December 31, 2012

#China now world`s largest market for #silver investment - Mineweb.com

China now world`s largest market for silver investment - SILVER NEWS - Mineweb.com Mineweb


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Opec cartel to reap record $1tn - FT.com

Opec cartel to reap record $1tn

The Opec oil cartel, led by Saudi Arabia, will pocket a record of more than US$1tn in net oil revenues in 2012 as the annual average price for Brent, the benchmark, heads to an all-time high in spite of weak economic growth.

The windfall will provide fresh capital to some of the world's largest sovereign wealth funds. United Arab Emirates, Saudi Arabia and Kuwait, the most influential members of the cartel, are home to three of the world's 10 largest SWFs by assets under management, according to estimates by the SWF Institute.

With one trading day left before the year-end, Brent oil prices are on the point of seeing an average for the year of about $111.5 a barrel, higher than the previous all-time high set in 2011 of $110.9.

The benchmark closed at or above $100 every trading day in 2012, bar 24 in June and early July.

In January, Ali Naimi, the Saudi oil minister, said that the world's largest oil producer aimed to keep oil prices at the triple-digit level throughout 2012. "If we are able as producers and consumers to average $100 I think the world economy would be in better shape," Mr Naimi told CNN at the time.

The record run of $100-plus oil prices, coupled with strong production in the first half of the year, lifted Opec's net oil export revenues to a peak of $1,052bn in nominal terms, up 2.5 per cent from last year, according to the US Energy Information Administration, the statistical arm of the US Department of Energy. A decade ago, Opec countries made just under $200bn selling their oil.

In real terms, adjusted for inflation, Opec's revenues in 2012 were also the highest ever, surpassing the peaks set during the oil crises of 1973-74 and 1979-81.

The huge revenue windfall has been unevenly distributed among the members of the cartel, which controls roughly 40 per cent of the world's oil supplies. Iran took a smaller-than-usual share of the pot as US and European sanctions crippled its energy industry, pushing down its oil production to a 32-year low. Between January and November, Iran earned only 6.5 per cent of Opec's total net revenues, down from a a share of 9-10 per cent during most of the 2000s.

The shortage of Iranian oil helped Saudi Arabia, Iraq, Kuwait and the UAE to pump more, profiting from record annual prices. Also, Libya's oil earnings recovered in 2012 from the slump triggered by the 2011 civil war.

The huge inflows will shore up the finances of the 12-member group, particularly as some Middle East countries lift social spending on the wake of the Arab Spring.

The International Monetary Fund estimates that Riyadh and Abu Dhabi both need oil prices at about $80 a barrel to balance their budgets. Only a decade ago they were able to balance their budgets with oil prices averaging $25.

Read the article online here: http://www.ft.com/intl/cms/s/0/eedc5b56-50da-11e2-9623-00144feab49a.html#axzz2GdW0ysM6


December 24, 2012

Will the Sukhoi Log #gold project in #Russia ever be developed?


