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Posts tagged ‘AngloGold Ashanti (AU)’

Investors pour into gold stocks: Barrick gains $7bn in 7 weeks

August 23rd, 2013

by Frik Els | August 23, 2013 | Reprinted by permission of Mining.com

The gold price made a serious attempt to scale the psychologically important $1,400 level on Friday, sending investors scurrying for gold mining stocks.

Bullion bulls are celebrating an 18% jump in the price of gold since the metal hit multi-year lows below $1,200 at the end of June.

Barrick Gold TSX:ABX gained 3% to $21.20 on Friday, up an astounding 49% in just seven weeks.

The Toronto-based global No. 1 gold miner continues to recover from 21-year lows of $14.22 struck on July 5, following a string of setbacks at the company.

Barrick is now worth $21 billion on the TSX, gaining $7 billion in market value in as many weeks. The company, which has written down the value of its assets by some $13 billion this year, peaked at a market capitalization in January 2011 of more than $54 billion.

Gains for Newmont Mining NYE:NEM have been more modest, but the $16.4-billion Denver-based company, which hopes to mine around five million ounces this year, is still up nearly 20% since gold’s June 28 low.

Goldcorp is the best performer of the gold majors, keeping its 2013 market value losses to 10% despite the 16% drop in the gold price this year.

The world’s third-largest gold producer in terms of ounces mined, AngloGold Ashanti NYE:AU gained 3.3% on Friday, but the Johannesburg-based company has made few strides on the back of the resurgent gold price.

Shares of the company are still down 45% year-to-date as it struggles with unrest in its home country’s mining sector and falling gold output. In dollar terms AngloGold’s JSE-listed shares have performed even worse, down 10% as the rand continues to slide against the U.S. and Canadian dollar.

Fellow South African miner Gold Fields NYE:GFI was the lone counter in the red on Friday as the company suffered a second day of losses in reaction to its purchase of three Barrick gold mines.

Gold Fields’ acquisitions in Australia will add more than 400,000 to its annual output, putting it within range of the mined ounces of Canada’s Goldcorp TSX:G, which expects to produce between 2.5 million and 2.8 million ounces in 2013.

Vancouver-based Goldcorp, the world’s most valuable listed gold company, added 2.4% on Friday, pushing its market value to $26.6 billion.

Goldcorp is the best performer of the gold majors, keeping its 2013 market value losses to 10% despite the 16% drop in the gold price this year.

Canadian peer Kinross Gold TSX:K—which this year expects to produce between 2.4 million to 2.6 million ounces—traded up more than 3%.

Australia’s Newcrest Mining TSX:NM jumped more than 5% on the Sydney bourse.

The 2-million to 2.3-million-ounce producer is still 43% cheaper than at the start of the year after suffering $6 billion in writedowns, a dividend cut and an investigation by Australian market regulators prompted by suspicious price movements.

See also: Friday rally sets up gold price breakout.

Reprinted by permission of Mining.com

Top gold producers in SA downgraded by HSBC to “sell”

August 12th, 2013

by Cecilia Jamasmie | August 12, 2013 | Reprinted by permission of Mining.com

South African top gold producers AngloGold Ashanti NYE:AU, Harmony Gold NYE:HMY and Sibanye Gold NYE:SBGL were downgraded to sell by HSBC, which said the lower price of the metal is cutting margins at the companies currently dealing with labour disputes.

The mining industry in Africa’s No. 1 economy failed to contain costs during a decade-long bull market in gold and it is now badly placed to manage the pressures that come from lower prices, HSBC analysts led by Johannesburg-based Derryn Maade wrote in a note released last week, reports Commodity Fundamentals.

Gold producers represented by the Chamber of Mines of South Africa (CMSA), are in dispute with South Africa’s four biggest labour unions after workers rejected a 5% raise offer.

South Africa’s two main mining sectors, platinum and gold, are under pressure from spiralling costs and weaker commodity prices. Their representatives have warned that any significant increase in wages will risk more job losses and trigger closures.

Wage negotiations are expected to run until the end of the year.

Reprinted by permission of Mining.com

Week in review

December 14th, 2012

A mining and exploration retrospect for December 8 to 14, 2012

by Greg Klein

Next Page 1 | 2

U.S. politicians ponder windfall royalties

The United States has joined the list of countries considering additional ways to mine miners, according to a Wednesday Reuters story. Some American politicians are talking about royalties as high as 12.5%, the same benchmark applied to certain other resources, including oil and gas.

Reuters said the proposal would get about $700 million during the lifespan of Freeport-McMoRan’s copper-molybdenum operations in Colorado, Arizona and New Mexico. Last year alone, the royalty could have taken $150 million from Barrick’s TSX:ABX Goldstrike mine in Nevada, according to Reuters’ figures. Barrick told the news agency the company’s taxes have already jumped four-fold over five years.

Democrat Representative Raul Grijalva, a proponent of the 12.5% levy, sees it differently. “As we face these fiscal challenges, these are the pennies that we should pinch,” Reuters quoted him. Along with some other U.S. federal politicians, Grijalva also wants to review miners’ tax breaks.

Previous attempts to raise miners’ taxes have failed, Reuters stated, “as the industry has strong political allies.” The story added that “state and local governments often catch a windfall from mining revenue.”

Ivory Coast hikes taxes but overestimates profits, miner says

A mining and exploration retrospect

A new tax on Ivory Coast gold extraction underestimates cash costs by nearly 50%, according to at least one source. New legislation that applies to 2012 production assumes cash costs of $615 an ounce, Reuters stated on Friday. The tax on “profits” above that amount will fluctuate with the yellow metal’s price. At $1,600, that comes to 17%. The rate will be lower for companies that pay the country a corporate tax, the news agency added. Randgold Resources CEO Mark Bristow called the new levy, expected to raise $79.8 million, a “punitive tax,” Reuters said.

