Gold Summary for March 2, 2015
2015-03-02 21:13 ET - Market Summary
by Stockwatch Business Reporter
New York spot gold closed down $7.80 to $1,205.90 Monday, falling as the U.S. dollar rose after China increased its interest rates. The TSX Venture Exchange slipped 2.43 points to 704.30 and the TSX Gold Index lost 4.03 points to 177.98.
Gold miners in Canada ended the day down. Detour Gold Corp. (DGC) lost 49 cents to $11.60, Yamana Gold Inc. (YRI) lost nine cents to $5.22, Agnico Eagle Mines Ltd. (AEM) lost four cents to $40.13 and Barrick Gold Corp. (ABX) lost 25 cents to $16.01.
Paul Wright's Eldorado Gold Corp. (ELD) dropped 49 cents to $6.72 on 8.88 million shares. Greece's unpredictable new energy minister has revoked Eldorado's permit to build a processing plant at its Skouries gold mine in northern Greece. Eldorado is not pleased. President Wright has spent the past few weeks assuring investors that the new Greek government would support the mine. The company has invested $450-million on development in Greece so far, on top of the $2.5-billion it paid to acquire Skouries by taking over its previous owner, European Goldfields Ltd., in 2011. Eldorado had been budgeting $310-million on Skouries development this year, but now it says it might have to reconsider.
Arnold Kondrat's Banro Corp. (BAA) remained unchanged at 28 cents on 3.62 million shares. The company has arranged $100-million in financings from Gramercy Funds of Connecticut. This is in place of the $121-million it had been hoping to receive from Gold Holding Ltd. of Dubai, but Banro had been waiting for that money since August. On Sept. 30, it had negative $60-million in working capital, so it cannot afford to wait much longer. The company will spend the money expanding gold production at its two gold mines in the Democratic Republic of the Congo. Its Twangiza mine should produce about 110,000 ounces of gold this year, and Banro hopes its Namoya mine will produce 100,000 ounces, but this will likely be difficult. The mine has caused the company nothing but trouble since Banro started building it in 2011. Months later work had to stop because rebel violence broke out across the country. The violence prevented supplies from getting to the mine, and the delay ended up doubling capital costs to $224-million. Banro finally brought Namoya to production at the beginning of last year, when it aimed to produce 120,000 ounces in 2014. It managed only 18,000 ounces, which it blamed on torrential rains that washed out roads and prevented fuel from reaching the site.
Mark O'Dea's True Gold Mining Inc. (TGM) slipped one cent to 19 cents on 603,000 shares. The company says it will take 10 months to reach gold production at its Karma gold mine in Burkina Faso, but that is only after it resumes construction for which there is no date. In other words, it is pushing back its production start indefinitely. Work at the company's Karma mine is still stalled as True Gold negotiates with what it calls a "small fringe element, largely responsible for the unrest in January." The small fringe element is led by the sheik of a nearby mosque, who in January managed to persuade 2,000 angry Muslim followers to storm the Karma site, setting equipment ablaze. To conserve cash, True Gold has suspended most of its work in Burkina Faso for now, and is offering financial assistance to its temporarily out-of-work employees. The company does not need any more angry locals opposing its mine.
Michel Bouchard's Clifton Star Resources Inc. (CFO) climbed 7.5 cents to 17.5 cents on 563,000 shares. The company finally had some good news to share with investors. It is about to receive $11-million from Agnico Eagle and Yamana, the owners of the Malartic gold mine in Quebec, as settlement for a claim Clifton filed last summer against Malartic's previous owner, Osisko Mining Corp. Clifton sued in hopes of getting its hands on a $22.5-million loan Osisko promised in 2010, when the companies were joint venturers at Clifton's Duparquet gold property in Quebec. Osisko pulled out of the JV later that year, but Clifton was still under the impression that it was entitled to the money. It had been asking for it since late 2012.
Agnico and Yamana will pay $5.2-million in cash and buy $5.7-million worth of Clifton shares at 60 cents for 19.8 per cent of the company. Clifton could have used this money three months ago. On Dec. 1, it failed to make a $10-million option payment on Duparquet, losing its option to earn 90 per cent. It is left with a 10-per-cent interest. After the settlement Clifton will have about $14-million in its treasury, much of which will go toward a dissident battle. The group is being led by former president Harry Miller, who owns 1.1 million shares that have lost $8.6-million in value since 2010 when the stock was $8.
Newsletter writer John Kaiser presented at the PDAC conference in Toronto this morning. He was as grim as ever, pointing out that there are now 717 juniors (of the 1,560 he follows) with working capital positions below $0. He still predicts that these juniors will disappear, as he first foresaw on Dec. 6, 2012, when he published an article entitled, "Bracing for the Extinction of 500 Juniors or an entire institution?" Today, he has only 15 buy recommendations, plus a few dozen companies on his bottom-fish watch list. Looking at his buys, there are five in the gold sector. David Palmer Probe Mines Ltd. (PRB: $4.79) is probably the most successful. It has $37-million in working capital and just attracted a $526-million takeover bid from Goldcorp. Then there are Randy Reifel's Chesapeake Gold Corp. (CKG: $2.25), which has $32-million in working capital for its Metates gold project in Mexico, Stephen Quin's Midas Gold Inc. (MAX: $0.485), which has $8.6-million for its Stibnite project in Idaho, and Donald Robinson's Eastmain Resources Inc. (ER: $0.30), which has $6.5-million for its Clearwater project in Quebec. Mr. Kaiser's most-speculative gold pick is John and Gordon Leask's Highway 50 Gold Corp. (HWY), which has $1.8-million and some gold properties in Nevada. |