Sukhoi Log gold development could propel Russia to world No.1 - Mineweb.com

GOLD NEWS

Russia's Sukhoi Log gold deposit could well be the world's largest but there still seems no rush by the government to develop its riches. It may well be worth even more remaining in the ground.
Author: Clara Ferreira-Marques
Posted: Thursday , 20 Dec 2012 
BODAIBO, Russia (Reuters) -
It looks like any one of remote eastern Siberia's low-lying, peat-coloured hills: only the thin trenches that scar Sukhoi Log hint at the work of generations of geologists to measure the riches beneath.
This bleak expanse, uninviting against a steel grey sky, is probably the world's largest virgin gold deposit, with mineral wealth to rival the world's largest, at Grasberg in Indonesia.
Yet it has remained untapped for half a century, held back by its remoteness, state restrictions and, in recent years, a lack of interest on the part of a Moscow government riding the wave of energy profits and holding out for higher gold prices.
"(The government) would love more gold, but they have no time to think about these issues at the top level," said Sergei Guriev, rector of the New Economic School in Moscow.
"At the lower level, people are happy with the status quo."
Soviet geologists surveyed Sukhoi Log intensively in the 1970s yet little came of it. But now the Russian government has stirred long-dormant interest, suggesting it might invite bids to mine the gold. While such talk has come and gone in the past - and no details of any tender have been given - there is new debate on how, and at what cost, the ore might be exploited.
Beyond the future of Sukhoi Log itself, the outcome could be a litmus test for Moscow’s willingness to embrace changes some have been lobbying for in the mining sector - whether lifting a bar to foreigners' involvement in strategic assets or simply showing any appetite at all for turning earth into bullion.
For all the gold fever of pioneers who claimed Russia’s wild east for the tsars in the 19th century, Sukhoi Log - the name means Dry Gully - remains a symbol of a more recent lack of drive to mine the riches beneath the world's biggest country.
Analysts say the latest study on that single deposit indicates it could produce 1.6-1.9 million ounces of gold a year over three or four decades - worth an annual $3 billion or so at today's gold price near $1,700 per ounce. Initial development costs are forecast at upwards of $2.5 billion.
There are traces of Soviet ambitions in this distant corner of Siberia, 1,000 km northeast of Irkutsk: half-built bridges are scattered along the cratered road out of the gold rush town of Bodaibo, concrete pillars sticking out among the fir trees.
Nearby, a handful of five-storey apartment blocks, the start of a miners' colony, stand forlorn in the taiga, close to where, in 1912, soldiers shot dozens of striking gold miners from the Lena river fields in a massacre that helped foment revolution.
In Bodaibo, few expect a new rush to develop Sukhoi Log.
"For now, it is worth more in the ground," says Alexander Tuluptsov, a senior engineer at GV Gold, a private firm that is mining the neighbouring Golets Vysochaishy deposit. A local man whose wife's father was among the geologists who first charted Sukhoi Log, he does not expect to see it worked in his lifetime.
There is little pressure locally for work to start. Gold prices are riding high, bringing jobs and money to the sparse population. In Bodaibo, home to about 15,000, shiny SUVs are testimony to work at other mines and along historic riverbed deposits of the Lena basin. So too are prices in shops, where basic produce can cost three times what it does in even Moscow.
Irkutsk Region is bigger than France but has less than 2.5 million people. Anyone wanting to mine Sukhoi Log would probably have to fly in workers from further afield.
Speaking in London, where his mining firm is listed, Vitaly Nesis, U.S.-trained chief executive of Polymetal, said the Kremlin sees no haste in doing anything with the deposit:
"It is an asset that is a natural hedge against global inflation. Why does the government need to turn a real asset into a pile of dollars or euros that could be inflated away?"
However, Russia's leadership should foster more probing digs across its territory: "What the government should do," he said, "Is promote investment in exploration to find new assets."
Yet that, too, has lagged in Russia. Exploration alone could bring development to its farthest reaches - metalled roads, modern airports, rail, power, not to mention training and jobs.
But, say mining entrepreneurs, encouraging pioneering, small outfits and attracting foreign prospectors will need an overhaul of red tape and changes to laws, notably limits on foreigners' rights to exploit any big, new seams they discover.
Lou Naumovski, who runs the Moscow office of Canadian mining firm Kinross, estimated more investment in exploration could bring the Russian economy an additional $1.6 billion a year - but only if the government improves the regulatory framework:
Prospectors "take huge risks for high returns", he said. "If you have so many barriers, it simply doesn't work.
