Wednesday, February 29, 2012

Costa Rica denies Canadian firm right to resume mining

SAN JOSE — Costa Rican officials Wednesday nixed a resumption of mining by Metales Procesados M.R.W, a subsidiary of Canadian-owned B2Gold, at a site that collapsed back in 2007.

A technical-environmental body in the environment ministry said plans for resuming operations at the site in Miramar de Puntarenas, about 110 kilometers (68 miles) west of San Jose, were environmentally non-viable.

The body cited a May 2010 decree by President Laura Chinchilla slapping a moratorium on new mine exploration and mining, particularly for gold, which uses highly toxic chemicals like cyanide and mercury.

In 2007, after the mine had been open for two years, an accident led to nearby waters being polluted by cyanide. The mine was then shuttered.
In recent years, Costa Rica has boosted its efforts to protect the environment from mining-related pollution.
The freeze on new mining operations should span the length of Chinchilla's term at least, through May 2014.

Big cuts at Shore Gold as crisis scuppers funding plans

TORONTO  – Spare a thought for a junior looking to raise nearly C$2-billion to build a diamond mine in these rough markets.

Shore Gold, trying to do just that, said on Wednesday it was far down path with a potential backer, but then the European debt crisis and its wave of negative sentiment capsized the deal.

As a result, the TSX-listed company has decided to cut back its staffing levels to the bare minimum required to complete environmental permitting at its Star-Orion South project, with even the board of directors shrinking by three heads to five.

COO Harvey Bay has agreed to step down from his full time job, but will remain as CFO and a board member.

Administration VP Duane DeRosier and corporate affairs VP Eric Cline will both leave at the end of March.

Shore is it is cutting its staff complement by around one-third to 15, with the technical department seeing the biggest cuts.

In a statement, CEO Kenneth MacNeill thanked the departing directors, and wished them luck.

Exploration and development VP George Read said the cuts were important to conserve cash and protect the project.

“We are convinced that the project is an essential part of the world's future rough diamond supply and we will continue our efforts to source and assess financing options,” he commented.

As at November 10, Shore Gold had some $16.9-million in cash and cash equivalents and short-term investments.

A feasibility study had predicted it would cost the company C$1.9-billion to build a mine that would produce an average 1.72-million carats yearly, starting in 2017.

Construction on what would be Saskatchewan’s first diamond mine was to start in the third quarter of this year.

Shore Gold ended the day 3.6% lower – it made the announcement after the closing bell had already tolled – with shares going for C$0.405 apiece. That valued the firm at C$90-million.

Gold tumbles, copper drops from 2-wk high

Gold tumbled 5% on Wednesday, its biggest one-day decline in more than three years, while copper slipped from a two-week high and soybeans posted a five-month high.
Oil closed higher, turning up in late dealings, ending the month up sharply.

Many funds exited the gold market, pushing it down nearly $100, on speculation that central banks may be done with easy monetary policies after US Federal Reserve Chairman Ben Bernanke spoke and didn't mention another round of monetary easing was imminent.

Bernanke's tempered view of the U.S. economy caused copper to fall for the first time in four days while agricultural markets trading in Chicago climbed on growing export demand.

The Thomson Reuters-Jefferies CRB index closed the day down 0.21% at 322.43, paring losses after falling 1.3% to a six-day low at 319.03. For the month, it climbed 3.3%.

Spot gold was last traded down 5% for the day around $1 695.47/oz, after hitting a one-month low at $1 687.99.

Trading volume in gold exploded amid rampant talk of an unusually large sell order. Option traders said funds were heavy buyers of puts to protect against further losses.

"There is no hint from Bernanke's speech that there will be a QE3 type program which people have been hoping for," said Jeffrey Sherman, commodities portfolio manager of DoubleLine Capital, a Los Angeles-based investment manager with $28-billion in assets.

"It's just a pullback, it doesn't feel like it would be the start of a bear market," Sherman said.

Spot silver was down 6.4% at $35.54/oz, reversing a 4% gain posted on Tuesday.

Copper fell along with other risk assets after rising earlier in the day on news that the European Central Bank had allocated more than $500-billion for low-interest loans, fueling hopes that more credit will flow to businesses and that government borrowing costs will ease further.

London Metal Exchange (LME) three-month copper shed $101 to end at $8 499/t, after touching a session peak at $8,695.25 -- its highest since Feb. 10.

In New York, the active May COMEX contract settled with a loss of 4.20 cents at $3.8795/lb, after dealing between $3.8050 and $3.9615.

Soybean futures on the Chicago Board of Trade rose for the eighth straight session and corn the sixth straight day. Wheat also ended firm, rising to their highest price in more than three weeks.

"The common theme is: Demand is good, not great, and it's been consistently good for a month now," said PFG Best analyst Tim Hannagan.

Soybean futures rose more than 9% in February in the largest monthly gain since December 2010, while corn posted a monthly rise of about 2.5% and wheat ended the month flat in the third straight month without a decline.

Oil jumped back to positive territory in late trading, ending the month up 8.7%, settling at $107.07 a barrel, gaining 52 cents, after trading between $104.84 and $107.43.

In London, ICE April Brent crude settled at $122.66, rising $1.11, after trading from $120.50 to $123.20.

Strait Gold Options Caribe Copper Property in Peru

TORONTO, ONTARIO--(Marketwire - Feb. 29, 2012) - Strait Gold Corporation ("Strait Gold" or the "Company") (TSX VENTURE:SRD) is pleased to report that it has reached an agreement with Minera Senna EIRL ("Senna"), a private Peruvian company, giving Strait Gold the option to purchase a 100% interest in the Caribe copper property in Peru's Apurimac Region.

The 200-hectare property is approximately 500 km southeast of Lima, within the Andahuaylas-Yauri copper belt and surrounded by concessions registered to Xstrata Peru S.A. It is accessible by paved and gravel roads from the city of Cusco and lies about 80 km west of the Company's Alicia Project, recently optioned to Teck Resources (see news release dated December 9, 2011), which lies within the same copper belt.

The Andahuaylis-Yauri belt hosts a number of important copper and copper-gold deposits including Grupo Mexico's Los Chancas 35 km west of Caribe currently at the feasibility stage, Xstrata's Las Bambas 60 km east of Caribe and Antapaccay 100 km further southeast in which Xstrata is investing an aggregate of US$5.7 billion for development, the Haquira copper project acquired in 2011 by First Quantum Minerals and the Constancia copper project acquired in 2011 by HudBay Mining.

Porphyry copper-molybdenum mineralization at Caribe is associated with quartz porphyrytic intrusives that are extensively brecciated. Typical porphyry-style alteration is present including secondary biotite (potassic) and intense argillic alteration. Secondary enrichment zones composed of covelite-chalcocite-bornite and pyrite locally make up more than 10% of the rock. Historical assays of nine samples returned up to 4.5% copper, greater than 100 grams per tonne (g/t) silver and greater than 1% zinc in the secondary enrichment zone and up to 0.82% copper and 0.08% molybdenum in the primary sulphide zone. The porphyry system extends across the property in a northwest-southeast direction for more than 1,000 metres and is approximately 700 metres wide.

Recent reconnaissance mapping and sampling was conducted by Strait Gold geologists as part of the Company's due diligence. A total of 11 composite chip samples from panels of 1-4 square metres were taken intermittently over approximately 500 metres Highlights include: 5.38% copper, 1.405% molybdenum, 0.334 g/t gold and 63 g/t silver in one sample and 3.88% copper, 1.055% molybdenum, 0.387 g/t gold and 31.8 g/t silver in another. Five of the 11 samples returned greater than 3.3% copper. Detailed results are shown in the table below:

"Caribe is a very prospective concession in an emerging world-class copper belt where we are fortunate to now have two excellent properties," said Strait Gold President Jim Borland. "Drilling at our Alicia Project is fully funded for 2012 and at Caribe we plan to complete all preliminary work as quickly as possible so that we can begin drilling to test its true potential."

Sample IDPanel
dimensions (m)
rock typeAu
Abbreviations: bd below detection limit; QFP quartz feldspar porphyry, detection limits: Au <0.005ppm; Ag <0.2 ppm.