In a December 7 Bloomberg report, Endeavour Mining TSX:EDV spokesperson Nouho Kone said Ivory Coast gold production can actually cost between $1,000 and $1,200 an ounce. “The worst-case scenario would be to see companies shut down their mines in the short term,” he told Bloomberg. Reuters stated that Perseus Mining TSX:PRU put its $160-million Sissingue project on hold last September “pending clarification of the fiscal regime applicable to the project.”

Maybe Ghana too

Ghanaian President John Dramani Mahama’s re-election brings to mind his previous effort to impose a 10% tax on windfall profits, Monday’s Financial Post reported.

The government had already raised miners’ corporate taxes from 25% to 35% and imposed “a uniform regime for capital allowance of 20% for five years of mining,” the FP stated. But the government’s intended windfall tax had been shelved due to industry pressure, according to a Wednesday Reuters dispatch.

Reuters added that government discussions with gold miners are underway “to loosen up so-called ‘stability agreements’ held by some firms that lock in royalty and tax rates.” This year Ghana raised gold royalties from 3% to 5%, but the stability agreement exempted companies like AngloGold Ashanti and Newmont Mining TSX:NMC, the news agency stated.

Unions lose bid to block foreign workers from staffing B.C. mine

HD Mining International called it a “massive victory,” the Globe and Mail reported Friday. A federal court judge has allowed the company to import Chinese workers for its proposed Murray River coal mine in British Columbia. Two unions had applied for an injunction blocking the work permits after learning that HD Mining planned to staff its underground operation exclusively with Chinese workers—which would total over 400 at full production.

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Week in review

October 19th, 2012

A mining and exploration retrospect for October 13 to 19, 2012

by Greg Klein

Unhappy birthday. Many unhappy returns

With Friday marking Black Monday’s 25th anniversary, pundits around the world reflected on the calamity, its causes and whether it helped set off the financial crises that followed. Among the not-reassuring news for the future was this headline from Thursday’s Der Spiegel: “Euro Exit by Southern Nations Could Cost 17 Trillion Euros.”

Referring to a study by an economic research group called Prognos, the German weekly stated, “The researchers arrived at a particularly bleak assessment because they didn’t just calculate the losses of creditors who had lent money to the crisis-hit nations. They also analysed the possible impact of a euro collapse on economic growth in the 42 most important industrial and emerging economies that make up more than 90% of the world economy.”

Prognos predicated that result on a chain reaction set off by Greece reverting to the drachma. But keeping Greece also has its costs, as another headline from Thursday’s Der Spiegel stated: “Corruption Continues Virtually Unchecked in Greece.”

Chinese companies bring Canada investment, skills, controversy

Revelations continued this week about a plan by Chinese interests to import Chinese workers to staff four proposed British Columbia coal mines. The first 200 are expected to arrive any time now, with possibly 2,000 more to come.

A mining and exploration retrospect for October 13 to 19, 2012

On Monday Mark Olsen, President of the Bargaining Council of B.C. Building Trade Unions, called the plan “simply a strategy to employ lower-paid workers who are compliant with the culture of coal mining in China … a culture which leads them to accept the possibility of death as a cost of having a job.”

Also on Monday, Vancouver Sun columnist Daphne Bramham noted that the workers will be “indentured” to one employer, “dependent on staying in the company’s good graces in order to hold their jobs [and] in a remote area fully reliant on [their employer] for help in getting housing, health care and ensuring their safety.”

The companies’ rationale was partly based on insufficient response to job ads posted in Canada. But another story in Monday’s Vancouver Sun stated that the ads offered wages far below Canadian standards. “Chances are they won’t find an underground miner (in Canada) who will work for $25 an hour,” said the manager of one mining personnel agency. “I mean, they’re putting their lives at risk.”

Additionally, Olsen stated that neither the federal nor provincial government “has a mechanism in place to verify the wages these foreign workers actually receive.”

More news hit the fan on Tuesday when the United Steelworkers revealed that at least four of those Canadian job ads, for approximately 70 positions, required applicants to speak Mandarin.

According to a Tuesday Vancouver Province column by Michael Smyth, B.C. Minister of Jobs, Tourism and Skills Training Pat Bell claimed, “This is a unique situation for the next six to eight months. Once those mines go into full production, I expect those jobs will be filled by British Columbians first and Canadians second.”

On October 11, however, HD Mining International spokesperson Jody Shimkus told ResourceClips that the first of the four proposals, the Murray River Project, will probably rely on Chinese underground workers for 10 years after its projected 2015 start date.

On Thursday a labour-sponsored online journal called the Tyee stated that two companies recruiting miners in China were charging exorbitant fees. A reporter who responded to ads on a Chinese Web site was told applicants pay about $4,700 in advance, approximately two and a half years’ salary for a Chinese miner. Once working in Canada, the miner would pay another $7,800 in $400 monthly instalments.

The fees are illegal in B.C. The wages offered by the recruiter were $22 to $25 an hour, the Tyee stated, below the minimum $25 that the company claimed in Canadian job ads.

But two solid weeks of wide-ranging controversy haven’t stopped Canadian Dehua International Mining Inc from picking up another acquisition. On Friday Lions Gate Metals TSXV:LGM announced a $15-million LOI in which Canadian Dehua may option 100% of the 77,705-hectare Poplar Copper-Gold-Silver Project in west-central B.C. The agreement is subject to shareholder and regulatory approval.

A big-time B.C. operator Canadian Dehua may be, but its Web site reads like a parody of broken English. Here’s just one example, about the Murray River Project:

Proved and inferred reserves the coal seam area is 17 square kilometers.

That would be an especially interesting use of NI 43-101-ish terminology were the Vancouver-headquartered company a reporting issuer in any Canadian jurisdiction. B.C. Securities Commission spokesperson Richard Gilhooley would only tell ResourceClips that Canadian Dehua is “not currently listed on SEDAR, which is where issuers typically are.”

