considerable slack...will be a situation that merits considerable monetary policy stimulus," when he takes over from Sir Mervyn King in June.

The gold price for UK savers today touched a 10-week high above £1073 per ounce.

It has risen more than 5-fold since King moved from deputy to governor in June 2003. Consumer price inflation has averaged 2.7% per year, against the Bank's official target of 2.0%.

Adrian Ash

Gold Market Report 5 February

noreply@blogger.com (MINING NEWS Today) — Tue, 05 Feb 2013 16:20:00 +0000

Gold "Could Test Resistance After Consolidation", Chinese Gold Imports from Hong Kong Set New Record

WHOLESALE MARKET gold bullion prices rose above $1680 an ounce Tuesday morning in London, trading close to last week's high, as stocks, commodities and the Euro also gained and US Treasuries fell, following better-than-expected services sector data from Europe.

Silver meantime touched $32 an ounce for the first time this week.

"We will remain short term bearish [on gold] while resistance [around $1696 per ounce] caps," says Axel Rudolph, senior technical analyst at Commerzbank.

"Should this resistance zone unexpectedly be overcome, however, our medium term bullish forecast will be reinstated with the 1750 region then being targeted."

"The January 4 low at $1625 is pivotal," add technical analysts at Scotia Mocatta,"and there should be good support there...the consolidation since that date may indicate gold is forming a base."

Sentiment towards gold among western households grew less bullish last month, according to data published by BullionVault Tuesday.

The Gold Investor Index, which tracks buying and selling on the world's largest physical gold market for private investors online, fell to 54.9 in January, down from a 12-month high of 58.3 a month earlier and its lowest reading since September. A figure above 50 indicates more net buyers than net sellers over the month.

Weekly data published by the Commodity Futures Trading Commission last Friday meantime show the speculative net long position of gold futures traders, a closely-watched measure of futures market sentiment, fell to levels not reported since August during the week ended last Tuesday, indicating reduced bullishness among traders.

Over in India, traditionally the world's biggest source of private gold demand, the government's "anti-gold" stance means Indian gold demand "is going to face a difficult year", according to Philip Klapwijk, global head of metal analytics at precious metals consultancy Thomson Reuters GFMS.

"Comparing demand last year with 2011, we see this rather strange phenomenon that India was the standout for the country where demand collapsed the most," Klapwijk told a conference in cape Town Monday.

"In other parts of the world, they shrugged off the 6% increase in gold prices rather well and in other parts we saw growth in jewelry demand."

Gold bullion imports to China through Hong Kong nearly doubled in 2012, hitting a record 834.5 tonnes, the island's Census & Statistics Department said today.

Now the world's largest gold consumer as well as the number one mining producing nation, however, China also trebled its exports of gold through Hong Kong, the data show.

Gold bullion imports net of exports rose 56.0% to 523.6 tonnes on BullionVault's maths.

China's central bank meantime injected a record 450 billion Yuan ($72 billion) into the country's money markets Tuesday ahead of next week's Lunar New Year holiday.

Bank of Japan governor Masaaki Shirakawa announced Tuesday that he will step down three weeks earlier than scheduled, and will now leave his post on March 19.

At its most recent policy meeting, the BOJ doubled its inflation target from 1% to 2% and announced it will launch open ended quantitative easing once the current round of QE ends next year.

The BOJ's move was largely expected, having been called for by prime minister Shinzo Abe following his election victory in December, and was described as "threatening an end to central bank autonomy" by the head of Germany's Bundesbank Jens Weidmann.

"[Shirakawa's] resignation will likely push forward the timing of bold monetary easing action [by the BOJ," reckons Akito Fukunaga, chief rates strategist at RBS Securities Japan in Tokyo.

"Shirakawa has probably judged that it's better for the BOJ to start with a new top three who have similar views."

In Europe, the services sectors of Germany, Spain and the Eurozone as a whole all saw better-than-expected improvements in conditions last month, according to monthly purchasing managers' index data published this morning, although the PMIs for Spain and the Eurozone remained below 50, indicating sector contraction.