Strait can earn a 100% interest in the Caribe Property by making option payments over a three-year period commencing upon the registration of a community agreement with Peruvian authorities (the "Anniversary Date"). The total cost for Strait Gold to earn its interest is US$1.2 million with payments scheduled as follows: a non-refundable payment of US$20,000 to secure the option (paid); US$40,000 on the Anniversary Date; US$40,000 six months after the Anniversary Date; US$100,000 one year after the Anniversary Date; US$400,000 two years after the Anniversary Date; and a final US$600,000 three years after the Anniversary Date. There are no work commitments and no royalties and Strait Gold will not earn any interest until the final payment is made.

The agreement with Senna has been duly registered under Peruvian law. The property is currently the subject of small-scale mining. Under Peruvian law, small-scale mining is governed by an environmental impact statement regime that is more lenient than that applicable to mid-scale and large-scale mining. It is the Company's intention to obtain community and government approval to conduct exploration adhering to the highest Peruvian and international standards.

Quality Control and Quality Assurance
All sampling is supervised by Strait Gold personnel. Samples are placed in plastic sample bags that are closed with single use plastic ties. Samples are securely stored in a locked room prior to transportation to Cusco by Strait Gold personnel. Samples are delivered to the ALS Chemex office in Cusco and forwarded by ALS Chemex to Arequipa for sample preparation. The resulting pulps are sent to its laboratory in Lima, for analysis. ALS Chemex is an ISO 9001:2000 registered laboratory. Samples are analyzed for gold by fire assay followed by atomic absorption spectroscopic (AAS) finish and by gravimetric finish for samples exceeding the upper limit of analysis (over limit). Silver, copper, molybdenum, lead and zinc, together with 30 other elements, were assayed by inductively coupled plasma-atomic emission spectrometry (ICP-AES) following aqua regia dissolution. Overlimit silver (>100ppm); copper (>10,000ppm), lead (>10,000ppm) and zinc (>10,000ppm) are reassayed by atomic absorption. Strait Gold routinely carries out a program of quality assurance/quality control (QA/QC) that includes insertion of blanks, standards and duplicates into the sample stream to verify results prior to dissemination.

All of the Company's exploration programs are prepared by, or prepared under the supervision of, Dr. Roger Moss, P.Geo., who serves as the Qualified Person as defined by NI 43-101 and is a director of the Company. Dr. Moss has reviewed the technical content of this news release.

About Strait Gold
Strait Gold Corporation is a Canadian mineral exploration company active solely in Peru since 2003 and listed on the TSX Venture Exchange. It holds a 55% interest with an option to increase that interest to 100% in the Alicia copper-gold property which lies within the Andahuaylas-Yauri porphyry-skarn copper belt approximately 500 km southeast of Lima. Strait Gold has granted Teck Peru S.A., a wholly owned subsidiary of Teck Resources Limited, an option to earn up to a 75% interest in the property by, among other things, spending $30 million on exploration or by spending $10 million on exploration and delivering a pre-feasibility study. The Company also holds a 100% interest in the Letra Rumi South base metals property and a 100% interest in the Culebrilla precious metals property, both approximately 250 km north of Lima. The Company continuously reviews exploration opportunities in Peru and is actively seeking additional projects.
To learn more about Strait Gold Corporation, please visit our web site at

Forward Looking Statement:
Some of the statements contained herein may be forward-looking statements which involve known and unknown risks and uncertainties. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various risks. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of mineral commodities, general market conditions, risks inherent in mineral exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events may differ materially from those anticipated in such statements. Strait Gold undertakes no obligation to update such forward-looking statements if circumstances or management's estimates or opinions should change, except as required by law. The reader is cautioned not to place undue reliance on such forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Freeport Indonesia stoppage to be resolved by next week -union

JAKARTA - A stoppage at Freeport McMoRan Copper & Gold Inc.'s Grasberg mine in Indonesia could be resolved within days, with talks between workers and management progressing well, a union official said on Wednesday.
Last week, Freeport Indonesia, which operates the world's second largest copper mine and the largest gold mine, told its workers not to work due to safety concerns linked to labor unrest.

Attempts to return the mine to normal after a three-month strike last year have been hampered by protracted disputes between management and union workers, as well as by security concerns.

"The mine is still suspended until today," union spokesman Juli Parorrongan told Reuters, adding that progress was being made in management talks. "We are trying to negotiate to resolve this problem. It is looking good."

"Not too long ... the operations will be running again and normal again," Parorrongan added. "Maybe for next week, I think this problem will be resolved."

Intimidation and violence by some workers against others who did not take part in last year's strike have disrupted the mine in the highlands of central Papua, the company said on Thursday.

There had been no injuries to workers during the current stoppage, said Parorrongan.

The Grasberg strike ended Dec. 14 with a deal for a pay increase, allowing workers to gradually return to work, but the force majeure has yet to be officially lifted.

Earlier this month, Freeport McMoRan Copper & Gold Inc said it wanted to extend its contract with Indonesia's government to enable it to run the world's second-biggest copper mine beyond 2021.

Arizona-based Freeport could not immediately offer comment on Wednesday.

Look Skyward For The Future Direction of Gold Prices

Gold prices are influenced by many elements, but this time around there seems to be more of a connection with the Greek crisis. What is the association? Apparently, the rumor is that the Eurozone debt crisis has been carried out by Greece’s support by other comrades. Obstacles still exist such as the approval by individual Greek bondholders of the 53% trim and shallow interest rates they will receive for another three years. Whether or not they take the cut, this is what is occurring at the moment. The initial market feedback was to move up and hold new levels without any pep in any market. These moves had previously been reduced. Nothing out of the ordinary yet, but there currently are money modifications from the US Treasury market to the Euro.

The truth will remain what it is, devoid of anybody’s manipulations. The Greek government has failed to pay its debt and has been fortunate enough to have had the total debt situation maneuvered in the light of its evasion. Their economy is presently enduring a depression. At present, indicators demonstrate a 7% contraction of their economy and this is getting worse. Along that route are government revenues. This will also be influenced by the scheme of ducking taxes. The current interest rate on the debts is 121% of current GDP, while at 2% on the outstanding debt. This may overwhelm government revenues. So, in effect, even if Greece receives the aid, they will still require international aid to avoid bankruptcy. Other EU countries that also need assistance are Portugal, Spain, and Italy. The EU debt predicament is lingering onward.

Soon we will possibly experience an upsurge in interbank liquidity with the Greek bailout now established as well as an increase in money pace extending probably within the business arena. The question is whether growth will be incited if the debt crisis is controlled. Some believe only a miracle could make that happen.

The direction of gold prices is guided by the developed world markets simply because this is where supply and demand thrives. Everyone else has to draw into these markets for the leading prices and to be able to source and peddle the biggest amounts of precious metals across the continents. Transformations are on the forefront, but just not right now. We all know that China is cultivating its own markets and may soon be part of or even control precious metal markets as it will be the source of highest demand. Notwithstanding the fact that they hold the position of the largest gold producer in the world at the moment, we really can not define them as suppliers because most, if not all, of its stock does not extend to the open market. Consequently, the hastiest short-term retort to the apparent determination of the Greek debt predicament will be experienced in the developed world’s precious metal markets, particularly at the London Gold Fix. Prices have risen somewhat already.

In reality, the world-wide demand for precious metals is not driven from the developed world. It’s really very simple to follow how it works. It is the emerging markets which incite demand and is transported into the developed world’s markets by way of the global network of banks. The very transparent outcome here is that even though developed world markets can manipulate prices backwards and forwards in the very short-term, they are dependent upon the weight of emerging world demand over the longer term. It is the latter who will laugh last.

It was over four decades ago when gold was revered appropriately. We are currently observing a shift as to its perception and value. We are also watching as it sustains countries like Iran, Sudan, and some European nations out of trouble, as it makes international loans much easier and takes down interest rates with its power. International trade is conceivable when nations are not able because of their existing economic condition. This validates its future course as well as establishes its vital role in the future of the global monetary system. The precious metal will not substitute currencies in the existing monetary system, but it can and will back them soundly. Accordingly, gold prices can only surge because of this.