Plan Nord not dead, just modified

Following dismissive comments by her mining minister, Quebec Premier Pauline Marois saw fit to reassure French investors that Plan Nord will go ahead after all. Prior to the province’s September 4 election, Marois had spoken of altering the former government’s proposed $2.1-billion in public funding for an infrastructure program. On October 1 La Press reported that Quebec Natural Resources Minister Martine Ouellet said Plan Nord was merely a “marketing” strategy for projects that were already underway or in planning. But on Wednesday the Nunatsiaq News reported that a modified Plan Nord “could involve companies chipping in financially or giving Quebec shares if Quebec built a road or a port in northern Quebec, and the company benefitted from this infrastructure. These changes will be made ‘in the coming months,’ Marois said. ‘But we remain focused on the development of the North.’”

Iron ore an indulgence or a strategic asset?

In a Thursday story picked up by media including the Globe and Mail, the Financial Times reported that the world’s largest steelmaker is considering selling a chunk of its Canadian assets. Sources told the FT that ArcelorMittal might put 30% of its Canadian operations, which total some $8 billion to $10 billion, up for grabs.

ArcelorMittal Mines Canada produces about 15 million tonnes of iron ore concentrate and 9 million tonnes of iron oxide pellets annually, accounting for approximately 60% of Canada’s total production. The company’s Mont-Wright and Fire Lake mines in Quebec’s Labrador Trough region were slated for $2.1 billion in upgrades by 2013. But according to the FT, “One sector specialist described ownership of iron ore assets as an ‘indulgence’ in the current environment.”

Iron ore prices plummeted in August due to a situation in China variously described as over-supply, slumping demand or a buyers’ strike. China is the world’s largest importer of iron ore.

In July 2011 Forbes reported China’s intention to “break the grip” of its three main suppliers, Vale, Rio Tinto and BHP Billiton, which together provide 62% of China’s imports. Li Xinchuang, Deputy Secretary-General of the China Iron & Steel Association, told media his country should get more than half its supply from Chinese-invested mines overseas.

The FT stated that “Chinese companies and commodities trading houses had expressed an interest” in ArcelorMittal’s Canadian operations.

South Africa updates

Junk status looms for AngloGold Ashanti and Gold Fields as Standard & Poor’s considers lowering the companies’ debt ratings, Bloomberg reported on Thursday.

On Friday Kitco.com provided another weekly update of 12 major companies operating in South Africa.

[The plan to staff Canadian mines with Chinese workers is] simply a strategy to employ lower-paid workers who are compliant with the culture of coal mining in China … a culture which leads them to accept the possibility of death as a cost of having a job.—Mark Olsen, President of the Bargaining Council of B.C. Building Trade Unions

E-Caddy shows EV commitment

The bankruptcy of an e-car battery manufacturer reported on Tuesday might have reflected negatively on prospects for graphite and lithium, not to mention the environment. But the same day General Motors got a jolt of publicity for its 2013 electric Cadillac.

Battery builder A123 Systems filed for bankruptcy protection after a US$249.1-million government grant failed to save the company. In a Tuesday press release A123 stated that Johnson Controls plans to acquire A123’s automotive business assets in a $125-million transaction.

GM’s new model shows an EV commitment despite disappointing sales for its better-known Chevy Volt. Sales never lived up to the company’s initial expectations, although steep discounts have more recently given it the middling distinction of “outselling about half of all cars marketed in the U.S.

American projections are just part of a much bigger market. According to a TechSci research report published in August, the “global electric vehicle industry clocked a turnover close to US$54 billion in 2011, while electric two-wheelers became the dominating vehicle category for the whole segment.” The study predicts “phenomenal” EV demand worldwide due to “overall consumer spending, growth in population, increasing demand for environment-friendly vehicles and growing government support.”

They seek safe haven

“Forget gold: Here’s where die-hard skeptics are stashing their wealth,” declared Tuesday’s Financial Post. High yellow metal prices have pushed some discerning pessimists into a range of commodities, collectibles and other presumably secure assets.

Scandinavian and Canadian bonds are proving popular, as are rare coins, stamps and watches. Farmland offers obvious practical value. The finer things in life, from art to liquor, might also bring security. The same might be said, with far more chilling connotations, for guns and ammo. But the FP conceded that its list isn’t exhaustive. That might explain why it didn’t include canned food.

Week in review

September 28th, 2012

A mining and exploration retrospect for September 22 to 28, 2012

by Greg Klein

Saskatchewan miners safe after 17-hour ordeal

Widespread relief greeted the news Tuesday evening that 20 miners surfaced safely after 24 hours underground—including 17 hours trapped by a fire.

Smoke spread through PotashCorp’s TSX:POT Rocanville Mine in southeastern Saskatchewan as plastic insulation on coiled electrical cable caught fire just before 2:00 a.m. Tuesday morning. Nine workers made it to surface within minutes but 20 others had to make their way through smoke to refuge stations.

A rescue squad spent nearly 12 hours fighting the fire with water and foam, then waited hours for the mine to cool and ventilate.

All 20 were reported safe at about 6:42 p.m. Tuesday, nearly 17 hours after the fire started and over 24 hours after their shift began. The mine re-opened Wednesday afternoon.

In a statement released Wednesday, President Dave Coles of the Communications, Energy and Paperworkers Union said, “The potash industry has seen more than 50 fatalities in Saskatchewan since its inception in the late 1950s.”

Mining and exploration week in review

Last June a backup operator died at the PotashCorp Allan Mine. Two others died in accidents at Agrium’s TSX:AGU Vanscoy Mine in May 2010 and Mosaic’s MOS Esterhazy Mine in November 2009.

Reports suggest this week’s emergency was handled effectively, with the trapped miners waiting out their vigil safely in four well-provisioned refuge stations. Some of the miners recounted their experience to the Globe and Mail. At press time, however, the cause of the fire hadn’t been determined. An internal investigation is underway.

With a market cap of $36.7 billion, PotashCorp says it is the world’s largest potash producer, providing about 20% of global capacity.

Unsettling questions about South Africa

Turmoil continues in South Africa, increasing concerns about how far the labour strife will go. After strike-related violence killed 46 people at Lonmin’s Marikana platinum mine last August the company settled with employees, most of whom returned to work on September 20. But approximately 75,000 others remain on strike at mines operated by other companies, including Anglo-American Platinum (Amplats), Impala Platinum (Implats), AngloGold Ashanti, Gold Fields and Villa Main Reef. An additional 20,000 transport workers have joined the walkouts.