"You need huge political courage to say 'we need to really work to diversify, even within natural resources'."
GOLDEN AMBITION
Russia has gold deposits second only to South Africa and major deposits of copper, coal, diamonds, nickel, palladium and much else. But it has remained underdeveloped and underexplored since the collapse of the Soviet Union, as the state has focused on profiting from oil and gas reserves that account for 70 percent of Russia's exports. Where in Canada, say, an average of $178 was spent on exploration per 100 square kilometres of its vast territory in the last five years, Russians spent just $28.
"In other countries, there is a lot more interest in developing their mining industry," said Nikolai Zelenski, chief executive of Nord Gold, one of the few Russian mining companies to operate beyond the former Soviet Union.
He compared his own country unfavourably with Burkina Faso: "It is not a very rich country in mineral resources," he said. "But since 2005 they have built six mines, and I am not sure that many more mines have been built in Russia since then."
Foreign-owned miners have been the engine of development in much of the emerging world but have had little success in Russia, with the notable exception of Kinross. The world's biggest producer, Barrick Gold, pulled out this year.
Most have preferred to tap resources elsewhere - even in countries as challenging as the Democratic Republic of Congo - than tackle Russia’s climate, restrictions and red tape.
However, easy pickings are running out in Africa, which may push miners to look again at Russia, while Moscow’s leaders may also see more reason to encourage them; official figures suggest Russia's viable reserves may run out in 15 to 30 years. And a lower oil price may spur the Kremlin to exploit other resources.
Mark Bristow, chief executive at London-listed Randgold Resources, said his Africa-focused firm could look east in five or 10 years - "Russia's incredibly important" - and he expected Moscow in time to pay more attention to encouraging gold production - "I think it will eventually matter," he said.
FROM SCRATCH
There is already a range of companies ready to expand.
Unlike other sectors in Russia, gold mining has not become dominated by the fabulously rich and politically influential "oligarchs" who took over other industries privatised in the 1990s. Arguably, there were few existing gold assets to grab.
"Whatever we did, we did from scratch. That is what is special about gold mining," said German Pikhoya, chief executive of Polyus Gold, Russia's largest producer, which has spent billions in exploration and works on the fringes of Sukhoi Log. It is seen as a top contender to develop the deposit.
Russia is not without success in gold mining, even in areas where nature is at its toughest. Operators have tackled complex projects, building operations like Polyus’s Olimpiada mine or Polymetal's Amursk processing hub for complex, refractory ore or Kinross's Kupol mine in hostile, Arctic Chukotka.
Some 30 km (20 miles) from the swelling outline of Sukhoi Log, tapping a satellite deposit, GV Gold has gone from start-up to mid-ranking producer in just over a decade. It aims to produce 5.2 tonnes (some 167,200 ounces) of gold this year, has fund manager BlackRock as an investor and ambitions to list its shares. It could reap the benefits of development at Sukhoi Log.
Its director for corporate development, Maxim Gorlachev, stressed GV Gold would not over-reach itself in talking about potentially the world's biggest deposit, but it was willing to take advantage of opportunities if the conditions were right:
"We understand our place in the food chain," he said. "But if there was an opportunity to participate, we would evaluate. And if cost-efficient for us, why not?"
Getting conditions right for investment in gold exploration may take some time yet, however. There is no sign the government will move soon to lift a limit on foreign ownership of strategic assets; legislation scheduled for this year has not appeared.
Russia has overtaken South Africa as South African output has slowed and it is now the world's fourth largest producer of gold, according to data from Thomson Reuters GFMS. With Sukhoi Log, Russia could rival top producer China. But its exploration - key to securing a future for Russian gold mining - still lags.
Legislation is not the only problem. Lack of labour and skilled contractors in remote Siberia is another, as is funding, especially tough at the moment. Poor infrastructure is a barrier too. Bodaibo's airstrip, for example, is served by only small, ageing turboprops. And they cannot land in heavy rain.
Some mining firms adopt a go-it-alone strategy, building infrastructure themselves rather than rely on local officials. But without a clear political signal in Moscow that it wants to develop Sukhoi Log, none is rushing to build the new highways, airport and water and power plants a major deposit requires.
"Is there going to be a gold rush in the next five years?" asked Kinross's Naumovski. "I would like to believe there will.
"But not unless the government undertakes those reforms that we and other mining companies are recommending."