Firestone Diamonds suspends BK11 ops

Firestone Diamonds plc said it has suspended operations and placed its BK11 mine in Botswana on temporary care and maintenance because of operational challenges and the weakness in the diamond market.

"We remain committed to the operations in Botswana and the programme at BK11 is a temporary measure that has been designed to enable a rapid re-start of operations when the technical and market challenges have been resolved," said chief executive Tim Wilkes.

The care and maintenance programme will cost around US$65,000 a month.
Earlier this month, the AIM-listed company said the project had continued to encounter technical challenges regarding the liberation of diamonds from the secondary crushing circuit of the plant and that it would conduct a strategic review.

The company said it will focus on its flagship Liqhobong Mine in Lesotho, which remains on track to announce a feasibility study in June 2012 and produce 1Mct by 2014.

Grasberg suspended after new unrest

Freeport McMoRan Copper & Gold Inc has suspended operations at its troubled Grasberg copper-gold mine in Papua province, Indonesia, citing “violence and intimidation” against staff in the aftermath of a three-month strike last year.

Freeport, among the world’s largest copper producers, concluded a new wage and benefits agreement with striking employees at the operating subsidiary, PT Freeport Indonesia (PTFI), last December. However, representatives of the employees’ union argued in comments to Bloomberg that some of their members had not been paid according to the new arrangement.

Sporadic violence has apparently persisted since the conclusion of negotiations, with two Grasberg workers killed in an attack near the mine on January 9. On January 23, the union said its members would stop work, and Freeport elected to suspend production.

A Freeport spokesman said “Although a new labour agreement has been reached, we are experiencing work interruptions in connection with our efforts to resume normal operations at PTFI”.

He continued: “We temporarily suspended operations to protect our employees and assets following the incidents of intimidation and threats within the workforce. We are working with union officials and government authorities to resolve the ongoing issu

Industry groups move to challenge Arizona uranium ban

Two major lobby groups, representing the US mining and nuclear industries, have started legal action against the federal government’s 20-year ban on new mining across 4,047km2 of land near the Grand Canyon National Park.

The Nuclear Energy Institute and the National Mining Association said they had filed a lawsuit in Arizona’s Federal District Court attempting to overturn the ban.

In a challenge to the constitutionality of the government decision, the groups argued that Secretary of the Interior Ken Salazar did not have the legal power to withdraw areas exceeding 5,000 acres (around 20 km²) from commercial use. They further argued that Arizona state law did not permit the creation of a buffer zone around wilderness areas.

In January, the US government published a Public Land Order banning new mining development in the area for 20 years, predominantly affecting uranium exploration.

The government argued the move was necessary to protect US$3.5 billion of annual recreational spending in the neighbouring Grand Canyon National Park, and said the decision would not affect existing operations in the area.

Korean tungsten project gets Berkshire Hathaway investment

TORONTO  – He may not like gold much, but billionaire Warren Buffet has taken a shining to tungsten – the metal with the highest melting point.

Berkshire Hathaway unit IMC International Metalworking Companies this week agreed to invest around $80-million in TSX V-listed Woulfe Mining’s Sandong project in South Korea, which was once the biggest tungsten producer.

The deal involves IMC buying a 25% stake in the shuttered mine for C$35-million, investing C$19.25-million in a joint venture to build a plant that will produce ammonium paratungstate (APT), the metal’s tradeable form, and agreeing to provide up to C$15.75-million in a loan to fund Woulfe’s share of the capital cost of the plant.

The mine at Sandong as well as the APT plant are set to start producing early in 2013, when the operation will reclaim the title as the world’s biggest producer, accounting for 7% to 10% of global output – and half of non-Chinese supplies, Woulfe CEO Brian Wesson told Mining Weekly Online.

To get there, the company will need to raise around another C$80-million in debt.

Woulfe will look to use a feasibility study due out in “the next few weeks” to do this, with Wesson hoping to finalise the funding around June.

That will bring the total financing for Sandong and the APT plant up to around C$150-million, with capital cost estimates currently at C$135-million.

Given the strong performance of Tungsten prices over the past two years, and the attractive economics of the project, Wesson does not foresee any problems in raising the additional financing required.

Prices for the metal, used make wear-resistant abrasives and cutters for the metalworking industry, were $18 000/t when Woulfe bought the Sandong project in 2009.

Today, they have reached around $44 000/t, as demand grows and China, as is the case of rare earth elements, has curbed exports. The metal is usually quoted in metric ton units, with Metal Pages listing the most recent price at about $435.

Rare earths prices showed even more drastic meteoric rises throughout 2010 and into the first half of 2011.

However, these rocketing prices turned out to be their own worst enemy, as buyers retreated from the market and began intensively developing alternatives.

Wesson is not expecting tungsten to follow a similar scenario.

“Even at a price of $600 it would never pay to go to equivalents. The issue with tungsten is, you can’t machine steel without it, you can’t roll steel without it,” he said.

“To create economical alternatives would be very difficult, very pricey and take many years.”


But while Berkshire Hathaway might be going after the tungsten – it bought an 80% stake in IMC in 2006 for $5-billion, and Buffet gave speech at the sod-turning of a major expansion at the company’s South Korea plant last year – shareholders in Woulfe have a potential gold kicker too.

The Vancouver-based company also owns the Maguk gold project in South Korea, which Wesson said was the country’s biggest producer.

With prices hovering around $250/oz, the operation closed in 1997.

Now, Woulfe is hoping an investment of around $30-million will allow it to reopen the mine and produce 50 000 to 60 000 oz/y.

A preliminary economic assessment, due out in early March, should provide a better outline of the potential production and economics.

While open, the mine produced from average ore grades around 11 g/t.

Wesson concedes that it is “probably not ideal to mix tungsten and gold”, adding that Woulfe would look to either listing Maguk separately, or unbundling it to shareholders at some point.

Vale says huge iron-ore expansion needed globally to replace old mines

BEIJING – A huge expansion of global iron-ore output is needed as older mines become depleted, a senior executive of Brazilian miner Vale SA said, adding that the company's medium-term strategy was to maximise production at its mines.

Luiz Meriz, president of Vale Minerals China, also told at an industry conference in Beijing on Tuesday that the company was in talks with countries around the world, including Japan and South Korea, to dock its fleet of Valemax giant ore carriers, which range from 380 000 to 400 000 t in size.

"Our strategy is to continue maximising output even when supply becomes more balanced in future," Meriz said.

Meriz said Vale had invested $15.1-billion between 2010-2011 to boost production and to raise operational efficiency. It is looking to its Valemax vessels to better compete with Australian rivals Rio Tinto and BHP Billiton.

"We're in discussions with ports around the world, including China ... and so far there has been positive dialogue," he said, adding that the acceptance of vessels was a technical issue.

He said three main technical issues were the depth of access channels, the strength of terminals, and the maneuverability of the vessels when docking.

Vale's efforts to ship iron ore to China -- its largest customer -- using the giant ships hit a wall after Beijing slapped a 350 000-deadweight-ton limit on vessels to dock, citing safety issues and a protracted slump in its shipping industry.

With Beijing's ports closed to Valemax vessels, the Rio de Janeiro-based miner will have to rely on costlier trans-shipment hubs in the Philippines and Malaysia to ensure its mega-ships, each costing about $110-million, remain employed.

Vale also said it was confident about China's growth this year and saw economic growth exceeding the government's average annual target of 7% in 2011-2015.

Vale reported a 21% fall in fourth-quarter net income, hit by higher costs and weaker iron-ore prices that analysts say could keep earnings under pressure this year.

Edited by: Reuters

Return to gold standard would be damaging – report

LONDON – A return to the gold standard would be impractical and could even be damaging to the financial system, even though it can serve as a hedge against declining values of fiat currencies and plays a role as a reserve asset, a think-tank said on Tuesday.

The price of gold, which last year hit a record high above $ 1 920/oz and on Tuesday traded near $1 780/oz, has been rising for the last 11 years, driven by widespread appetite for the metal including from central banks, whose purchases are at their highest for at least two decades.

Gold has got a boost since the financial crisis from Western central banks' attempts to reinvigourate domestic growth with near-zero interest rates and trillions of dollars in government bond purchases.

