Investors pile back into gold stocks

Investors pile back into gold stocks
Topping the list of Canada's wealthiest 'losers' are two mining magnates
Buyers line up for Montenegro's bankrupt aluminum plant and biggest exporter
Gold higher after disappointing US jobs report
Argentina lobbies to overturn Barrick’s Pascua Lama freeze in Chile

Posted: 10 Jan 2014 04:19 PM PST

The gold price jumped 1.6% or $20 an ounce on Friday to $1,249 an ounce, bringing its gains for the year to over 4%.

Gold's advance came after a surprisingly weak US jobs report showing labour participation rates at levels last seen in 1978. The jobs shocker could force the Federal Reserve to keep interest rates near zero for longer than anticipated, hurting the dollar and boosting gold in return.

After a horrendous 2013 when gold mining stocks lost much more ground than the metal itself, 2014 so far is looking up.

And the rerating of gold stocks this year also comes in the face of ratings agency Moody's decision this week to cut the gold and silver prices at which it assesses the majors to $1,100 and $18 an ounce, a move that could drive up borrowing costs for the industry.

By the close on Friday Barrick Gold Corp (TSX:ABX) had climbed 3% in heavy volume adding some $8 billion in market value since hitting 21-year lows in July last year. Barrick is now worth $23.1 billion on the TSX, up almost 6% since the start of the year.

The world's number one producer was also lifted by news that its controversial $8.5 billion Pascua Lama mine may be getting a helping hand from Argentine authorities who want Chile to help revive the project straddling the countries' borders.

Goldcorp (TSX:G) was the biggest gainer among the top producers, jumping 4% on the day. The Vancouver-based company which held the position as the world's most valuable gold mining company for the better part of 2013 is up 9.8% this year.

Goldcorp, worth 20.5 billion on the TSX, said yesterday it expects to produce more than three million ounces of gold in 2014, a 13% increase compared to last year even as it drives down costs by 15% – 20% over the next two years.

Canada's Kinross Gold (TSX:K), which is expected to produce around 2.6 million ounces of gold this year, jumped 2.3%. In terms of market worth, $5.6 billion Kinross has been overtaken by Yamana Gold despite the fact that Yamana produces almost 1m ounces fewer per year.

Investors have picking up Yamana (TSE:YRI) stock in droves betting that its low cost base and light debt load will see it weather current conditions better than its peers. Yamana ended 3.4% higher on Friday and is up over 8.3% in 2014. The Toronto-based company has a market value of $7.5 billion.

Agnico Eagle Mines (TSX:AEM) jumped more than 6%, Eldorado Gold Corp (TSX:ELD) climbed 4.6%, IAMGold Corp added 2.4% while NovaGold Resources (TSE:NG) rocketed 7.7%

Outside Canada, Denver-based Newmont Mining Corp (NYSE:NEM), the number two global gold producer in terms of annual output of around 5m ounces, added 2.6%, while the ADRs of AngloGold Ashanti (NYSE:AU) was one of Friday's best performers, gaining 3.9%. However, The Johannesburg-based company has a long way to go to make up for last year's 60% slump in market value as it embarks on an aggressive turnaround strategy.

Fellow South African miner Gold Fields (NYSE:GFI) shot up 4.8% in New York, but the world's fourth largest gold producer remains down for the year after losing almost three-quarters of is market value in 2013. Investors punished the company it for its contrarian purchase of high-cost mines last year while other producers were aggressively slashing costs.

Topping the list of Canada's wealthiest 'losers' are two mining magnates

Posted: 10 Jan 2014 01:37 PM PST

Don't worry – most of Canada's wealthiest people are doing just fine. In fact, a big chunk of the country's billionaires saw their fortunes balloon in 2013, based on Canadian Business' list of Canada's most well-to-do.

Laurence Ho – the CEO of Melco International Development – who wasn't even on the list in 2012, became 124% richer last year, earning himself the title of Canada's 58th-wealthiest person.

But out of the top-100 richest people, seven actually saw their wealth decrease in 2013.

Not surprisingly, some notable figures in the mining industry top last year's list of "biggest losers."

In the number one spot, based on percentage of wealth lost, is Eric Sprott – hedge-fund manager and major gold bug.

Sprott's billion-dollar fortune declined by 17% in 2013 as precious metals prices tanked, recording their worst year in decades.

But this isn't a new trend: In 2012, the billionaire's fortune shed 19%.

According to the Wall Street Journal, Sprott's flagship fund lost more than 50% over the year.

Meanwhile, the hedge-fund manager has argued that Central Banks have been orchestrating the price of gold and that physical demand is booming.

"We already have a shortage of physical gold, it's just that no one knows it yet, and the banks have been supplying it," Sprott said in an interview with Tekao da Silva last month.

Despite his losses, Sprott is still Canada's 75th-wealthiest person.

Second on the list for biggest losses is the poster boy for junior miners, Robert Friedland.

Friendland's wealth declined by 14% in 2013, pulling his fortune just below $1 billion and ranking him as Canada's 87th-richest person.