Sukhoi Log gold development could propel Russia to world No.1 - GOLD NEWS - Mineweb.com Mineweb


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December 14, 2012

#Gold. Big correction below 1800. If gold breaks out of this correction on the upside, we should see fireworks

Below we see five years of gold. Big correction below 1800. If gold breaks out of this correction on the upside, we should see fireworks.

#Centamin getting fuel again. Should trade up today!

Centamin Says Chevron Has Been Told Fuel Supplies May be Resumed
2012-12-14 07:42:07.804 GMT


By Tim Barwell
Dec. 14 (Bloomberg) -- Chevron is Centamin's fuel supplier, has been notified by Egyptian General Petroleum Corporation that fuel supply to Sukari may be resumed and that no retrospective payment is currently due.
* Centamin says further update on the status of gold exports
will be provided in due course as this will determine when
operations at Sukari may resume
* NOTE: Centamin dropped 47% in London yesterday after halting
its mining operations

Link to Statement:{NSN MF0FUZ3HBS3K <GO>} Link to Company News:{95678Z EY <Equity> CN <GO>} Link to Company News:{CVX US <Equity> CN <GO>} Link to Company News:{CEY LN <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Tim Barwell at +44-20-7073-3512 or
tbarwell@bloomberg.net

December 13, 2012

Egypt: #Centamin Operations suspended

Bad news for Centamin shareholders. Operations halted. This note from Canaccord Research 

Centamin



UK and European Research | Hold | Target 40p | 13 December 2012

Basic Resources - Mining - Gold Mining

Operations suspended

What's new?

Centamin has suspended operations following an inability to export gold and a lack of fuel supplies, combined with a claim for $65m to back-pay fuel subsidies from 2009.

Impact on the Canaccord Genuity view

The squeeze on working capital and the apparent rapidly deteriorating business environment has forced the company to suspend operations. The mine has been placed on care and maintenance until the gold sales and fuel supply issues are resolved.

(1) We note that the group was relatively well funded at the end of September, holding cash of $125m, gold sales receivables of $27m and bullion on hand of $22m, totalling $174m or 10p per share. While there would have been major movements in these levels during Q4, given recent issues, we see this 10p level as a floor, suggesting maximum downside is around the c. 80% mark.

 (2) We expect that due to the requirement for government to endeavour to sustain conditions to attract foreign investment, it is possible that the export and supply issues may be quickly resolved, but confidence in Egypt continues to edge lower.

Valuation

Centamin traded at 0.43x NAV (spot, 5%) yesterday comparing to the global junior producers average of 0.66x (and intermediate producers at 0.85x). However with limited marginal buyers, we think it is possible that the share price could move down by up to 80% today, with 40% being the mid point and most likely scenario, which would represent a P/NAV of 0.25x (spot gold).  
Given uncertainty we downgrade to a Hold (from Spec Buy) and reduce our target price to 40p share (from 110p) by reducing our target price multiple to 0.25x from 0.65x (at peak gold price of US$2,000/oz).

Share performance catalyst

Restart of operations and gold exports.

December 6, 2012

#Gold and #silver the ‘go-to’ assets for capital preservation – Mylchreest - Mineweb.com


On the path of the global economy and the role of gold and silver in preserving wealth.