A team of researchers at Chatham House, the London-based policy institute for international affairs, examined the potential for gold to play a more formal role in the international monetary system by looking at the four main ways in which it could do so: as an anchor, as a safe-haven, as collateral or as a policy indicator.

They determined that as the dominance of the United States in the global financial system waned and other powers emerged, the likelihood for greater financial volatility and uncertainty would grow.

"In such an environment, gold is likely to continue playing a useful role as an effective hedge and safe haven. But despite gold's positive attributes, the evidence which emerged from the taskforce's deliberations led to the conclusion that in today's world there is little scope for gold to play a more formal role in the international monetary system," they said.


The end of the Bretton Woods agreement in 1971 decoupled national currencies from the gold price, allowing them to float freely as national central banks put independent monetary policies into place.

A return to using gold as an anchor would "undoubtedly be impractical or even damaging, given bullion's deflationary bias", the report said.

"In fact, a serious drawback is that a gold anchor can become particularly unstable precisely when a stabilizing force is needed most. As gold prices tend to rise when inflationary expectations and/or other risks in the fiat monetary system increase, the gap between the reference price and the market price is likely to widen at times of uncertainty," the report said.

"Although it is far from clear what is the 'right' price for gold, given the large volume of global money in circulation, the disadvantages of using bullion as a monetary anchor are clear: a return to a gold standard could inflate the price of gold significantly, while restrictions on money supply growth could provoke a severe downturn in the growth cycle of global economies."

Gold has a role to play as a reserve asset and as a hedge against the declining values of fiat currencies, but it also carries inherent risks due to the price volatility of bullion and its lack of yield.

"Gold can therefore have some utility in a portfolio of assets by spreading valuation risk but would not be very effective as a sole reserve asset," the report said.

According to the World Gold Council, an industry group, central banks bought nearly 440 t of gold in 2011, more metal than at any time since the end of the gold standard, as they sought to cut the amount of foreign reserves that they hold in US dollars or euros.

Even though the Chatham house taskforce said gold had a role to play in a reserve portfolio, it said there was little evidence that including gold in the International Monetary Fund's Special Drawing Rights (SDRs) basket of currencies would prove effective.

The IMF's SDR basket is not a currency itself and is only used as a reserve asset by central banks. It is backed by currencies that are freely traded and at present includes the US dollar, the pound sterling, the euro and the Japanese yen.

The IMF said in November it was considering dropping the requirement for currencies to be "freely usable" to be part of the SDR basket but did not mention including gold.

Edited by: Reuters

AngloGold to make decision on US$3.5bn La Colosa gold project in 3-4 years

South African miner AngloGold Ashanti (NYSE: AU) expects to make a decision on developing its La Colosa gold project in Colombia's Tolima department in 3-4 years, the company's president in Colombia, Rafael Herz, told ...

"Within 3-4 years, we expect to have all the evidence to be able to look at, on the one hand, the technical and economic feasibility of the project, and on the other hand, and most importantly, the social and environmental viability," Herz said.

The company is currently working on the prefeasibility study, as well as on technical engineering and infrastructure studies.

The prefeasibility work will take about two years, and by mid-2015 there will be a feasibility study
and decisions will have to be made "not just by the company but also by authorities on the project's viability," Herz said.

The company announced a delay to the development of the project in May 2011, pushing back first production to 2018 and not 2016 as originally planned.

Project costs were also bumped up to US$3.5bn from US$2.7bn due to problems with obtaining permits, the company said at the time.

AngloGold Ashanti, which estimates that La Colosa will produce at least 700,000oz/y of gold, expects to invest US$310mn over the next three years in the project and in its projects in the departments of Antioquia, Caldas, Cauca, Nariño and Bolívar.

Investment decisions are better indicator of nation's attractiveness than Fraser survey

Investment decisions in the Chilean mining sector are better indicators of how attractive the country is than the Canadian Fraser Institute's annual mining survey, the executive director of the Chilean copper study center Cesco, Juan Carlos Guajardo, told...

"The Fraser Institute survey has a severe methodological weakness that makes it useless as a real reference tool to analyze risks in mining," Guajardo said.

The huge changes in ranking that countries and jurisdictions suffer are a reflection of its methodological problems, according to Guajardo.

"It's not reasonable that the mining risk index for a country sees such variations in a year. This is a long term index and therefore its evolution should be based on trends and not as an indicator of a current situation, as the results suggest," he said.

Some of the methodological limitations of the survey are that the number of participants is small, there is no consistent universe of participants every year and the final measurement is based on completely subjective factors.

"As a result, the Fraser Institute's index is not good as a measure of competitiveness or to make decisions about public policies," he said.
"Unfortunately, there are few detailed studies and indicators on key issues affecting countries' mining competitiveness. This explains the success of the Fraser Institute's index despite its limitations," Guajardo added.

"In my opinion, investment decisions are a much more realistic indicator," he added, referring to the US$75bn mining investment portfolio in Chile up to 2020.

Tuesday, February 28, 2012

Speculators Increase Appetite For Precious Metals –CFTC

Speculators raised their appetite for precious metals by increasing their exposure to U.S. futures and options contracts traded on the Comex division of the New York Mercantile Exchange and on the Nymex, according to U.S. government data released Friday.
For the week ended Feb. 21, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report added to their net-long positions in all precious metals markets for both the disaggregated and legacy reports. Speculators’ positions in copper were pared back.

During the timeframe measured, most-active April gold futures contract on Comex rose $40.80 an ounce and settled at $1,758.50 on Feb. 21. Comex March silver gained $1.081 an ounce to settle at $34.429. April Nymex platinum rose $56.90 an ounce to settle at $1,684.90 and June Nymex palladium gained $23.60 an ounce to settle at $712.55. Comex March copper increased 2.2 cents a pound to $3.8365.

“Over that week, precious metals prices rose strongly across the board, driven by high risk appetite, notably on the back of the Greek restructuring agreement, geopolitical risks related to Iran and PGM (platinum group metal) supply issues in South Africa. Open interest rose in all precious metals, with the exception of palladium,” said Anne-Laure Tremblay, senior precious metals strategist at BNP Paribas.

Managed-money accounts significantly raised their net-long position in gold, lifting it to 179,132 contracts. Managed-money accounts added 16,612 gross longs and added 437 gross shorts. Producers and swap dealers raised their net-short positions. Producers added many more gross shorts than gross longs and swap dealers cut gross longs and added shorts.

Citigroup Futures Perspective said while the managed money position in gold is the “largest and most overbought since Sept. 13, there is also still ample room for further buying relative to the record of 253,653 set Aug. 2.”

Non-commercials in the legacy report also sharply increased their net-long gold position, having added 18,871 gross longs and added 1,035 gross shorts. They are now net-long 201,637 contracts. Commercials are net short, having added heavily to gross shorts and only slightly added to gross longs, lifting their net short position.

The silver net-long position for the managed-money accounts increased to 28,025 contracts. The growth came from adding 2,851 gross longs and adding 300 gross shorts. Producers remain net-short, increasing that position as they added more gross shorts than longs. Swap dealers are net long but trimmed back on exposure, having added to more gross shorts than gross longs.

In the legacy report, the silver net-long for non-commercials mirrored the disaggregated report. They added 2,146 gross longs and added 675 gross shorts. They are now net long 29,751 contracts. Commercials added to their net-short position by slicing gross long positions and adding gross shorts.

Managed-money accounts in platinum increased their net-long position to 20,970 contracts, having added gross longs and cut gross shorts. Non-commercials continued to build their net-long position, which now is 28,567 contracts, having added more gross longs than gross shorts.

In palladium the managed-money accounts lifted their net-long position to 9,540 contracts. They cut gross shorts and added gross longs to raise their net-long position. In the legacy report, non-commercials left gross longs essentially flat, but decreased shorts, ultimately raising their net-long to 10,788 contracts.

Barclays Capital said the rise in the net fund length in the platinum group metals came on the back of a combination of fresh long positions being established as well as short-covering activity. “Speculative positions in platinum are now at their highest in one year … representing 64% of open interest, thus should the supply disruptions ease in South Africa, prices could be subject to price corrections,” they said, adding that palladium positions are at their highest since September.

