Gold Summary (C-*MKTGOLD) - Market Summary Gold Summary for March 4, 2014
2015-03-04 21:17 ET - Market Summary
by Stockwatch Business Reporter
New York spot gold closed down $4.60 to $1,198.90 Wednesday, as the U.S. dollar hit an 11.5-year high. The United States Federal Reserve said the American economy grew at a moderate pace last month. Here in Canada, the TSX Venture Exchange lost 4.21 points to 698.09 and the TSX Gold Index fell 3.78 points to 170.41.
Gold miners in Canada ended the day down. Barrick Gold Corp. (ABX) lost 52 cents to $15.09, Agnico Eagle Mines Ltd. (AEM) lost $1.31 to $38.21, Goldcorp Inc. (G) dropped 63 cents to $25.45 and Iamgold Corp. (IMG) slid 12 cents to $2.78.
Paul Huet's Klondex Mines Ltd. (KDX) dropped 10 cents to $2.56 on 448,000 shares. The stock rose to $2.70 from $1.90 in January and held fairly steady in February, but some insiders have decided it is time to sell. The company's largest shareholder, Sun Valley Gold LLC, owned by Peter Palmedo, has sold one million shares at $2.65, leaving it with 14 million shares, and its second-largest shareholder, The K2 Principal Fund Ltd, has sold 1.94 million shares also around $2.65, leaving it with 12.3 million. The most active director has been Rodney Cooper, who offloaded 110,000 shares at around $2.55 (after exercising options to buy 180,000 at prices ranging from $1.21 to $1.50) for a quick $139,000 profit. This is almost four times his $37,000 a year in director fees.
Klondex has $48-million in working capital, and budgets $30-million on exploration this year. It has two gold deposits, Fire Creek and Midas, both in Nevada, where for the past year it has been trucking ore from Fire Creek to Midas for processing. It bought the old Midas mine and mill from Newmont Mining Corp. (NEM: $25.19 (U.S.)) last February for $83-million. Newmont was about to close the mine, but Klondex was mostly after the mill, until last fall when it determined that there is enough gold to continue production for at least three more years. President Huet knows old Midas well, having run the mine for seven years (2000 to 2007) while working for Newmont. At Klondex, he aims to produce 125,000 ounces of gold equivalent this year. All-in cash costs will be low, since they were $425 an ounce after byproduct credits in 2014. This means the company would be able to mine profitably even if gold were to drop to $700 an ounce.
Adrian Hobkirk's Codrington Resource Corp. (CA) edged up one-half cent to 5.5 cents on 15,000 shares. The company has finished three weeks of test mining at its Groete gold property in Guyana, where a new green gold processing technology (no mercury) managed to recover 45 ounces of gold. At this rate, Codrington could produce about 780 ounces of gold a year, which is unlikely to be profitable. The company says its next task will be to increase recovery and throughput. Mining with mercury is prohibited in some parts of the world, but Guyana is not yet one of them. Thousands of artisanal miners use mercury each day as they extract gold, and Codrington is more than familiar with these illegal mercury miners. Twice now, in 2009 and in 2011, it was forced to stop work and hire extra security guards to remove hundreds of illegal miners from it Groete property. In 2011, the removal was especially difficult as many of the miners had malaria. Mr. Hobkirk has been exploring in the tropical country for the past two decades, but this is his first time ever announcing gold production.
We have good news to report from the PDAC conference in Toronto. Last night, Stan Bharti held his "iconic" PDAC party, the one that he cancelled last year because of the depressed junior markets. For those who made it in to the exclusive affair, the party did not disappoint anyone. It was held at Pravda, a trendy Russian bar, where the vodka was flowing and the zakuskis (Russian tapas) were plentiful. At midnight, guests were treated to the Russian anthem, and all through the night they were reminded of the party's sponsor, African Thunder Platinum, which was plastered on the servers' T-shirts. African Thunder Platinum is one of Mr. Bharti's more recent deals. It is a private company with a past producing platinum mine in South Africa, which Mr. Bharti's management company, Forbes & Manhattan, aims to bring back to production this quarter.
Last fall, Mr. Bharti's Aberdeen International Inc. (AAB: $0.145) bought 42.25 per cent of African Thunder for $7-million. (Russia's Pala Investments, owned by Vladimir Iorich, has another 42.25 per cent and Australia's Platinum Australian Ltd. holds the remaining 15.5 per cent). Aberdeen would have started work in South Africa right away, but it had to spend two months fighting a messy dissident battle with Ryan Morris, an activist investor from San Francisco. Mr. Morris had control over 9 per cent of Aberdeen's stock, but failed to gain control of any more. His complaints had to do with Mr. Bharti's high pay practices. Aberdeen pays him $300,000 a year in salary, plus another $1-million a year in management fees to his Forbes & Manhattan. This is on par with the fees Forbes charges its other low-priced juniors.
The management company is well-known for its high fees, which sometimes upset investors. In late 2012, investors of Mr. Bharti's Sulliden Gold Corp. shot down a proposed milestone bonus program that would have entitled executives to up to $17-million in bonuses over three years for tasks that fell well within their regular duties. They included $2-million for completing an environmental assessment, $2-million for receiving environmental assessment approval, $3-million for completing land purchases, $2-million for signing an electrical connection agreement, $3-million for the start of construction, $1-million for the first gold pour and $3-million for the declaration of commercial production. Sulliden investors no longer have to worry about Forbes's bonus plan ideas. Mr. Bharti sold the company to Alex Black's Rio Alto Mining Ltd. (RIO: $3.66) for $377-million last May, and now Mr. Black is selling Rio Alto to Tahoe Resources Inc. (THO: $16.01) for $1-billion. |