Gold and silver the ‘go-to’ assets for capital preservation – Mylchreest

Paul Mylchreest’s latest 75 page long Thunder Road report makes for fascinating and disturbing reading on the path of the global economy and the role of gold and silver in preserving wealth.
Paul Mylchreest’s occasionally-produced Thunder Road Report always makes for fascinating reading and delivers insights into the markets which most mainstream analysts miss – or choose to ignore. He’s now producing his unique view on the markets under the auspices of London broker, Seymour Pierce, which one hopes does not cramp his style too much!
The latest report, which he put out today, suggests that the insights are still incisive – and often worrying, for those looking to their financial futures, but there is the advantage that under the Seymour Pierce banner it is now available to those who may want it in hard copy, as well as online.
Mylchreest is a believer in the Kondratieff, or Long Wave economic theory. Wikipedia describes this as sinusoidal-like cycles in the modern capitalist world economy. Averaging fifty and ranging from approximately forty to sixty years, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics – which puts Mylchreest somewhat out on a limb, as he accepts himself. However to set against this the theory does support the ‘supercycle’ idea which gained a certain amount of mainstream acceptance during the recent commodities boom.
Mylchreest titles the Executive summary of his latest report - Inflationary Deflation: creating a new bubble in money and looks at the way excessive monetary stimulus, coupled with low interest rates, creates financial bubbles and reckons that Central Banks are now creating the ultimate bubble – in Money – in an attempt to counter what he sees as the downward leg in most recent Long Wave cycle. He notes “first it was NASDAQ, then it was real estate and now it is money” (He describes the “Inflationary Deflation” paradox as referring to the rise in price of almost everything in conventional money and simultaneous fall in terms of gold.)
“This”, Mylchreest notes referring to the QE policies being followed by most major governments and Central Banks “is the biggest debt bubble in history. Each time deflationary forces re-assert themselves, offsetting inflationary forces (monetary stimulus in some form) have to be correspondingly more aggressive to keep systemic failure at bay. The avoidance of a typical deflationary resolution of this long wave is incubating a coming wave of inflation. This will not be the conventional “demand pull” inflation understood by most economists.
“The end game is an inflationary/currency crisis, dislocation across credit and derivative markets, and the transition to a new monetary system, with a new reserve currency replacing the dollar. This makes gold and silver the “go-to”assets for capital preservation.”
As Mylchreest sees it physical gold is the ONLY financial asset with no counterparty risk and a several thousand year track record as a store of wealth par excellence. Furthermore, gold is the only asset which outperforms during both inflation and deflation and he reckons we are seeing a battle to the death in these opposing forces.
While he comments that some commentators doubt gold’s outperformance during deflations, he draws attention to Roy Jastram’s 1977 classic book on the subject – The Golden Constant – with its 500+ years of data (updated and re-issued in 2009 with support from the World Gold Council) which actually shows that gold performs better in major deflations than perhaps it does in inflation – somewhat contrary to generally accepted monetary thinking these days. What Jastram’s research does suggest is that gold retains its purchasing power across a wide range of scenarios and that, in effect, its performance in perhaps countering inflation is probably more due to it retaining purchasing power as currencies themselves depreciate – and that gold will ultimately counter the loss in currency values caused by the kind of excessive money printing which we are seeing now. Thus Mylchreest reckons that this will lead to an eventual victory for inflationary forces – over deflation – as currency crises erupt which makes physical gold (and silver hanging on its coattails) the best assets to hold in this scenario – but also perhaps that if deflation should win out over inflation, then gold is the best asset to hold in this scenario too.