Further, the firm said it while short-term traders are buying up PGMs on a worsening of supply losses -- even though the market remains in a supply surplus -- net demand from the exchange-traded fund community needs to start rising as “speculative positioning … is closing in on its peak,” they added.

The copper net-long position for the managed-money accounts slipped to 13,260 contracts as they have cut gross longs and hiked gross shorts. Funds also lowered their net long position in the legacy report, having added more gross shorts than gross longs. They are net-long 9,430 contracts. Commercials are net short but cut more gross shorts than gross longs.

For further information, see the CFTC’s website:

Antofagasta Official: Chilean Copper-Mining Industry To Grow But Faces Challenges

Chile’s copper-mining industry is expected to grow in future years but nevertheless will have to deal with a number of challenges along the way, including availability of water, electricity and skilled labor, said a representative of mining concern Antofagasta Tuesday.

“There is a whole stack of new projects coming into construction from now until 2020,” said Jean Paul Luksic, chairman of Antofagasta, at the BMO Capital Markets Metals & Mining Conference taking place in Hollywood, Fla.

Chile’s copper output is scheduled to grow to 7.8 million metric tons by then, compared to 5.5 million in 2010.

Antofagasta is a Chilean-based mining group that undertook projects in recent years to increase its own output. The company’s fourth-quarter earnings statement said 2011 copper production rose 22.9% to 640,500 metric tons from 521,100 in 2010. “This year, we are aiming to produce 700,000 tons of copper,” Luksic said.

He described the supply/demand fundamentals for the copper market as “very strong,” citing low inventories coupled with constraints producers have faced when trying to bring new projects on line. In the case of Chile, there will be challenges even as output is ramped up.

Much of the mining is from the central to northern part of the country, where there is a lack of water, Luksic said. Antofagasta had to bring water from the ocean for its new Esperanza operation.
“This is what we think is going to be happening to projects in the future in Chile,” Luksic said. “There is no more water available in the mountains, and if you do have water, it is probably unlikely that the authorities are going to allow you to use much of that water in the future (for new projects).”
For electricity, mining companies in the northern part of Chile have to rely heavily on coal that comes from Colombia or Australia, Luksic said.

Meanwhile, the combination of a growing mining industry and healthy economy in Chile means labor shortages, Luksic explained. Tens of thousands of new workers will be needed by the mining sector in future years.

“So the market is going to get very, very tight and we’re going to see a lot of issues stemming from this problem—a shortage of labor,” Luksic said.

Much of the increased output for Antofagasta is the result of its new Esperanza project and an expansion of Los Pelambes. Antofagasta also has a number of exploration projects under way.
Antofagasta also mines gold and molybdenum as a by-product. Its gold output jumped to 196,800 ounces last year from 35,100 in 2010, mainly due to the ramp-up of Esperanza.
Esperanza has been the company’s main focus over the past year, although the operation is still not at full capacity and may not be for another 1 ½ years, Luksic said. Current throughput is 86,000 tons of ore a day, compared to a capacity of 97,000. “The company is focusing very hard in trying to get this to the right production,” he said.

Newmont CEO confident $4.8bn Peruvian gold mine will go ahead

Richard O'Brien, Newmont Mining CEO, says he is confident the company will be able to go ahead with its $4.8bn jv with Buenaventura to develop the Minas Conga gold mine in Peru.
NEW YORK (Reuters) -
Newmont Mining Corp is confident Peru's government will approve the U.S. gold company's proposed $4.8 billion Conga project after it reviews the environmental impact permit that has sparked protests, Chief Executive Officer Richard O'Brien said on Monday.

He said new exploration projects in North America, Africa and the Pacific region would contribute to Newmont's target of increasing annual gold production from 5 million ounces to 7 million ounces by 2017.

"But the big question mark is South America," he told investors at the BMO Capital Markets metals and mining conference in Hollywood, Florida.

Potential growth by a total of about 1-1/4 million ounces in the region is dependent on Conga's Environmental Impact Assessment (EIA) being approved.
"There has been some social disorder and unrest," O'Brien said of protests by left-wing activists and local politicians over President Ollanta Humala's support of mining projects in the Andean nation and Conga in particular.

"We have strong political support from the president, but the regional government does not see eye-to-eye," O'Brien said in a webcast monitored in New York.

He said the central government has appointed a three-person panel and given it 40 days to "re-review" the EIA, which had been previously approved by Lima.

"I believe they will approve it and then we will proceed," he said, noting than in the meantime, Conga is on hold. "It could have a regional impact as we have other projects in Peru."

Politicians and activists in Cajamarca, where Conga is located, oppose the project, saying it would damage water supplies from a string of lakes. Newmont's detailed plan, which includes building reservoirs, was approved initially by the previous Lima government.

Doe Run Perú sues govt for US$800mn

A lawsuit presented by Lima-based Doe Run Perú against the government claiming US$800mn in damages could affect the restart of operations at its La Oroya metallurgical complex in Junín region, according to the mines and energy ministry (MEM).

The company is suing to have the government removed from its list of creditors, after competition regulator Indecopi recognized the debt that Doe Run Perú owes to the government in unpaid fines.
Meanwhile, in the US Doe Run is suing the Peruvian government for US$800mn for violating equal-treatment clauses in the US-Peru free trade agreement.

MEM warned that the lawsuit filed by Doe Run Perú against the Peruvian state without proper notice could affect the resumption of operations at the company's La Oroya plant.

"The attitude of Doe Run Perú is inexplicable, especially because it hinders the efforts being made by the state as the largest creditor in the meeting of creditors, which could affect the prompt resumption of operations at the La Oroya metallurgical complex " MEM said in a release.

MEM said it reaffirmed its willingness to maintain a positive attitude so that Doe Run Perú could restart its operations and meet its environmental obligations, ensuring employment for workers, environmental control, health and sustainable development of the metallurgical plant.

Doe Run Perú represents the type of investment that the nation does not want to have due to non-compliance of agreements with the state, said the president of the national confederation of private business (Confiep) Alfonso García Miró.

"For us this new lawsuit from Doe Run was a surprise in the sense of challenging the state's participation as a creditor," said mines and energy minister Jorge Merino.

Operations at the complex were stopped in 2009 when the company ran into financial difficulties as a result of the global financial crisis. In September of the same year, congress approved a 30-month extension to the deadline to complete its cleanup plan at the La Oroya metallurgical complex but this was not complied with.

In mid-January Doe Run Perú's group of creditors voted unanimously to keep the management of La Oroya in the hands of the company, which was given 60 days to present a restructuring plan which must include a commitment to its environmental obligations.

La Oroya produced 11 different metals but mainly copper, zinc, lead and silver.
Built in 1922 by the Cerro de Pasco Corporation and acquired in 1997 in a privatization process by St Louis-based Doe Run, the plant is known for having caused serious lead contamination around La Oroya.

Doe Run Perú is an affiliate of the New York-based Renco Group.

Monday, February 27, 2012

Escondida to start US$17mn exploration campaign at Pinta Verde

Chilean firm Minera Escondida received approval for a US$17mn exploration campaign at the Pinta Verde target at its operation in northern region II, a source from the environment ministry's (MMA) regional evaluation office told.

Pinta Verde is located 4km north of Escondida's main deposit, which is the largest copper operation in the world.

Previous drilling at the target identified the presence of near surface oxide mineralization and the company is looking to carry out further tests and develop economic studies to evaluate the potential mining of the resources.

The campaign will run for 19 months and works are expected to start immediately.

Multinational resource group BHP Billiton (NYSE: BHP) controls 57.5% of Escondida. Rio Tinto (LSE: RIO) owns 30% while two JVs led by Mitsubishi hold the remainder.

Eldorado profits up to US$319mn in 2011

Vancouver-based Eldorado Gold's (TSX: ELD, NYSE: EGO) profit attributable to shareholders rose to US$319mn in 2011 from US$221mn in the prior year, according to the company's annual financial results.

Revenues reached US$1.1bn in 2011, up 38.8% from US$791mn the previous year.
Net earnings from gold mine operations amounted to US$611mn, up from US$401mn in 2010.
Cash generated from operating activities increased 40% to US$502mn in 2011, from US$358mn a year earlier.