Adding to the tension is rivalry among unions and politicians, including President Jacob Zuma and his arch-foe Julius Malema. The latter talks of nationalizing the country’s mining sector and has encouraged strikers to make the industry “ungovernable.” Zuma counters that the strikes could plunge the country back into recession.

Meanwhile Lonmin’s pay raises, ranging from 11% to 22%, haven’t pacified the situation. On Wednesday Bloomberg quoted SBG Securities gold analyst David Davis, who says, “Workers are now demanding wage increases according to the ‘Lonmin settlement.’” That prompts the despairing question of whether a significant pay hike from one employer can help destabilize poverty-stricken countries.

Riot shuts down Chinese factory city

Last Sunday’s riot at one of China’s sprawling labour camps might indicate deeper problems within the world’s largest consumer of resources. Although details are murky, reports indicate a personal dispute in a Foxconn factory barracks may have lead to security guards beating a worker severely, which then sparked a much bigger confrontation. As of Friday, work was still shut down and the 79,000-person company city was being patrolled by riot-equipped company cops.

As the Sydney Morning Herald explains, “The unrest underscores the social strains of a Chinese export-manufacturing model where thousands of workers, mostly young, work long hours in military-style conditions, sleeping in dormitories and surrounded by security guards.”

Foxconn’s factory cities came to Western attention in 2010 after a wave of suicides at its 300,000-person complex in Shenzhen, China. The company manufactures electronic components for Apple, Nokia, Dell and Sony.

Guess what—Bre-X has no money

That revelation came out in a Calgary courtroom Thursday as bankruptcy trustee Deloitte & Touche applied to have investors’ class action suits dismissed. The infamous gold scam came to light in March 1997, when Bre-X shares plunged faster than a geologist falling from a helicopter.

But University of Calgary Finance Professor Gordon Sick comments on the futility of the lawsuits, asking, “Who else can pay but other shareholders?” As he told the CBC, “Shareholders are essentially suing themselves. The only winner is the lawyer…”

The hearing was adjourned until December 4.

Bean honoured

Gold bugs continue to gain mainstream support. On Tuesday the Financial Post reported Morgan Stanley’s top picks for commodity investments. Gold holds the #1 spot due to “interest rates, risk aversion and strong physical market fundamentals.” The firm’s commodities team likes silver for the same reasons. Among base metals, copper, nickel and, looking further ahead, zinc get good marks. Platinum, however, “lacks safe haven status and has limited investment demand.”

But no metal follows gold into second place. Morgan Stanley reserves that honour for soybeans. “U.S. production continues to get slammed and South American harvest results have also been disappointing,” the FP states. “Meanwhile demand remains high.”

Juniors are the only way to invest in graphite

In an interview published Tuesday by the Gold Report, Industrial Minerals writer Simon Moores points out that Chinese companies and private companies dominate the graphite market. Therefore “juniors are really the only way to participate directly in this market. The non-Chinese major players, like TIMCAL Graphite & Carbon in Canada, are part of larger minerals companies. So when you invest in Imerys, which is the parent company, you’re not investing in an exclusively graphite-focused company. Graphite is only a tiny percentage of its business…. Ultimately, your most direct option is to go for the juniors.”

Moores sees a bright future for graphite, which he attributes to “layers of demand.” The commodity’s new uses don’t replace older uses, so demand keeps growing. “Electric vehicles should be the catalyst for explosive growth in graphite demand,” he adds.

Just what this industry needs

The shortage of skilled mining specialists could reach 50,000 to 100,000 people in the next five years, according to one prediction reported by the Financial Post on Tuesday. Not only that, but the industry needs new types of expertise. The paper quotes Richard Ross, former CEO of Inmet Mining TSX:IMN, who says executive responsibilities are no longer limited to “building and running a mine.” They now include “all the issues around that mine, such as sustainability, government relations, business modeling, strategic planning, etc.”

To address those issues, Ross is now program director for York University’s Global Mining Management studies, a new field for MBA specialization. Additionally Laurentian University has created a School of Mines which will eventually turn out MBAs.

The FP quotes Dave Constable, former VP of FNX Mining (now Quadra FNX Mining TSX:QUX): “You need people with the full integration of skill sets, from capital market and business development to the technical, cultural and environmental aspects of the business.”

And if there’s anything MBAs don’t learn in their theoretical studies, someone can always show them how to do it.

How junior might help the juniors

While industry executives were preparing for the Toronto Resource Investment Conference this week, five minutes of fun called Gangnam Style went viral. The video might have inspired reflection for any CEOs disappointed with offspring pursuing celebrity ambitions instead of the practical world of business. According to a Tuesday Reuters dispatch, Psy’s video helped his father’s software firm double its share price.

Rich And Stable

April 20th, 2012

Abzu Has Two Potentially Big Gold Properties in Ghana

By Ted Niles

Investor opinion is divided on West Africa. On the one hand, it is a place of extraordinary mineral potential; on the other, it is a region with a high level of geopolitical risk. The March 22 coup by Mali’s military is only the latest example. But Peter Klipfel, President of Abzu Gold Ltd TSXV:ABS, has reason to believe that Mali is the exception in the region and that neighbouring Ghana is both rich in minerals and politically secure.

“For the last 15 years now, Ghana has had a very stable government and parliamentary process,” Klipfel reports. “You have an emerging middle class that has expectations of its country and society. They are an entrepreneurial bunch. And for the most part, what you see is a legitimate and fair rule of law and order. If there ever was an issue, I take faith in the fact that it would go a lot better than it might if you were somewhere like Venezuela.”