Jastram’s Golden Constant tells us that since the 14th Century, gold’s purchasing power has maintained a broadly constant level. To put this in practical terms, an ounce of gold has repeatedly bought a mid-range outfit of clothing. This was true in the fourteenth century, when an ounce of gold was worth £1.25 to £1.33; it was true in the late 18th century and it remained true at the beginning of this century (2000 to 2008), when an ounce of gold averaged £269 or $472. Even the exchange rate between gold and commodities has been relatively constant over the centuries.
On the other hand, the US dollar that bought 14.5 loaves of bread in 1900 buys only 3/4 of a loaf today. While inflation and other forces have ravaged the value of the world’s currencies, gold has emerged with its capacity for wealth preservation firmly intact. Being no-one’s liability, gold exhibits the same wealth preserving qualities in the face of financial turmoil, earning a reputation as a crisis hedge in addition to its credentials as an inflation hedge.
But back to Mylchreest’s Thunder Road report, and its comments on gold. He notes that some potential gold investors may feel they have missed the boat given the 11-12 year bull market in gold, but he reckons that in the end game the gold price will reflect the reciprocal of the purchasing power of existing currencies and that these are being debased at an ever-increasing rate. He reiterates something that has been noted by other commentators that there is evidence that, contrary again to some economic theory, gold is seeing increased demand as the price rises, rather than the reverse with ETF holdings at an all time high and Central Banks turning to being buyers rather than sellers. He also notes the view, often expressed by Mineweb in these pages, that China is actually at the forefront of gold purchasing despite it not reporting such changes in its official reserve figures.
There are a number of very interesting – indeed worrying –pieces of research in this 75 page report which the writer has to admit he has only had time to skim through so far. Among these are the view that we are now entering the fourth great inflation phase in history – and that the prior ones were brought on by factors which seem awfully familiar today: Excessive population growth putting increasing pressure on available resources; Governments – or rulers – running large deficits; and expansion of the money supply leading to currency debasement.
What is perhaps most worrying is the way these great inflation phases ended. That of 1180-1317 ended with banking collapse and the Black Death with known world population sinking by 20%. The second great inflation of 1496 to 1650 ended with plague (again) and wars with consequent population reduction– coupled with a decline in silver supply, which was then the world’s money. The third of 1733-1814 ended rather less unpleasantly with the Great re-coinage of 1816 and Britain adopting the gold standard – i.e. going on to a hard money backing for what was then the world’s strongest economy.
Mylchreest reckons we are in the fourth great inflation –which started back in 1897 – but with no evidence that the world’s now dominant economy, the U.S, is likely to adopt sound money principles, although one supposes the position could be usurped by China which many believe to have more strong money ideals.
And this leads us, to a final section of the Mylchreest report which is looking at the likelihood (inevitability) of a new global reserve currency emerging to replace the US dollar. He reckons that China is taking the role of France, which effectively brought down the old Bretton Woods agreement through its distrust of the dollar leading it to converting its dollars to gold, which was unsustainable. Key Chinese figures have publicly been commenting on their dissatisfaction with U.S. monetary policy and the country is believed, as we noted above, to be buying large quantities of gold to help give its own currency a better negotiating position in possibly participating in the most likely future reserve currency which is surmised to likely be an expanded version of the IMF’s Special Drawing Rights.
Mylchreest’s latest Thunder Road Report is some 75 pages in length so there is no way we can cover it in detail – however much of it is devoted to explaining his views on the various phases of the Long Wave economic theory. To download the full report as a pdf click here.