Eldorado produced 658,652oz of gold, up 4% from 632,539oz, and 537,958t of iron ore in 2011.
Cash costs were US$405/oz and US$64/t, respectively.

The increase in iron ore output reflects the first full year of production at the company's only iron ore operation, the Vila Nova mine in Brazil's Amapá state.

In Brazil, Eldorado also has the Tocantinzinho gold project in Pará state. The company expects to make a construction decision on Tocantinzinho this year, pending the results of a feasibility study in the second quarter and the approval of the environmental impact study (EIS), expected in Q3.


Eldorado is expecting iron ore production of 560,000-600,000t at a cash cost of US$65-US$75/t this year at Vila Nova. Capital expenditure at the operation is set at US$10mn.
Gold guidance for 2012 is set at 730,000-775,000oz at a cash cost of US$430-US$450/oz.
The company is forecasting an average iron ore price of US$100/t and a gold price of US$1,700/oz in 2012.


The global exploration budget for 2012 is estimated at US$66mn, with around US$16mn earmarked for Brazil.
Eldorado also has mines in Turkey, China and Greece.
To read the full results, go to this link

Gold Fields' Chucapaca should include social development plans, expert says

South Africa-based Gold Fields (NYSE: GFI) should include social development plans in the environmental impact study (EIS) for its Chucapaca project in Peru's Moquegua region, mining consultant Leopoldo Monzón
"To ensure the social license [the company must include] development plans for all the provinces and districts in the area of influence with their respective infrastructure projects; an aggressive water program for the entire area of influence, which should be extended as much as possible; and third, the implementation of the Sierra Productiva program," Monzón said.

Sierra Productiva promotes sustainable farming in the highlands based on water storage and technified irrigation.

Chucapaca is a 51:49 JV between Gold Fields and local miner Buenaventura (NYSE: BVN).
The feasibility study for the project is on track for completion in H1 and baseline field work for environmental permitting is complete. The EIS is scheduled to be submitted during H2. Construction is set to start in the first quarter of 2013 and operations in 2015, according to the company.

The project has an estimated resource of 7.6Moz of gold equivalent and average production from Chucapaca is expected to be 500,000oz/y.

Gold Fields' only operating mine in South America is Cerro Corona in Peru's Cajamarca region. The company set 2012 guidance for the mine at 325,000-350,000oz of gold equivalent at a total cash cost of US$515/oz.

The company is carrying out an optimization project to increase recoveries and throughput at Cerro Corona and expects a prefeasibility study for an oxides project to be ready in 2Q12, with construction to start in 2Q13 and production in 2Q14.

In South America, Gold Fields has greenfield exploration projects in Peru, Chile and Argentina and plans to be producing 1Moz/ in the region by 2015.

The company also has producing mines in South Africa, Ghana and Australia.

Newmont posts record 2011 operating cash flow of US$3.6bn, revenue of US$10.4bn

US-based Newmont Mining (NYSE: NEM) reported record operating cash flow of US$3.6bn for last year, up 13% from 2010.
Adjusted net income was a record US$2.2bn, compared with US$1.9bn in the prior year, according to the firm's annual results.

Income from continuing operations totaled US$502mn, compared with US$2.3bn in 2010.
Income from continuing operations was impacted by US$1.6bn from the non-cash write-down of the company's Hope Bay project in Canada.

Newmont posted record revenue of US$10.4bn, up 9% from 2010.
Attributable gold output reached 5.2Moz, while copper production totaled 206Mlb (93,440t), down 4% and 37%, respectively, from 2010.

Gold and copper costs applicable to sales were US$591/oz and US$1.26/lb, up 22% and 58%, respectively, in 2011.

Record average realized gold and copper prices of US$1,562/oz and US$3.54/lb were up 28% and 3%, respectively.

The company also had record gold reserves of 98.8Moz, an increase of 5.6%, and record copper reserves of 9.7Blb, an increase of 3.2%.

In Latin America, Denver-based Newmont's main assets is a controlling stake in Peru's Yanacocha gold mine.

Mining experience should be complementary, adjusted to local reality, says ex-minister

Each country's experience in mining issues should serve as a complement for other countries, rather than a model, Chile's former mining minister Karen Poniachik told BNamericas."Each country has developed its own institutional framework, its rules in the context of its own realities; and Chile's experience - more than a model - can be used to learn and understand certain formulas that may serve Colombia," Poniachik said.

Nevertheless, Chile has made progress on legal, environmental and institutional issues and environmental impact assessments, which have served as examples for Colombia, she said.
"Likewise, things that we see in Colombia, such as decentralization, are issues that can serve as examples for what we can do in Chile," Poniachik said.

In the latest report from Canada's Fraser Institute highlighting the most attractive countries for mining investment, Chile dropped from 8th to 18th place with a score of 75.3 points, compared to the previous year's 81.3 points.
Chile's score was impacted by low results in indexes such as room for improvement, trade barriers and even in political stability, mainly as a result of recent civil protests over several issues such as education.

Colombia fell from 51.2 points last year to 38.0 points, suggesting continued uncertainty in the mining community about policies and political stability in the country, according to the survey.
Latin America's overall average score also declined from 34.3 points to 29.6 points.

Gener eyeing mining PPAs for Cochrane project

Chilean generator AES Gener is eyeing power purchase agreements (PPAs) with Chile's rapidly expanding mining industry for its 552MW Cochrane coal-fired project set for northern region II, according to Andrés Gluski, CEO of parent company AES.

"There's a very big expansion of the mining sector in Chile, people have talked about numbers of US$50bn of new investment, and they will need energy, so right now we are talking to various counter parties to see if we can get a PPA," Gluski said during a webcast.

"[Cochrane] is basically a second Angamos project if you think about it, and we have the best track record for delivering projects on time, so we are in a very strong position right now."
The Cochrane plant is expected to come online in 2015 and is being built next to the existing 518MW Angamos thermo plant, commissioned by Gener mid-way through last year.

According to the CEO "good progress" on the Cochrane facility, which will also be linked to a 24MW lithium battery energy storage system, has already been made.
Gluski also added that Gener is expected to bring its 270MW Campiche coal-fired thermo plant online during the first half of next year.

Construction of the thermo plant set for central region V resumed at the end of 2010 after being suspended by the country's supreme court for over a year due to a legal challenge by local communities.

AES reported revenues of US$4.2bn for 4Q11 and US$17.2bn for the full-year 2011, up 0.9% and 8.3% respectively from a year earlier. The firm's Latin American operations and utilities, which include units in Chile, Brazil, Colombia and Panama, accounted for 68% of quarterly and 69.5% of annual revenues.

Net income for 2011 hit US$1.5bn compared to US$1.05bn in 2010

Barrick CEO sees further dividend increases

TORONTO – Barrick Gold, the world's largest gold miner, expects to continue to increase dividends aggressively given the bullish outlook for gold, Chief Executive Aaron Regent said on Monday.

"We do have a policy of paying an aggressive dividend and we expect this trend to continue into the future, particularly given the financial performance and the outlook for the business," Regent said at the BMO Global Metals and Mining Conference in Hollywood, Florida.

"One should expect to see growing dividends as part of the Barrick story."

Over the last five years, Barrick has increased its dividend by about 170%, including a 25% boost last year.

Last October, Barrick raised its quarterly dividend payout to 15 cents a share from 12 cents a share.

A surge in the price of gold has propelled earnings for gold miners higher over the past year, and many miners, including Goldcorp, Kinross, Newmont and others have boosted dividend payouts.

Copper prices to remain high in 2012

Despite some price retracing in 2011, the copper physical market fundamentals remain strong; with liquid stocks near an all-time low. China’s growth will continue to underpin copper’s performance although it may not be the “market saviour” that it was in 2009. In the longer term, according to Intierra Resource Intelligence, increased mine supply will temporarily overwhelm the market. This will create a dip in the price of copper from 2014 to 2017 followed by a recovery in the last part of the decade. Production costs will become more of a factor in determining the price of copper and these costs are higher than in the past.

Intierra’s Executive Director, Glen Jones, will present Copper: Market Dynamics and the Exploration Pipeline at the PDAC 2012 Conference in Toronto, Canada on Sunday March 4 at 2:15 pm. This talk is part of the Commodities and Market Outlook session.

