Tweet

By Kishori Krishnan Exclusive To Gold Investing News

Gold is a safety mechanism and it is also an anti-inflation mechanism -  so you get two for the price of one. “Some people will claim there’s no value to it (gold) but so what, it does what it’s supposed to do,” according to Joseph Saluzzi, co-head of equity trading at Themis Trading LLC.

Gold was little changed on Friday in Tokyo, just off a six-week high hit earlier this week, torn between a soft dollar and firmer equities. On Thursday, gold for immediate delivery was at $924.40 an ounce. The metal rose to $930.90 an ounce on Wednesday, the highest since April 1.

Spot gold was steady at $925.90 per ounce in early afternoon, compared with New York’s notional close of $925.35, and was poised for a 1 per cent rise on the week. U.S. gold futures for June delivery fell $1.8 or 0.2 per cent to $926.60 per ounce, after rising $2.50 on Thursday on the COMEX division of the New York Mercantile Exchange.

“Gold is somewhat following the currency market right now,” said Dick Poon, a manager at Heraeus in Hong Kong, referring to firmness in sterling and euro against the dollar.

Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, increased for the first time since April 9 to 1,105.62 metric tons. The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, earlier said holdings had risen to 1,105.62 tonnes as of May 13, up 1.53 tonnes for the first gain in a month. Platinum was at $1,107.50 an ounce from $1,111.00, while silver was at $13.89 from $13.94, and palladium was at $222.50 against $220.50.

“I walk into the mall I see a lot of people not shopping; I see them walking around with no bags at all, that’s the real test,” said Saluzzi. Gold has “another 10 per cent upside before some profit taking kicks in.”

In India, gold prices surged to a three-week high of Rs 15,080 per 10 gram in the bullion market on Thursday, on sustained buying by stockists and jewellery fabricators to meet the current marriage season demand. Gold, which remained on an upward march since the last three days, added another Rs 110 to Rs 15,080 per 10 gram.

Of the top five performing gold equities on May 14, Randgold Resources Ltd (NASDAQ:GOLD) was at US$60.47, registering a 5.77 per cent upward revision, Hecla Mining Co (NYSE:HL) was at US$3.11,  reporting plus 4.36 per cent change, Aurizon Mines Ltd (ARZ.TO) was at C$ 5.35, plus 3.88 per cent, Gabriel Resources Ltd (GBU.TO) was at C$ 2.48, plus 3.77 per cent and Tanzanian Royalty Exploration Corp (TNX.TO) was at C$3.77, up 2.17 per cent.

Changed management

Toronto-based gold-miner Iamgold  (NYSE: IAG) is to oversee the engineering and construction of the new Essakane mine, in Burkina Faso, itself, after removing the engineering, procurement and construction management (EPCM) contractor for the project. Iamgold bought the project earlier this year, when it acquired Canadian junior Orezone Resources, and the firm’s project development team has been “happily surprised by the constructability” of the project, said senior vice-president for project development Denis Miville-Deschênes.

The firm will sell $275 million of new shares to fund a gold project in the West African nation.

The firm is pleased with the quality of the work force at Essakane and the government support it has received, and is confident that the mine will be built on schedule, with first production expected before the end of 2010. As well as the switch to owner-managed construction, Iamgold is looking for ways to accelerate the project schedule and reduce costs, and the company expects to announce an updated capital cost and schedule in mid-June.According to a July 2008 feasibility study, the Essakane mine is expected to produce an average of 315 000 oz/y of gold  at an average cash operating cost of $358/oz.

After failing in his bid for Oz Minerals’ Martabe gold project in Indonesia, former Oxiana boss Owen Hegarty has struck a deal to run the planned mine and start a new regional gold miner. In an unexpected twist, Hegarty has been made chief executive of a company called Smart Rich Energy Finance, which shares directors and management with Hong Kong-listed China Sci-Tech, the real estate investor turned miner that paid Oz US$211 million ($275.1 million) for Martabe last month.

Hegarty stepped down from running Oxiana after its ill-fated merger with Zinifex and name change to Oz Minerals. He collected an $8.35million retirement cheque after Oz shareholders, angry at the slide in the value of their shares following the tie-up with Zinifex, voted down a $10.7million payout. Under the deal with Smart Rich, Hegarty, 61, will get a US$200,000 signing on fee, a salary and bonus package worth up to US$1.08 million a year and options that allow him to buy 1.5 per cent of the company’s shares.

Corporate news

AngloGold Ashanti (ANGJ.J), the world’s Number 3 producer, posted improved earnings for the first quarter of this year on the back of a higher gold price, and trimmed its hedge book further. It reported adjusted headline earnings of $150 million or 42 cents a share in the period to end-March compared with a loss of $17 million or 5 cents a share in the quarter to end-December.

Hedge book commitments by AngloGold were reduced by a further 154,000 ounces, the group said in a statement. The hedge book, or forward sales, stood at 5.84 million ounces as of March 31, representing an overall reduction of almost 50 per cent over the past year. First quarter production was at 1.103 million ounces, in line with AngloGold’s guidance, and was lower than the 1.268 million ounces the group produced in the December quarter.

Gold miner Great Basin Gold is making good progress in developing its mines at Burnstone in SA and Hollister in Nevada, US, CEO Ferdi Dippenaar said. Great Basin made an increased loss of C$0,04 a share in the March quarter, compared with a loss of C$0,01 in previous quarter. Chief financial officer Louw van Vuuren said the group was not yet making regular revenue as it was still building its access shafts at Burnstone and trial mining at Hollister.

Earnings were also affected by a charge of C$3.1 million for share-based compensation in the March quarter, while the December quarter benefited from a $22 million tax credit. In the March quarter Great Basin’s revenue was C$ 11.8 million from selling 18000oz of gold from trial mining at Hollister, at a cash cost of $320/oz, which was expected to improve as production increased at both mines.

At Burnstone, Great Basin was set to start commercial production by next June and achieve 140000oz of gold equivalent production by December next year, Dippenaar said. At Hollister, there was a stockpile of 23525 gold-equivalent ounces at the end of the quarter. Dippenaar said the group was exploring an area in the Blanket Zone at Hollister and at Hatter Graben and planned to spend $9 million on drilling these areas in the remainder of the financial year.

Amador Gold Corp. (TSX-V: AGX) has provided an update on its Jessop Gold Project, situated 5 km northwest of downtown Timmins, Ontario. The property is located in the Jessop, Murphy and Mountjoy townships.

Reinforcing the conceptual model is the presence of gold in tills along the southern boundary of the Jessop property. Tills are a type of overburden deposited by glaciers and is a mixture of clay, silt, sand, gravel, boulders and other material collected by glaciers as they advanced over the ground. “We are now reviewing recent VTEM data along with historical work to assess the property’s mineral potential as well as the possible extension and intersection of the North Mines Trend, ” said John Keating, V.P. of Exploration for Amador Gold Corp.

Comment

Tweet