Alacer Gold raises guidance at Çöpler mine in Turkey

Alacer Gold raises guidance at Çöpler mine in Turkey
Construction to begin at Queensland's first oil refinery
One of Goldman Sachs top trades for 2014: Go short copper
New Barrick chief uses the h-word
Another big bank pulls out of commodities
Diamonds made from human ashes the industry latest (and creepiest) fad

Posted: 05 Dec 2013 11:11 PM PST

Alacer Gold has lifted its 2013 guidance for its flagship mine in Turkey by 10% to between 214 000 oz and 218 000 oz of attributable gold output.

"Çöpler achieved record production in the third quarter of 81 059 oz and fourth quarter production remains strong," said CEO Rod Antal.

"Improvements in operating efficiencies, including increased levels of cyanide dosing and a focus on quality agglomeration, have increased production beyond expectations resulting in higher than forecasted gold production."

"Çöpler's performance reinforces our strategy to focus on this world-class asset and the surrounding area. Alacer has a large landholding in Turkey with 14 active exploration projects."

"Using the initial positive geochemical and drill results received to date, Alacer is intensifying its exploration focus in Turkey with the goal of discovering one or more oxide ore deposits that can be brought into production over the next three to four years."

Read the full release here.

Construction to begin at Queensland's first oil refinery

Posted: 05 Dec 2013 06:05 PM PST

Work to construct the Northern Oil Refinery near Gladstone, Queensland's first, will begin this weekend.

The project, a joint venture between Southern Oil and J.J. Richards, is to cost roughly $50 million and will require 40 full time employees.

The two companies plan to open the refinery in February of next year.

"The process produces no waste, reduces the need for oil imports and our product has a significantly smaller carbon footprint than crude base oils," said Tim Rose, Southern Oil managing director.

"Refining sits at the top of the waste management hierarchy and secures and environmental and economic value for used oil."

On why they chose Yarwun: "Most of Australia's oil is generated and used in Queensland…Gladstone just felt like the place to be."

One of Goldman Sachs top trades for 2014: Go short copper

Posted: 05 Dec 2013 03:17 PM PST

Goldman Sachs has unveiled its top six trade recommendations for 2014 in a series of research notes to the investment bank's clients.

Business Insider reports among Goldman Sachs' top trades for next year is the shorting of the Canadian loonie and the Australian dollar, two currencies heavily dependent on the mining and natural resource sectors.

But what stands out among the top recommendations – most of which are pair trades, technical in nature and not aimed at your average retail investor – is the bank's copper and China play:

Go Long Chinese Stocks, Short Copper

Originally introduced: December 2

Target return: 25%

The trade: Buy the HSCEI Index and sell Copper Dec 14 LME futures.

The logic: "This long equity/short commodity trade is a way of isolating exposure to China equity risk via a long HSCEI position, which we think is underpriced by the market given our views of stable growth and ongoing rebalancing there, while the copper short hedges out exposure to China's economic growth, which we think will be stable but not stellar," says Goldman.

"Short copper, which is typically highly correlated to China growth outcomes and China equities too, has the added advantage of being an asset that we think will likely be facing headwinds of its own over the course of the year, with the short position potentially adding to the positions' expected returns, and not just a hedge against unanticipated outcomes."

Copper futures contracts for delivery in March 2014 was last trading at $3.22 a pound on the Comex division of the New York Mercantile Exchange and LME three-month contracts at $7,070 a tonne in London.

The red metal is down 9.7% this year after recovering from near three-year lows of $3.04 a pound struck at the end of June. The copper price peaked above $4.50 a pound in February 2011.

Read more at Business Insider

Image of The Copper Bull sculpture in Beijing by chinahbzyg

New Barrick chief uses the h-word

Posted: 05 Dec 2013 01:44 PM PST

Gold producers reduced their hedging for the first time in three quarters according to the latest data about forward selling in the gold mining industry from metals research firm GFMS.

The outstanding producer hedge book now stands at 3.6 million ounces, or 112 tonnes, nowhere near the levels seen before gold began its 12-year upward climb.

Locking in prices and steady cash flow made sense for gold miners when gold was around the $300-level with little prospect of any substantial move higher.