The PDAC four-day annual Convention held in Toronto, Canada has grown in size, stature and influence since it began in 1932 and today is the event of choice for the world’s mineral industry. In addition to meeting over 1,000 exhibitors and 27,000 attendees from 120 countries, it allows the opportunity to attend technical sessions, short courses, the Prospector’s Tent, the Core Shack as well as social and networking events.

Junior acquisitions, financing roundup: Newstrike, Mariana, Mammoth

Toronto-based Newstrike Capital (TSX-V: NES) entered into an agreement with a syndicate of underwriters led by Cormark Securities for a bought deal private placement of 8mn common shares at Cdn$3.10 each for proceeds of Cdn$24.8mn (US$24.9mn), the former said in a statement.

The offering is scheduled to close on or about March 20 and proceeds will be used for continued exploration of the Ana Paula project as well as other exploration activities within Mexico's Guerrero gold belt, and for general corporate purposes and working capital.

The syndicate also includes GMP Securities, Scotia Capital, Euro Pacific Canada, Desjardins Securities, Macquarie Capital Markets Canada and Raymond James (NSE: RJF).

Vancouver's Mammoth Resources (TSX-V: MTH) and compatriot Yale Resources (TSX-V: YLL) amended and restated the terms of the option agreement under which the former can acquire up to a 100% stake in the latter's Urique gold-silver project in Mexico.

Under the new terms, Yale agreed to contribute a total of Cdn$125,000 towards taxes owing on concessions comprising the Urique property during the term of the amended agreement, Mammoth said in a statement.

In addition, scheduled issuances of Mammoth common shares to Yale, deadlines for incurring expenditures and exercising options granted under the original agreement's terms have been changed to align with tax payment deadlines, and certain share issuances have been made conditional upon the receipt of such contributions from Yale.

Also, the first year's expenditures of Cdn$300,000 has been combined with the second year's expenditures so that Mammoth must now incur a total of Cdn$800,000 prior to the second anniversary, the statement said.

Channel Islands-registered Mariana Resources (TSX: MRY, AIM: MARL) completed the purchase of the remaining 30% interest in the 7,000ha Sierra Blanca gold-silver project in the Deseado Massif area of Argentine province Santa Cruz held by Canada's IAMGOLD (TSX: IMG, NYSE: IAG).
The project is now 100% owned by Mariana, subject to a 1.5% NSR held by IAMGOLD, the former said in a statement.

This second tranche of the purchase option comprised a USD$250,000 payment and the issue of 1.64mn shares.

The first tranche was completed on November 18, 2011 with the payment of US$250,000 and issue of 1.69mn shares.

Under an agreement between Mariana and South African AngloGold Ashanti (NYSE: AU), the latter has the right to maintain its equity interest in the former at 19.89%. AngloGold exercised this right and Mariana issued a further 406,147 shares.

Junior acquisitions, financing roundup: Newstrike, Mariana, Mammoth

Toronto-based Newstrike Capital (TSX-V: NES) entered into an agreement with a syndicate of underwriters led by Cormark Securities for a bought deal private placement of 8mn common shares at Cdn$3.10 each for proceeds of Cdn$24.8mn (US$24.9mn), the former said in a statement.
The offering is scheduled to close on or about March 20 and proceeds will be used for continued exploration of the Ana Paula project as well as other exploration activities within Mexico's Guerrero gold belt, and for general corporate purposes and working capital.

The syndicate also includes GMP Securities, Scotia Capital, Euro Pacific Canada, Desjardins Securities, Macquarie Capital Markets Canada and Raymond James (NSE: RJF).

Vancouver's Mammoth Resources (TSX-V: MTH) and compatriot Yale Resources (TSX-V: YLL) amended and restated the terms of the option agreement under which the former can acquire up to a 100% stake in the latter's Urique gold-silver project in Mexico.

Under the new terms, Yale agreed to contribute a total of Cdn$125,000 towards taxes owing on concessions comprising the Urique property during the term of the amended agreement, Mammoth said in a statement.

In addition, scheduled issuances of Mammoth common shares to Yale, deadlines for incurring expenditures and exercising options granted under the original agreement's terms have been changed to align with tax payment deadlines, and certain share issuances have been made conditional upon the receipt of such contributions from Yale.

Also, the first year's expenditures of Cdn$300,000 has been combined with the second year's expenditures so that Mammoth must now incur a total of Cdn$800,000 prior to the second anniversary, the statement said.

Channel Islands-registered Mariana Resources (TSX: MRY, AIM: MARL) completed the purchase of the remaining 30% interest in the 7,000ha Sierra Blanca gold-silver project in the Deseado Massif area of Argentine province Santa Cruz held by Canada's IAMGOLD (TSX: IMG, NYSE: IAG).
The project is now 100% owned by Mariana, subject to a 1.5% NSR held by IAMGOLD, the former said in a statement.

This second tranche of the purchase option comprised a USD$250,000 payment and the issue of 1.64mn shares.

The first tranche was completed on November 18, 2011 with the payment of US$250,000 and issue of 1.69mn shares.

Under an agreement between Mariana and South African AngloGold Ashanti (NYSE: AU), the latter has the right to maintain its equity interest in the former at 19.89%. AngloGold exercised this right and Mariana issued a further 406,147 shares.

Junior exploration roundup: Vista, Cream, Batero

US-based Vista Gold (TSX, Amex: VGZ) announced additional results from the ongoing drilling program at the Guadalupe de los Reyes gold-silver project in Sinaloa, Mexico.
Gold equivalent highlights included 2m of 22.6g/t, 8.9m of 15.7g/t, including 5.3m grading 24.5g/t, and 15m of 5.51g/t, including 6.3m of 11.0g/t, Vista said in a statement.
Vancouver's Cream Minerals (TSX-V: CMA, OTC.BB: CRMXF) announced in-fill drill results for four holes testing the Once Bocas North zone at the Nuevo Milenio project in Mexico.
Highlights included 63.7g/t silver and 0.30g/t gold over 22m, including 114g/t silver and 0.55g/t gold over 8m, and 259g/t silver and 1.28g/t gold over 2m; 53.4g/t silver and 0.37g/t gold over 8m, including 185g/t silver and 1.05g/t gold over 2m; and 70.9g/t silver and 0.51g/t gold over 4m, including 110g/t silver and 0.53g/t gold over 2m, Cream said in a statement.
Vancouver-based Batero Gold (TSX-V: BAT) announced the initial NI 43-101 compliant resource estimate for the Batero-Quinchía project in Risaralda, Colombia.
Indicated resources total 249Mt grading 0.44g/t gold, 1.54g/t silver and 0.08% copper containing 3.55Moz, 12.3Moz and 438Mlb (198,673t), respectively, Batero said in a statement.
Inferred resources amount to 242Mt grading 0.33g/t gold, 1.8g/t silver and 0.06% copper containing 2.59Moz, 14Moz and 320Mlb, respectively.

To read the full statement, go to this link

Near-mine exploration programs yield strong results for Endeavour Mining

MONACO, Feb. 23, 2012 /CNW/ - Endeavour Mining Corporation ("Endeavour" or the "Corporation") (TSX:EDV, ASX:EVR) is pleased to report the results from the successful 2011 exploration programs and provide an overview of the 2012 work plans for the Nzema gold mine in Ghana and the Youga gold mine in Burkina Faso. Total attributable measured and indicated mineral resources have increased to 3.8 million gold ounces plus 1.4 million gold ounces inferred as of December 31,
2011 at a 0.5 g/t cut-off (see Table 1 at the end of this news release).
Highlights include:

Youga gold mine, Burkina Faso

-- 49% increase in proven and probable reserves (a gain of 179,000 ounces; net of 2011 depletion) and extension of mine life to 7.3 years (see Table 2 at end of this news release)

-- Addition of 172,000 ounces of measured and indicated mineral resources (net of 2011 depletion, at a 0.5 g/t cut-off) from the Main and East hanging wall mineralization and the satellite deposits

Nzema gold mine, Ghana

-- Addition of 65,000 ounces of measured and indicated mineral resources (net of 2011 depletion, at a 0.5 g/t cut-off), plus a 40% increase of inferred mineral resources of 186,000 ouncesat a 0.5 g/t cut-off

-- Updated Nzema reserves are currently being prepared for reporting in the next few weeks 2012 Exploration Budget

- Exploration budget of US$30 million for 2012 to continue resource delineation, test deposit extensions and exploration of new targets including $7.5 million allotted to Youga and $8.1 million to Nzema mine permits. The 2012 exploration budget includes +200,000 metres of drilling.