The MasterMetals Blog

Annual #Energy Outlook #AEO2013 Early Release Overview @eia

#AEO2013 Early Release Overview

ANNUAL ENERGY OUTLOOK 2013 EARLY RELEASE OVERVIEW - December 5, 2012

ANNUAL ENERGY OUTLOOK 2013 EARLY RELEASE OVERVIEW
The Annual Energy Outlook 2013 (AEO2013) Reference case released today by the U.S. Energy Information Administration (EIA) presents updated projections for U.S. energy markets through 2040. The Reference case projetions include only the effects of policies that have been implemented in law or final regulations. 

See the report at:
http://www.eia.gov/forecasts/aeo/er/

 

Contact: 
Paul Holtberg
202-586-1284

December 5, 2012

#ENI Announces Major #Gas Find Off #Mozambique - NYTimes.com #Energy

One of the wells ENI drilled, called Coral 2 found gas-bearing rock 140 meters, or almost 460 feet, thick — an exceptional amount
The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion is likely to be recoverable, ENI said.
According to industry estimates, ENI’s share of the Mozambique discoveries could be worth around $15 billion.

ENI Announces Major Gas Find Off Mozambique

LONDON — The Italian oil company ENI said Wednesday that it had made new natural gas discoveries in the waters off Mozambique, a find that will help consolidate ENI’s position as one of the leaders in the hot new East Africa region.
Offshore Mozambique, where ENI’s discovery is located, ranked third in the world in terms of oil and gas discovered last year, after the Santos Basin in Brazil and Iraqi Kurdistan, according to Mansur Mohammed, an analyst at Wood Mackenzie in Edinburgh.
The finds — from the sixth and seventh wells that ENI has drilled — add an additional 6 trillion cubic feet of gas to what ENI has already found. That is a large amount of gas but is dwarfed by the 68 trillion cubic feet that ENI now says it has found in its exploration concession called Block 4, where ENI has a 70 percent shareholding.
Three other shareholders — Galp Energia of Portugal, Kogas of South Korea and ENH, the Mozambican national oil company — each hold 10 percent.
The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion is likely to be recoverable, ENI said.
According to industry estimates, ENI’s share of the Mozambique discoveries could be worth around $15 billion.
The ENI finds coincide with an effort by the company’s chief executive, Paulo Scaroni, to focus more on exploration and production. In an interview, Mr. Scaroni said that ENI’s exploration activities in Mozambique would come to about $700 million. When you make a business of exploration and are “successful you make a huge amount of money,” he said.
ENI first found gas in Mozambique last year, closely following a discovery by Anadarko Petroleum of the United States.
The two companies are now negotiating with the government on a development plan. The biggest money earner is likely to be exporting gas to Asia as liquefied natural gas. The Web site of the Mozambique Instituto Nacional de Petroleo, the energy ministry, has a presentation that indicates that as many as 10 LNG plants or trains could be built, which would make Mozambique a very large player in the world gas market.
Mr. Scaroni said there could also be a role for a floating LNG facility, a technology that Royal Dutch Shell is now developing for use off western Australia. Shell recently tried to buy Cove Energy, which had a small position in the Mozambique discoveries, but was outbid by Thailand’s PTT Exploration and Production.
ENI is not a major player in LNG and may need help with the huge capital costs for developing the gas, which Mr. Scaroni put in the “tens of billions” of dollars.
Anadarko is also not an LNG specialist. It is widely thought in the industry that the companies will bring in partners.
Mr. Scaroni said he had been talking to potential partners “but we are fairly reluctant to strike a deal with anybody until we finish our exploration.”
A recent report by Bernstein Research says that Mozambique will be “ENI’s most significant project, although we do not expect production until 2019 at the earliest.” Bernstein estimates that the internal rate of return for Mozambique LNG will be a substantial 27 percent.
The gas discoveries off Mozambique are contained in sandstone deposits in what were ancient river beds, similar to those off West Africa and elsewhere.
What makes the Mozambique discoveries particularly rich is that the sandstone layers containing the gas are particularly thick. One of the wells ENI drilled, called Coral 2 found gas-bearing rock 140 meters, or almost 460 feet, thick — an exceptional amount. 

Read the article here:  ENI Announces Major Gas Find Off Mozambique - NYTimes.com

December 4, 2012

Jim Rogers: Short US #Bonds, Likes #Russia, Hold #Gold, doubts Shale #Gas & #Oil

Jim Rogers takes no prisoners in the way he makes the case for commodities. The author of “Hot Commodities” is so bullish—particularly on agriculture these days—that hearing what he has to say can leave you a bit unsettled. When IndexUniverse.com Managing Editor Olly Ludwig caught up with Rogers recently, he said new RBS’ lineup of commodity ETNs that have his name on them are so far superior to the competition.

Surveying the world of agriculture, Rogers talked about the growing shortage of farmers around the world at a time of tight food supplies. He also reaffirmed his bullishness on gold—and his bearishness on bonds—both of which are closely tied to his skepticism that the U.S. and the rest of the industrialized world will ever get out from under all its indebtedness without some additional crisis.

His most surprising revelation? After dismissing Russia for years as a dangerous investment destination, where losing money was almost guaranteed, he said Russian President Vladimir Putin has changed his approach to foreign investment. That means Rogers is poking around the commodities-rich country looking for ways to profit.

On Gold:


Rogers: I own gold and I own silver. I own all the precious metals, especially gold and silver. I'm not sure I would buy right now. Gold has gone up 12 years in a row, which is extremely unusual for any asset, at least in my experience. I don’t know any asset that’s gone up 12 years without a down year except gold. Gold has had only one decline over 30 percent in those 12 years. That, too, is extremely unusual.
Plus, if you look at the open interest from the CFTC, the speculators have been piling into gold. The number of call options is more than twice the put options. All the signs are that there's too much speculation in gold right now.
I’m not selling, by any stretch. I own it. If it goes down, I’ll buy more. If America bombs Iran, I’ll probably buy more going up. But I own it and, over the longer term, gold is going to go much higher because the world is doing nothing but printing money. And when the world economies get bad again, they're going to print even more money. But I'm not buying now.
Ludwig: As far as gold and silver right now, which do you see as the more prospective of the two precious metals?
Rogers: On a historic basis, silver is cheaper than gold. Gold is down 10 or 15 percent from its all-time high. Silver is down 30 or 40 percent. So I guess I’d rather buy silver than gold. I’m buying neither at the moment. But if I had to, I’d probably buy silver today rather than gold. But again, I’m not buying or selling either.