Italy's services PMI by contrast was lower than the consensus forecast among analysts, and down on the month earlier, indicating a sharper rate of contraction during the month.

In the UK, January's services PMI was 51.5, up from 48.9 a month earlier.

"A huge sigh of relief accompanies these numbers, as a return to growth of the service sector in January greatly reduces the likelihood of the UK falling back into a 'triple-dip' recession," says Chris Williamson, chief economist at Markit, which produces the PMI.

Both the Euro and Sterling rallied against the Dollar this morning, although Sterling reversed most of the move by lunchtime. Both currencies remain below where they started the month.

Ben Traynor

Gold Market Report 4 February

noreply@blogger.com (MINING NEWS Today) — Mon, 04 Feb 2013 15:09:00 +0000

Futures Market Retreat "Good for Gold in the Long Term", Spain Hit by Political Crisis

WHOLESALE MARKET gold prices hovered just below $1665 per ounce Monday morning in London, having failed to hold onto gains in earlier Asian trading, as stocks and commodities also ticked lower along with the Euro, which retreated from recent highs following news of a political scandal in Spain.

Silver erased most of Friday's gains this morning, dropping below $31.60 an ounce.

The gold price in Euros meantime regained some ground this morning as the Euro fell against the Dollar. Last Friday, gold in Euros dropped to its lowest level since May last year as Euro-Dollar touched a 14-month high.

In New York, the so-called speculative net long position of Comex gold futures and options traders fell to its lowest reported level since last August during the week ended Tuesday 29 January, weekly data published Friday by the Commodity Futures Trading Commission show.

The spec net long is calculated at the difference between 'bullish' long and 'bearish' short contracts held by traders such as hedge funds which are classified as 'noncommerical', and is regarded as an indicator of short-term sentiment in the derivatives markets.

"The 'weak hands' are further retreating from the gold market, which is a good thing in terms of the long-term price prospects," says today's commodities note from Commerzbank.

Spanish prime minister Mariano Rajoy, who travels to Berlin today for talks with German chancellor Angela Merkel, denied allegations in the Spanish press over the weekend that he received illegal payments from a slush fund run by his Popular party (PP).

Support for the PP has fallen six percentage points to 24% since the allegations were made, according to a poll published by Spanish newspaper El Pais, while 77% of those surveyed said they do not approve of Rajoy.

The number of unemployed in Spain meantime rose to 4.98 million last month, official figures published Monday show. Last month brought news that the unemployment rate rose to record levels above 26% towards the end of 2012.

In Italy, prime minister Mario Monti today criticized his predecessor Silvio Berlusconi's proposal to reimburse taxes paid on primary residences that were levied by Monti.

"Berlusconi wants to buy the votes of Italians with the money that Italians had to turn over to cover up the shortfall left in the public accounts by Berlusconi," Monti said.

A poll published last week showed Berlusconi had cut the lead of front runner Luigi Bersani to five percentage points ahead of elections in three weeks.

Bersani's Democratic Party (PD) has faced criticism for allegedly receiving funding from Siena-based Monte dei Paschi (MPS), the world's oldest bank dating back to 1472, which is currently being investigated for covering up losses on derivatives trades and overpaying for its 2007 acquisition of Banca AntonVeneta.

MPS lost an estimated €2 billion-plus in 2012, following a €4.6 billion loss in 2011.

In Germany meantime, politicians have expressed skepticism over whether to accede to Cyprus's request for a bailout from the European Union and International Monetary Fund.

"Without the introduction of effective controls on money-laundering and urgently needed structural reforms, we need not even discuss financial aid," Rainer Bruederle, a member of the Free Democratic party which shares power with Merkel's party, said over the weekend.

"Cyprus is based on a business model that damages us all," added Johannes Kahrs of the opposition Social Democrats.

"Yet it is now supposed to be saved by the EU. The SPD will not support that."