Alliance Resource Partners, L.P. Announces Agreement to Acquire Illinois Basin Coal Assets

Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced that Alliance Coal, LLC (“Alliance Coal”), its wholly-owned subsidiary, has entered into a definitive agreement with Green River Collieries, LLC (“Green River”) to acquire substantially all of its coal-related assets located in Webster and Hopkins Counties, Kentucky. The transaction includes the Onton No. 9 mining complex and an estimated 40.0 million tons of coal reserves in the West Kentucky No. 9 coal seam.
“Strategically the acquisition of Green River further expands our presence and enhances ARLP’s existing operating platform in the growing Illinois Basin coal market”

ARLP currently anticipates consummation of the proposed transaction following the completion by Green River of certain closing requirements.

“Strategically the acquisition of Green River further expands our presence and enhances ARLP’s existing operating platform in the growing Illinois Basin coal market,” said Joseph W. Craft III, President and Chief Executive Officer. “The Onton No. 9 mine is an attractive addition to our current operations in western Kentucky and provides ARLP with increased flexibility to service our existing customer base. We look forward to welcoming Green River’s employees and management to the Alliance team.”

The Onton No. 9 mine is an underground mining complex which uses three continuous mining units employing room-and-pillar mining techniques. The mine currently produces annually an estimated 2.1 million tons of coal and employs approximately 315 workers. Green River is in the process of completing an air shaft which would allow the addition of a fourth continuous mining unit should market conditions warrant increased production from the mine. Essentially all of the planned 2012 production from the mine is committed and priced under Green River contracts with existing ARLP customers.

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership’s distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, ARLP’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

Guyana Goldfields Completes Positive Feasibility Study for its Aurora Gold Project in Guyana

Guyana Goldfields Inc. (TSX: GUY) ("GGI" or "the Company") is pleased to announce positive Feasibility Study results for its 100% owned Aurora Gold Project in Guyana, South America. The NI 43-101 Feasibility Study report will be compiled under the supervision of SRK Consulting (Canada) Inc. ("SRK") with contributions provided by prominent industry consultants. A conference call will be held today by Guyana Goldfields management at 11:00 am Eastern Time to further discuss the results (see details at the end of this release).

The Aurora Gold Project is expected to have a positive impact on the economy of Guyana by maximizing employment, skills training, and generating business opportunities for local suppliers and service providers. The Company is dedicated to becoming a leading corporate citizen and a productive partner in the future of Guyana's economy. The Aurora Gold Project is presently the only large-scale licensed gold mine development project in Guyana and will be the next producing gold mine in the country in late 2014.

All figures in this release are in US dollars except where noted. All figures include contingency where applicable.

At a recent spot gold price of $1,775/oz and $100/barrel WTI Crude Oil, pre-tax NPV increases to $1.7 billion at a 5% discount rate generating a pre-tax IRR of 28.6% with cash costs of $522/oz (pre-royalty).

Claude Lemasson, President and COO, stated: "The completion of the Feasibility Study is a major accomplishment for the Company, establishing the Aurora Gold Project as Guyana's largest undeveloped gold reserve in the country's history. The positive results confirm that the Aurora Gold Project is poised to become a future significant gold producer in Guyana and in the Guiana Shield. Construction on the project is expected to commence later this year and will last for approximately 24 months."


An independent third party review of the Feasibility Study was initiated last month as well as an internal review by Guyana Goldfields which are both ongoing.

Sylvania Platinum to dispose of its iron-ore assets

JOHANNESBURG – ASX- and Aim-listed Sylvania Platinum, a low-cost producer and developer of platinum-group metals (PGMs), on Monday said it would move forward with its intention to dispose of its iron-ore assets.
Sylvania would sell its iron-ore assets, located on the Bushveld Complex in South Africa, to focus on expanding its PGM tailings dumps, and the development of the northern limb PGM and base metal surface mining operations.

The company currently has five PGM tailings dumps in operation.

Sylvania said it was in discussions with an Aim-listed company, which would acquire the iron-ore assets and issue equity to Sylvania as payment for the assets.

“Although there can be no certainty that any purchase will be agreed on, if such a purchase was finalised, the directors intend to distribute the shares in the purchaser to Sylvania's shareholders as a dividend ‘in kind’, which would result in the Sylvania shareholders holding the majority of the shares in the purchaser,” the company said in a statement.

Such a transaction would require regulatory and shareholder approvals and be subject to due diligence by both parties and formal documentation being negotiated.

“The board believes that selling the iron-ore assets to another entity and returning shares in the purchaser to Sylvania shareholders is the optimal means to deliver value to shareholders and allow the company to focus on reaching its production targets and development goals,” Sylvania stated.

The iron-ore assets are currently held by wholly owned subsidiaries SA Metals and Great Australia Resources, which Sylvania acquired in September 2009.

African Rainbow Minerals earnings up 24%

JOHANNESBURG – The half-year headline earnings of diversified miner African Rainbow Minerals (ARM) increased 24% to R1.94-billion in the six months to December 31.

Cash generated from operations increased by 25% to R2.56 billion, compared with R2.05-billion for the same period in 2011.

The company, which is not an operator but a portfolio manager, was boosted by the increased sales volumes of iron ore, manganese ore and manganese alloys through its black economic empowerment of Assmang; platinum group metals, nickel and chrome concentrate through its empowerment partnership with Implats, Amplats and Norilsk; and Eskom thermal coal through its empowerment partnership with Xstrata.

It has net cash – excluding partner loans – of R1.66-billion.

Growth projects from which it is continuing to benefit are Assore’s Khumani iron-ore expansion project from 10-million tons a year to 16-million tons a year, which is currently ramping up production well ahead of schedule.

The Nkomati Nickel large-scale expansion project with Norilsk is ramping up; Xstrata Coal’s Goedgevonden coal-mine reached design capacity and Vale’s Konkola North copper project in Zambia continues to advance on schedule and within budget. Commissioning of the concentrator plant is expected in December.

ARM, headed by executive chairperson Patrice Motsepe, says the South African government’s commitment to invest substantially in rail, port and electricity accelerates growth within its partnerships.

Iron-ore sales increased from four-million tons to 6.8-million tons; nickel sales increased 21% from 4 300 t to 5 200 t and manganese alloy sales 20% from 87 000 t to 104 000 t.

The initial drilling results across 10 612 m for the second phase of the Konkola North copper project are reportedly encouraging, with total production expected to increased to 100 000 t/y of copper.

ARM’s partners are working on expanding their iron-ore operations and increasing manganese ore production and expanding the Modikwa and Two Rivers platinum mines.

The target is to have all operations, with the exception of Nkomati Nickel, positioned below the 50th percentile of each commodity’s respective global cost curve by the end of 2012, with Nkomati is expected to reach this target in 2014.

Assmang has converted one furnace at the Machadodorp works from ferrochrome to ferromanganese and a further two furnaces will be converted by the end of the 2012.
ARM expects Konkola North to produce be producing copper below the median world production cost by 2015.


ARM’s CEO succession process involves new designated CEO Mike Schmidt taking over from Andre Wilkens on March 1, with Wilkens continuing as executive director growth and strategy, based in Motsepe’s office.

Six-months sales for the reporting period were 30% higher than the corresponding period last year at R8.72-billion (1H F2011: R6.71-billion).

The consolidated average gross profit margin of 38% is lower than the corresponding period (1H F2011: 41%) owing to decreased dollar commodity prices for manganese ore, ferromanganese alloys, rhodium and nickel, coupled with inflation unit cost increases for iron ore, nickel and coal.

Nkomati operated at a gross loss for the period, hit by waste-stripping costs as the mine improves mining flexibility.

ARM’s earnings before interest, tax, depreciation and amortisation were R3 635-million, which represents an increase of 17% or R532 million on 2011.