Worker dies at Newcrest's Telfer in the Pilbara

Worker dies at Newcrest's Telfer in the Pilbara
Trafficking gold through the Himalayas
Three dead at Barrick PNG subsidiary gold mine
Barrick: Thornton takes control April, former De Beers exec becomes COO
SHORT SQUEEZE: Gold price spikes $40
Turquoise Hill sinks 26%

Posted: 05 Dec 2013 01:02 AM PST

A contractor at Newcrest's Telfer gold and copper mine was crushed to death near a tailings dam on Wednesday morning.

Early reports suggest that the man was killed by polypipe.

"We send our condolences to the family, friends, and colleagues of the man, and are providing any assistance we can at this time," a company spokesman said.

All work on the site has been suspended and Western Australia's Department of Mines and Petroleum is carrying out an investigation.

This is the second Australian mining fatality in five days.

Trafficking gold through the Himalayas

Posted: 04 Dec 2013 06:19 PM PST

Nepalese customs officials seized 17 kilos of gold on Wednesday as two Chinese and a Nepalese national attempted to smuggle the bullion in juice cans from Tibet to Nepal.

Officials say that official imports of gold have declined recently while illegal trafficking is rising.

"Though the supply of gold in the domestic market is not enough to meet the demand, we have heard that partial demand is met by such illegally trafficked gold," said Tej Ratna Shakya, former head of the Federation of Nepal Gold and Silver Dealers' Association.

Toyam Raya at the Nepal Department of Customs explains the detrimental effect of smuggling on government revenue:

"For every kilo of gold that enters the territory without customs being paid, the country loses Rs 520,000" (roughly $5,000).

"We can only guess where the illegally imported gold is sent to or consumed," said Raya, adding that he suspects much of it ends up in India.

If an Indian purchases 10 grams of gold smuggled from China rather than buying the same quantity through official import channels, he or she will save roughly $90.

Posted: 04 Dec 2013 05:35 PM PST

At least three men are dead after a confrontation between Porgera gold mine workers and illegal miners in Papua New Guinea.

Police were sent to investigate a report that two illegal miners had died after falling into the pit.

Upon arrival of the police at the the mine, fighting allegedly broke out between the two groups of miners.

"There was this confrontation from the illegal miners, those who were with those two who were deceased, and so they were dispersing them, and in the process may have been hurt, and later we found out one or two other people died from the confrontation," said PNG's Deputy Commissioner of Police Operations.

"We are sending in extra reinforcements so that we can allow the normal situation to come back and also allow the mine to operate at the normal rate."

Barrick Niugini Limited, a subsidiary of Barrick, is a 95% owner of Porgera.

An investigation in under way.

Barrick: Thornton takes control April, former De Beers exec becomes COO

Posted: 04 Dec 2013 11:41 AM PST

Gold mining giant Barrick (TSX, NYSE:ABX) board has chosen John Thornton, 59, to be the new leader of the world's largest gold miner as founder Peter Munk plans to end his long career at the helm of the company.

Thornton will take over at the company's annual general meeting scheduled for April. The two departing directors are former prime minister Brian Mulroney and Howard Beck.

Former Canadian prime minister Brian Mulroney and Howard Beck are to step down from the board while Ned Goodman of Dundee Corp., Nancy Lockhart of Frum Development Group, former University of Toronto president David Naylor and Ernie Thrasher, CEO of Xcoal Energy & Resources have been appointed.

In a statement the gold giant said James Gowans, the former CEO of diamond giant De Beers' Canada unit takes up the position of chief operating officer in January.

John Ing, president of Maison Placements in Toronto, said both Goodman and new COO Gowans bring welcome mining experience.

"The addition of Gowans as a COO harkens back to when they had Bob Smith and his team," he said, referring to Barrick's legendary president from 1987 to 1996, who helped build the miner into a global powerhouse.

Despite having limited mining experience, Thornton brings to Barrick a significant contacts portfolio he built up in his days at Goldman Sachs Group from 1980 until 2003.

Not only did he become president of the global investment bank dealing with several Chinese firms, but he also helped start up a business leadership program at Beijing's Tsinghua University and sits on the board of China Unicom, the country's second-biggest cell-phone carrier.

The executive has also been a professor at Washington's Brookings Institution, where a China-focused research centre bears his name and is also a member of China Investment Corp.'s international advisory board.

With that background, it seems logical to think that Thornton may try to get a helping hand from China —perhaps as a joint-venture partner— for some of the company's projects, since the Asian country is the world's largest consumer of the precious metal.

Tough year

The leadership change at the Toronto-based miner comes at the end of a difficult year for the company. This year alone Barrick has lost 45% of its market value, with debt levels soaring due to low gold prices, rising operating expenses and a cost blowout at its $8.5 billion Pascua Lama project in the Chile-Argentina border.