Abzu Has Two Potentially Big Gold Properties in Ghana

Klipfel is not alone in this opinion, for Ghana, Africa’s second-largest gold producer, is not short of players. The country has seen a steady influx of juniors over the last decade, and majors active there include Gold Fields, AngloGold Ashanti, Kinross TSX:K and Newmont TSX:NMC. “If you look at Newmont,” Klipfel says, “they see the end coming someday for their Carlin Trend and some of their other deposits. For 10 years now, they’ve been pumping money into their Ahafo Project with the expectation that it is going to be their company maker in the future. That they’ll keep the company going strong from Ghana is, to me, a huge vote of confidence both in the country and its politics.”

Confidence that Abzu hopes to translate into success of its own. Abzu‘s properties in Ghana fall into two categories: concessions that it owns exclusively (six) and those that it holds in joint venture with Kinross Gold TSX:K (10). Of the 16, it has selected two for its flagship operations: Nangodi and Asafo, both highway-adjacent and with access to power and water.

The 142-square-kilometre Nangodi concession is located in the country’s north, on the Bole-Nangodi Belt—also host to Endeavour Mining’s TSX:EDV Youga Mine in Burkina Faso. An historical producer, Nangodi was acquired by Kinross when it bought out Red Back Mining in 2010. Abzu is currently earning a 51% interest in the property by spending $3 million over three years. “When we first picked up [Nangodi], it had the lowest hanging fruit available in terms of past work,” Klipfel says. “[It was] something we could sink our teeth into—get drill rigs going on and come up with what we thought would be good results.”

And that they’ve done. In 2011, the company undertook a 27-hole drill campaign, expanding on the 31 holes drilled in the 1990s by Australian miner Africwest Gold. Assays announced December 1, 2011, include

  • 1.91 grams per tonne gold over 44 metres (including 4.75 g/t over 15 metres)
  • 1.15 g/t over 73 metres (including 7.9 g/t over 4 metres)
  • 3.06 g/t over 10.7 metres
  • 1.99 g/t over 44.5 metres
  • 2.25 g/t over 24 metres
  • 1.61 g/t over 16 metres
  • 1.53 g/t over 66 metres (including 4.65 g/t over 15 metres)
  • 17.93 g/t over 3 metres
  • 41.6 g/t over 1 metre
  • 1 g/t over 12 metres

Klipfel comments, “We’ve expanded on the area that [Africwest] drilled and taken it from about a 600-metre zone to 1.2 kilometres—about 60-metres wide and drilled at a depth of 200 metres. Mineralization there is the sort that will go to great depths, like many of the other vein deposits in Ghana.”

The company believes that the deposit has “multimillion-ounce” potential. Klipfel explains, “You put a box around what we’ve defined so far—1,000 metres by 50 metres by 200 metres—at the grades we’re seeing, and that would give you two million ounces right there. That, of course, is our hope.” Ground geophysics and trenching work are ongoing at the site, and a minimum of 5,000 metres of drilling is planned to begin in June. An NI 43-101 resource estimate for Nangodi is expected to be released in 4Q.

Klipfel says that the company’s relationship with Kinross is good. “We’ve kept them apprised of things, and they’re happy with the work we’ve done. We’ve already exceeded the first-year expenditure [ie, $500,000], and we’re only eight months into the deal.”

Abzu‘s other flagship property—the 152-square-kilometre, 100%-owned Ahafo concession—is located in Ghana’s south on the eastern edge of the Kibi Belt. While not one of the company’s Kinross joint ventures, it too has a pedigree in that it was acquired and explored by Newmont in the early 2000s. On the basis of Newmont‘s work, plus their own geophysical work, Abzu determined three targets. A 13-hole drill program on the first of those targets returned October 20, 2011, assays including

We undertook 10,000-plus metres of drilling on four different campaigns in seven months last year. We went from blank pieces of paper to two flagship-level projects with multimillion-ounce potential —Peter Klipfel

  • 0.67 g/t over 20 metres
  • 4.08 g/t over 1 metre
  • 0.85 g/t over 12 metres
  • 0.6 g/t over 30 metres
  • 1.28 g/t over 3.5 metres
  • 4.72 g/t over 20 metres (including 62.2 g/t over 1.1 metres)

“We were jumping up and down for joy as far as a shotgun blast coming up with nine out of 13 holes with good intercepts,” Klipfel declares. “We’ve tagged on to something, and now we need to figure out what it is.” He believes that Ahafo, like Nangodi, has significant resource potential. However, before a resource estimate can be considered a trenching program and a further 4,000 metres of drilling in 2012 (planned for 2Q and 3Q respectively) are needed to better understand this project.

With about $1 million in the bank, Klipfel says that his company is due for a financing which will either be done publicly or by private placement “in the next month or so.” He continues, “We want to put about 50% of our effort and money into Nangodi, 35% into Asafo and 15% into the other [properties]. Hopefully, we can get another discovery going by the end of the year.”

Klipfel concludes, “I haven’t been able to be as aggressive about the exploration as I’d like early this year because we’re in budget-minded mode. We undertook 10,000-plus metres of drilling on four different campaigns in seven months last year. We went from blank pieces of paper to two flagship-level projects with multimillion-ounce potential. Including the joint venture with [Kinross], we’ve expanded our concessions from three to 16. I only hope our future allows us to grow like that and come up with goods like we have at Asafo and Nangodi.”

At press time, Abzu Gold had 59.2 million shares trading at $0.21 for a market cap of $12.4 million. Its other concessions in Ghana are located on the Sefwi, Asankrangwa and Ashanti Belts.

Disclaimer: Abzu Gold Ltd is a client of OnPage Media and the principals of OnPage Media may hold shares in Abzu Gold.

A Healthy Hybrid

October 17th, 2011

B2Gold Grows With Auryx Buy

By Ted Niles

It is a rare company that hasn’t seen its share price take a beating this year. Rarer still, one that has seen the steady growth that B2Gold Corp TSX:BTO has. President and CEO Clive Johnson puts it down to strength of management, “beating your projections” and growth through exploration and acquisition. He adds, “Most explorers don’t produce; and most producers don’t find a lot. In our case, we’re a bit of a hybrid company. We’re producers, but we’re also very good at exploration. We always have been.”