"There's general unease...about the fact that Cyprus takes in a good deal of cash from Russians," explains a note from Standard Bank.

Over in India meantime, traditionally the world's biggest gold buying nation, Rupee gold prices fell to five-month lows Monday as the Rupee touched its highest level against the Dollar since October.

At the start of the year Indian gold dealers imported increased quantities of gold ahead of a rumored import duty hike, with the authorities duly raising the duty from 4% to 6% last month.

"Not many deals are happening [at the moment]," one dealer at a state-run bullion importing bank told newswire Reuters this morning.

"[The] market has to clear the old stocks, which could finish this week."

Ben Traynor

Gold edging closer to upside breakout – Nichols

noreply@blogger.com (MINING NEWS Today) — Sun, 03 Feb 2013 20:05:00 +0000

A number of factors suggest that gold has found a base between $1650 and $1690 and is poised to move up through $1700, form a new base at that level, and from there move onwards and upwards.

Author: Lawrence Williams

As we prepare for this year’s Mining Indaba in Cape Town in South Africa (tough destination but someone’s got to go!) in a country which for years dominated global gold production but which is now rapidly slipping down the list of the world’s producers, it’s a good time to take stock of the gold market and what’s been happening in it. This time, rather than putting forth my own views I’m drawing on Jeff Nichols’ latest observations for Rosland Capital in the U.S.

As regular readers may have gathered, I consider Nichols’ views as perhaps the most similar to my own of all the gold pundits out there, although he is perhaps marginally more bullish than I.

Nichols feels that gold is edging closer to an upside breakout having built a good base of support in the $1650-$1690 range and he’s convinced that sooner, rather than later, the price will push back through $1700 and create a new floor at that level.

He also feels that one of the bullish indicators is what he sees as “the spate of downward revisions to the price forecasts proffered by many of the major banking firms, dealers, trading houses, and other institutional participants in the gold scene.”

One has to admit that there does seem to be a bit of a herd instinct among these forecasters – they seem to look at short term trends and base their medium and long term forecasts on them and them alone.

At the beginning of last year they were almost unanimous in predicting a $2,000 gold price by the year end – on the basis of Nichols’ observations surely a bearish signal. This year the forecasts are all being trimmed back and in classic contrarian style perhaps we can expect fireworks in the gold price, although this assumes that some of the strange selling activity on COMEX runs its course.

Indeed Nichols is pretty circumspect on the reasons for this, not being prepared, like many of the strongest of the gold bulls, to attribute any sinister motives to what appear to be regular take-downs in the price each time gold appears to be about to take off again.

He describes these, although not in his latest published commentary, as being institutional speculators and trading desks at the big banks and hedge funds making good money trading the range based on technical trading models and the latest bit of news -- economic or political -- out of Washington. It’s just that the pattern and timing of the take downs does, to the writer, suggest something rather more concerted than this.

But, back to the indicators. Nichols feels that the man-in-the-street, particularly in the Middle East and Asia, tends to be a far better judge of where the price is actually going, and notes that buying of bullion by individual investors has continued to grow and the gold ETFs, despite some big unloading by some funds, are still running at near-record levels. Add to this continued central bank buying and he sees the gold moving from weak hands into strong ones which, assuming the buying continues, will ultimately lead to a supply squeeze.

“As a result” Nichols notes in an email, “unbeknownst to most gold analysts and traders, the physical market is becoming increasingly tight with bullion going one way to the Asian markets (as evidenced by the high bar premiums in China) and to a number of central banks. Put another way, gold is moving into strong hands -- and recent buyers, be they the "man in the street" across Asia or the reserve managers at central banks -- are unlikely to sell anytime soon, even at much higher prices.”

The latest possible game-changer, as Nichols sees it, is the forthcoming launch of two gold ETFs in Shanghai for the Chinese investment market. While the individual in China may still prefer to hold physical metal, he sees the proposed ETF launch, which has already been approved by the government, as providing yet another opportunity to invest in gold via ETFs, and the Chinese “man in the street”, who has had a huge effect already on the rise in the gold price over recent years, could become even more important to the world gold price going forward.