The firm has faced pressure since before its annual meeting earlier this year, when shareholders voted against a largely symbolic executive pay resolution.

Since then, Barrick has been working on improvements to its corporate governance, with analysts saying that Thornton has what it takes to change the company's direction.

In fact, the US-born businessman is expected to bring even more changes, as he has made clear he is quite open to rethink the entire business, which may involve acquiring mining assets in other commodities, such as copper.

Image from a Brookings Institution video.

SHORT SQUEEZE: Gold price spikes $40

Posted: 04 Dec 2013 11:07 AM PST

Gold shorts may be losing the courage of their convictions ahead of D-day on Friday.

The gold price briefly touched a fresh 5-month low in brisk, volatile trade on Wednesday before turning sharply higher after the release of strong US jobs numbers.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at $1,251.50 an ounce during early afternoon dealing, up $40 from the $1,210.80 low struck shortly after the opening. Silver tracked gold's trading pattern, jumping more than 4% to a day high of $19.89.

The precious metal has been under pressure as markets believe a recovering economy – and specifically an improved labour market – could prompt the US Federal Reserve to slow the pace of its $85 billion in monthly bond purchases as soon as December.

The market got its first taste of the state of US employment today, with the November ADP non-farm payroll number coming in at 215,000 jobs added, easily beating the 172,000 forecast and the 184,000 reading in October, which was also revised upwards from 130,000.

A strong number usually leads to a sell-off in gold as it strengthens the hands of Fed members who are eager to start unwinding the near $4 trillion the central bank has taken onto its balance sheet since QE1. The Fed first embarked on its quantitative easing program in December 2008 when gold was trading around $830 an ounce.

The reaction of gold traders to the news was typical, but the rapid reversal after the initial slump shows just how finely poised the gold market is at the moment and how much uncertainty there is about future prices.

Friday's official jobs numbers would be the best indicator of the Fed's direction when it meets December 17–18 and large gold investors have been positioning themselves in anticipation of the closely watched data.

Standard Bank in its daily research note points out that shorts – bets that the price is going lower – are building in the gold and silver futures market with Comex gold shorts jumping to a 4 month high ahead of Friday's US employment data:

We believe one can interpret the way the market is trading in one of two ways: Either the gold price behavior is a signal that the market knows best and the employment number will most likely be a good print;

Or, Friday's employment number may not necessarily beat expectations, but this is irrelevant to participants as the majority looks through the noise towards the end goal, i.e. tapering and a slow normalisation of US monetary policy which is coming closer by the day.

Judging by Tuesday's rapid price reversal, gold shorts may be losing the courage of their convictions ahead of D-day on Friday.

Turquoise Hill sinks 26%

Posted: 04 Dec 2013 09:35 AM PST

Shares in Turquoise Hill (TSE:TRQ) operator of the massive Oyu Tolgoi copper and gold mine in Mongolia, dropped sharply on Wednesday as the rights issued under its recent $2.4 billion offering began trading in Toronto

By midday Turquoise Hill stock was changing hands at $3.44, down 26% in an anticipation of the more than one billion shares to be issued under the rights offering, doubling the number of shares outstanding.

The Vancouver-based firm decided on the rights offering to help the company repay a $600 million bridge loan and a $1.8 billion interim funding facility after talks with the Mongolian government over financing for the mine went nowhere.

Investor confidence in Mongolia has been shaken by the impasse over Oyu Tolgoi with foreign direct investment in the country dropping by almost half this year compared to last year.

Oyu Tolgoi – turquoise hill in the vernacular – which could have a final bill of as much as $14 billion if an underground expansion goes ahead is 34% owned by the Mongolian government with Rio Tinto-controlled Turquoise Hill owning the rest.

Talks over Oyu Tolgoi's expansion and the reworking of the initial 2009 deal which first unleashed the Mongolian investment boom, have dragged on for the better part of a year.

Both sides provided fresh faces for the Oyu Tolgoi board in September to break the impasse.

Talks on financing arrangements with the Mongolian government including a World Bank-led $4.5 billion debt package – the largest in the history of mining – have gone nowhere forcing Turquoise Hill's hand to launch the right offer.

The disputes are centred on costs with Rio's management fees and the Mongolian government's share of funding of surrounding infrastructure proving particular sticking points.

Production at Oyu Tolgoi's open pit began this year and the mine is now operating at nameplate capacity of 100,000 tonnes of ore processed per day.

The giant copper, gold and silver mine is set to contribute as much as a third of the nation's economy if the underground expansion – where some 80% of the value of the deposit is situated – in put into production.

Turquoise Hill – then called Ivanhoe Mines – was founded by mining financier Robert Friedland after making the Oyu Tolgoi discovery in 2001.

Friedland, who lost control of the miner to Rio Tinto in 2012 and still owns 8-9% of the company, told CEO.ca he plans to take up his rights, which means the colourful billionaire will have to fork out at least $200 million for the privilege.