True enough, as anyone familiar with B2Gold and its predecessor, Bema Gold, will attest. When Bema—a company which began as a grassroots explorer—was acquired by Kinross Gold Corporation TSX:K in 2006 for $3.1 billion, it had nine mines in five countries with reserves and resources of 50 million ounces gold, 80 million ounces silver and 2.9 billion ounces copper. Founded in 2007 (and retaining Bema’s executive and management team), B2Gold now has two producing mines in Nicaragua—La Libertad and Limon, with combined production in 2010 of 108,700 ounces gold—as well as other properties in Latin American and now, after its October 11 acquisition of Auryx Gold Corp TSX:AYX, Namibia.

B2Gold Grows With Auryx Buy

“Some people ask if we can handle all these projects in all these different locations, but I think you have to look at our history,” Johnson remarks. “All of us together in B2Gold built Bema Gold—so we’ve done it before in Russia, in South Africa, in Chile and now in Nicaragua. We have an unusually strong team from exploration all the way through construction and production. We didn’t go to Namibia saying we have to have something in Namibia—we’ve been looking at lots of projects. The [Otjikoto] project itself was the first thing that attracted us. We’re definitely ready to build another mine, and we have the team to do it. We’ve shown we can do it anywhere in the world.”

B2Gold acquired Auryx and its flagship Otjikoto gold project last week in a friendly-merger deal for $160 million. Otjikoto is located on the Damara Belt Formation—which also hosts AngloGold Ashanti’s Navachab Mine—and has a December 2010 NI 43-101 resource estimate of 1.16 million ounces gold indicated and 660,000 ounces inferred. In September 2011 Auryx released a positive preliminary economic assessment showing a pre-tax net present value of $301 million, and an internal rate of return of 42% (with gold at $1,300 per ounce).

“[Otjikoto] is a robust project economically,” Johnson continues. “We think there’s a lot of upside, and we think there’s a lot of optimization that can be done in a number of areas to make an already good project even better. It’s got a minimum 10-year mine life with, by 2015, [production of] 100,000 ounces per year. We think there’s upside on that, but that’s a long mine life. And Namibia is a very good jurisdiction. The logistics are fantastic; the tax regime is fair; and the mining law works. We think it’s a good acquisition for us, and it can have a significant impact on our production. By 2015, we’re looking at getting up over 300,000 ounces.”

B2Gold will visit the project this week. Auryx anticipated the completion of a definitive feasibility study by 2Q 2013, and while B2Gold will be conducting a detailed review, Johnson expects to follow the same timeline.

Meanwhile, B2Gold’s La Libertad and Limon mines in Nicaragua proceed apace. The company had gold revenues totalling $127.5 million in 2010—an increase of 517% from 2009—and expects to increase 2011 production to approximately 135,000 ounces. Also, exploration drilling at La Libertad in 2010 yielded the discovery of the high-grade Jabali target, which already has an inferred mineral resource of 522,000 ounces gold, increasing La Libertad’s total inferred resources by 180%.

We’re definitely ready to build another mine, and we have the team to do it. We’ve shown we can do it anywhere in the world —Clive Johnson

Johnson notes that the company’s Gramalote property in Colombia is becoming an important asset. It is a joint venture with AngloGold Ashanti (B2Gold holds 49%, AngloGold Ashanti 51%), with AngloGold as the project operator. “The 2.4 million ounces we started with there is definitely getting a lot bigger, and everything is looking very positive,” Johnson says. “Anglo is talking 250,000 to 300,000 ounces a year, and we think it might be larger than that.” Johnson expects an updated resource at Gramalote by the end of year.

The combination of good management, year-over-year production increases and aggressive exploration and acquisition have granted B2Gold a degree of financial independence unusual in the junior mining sector. Johnson reports, “We’re generating from the Nicaragua mines right now about $118 million of cash from operations. So we can do all of our capital spends at the mine and all of our exploration—our budget this year totalled $53 million—and we can take on [Otjikoto] as well and still maintain a really strong cash balance going well into the future. With [Auryx's] cash and our cash we’ll have about $100 million in cash and no debt or hedging.”

He concludes, “We’re looking at production growing from about 145,000 ounces this year to, within two years, over 200,000 ounces. Then up to 320,000 ounces or thereabouts by bringing the [Otjikoto] project on. Then there’s the Colombian project. So we see a path to approaching a half-million ounces a year from existing ounces. This puts us in a very unusual place in the sector right now. And there are more acquisitions to be done.”

At press time, B2Gold had 344 million shares trading at $3.36, for a market cap of $1.16 billion. Its other exploration projects in Nicaragua are the Trebol, Pavon and San Pedro properties, which it holds in joint venture with Radius Gold Inc TSXV:RDU; and the Borosi prospect, also a joint venture with Calibre Mining Corp TSXV:CXB. It also has the Bellavista property in Costa Rica, the Mocoa property in Colombia and the Cebollati property in Uruguay.

In The Footsteps of The Emperor

July 20th, 2011

Merrex Teams With IAMGOLD in Mali

By Greg Klein and Ted Niles

The wider world learned of Mali’s wealth at least as far back as 1324, when the Emperor Musa and his sumptuous court caused a sensation with their pilgrimage to Mecca. Now the wealthy come to Mali in hopes of getting, well, wealthier. In one such instance, the Siribaya Gold Project assembled by explorers Merrex Gold Inc has attracted IAMGOLD, a million-ounce-a-year mining giant with a $7.66-billion market cap, into a joint venture.

Siribaya comprises 848 square kilometres and is the largest contiguous block of gold exploration in Mali. “We put it together in 2005,” says Merrex President/CEO Greg Isenor. “We spent $8 million in all, geochemistry and drilling, and put together a resource. What’s significant about [Siribaya] is the grade—it’s two to three grams, and it’s open pit. That really attracted the attention of the majors.”