But as gold's bull run gained momentum gold miners lost out on billions of dollars under contracts signed for future delivery well below the ruling price – and often below cost.

Now with the rally in the precious metals losing steam, market watchers believe hedging may be making a comeback.

And the world's number one producer of the yellow metal no longer thinks hedging is a dirty word.

John Thornton, ex- Goldman Sachs banker who next year takes over the helm at Barrick Gold, the world's top gold miner, said the idea dusting off the hedge book should not be automatically ruled out:

"I don't know why you wouldn't look at it, if for nothing else as a kind of analytical intellectual exercise," Mr. Thornton said [in an interview with WSJ.com]. "And try to then make a judgment. I don't understand people in the industry who would say you should never do that."

Toronto-based Barrick like its peers in the industry spent billions unwinding its hedge book in 2009, but ended up still saving money on the deal as gold's rise still had a good two years to go.

Barrick, set to produce more than 7 million ounces in 2013, has embarked on an aggressive cost-cutting program and in October said it has reduced its 2013 guidance for all-in cash costs by a full $100 per ounce and that 75% of this year's production will be mined at a cost of less than $800 an ounce.

That compares to an industry average of $1,200 – $1,300.

GFMS analyst William Tankard told Reuters Barrick is well placed to take advantage of hedging thanks to its relatively low operating costs, but Tankard doesn't envisage a large scale return to forward selling:

"Interest rates remain exceptionally lean, and gold liquidity is not great. There aren't many central banks looking to lend over long tenures at the moment," he said. "Coupled with that, options hedging will not be especially cheap right now. So it is a tough decision."

Gold is coming off a 12-year bull run and has shed close to 27% so far this year. After a drop to $1,226 on Thursday the metal is within shouting distance of a three-year low.

The price of gold peaked at an all-time high of $1,921 an ounce in September 2011.

Another big bank pulls out of commodities

Posted: 05 Dec 2013 12:38 PM PST

Deutsche Bank, Europe's second largest bank, has joined the exodus and is getting out of the commodities business.

FT.com reports the German bank will lay off 200 employees as it exits trading in energy, agriculture, base metals and dry bulk cargoes over the next two years. The Frankfurt-based lender will keep its trading divisions in financial derivatives and precious metals, however.

Since the US Federal Reserve determined in 2003 that certain commodity activities are "complementary" to financial activities and therefore permissible to Wall Street bankers, many jumped at the chance, but that tide is now turning.

Morgan Stanley, Goldman Sachs, and JPMorgan moved aggressively into everything to do with physical commodities including mining, processing, transportation, warehousing and trading.

Revenues for the investment banks from the sector surged to $15 billion at the peak of the cycle, but has now fallen back dramatically in line with a retreat in metal and mineral prices.

JPMorgan is looking at selling its physical commodities which included metal warehousing unit, while Morgan Stanley has cut back on commodities operations and staff.

UK bank Barclays has reduced its presence, while other banks including France's Crédit Agricole and Swiss-based UBS have all but closed their commodities businesses.

Diamonds made from human ashes the industry latest (and creepiest) fad

Posted: 05 Dec 2013 11:36 AM PST

It surely sounds dark, but for some the possibility of converting the ashes of cremated loved ones into a diamond could truly be a jewel to remember. And that is exactly what Switzerland-based jewellery maker Algordanza has began offering through its so-called memorial diamonds.

As explained in its website, the company uses "Russian technology" to convert the naturally occurring carbon present in human bodies (about 18%) into diamonds.

Using roughly 500 grams of ashes, the firm is able to extract the carbon present in human ashes and use it to form a man-made diamond in a mould under high pressure. The process, which takes about a week, yields mostly blue gems because of certain chemicals in the human body.

Algordanza offers a variety of diamond sizes and cuts that can be placed on a ring or other jewellery pieces. Prices run higher than conventional diamonds, starting from about $3,000 depending on the size and cut.

The resulting diamond will be "an everlasting keepsake, remembrance, or heirloom to pass to future generations," Frank Ripka, CTO of Algordanza, told Business Insider.

This company is not alone. Chicago-based LifeGem claims to be the original inventor of these kinds of gems, saying it holds the U.S. patent for memorial diamonds.