Sunday, 27 April 2014

Larry Edelson - Gold & Miners Near Bottom in Time & Price

I have quoted Edelson previously, as a long term gold bull who has been rightly bearish since 2011 and sceptical of the early 2014 advance, which has since seen significant correction.

Friday, 25 April 2014

Brent Cook - What happens the year after?

Brent Cook again making the case for quality development and exploration in the next bull.

Building Goldcorp's Eleonore Mine

Interesting link from Sprott on the building of Goldcorp's Eleonore mine in Quebec.
Compare the factsheet in 2011 with $1.4bn capex vs latest estimate of $1.9bn.
Acquired from junior Virginia in 2005 for $420m (plus 2.2% NSR), relatively early in the exploration cycle, after 212 drill holes, but no fully defined resources or scoping studies, Goldcorp since developed the deposit with 600,000m of drill core. A 9 year development and build path.
Soon to be a high grade, low cost, long life asset producing 600k oz pa.

Wednesday, 23 April 2014

Gold Mining M&A - Barrick / Newmont / Goldcorp / Goldman

Are the Gold Miners "Cheap Enough"?

Gold Prices vs Cash and All in Mine Costs (Real Terms 1980-2014)

Putting an all too convincing medium term bearish gold case at CB Capital Research including this long run gold price vs costs chart. You have to say there is something in the DNA of miners to extract low grades and extend mine life when gold prices are good and high grade, shortening mine lives, when gold prices fall. There are very few periods in this 35 year chart where a profit has been delivered by the industry.

A bull market inevitably builds excess, and nowhere is this more evident than in the evolving marginal cost curve of gold miners. At the bottom in 2002, the marginal cost of extraction was approximately $300 a troy ounce. Despite technology improvements, the marginal cost of extraction steadily rose to nearly $1,000 an ounce by 2011 as gold miners exploited lower-grade mines and as mine workers enjoyed higher wages. Since the peak in 2011, the marginal cost of extraction has come back down to $850 an ounce (see Figure 2 below, courtesy Goldman Sachs). Deflation has set in within the gold mining industry–and given that it is a commodity industry, it is a race to the bottom. Ironically, some gold miners are producing even more gold in an attempt to stem cash flow problems–thus increasing supply and depressing gold prices even as demand remains anemic. So far, there have been no major mine closures; nor major bankruptcies in the industry. We believe that neither the price of gold nor gold mining stocks will bottom until the industry experiences a couple of major mine closures and/or bankruptcies. The gold mining ETFs, GDX ($24.26) and GDXJ ($36.66), could easily decline another 25-30% from current levels.

Wednesday, 16 April 2014

Mexico's Guerrero Gold Belt - Torex $375m Debt Financing & Osisko Spinco Exploration

Going to show some Gold projects can secure debt finance, subject to final due diligence, Torex (TXG.TO) announce$375m loans which should see them to production at El Limon in the Guerrero Gold belt in Mexico. At the end of 2012 the project's bankable feasibility saw a 24% IRR at $1276 gold. 6% of life of mine gold would be hedged, one of the issues in taking debt finance, whilst avoiding the dilution of share issue in current markets.

Interesting to note also today that as part of the current Osisko M&A battle the Osisko "Spinco" highlighted the recently secured large, 1 million Ha, Guerrero properties as a key exploration asset.......more

Current Trends in Mine Finance - Society for Mining, Metallurgy & Exploration - SME - NY April-14

Programme                      Abstracts

All looks very worthy with some interesting discussion to come no doubt, but then there's an astrologer as one of the 3 co-chairmen.

Gold Reportage and Silver Technicals

On the anniversary of the big decline in gold there was an interesting focus on gold yesterday.

Gold Mining M&A - Friendly Osisko bid from Yamana & Agnico

More twists in the bids for Osisko as Agnico team up with Yamana to bid ahead of Goldcorp.
The 3 companies issued a joint presentation which gives interesting reading.
The Osisko spinco will have high cash and significant royalty streams which may earn a premium rating. They will also hold a the large exploration package in Mexico which Osisko recently secured.

Sector Performance through the Economic Cycle -101

JC Parets at All Star Charts discussed Energy market performance and included this standard graphic indicating sector performance during the economic cycle.......

Thursday, 10 April 2014