Merrex Teams With IAMGOLD in Mali

Assays released July 11 include 1.59 grams per tonne gold over 13 metres (including 3.59 g/t over 2 metres), 4.06 g/t over 4 metres (including 6.44 g/t over 2 metres), 1.11 g/t over 11 metres (including 3.88 g/t over 1 metre) and 1.75 g/t over 7 metres. A February 2010 resource estimate shows 308,200 gold ounces indicated and 69,500 ounces inferred, for a total of 377,700 ounces at a cut-off grade of 0.5 g/t.

Isenor comments, “It hangs together and there’s good continuity. What IAMGOLD has done in the last year is they wanted to show the footprint—how big this thing could be—and we see it now over 10 kilometres. The resource is over one kilometre.”

“There are three drills on the property,” Isenor continues. “A diamond drill, an RC drill and an auger drill. We’re getting assays regularly now, so we’ll be putting out assay information over the next couple of months. These assays are reasonable. They’re certainly ore-grade. We have much higher assays and deeper drilling, and detailed drilling will certainly give us better assays. There’s a lot more assays to come out, but we’re extremely pleased with these results.”

IAMGOLD became project operator in September 2010. “IAMGOLD is spending $10.5 million to earn 50% of the project. They’ve got over $8 million spent, and they will earn their 50% interest before year-end,” says Isenor.

IAMGOLD has deep pockets, with $1 billion cash on hand. It has spent $7.75 million apart from its earn-in requirement already, including a total of $4.25 million in two private placements since May 2. As a result, the company now controls 14% of Merrex. IAMGOLD currently operates two gold mines in Mali, Sadiola and Yatela.

What IAMGOLD has done in the last year is they wanted to show the footprint—how big this thing could be—and we see it now over 10 kilometres —Greg Isenor

“They’re a natural to run [Siribaya],” Isenor says. “We will, at some point, make a decision on a buyout, but we’ve got a built-in partner, so we’re pleased with that. Mali is excellent. It’s a great regime. All the majors are there. Randgold is there with a couple of producing mines, IAMGOLD is there, AngloGold Ashanti, Avion Gold; Newmont is there doing a lot of exploration. It’s a very good jurisdiction.”

Isenor says the plan for the rest of 2011 is “drilling, drilling, drilling”—30,000 metres to extend the strike and 10,000 for an updated resource estimate, scheduled for early 2012. Drilling will also take place at two recently discovered mineralized trends, Siribaya West and Babara/Kofia.

At press time Merrex had 118.9 million shares outstanding at $0.495 for a market cap of $58.9 million. Apart from Siribaya, Merrex holds a 100% interest in the Jubilee Zinc-Lead Project in Nova Scotia.

Isenor concludes that Siribaya is “a big project. There are lots of untested structures on the property. It’s going to produce a lot of ounces. It’s in a proven area. It’s got good grade, and we’re very excited over it. The most important thing about it is its grade. It’s not a gram deposit; it’s two-and-half to three grams.”

The Beverly Hills of West Africa

July 12th, 2011

Pelangio is Surrounded by Gold Coast Giants

By Ted Niles

Brendan Cahill can’t think of a better place to be. “Ghana is kind of the Beverly Hills of gold exploration,” declares the VP of Corporate Development for Pelangio Exploration. “It’s all big players and stars out there.” Among them: Kinross, AngloGold Ashanti, Newmont, Gold Fields and Golden Star. Cahill says, “Those guys are there because it’s the best place in the world to work, and we’re lucky to have over 500 square kilometres. The combination of potential for massive deposits and a really supportive government and a well-trained workforce—I don’t think there’s a place in the world like it.”

Of its three properties in the West African nation—Obuasi, Manfo and Akroma—Pelangio’s Manfo property has received the lion’s share of attention so far. Manfo comprises 100 square kilometres and is located on the Sefwi Greenstone Belt. Cahill refers to it as a “company-making property,” and there might be something to that, given that Kinross’s Chirano Mine is located a mere 14 kilometres to the southwest, and Newmont’s Ahafo Mine is 50 kilometres to the north. Cahill remarks, “[Manfo] is one that people can invest in and be sure that there’s something there.”

Pelangio is Surrounded by Gold Coast Giants

Pelangio reported its first drill results from Manfo as recently as September 2010, so a date for a resource estimate hasn’t yet been decided, although Cahill estimates that it will likely be sometime in 2012. He explains, “When we got on the property, it was about trying to understand the geology, trying to understand exactly what we have. We’re at the stage now where we can start trying to prove up and grow the ounces as we work towards getting a resource together.”

Pelangio in currently in the middle of a 25,000-metre drill program at Manfo, focusing on four targets there: Pokukrom East, Pokukrom West, Nfante East and Nfante West. “We’ve got bulk tonnage and high grade, and there’s lots of room for other discoveries that we’re working on as well,” Cahill says. “So the aim is to have another drill on the property within the next few weeks, and that’ll give us quicker turnaround time in terms of results and also let us grow ounces quicker.”

July 11 Manfo assays include 1 gram per tonne gold over 50 metres, 1.12 g/t over 23 metres, 1.85 g/t over 17 metres (including 7 g/t over 4 metres) and 0.81 g/t over 54 metres (including 1.01 g/t over 38 metres). May 24 assays included 2.6 g/t gold over 19 metres (including 5.79 g/t over 8 metres), 14.1 g/t over 7 metres and 0.99 g/t over 22 metres (including 2.95 g/t over 6 metres). Cahill comments, “We are putting together some great strike at Pokukrom East, Pokukrom West and at Nfante West. It’s a matter of drilling them up to resource standard over the next year or so.”

A 5,000-metre drill program is also underway at Pelangio’s Obuasi property, adjacent to and on-strike with AngloGold’s Obuasi Mine, which produced 317,000 ounces gold in 2010. Cahill is optimistic about its prospects: “We have some really good targets there. If we don’t hit on the first go around, then we’ll go back and drill them again, because some of the targets warrant it.” He adds, “[Obuasi] is a potential game-changer. If we hit there, all bets are off.”

Between the company-maker and the game-changer, Pelangio has much to consider. But, insists Cahill, “All we can do is focus on what we can control right now. That’s putting together a really solid resource.”