But hey, at least it's not as bad as last year. The 53-year old founder of Ivanhoe Mines (TSE:IVN) topped 2012's list of biggest losers as he saw his wealth decline by more than 60%.

Friendland owns about 9% of Turquoise Hill (NYSE:TRQ) which shed about 65% of its value in 2013. His Ivanhoe Mine's dropped 64% during that time.

Lately the former billionaire has been pursuing a very different interest. Last year the mining tycoon launched his new company, Ivanhoe Pictures, to "finance and produce film and television projects that have broad appeal to a global audience."

The remaining five billionaire "losers" on the list – none of which are in the mining industry – saw their fortunes decline by between five and one percent.

To see the full list of Canada's 100 wealthiest people click here.

Buyers line up for Montenegro's bankrupt aluminum plant and biggest exporter

Posted: 10 Jan 2014 08:54 AM PST

The country is also receiving bids for oil exploration and drilling rights for oil and natural gas off its southern Adriatic coast.

At least four companies have placed bids to buy assets of Montenegro's Kombinat Aluminijuma Podgorica (KAP) aluminum plant, the country's top exporter that declared bankruptcy in October last year.

The proceeds will be used to repay the firm's $516 million debt —an amount that, according to Reuters, equals 10% of the Balkan country's economic output.

The interested firms are London-based Getsales, Montenegro-based Uniprom and Politropus Alternative, and Srbian Alemani Trade.

Getsales offered almost $7,000 for KAP's main production facilities outside the capital Podgorica and vowed to invest around $960 million.

Montenegrin Uniprom offered $39 million for a big portion of KAP's assets, while fellow company Politropus Alternative, offered $615,000 for a smaller share. The Serbian firm, reports Reuters, offered $243,000 for 22 plant wagons.

Since bankruptcy proceedings began last year, KAP, now under direct government control, has stopped disclosing financial information.

Montenegro, a nation with a population slightly over 620,000, recently opened bids for oil exploration and drilling rights for oil and natural gas off its southern Adriatic coast. The tender offers the exploration of 13 blocks, covering an area of 3000 square kilometres. They will be awarded for 30 years.

The country, which became independent in 2006, doesn't produce any oil at the moment, but initial data suggests the nation might one day have enough resources to cover its oil and gas demand.

Deadline for potential bidders was extended yesterday from Feb. 28 to May 16.

Gold higher after disappointing US jobs report

Posted: 10 Jan 2014 05:20 AM PST

Gold jump up a mere 1% to $1,239 an ounce Friday, building on earlier gains after US nonfarm payroll numbers cast doubt on the world's largest economy, and the direction of the Federal Reserve's monetary policy.

Yesterday gold prices scored their first gain in four sessions as traders shrugged off some cheerful news on the economic front.

The US added 74,000 payrolls in December, the Commerce Department reported, fewer than what economists forecasted —200,000 new jobs during the month.

The unemployment rate, calculated in a separate survey, dropped to 6.7% from 7% a month earlier, largely a result of people leaving the workplace.

In another sign of weakness, the average working week fell by 0.1 hours to 34.4 hours, normally regarded as a bad sign for the future because employers tend to cut hours before they cut jobs.

The most actively traded gold contract, for February delivery, recently traded up $8.30, or 0.7%, at $1,237.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Before the report, futures had traded steady at $1,229.40 an ounce.

Argentina lobbies to overturn Barrick’s Pascua Lama freeze in Chile

Posted: 10 Jan 2014 03:57 AM PST

Work at the Argentine side of Pascua Lama, halted since Oct. 2013.

Barrick Gold's (TSX, NYSE:ABX) $8.5 billion Pascua Lama mine is getting a hand from Argentine authorities planning to meet Chile's upcoming government to discuss the Canadian miner's options of reversing the decision that suspended the project in Sept. last year.

Chile's newspaper El Diario quotes (in Spanish) Argentine officials from the San Juan province —where the mine will be located— as saying they will keep asking for a meeting with incoming President-elect Michelle Bachelet and her ministers until they are granted one.

Sergio Uñac, vice governor of San Juan, said the message Argentine authorities want to deliver to their peers in Chile is the "importance of fast-moving the necessary decisions" to lift the project suspension.

Since the Canadian miner announced in late October it was temporarily suspending all construction activity at both sides of Pascua-Lama, which straddles the Chile-Argentina border, about 1,500 jobs have been put on the line.

On the Argentine side, the project currently employs 5,000, but in the next months the total will be reduced to 3,500, as Argentine workers won't be needed for another two years. Barrick is focusing its efforts on the Chilean side, where it needs to build a water treatment facility – a requirement to getting an environmental permit.

Pascua Lama is expected to produce around 850,000 ounces of gold and 35 million ounces of silver in its first five years. Production, scheduled to begin this year, has now been delayed until mid-2016.

Image courtesy of Greenpeace

Investors pile back into gold stocks

Investors pile back into gold stocks

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