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years.

Source: Mineweb

Gold Market Report 1 February

noreply@blogger.com (MINING NEWS Today) — Sun, 03 Feb 2013 19:50:00 +0000

"End of an Era" for Gold as S&P 500 Records Best January Since 1997

THE U.S. DOLLAR gold price recovered some of its losses from the previous day Friday, edging higher to $1666 an ounce by the end of the morning in London, while most stock markets also edged higher ahead of US nonfarm payrolls data due out 08.30 Washington, DC time.

A day earlier, gold dropped 1% during Thursday's US session, in what one analyst describes as "a remarkable display of schizophrenic volatility".

A few hours later there was "little buying on the physical side" in Friday's Asian session according to one Hong Kong dealer quoted by newswire Reuters.

"There's some buying from mainland China...but I think gold is a bit tired after it failed to break $1700 an ounce."

European stock markets edged higher this morning, with exceptions in Italy and Spain. Spain's IBEX 35 index extended recent losses and was down 1.4% on the day by lunchtime today, the first day of trading after a ban on short selling dating from last July came to an end yesterday. Spanish stocks have now erased their gains from January.

The S&P 500 by contrast has seen its best start to a year since 1997, rising 5.2% last month.

"Earnings are strong, the economies around the world are bottoming and valuations are attractive," reckons Paul Zemsky, head of asset allocation at ING Investment Management in New York.

BNP Paribas today became the fifth big bank to follow Goldman Sachs and cut its 2013 gold price forecast by up to $100 per ounce.

The French bank's analysts now believe gold will average $1790 per ounce this year.

Credit Suisse meantime published a note today entitled 'Gold: The Beginning of the End of an Era', arguing that the 2011 gold price peak could prove to have been the high "in this cycle" as the financial crisis grows less acute.

Like gold, silver also edged higher this morning, ticking above $31.40 an ounce, while other commodities were broadly flat.

China's manufacturing sector meantime continued to expand in January, though at a slower rate than the month before, according to official purchasing managers' index data published by Beijing Friday.

China's official manufacturing PMI fell to 50.4 last month, down from 50.6 in December, with a figure above 50 indicating sector expansion.

HSBC's manufacturing PMI by contrast rose to 52.3, up from 51.9 a month earlier, implying an accelerated growth rate. The HSBC PMI is more heavily weighted towards small and medium enterprises than the official PMI, which places greater emphasis on the views of purchasing managers at larger state-owned enterprises.

"Overall, I will put more weight on today's official PMI, largely because the current recovery is still rather narrowly based," says Li-Gang Liu, chief China economist at ANZ.

"We believe the state sector tends to benefit from this round recovery much more than the SME sector, a sector that tends to dominate the HSBC sample. The HSBC PMI also has a pattern of pro-cyclicality. When the markets are optimistic, the HSBC often becomes more so, and vice versa."

Over in Europe, Germany's manufacturing PMI rose from 46.0 in December to 49.8 last month, while for the Eurozone as a whole the manufacturing PMI rose from 46.1 to 47.9.

"Providing there are no further setbacks to the region's debt crisis, these data add to the expectation that the Eurozone is on course to return to growth by mid-2013," says Chris Williamson, chief economist at Markit, which produces the European PMI data.

In the UK meantime, manufacturing PMI fell last month to 50.8, down from 51.2 a month earlier. Similar PMI data for the US are released later today.

The US Senate Thursday approved legislation to extend the federal debt ceiling until May 19. The legislation now needs to be signed into law by President Obama.

The US Mint meantime reported a record monthly volume of silver American Eagle bullion coin sales for January. Just under 7.5 million ounces of the silver coins – which are produced specifically for investment purposes – were sold last month. Sales of gold American Eagle coins were their highest since July 2010 at 150,000 ounces.

Ben Traynor