We think we’re on to the next big gold deposit there; it’s just going to take work to get it together —Brendan Cahill

He continues, “We have a team that can go well beyond that stage, but once we get the resource done, then we’ll look about ourselves and see whether going to production is the way to do it.” He suggests the possibility, for instance, of Pelangio spinning the project out into another company—as it did in 2007 with its Detour Lake project in Ontario. “The wild card is always whether you get taken out along the way. But that’s not something we can control.”

In addition to its Ghana properties, Pelangio has several in Canada, including Ontario’s Birch Lake and Poirier properties. At press time, the company has 138.1 million shares trading at $0.57 for a market cap of $78.7 million.

“Everything we get continues to underline the fact that we’re on to something really significant,” Cahill concludes. “We think we’re on to the next big gold deposit there; it’s just going to take work to get it together.”

High Grades, Smaller Envelopes

May 31st, 2011

Argentex is Piling Up the Silver Ounces in Argentina

By Ted Niles

Peter Ball is very keen that you grasp the concept. For, impressive as Argentex Mining’s recently reported intercept of 88.8 grams per tonne silver over 61.8 metres may seem, its Executive VP of Corporate Development is more interested in what those numbers include. In this case, an interval of 675.7 g/t silver over 5.8 metres. “We’ve had areas of 277 grams over 24 metres—but our focus is defining mineralized widths of higher-grade material over concentrated or smaller widths. The concept in this area is open slot mining, near surface. Multiple pits. We’re not going to have a pit 300 feet wide!”

The area to which Ball refers is the Deseado Massif in the Patagonia region of Santa Cruz Province, Argentina. In addition to Argentex’s polymetallic Pinguino property, the area hosts Extorre Gold Mines’ Cerro Moro project, Pan American Silver’s Manantial Espejo mine, AngloGold Ashanti’s Cerro Vanguardia mine, Coeur d’Alene’s Mina Martha and Goldcorp’s Cerro Negro project. Ball explains, “They’re all mining these open slots, near surface. The first 50 to 100 metres everywhere on our project has been oxidised, where the gold and silver has been leached out, and it’s high grade. You’ve got this nice meat. That’s what’s going to be mined.”

Argentex is Piling Up the Silver Ounces in Argentina

Argentex has 100% control of over 124,000 hectares of property in the Santa Cruz and Rio Negro provinces, of which its Pinguino property is the most advanced. Pinguino comprises 10,000 hectares and has a 2009 indicated resource estimate (at a 50 g/t cut-off) of 7.32 million tonnes grading 169.64 g/t silver equivalent and inferred resources of 35.4 million tonnes grading 123.63 g/t silver equivalent (totalling approximately 180 million ounces silver equivalent).

Last year, a discovery hole at Pinguino graded 2,428 g/t silver and 0.22 g/t gold over 6 metres, bringing new attention to the near-surface vein systems.

Pinguino assays released May 26 include 88.8 g/t silver over 61.8 metres (including 675.7 g/t silver over 5.8 metres), 1.33 g/t gold and 92.9 g/t silver over 29 metres (including 3.83 g/t gold and 271.3 g/t silver over 9 metres), 1.14 g/t gold and 38.8 g/t silver over 17.8 metres and 1.03 g/t gold and 112.7 g/t silver over 11 metres.

May 5 assays revealed 118.1 g/t silver over 19 metres (including 3.21 g/t Au and 678 g/t silver over 3 metres), 205.5 g/t silver over 20 metres (including 1.64 g/t gold and 470 g/t silver over 8 metres) and 86.2 g/t silver over 21 metres (including 2.77 g/t gold and 121.9 g/t silver over 7 metres).

Ball reports, “We’re consistently seeing veins with widths in the range of four to 12 metres within the first 100 metres of surface, with the vein systems open at depth and open along strike. And some of these veins can range longer than a couple kilometres. Wherever we drill, we appear to consistently and continuously hit high-grade silver with positive associated gold grades. We currently have in excess of 50 veins measuring over 75 line-kilometres, and we keep finding more as we go along. All sitting very close to surface. So it is quite a large, very high-grade system. We believe it’s the second-largest mineralized vein swarm in Patagonia—second only to the Cerro Vanguardia mine, which is along strike to the southeast.”

Wherever we drill, we appear to consistently and continuously hit high-grade silver with positive associated gold grades – Peter Ball

Ball characterizes the Pinguino property as “advanced exploration or early development.” He notes that, to date, Argentex has drilled greater than 50,000 metres on the property and that a preliminary economic analysis has been completed. “At today’s prices, we could build a small mining operation for under $22 million. Internal rate of return would be just under 200%, a payback period of less than six months. That small mine would run over 650,000 ounces of silver for eight years and approximately 6,000 ounces gold.” And that’s based on the resource calculated two years ago.

But Ball does not see production in Pinguino’s future. He says, “This year and most of next we’re working on prefeasibility studies and more drilling and such. We’re looking to have two resource estimates completed by the fourth quarter of this year. One will be an update on the polymetallic; the second will be for the new near-surface stuff, which will probably be giving us a nice re-rate. We are looking to build a significant silver resource and build value through ounces in the ground first.” He adds, “We will worry about building a mine when we have done the due diligence.”

Argentex has not been wanting for interest. Its major shareholder is International Finance Corporation—a member of the World Bank Group—who holds 19.9% of the company. And, Ball adds that the company’s $20-million financing announced May 26 is being led by GMP Europe, “an excellent financial group to have representing us, supported by a solid syndicate including Byron, Northland Capital, LOM, Casimir and Haywood.”

Ball concludes, “Shortly after I joined Argentex, the phone was ringing. I was contacted by most of the investment houses and banking groups looking to be involved in the Argentex story. Within a month I had six analysts on site in Argentina. It’s one of the few stories I’ve had the pleasure of working for where the calls coming into the office outmatched the calls going out.”

Argentex currently has 59.8 million shares trading at $1.17 per share. The company has a market cap of $69.97 million.