Read the article online here:  Jim Rogers: Short US Bonds, Likes Russia

December 3, 2012

China Moves Forward in Opening #Gold Market - WSJ

#China will allow over-the-counter gold trading between banks for the first time Monday, a significant financial reform for the world’s second-largest buyer of the precious metal.

China Moves Forward in Opening Gold Market - MarketBeat - WSJ

By Clementine Wallop


Bloomberg
China will allow over-the-counter gold trading between banks for the first time Monday, a significant financial reform for the world’s second-largest buyer of the precious metal.
The move reflects the Chinese government’s latest effort to develop Shanghai into a major gold trading center, and mirrors similar developments in the country’s currency and oil markets.
The introduction of interbank trading is intended to develop China into a liquid and market such as London, and demonstrates the government’s readiness to open the market to greater participation by international banks, said Jeremy East, global head of metals trading at Standard Chartered PLC STAN.LN +1.37%(STAN.LN).
“From a government perspective, gold is seen as currency, and the government is slowly releasing the controls on currency. We expect the [gold] market will be opened up to more foreign banks,” he said.
Given their trading volumes, Chinese banks already play a significant role in determining international gold prices, so the move will have a limited impact on prices, Mr. East said.
China offers a massive gold market, albeit one that is tightly controlled. The country is the world’s biggest gold producer and ranked as the No. 2 gold consumer in the third quarter of this year. It has official gold reserves of 1,054 metric tons, the world’s sixth-largest, World Gold Council data show. But gold exports are banned and only a handful of banks hold import licenses.
Until now, member banks have been able to trade physical gold between themselves on the Shanghai Gold Exchange, but the absence of an over-the-counter market restricted them from becoming market makers in gold. In an over-the-counter market, transactions are quoted and conducted between parties on a principal-to-principal basis rather than being traded through a broker on an exchange.
Chinese gold demand has surged in recent years. The People’s Bank of China 601988.SH -0.72% has encouraged people to buy gold while it has added to its own stockpile to diversify its foreign reserves. The Shanghai Gold Exchange is the world’s biggest platform for trading physical gold.
The introduction of interbank trading represents only a “small step” in the government’s long-term plan for its gold market, but the initial stages of interbank trading are likely to be “very limited,” said Xie Duo, director-general of the central bank’s financial market department.
“We’re trying to test the market,” Mr. Xie said.
Standard Chartered is one of the banks that will participate in interbank trading when it begins next week. Others include Chinese banks such as Industrial & Commercial Bank of China Ltd. 601398.SH -0.52% (601398.SH) China Construction Bank Corp. 601939.SH 0.00% (601939.SH) and Bank of China Ltd. (601988.SH), as well as Chinese units of foreign banks such as HSBC Holdings PLC HSBA.LN +0.24%(HBC).
Mr. East noted that the gold market will remain tightly regulated.
“Ultimately the gold market will open up to more banks, but it’s not going to be carte blanche,” he said. “It’s unlikely the floodgates will be opened and every foreign bank will be able to import everything they want.”
The Shanghai Gold Exchange said late Thursday that the interbank gold trading will be cleared and delivered by the bourse and will be conducted via the China Foreign Exchange Trading System, a central bank subsidiary that oversees onshore currency trading. The SGE is directly supervised by the PBOC.
The gold exchange currently offers spot and deferred prices to more than 3 million individual clients, a senior PBOC official said this month.
The opening up of the gold market comes as China is seeking to increase foreign investors’ participation in the nation’s crude-oil market. Chinese regulators said this month that they will allow qualified foreign institutional investors to trade crude-oil futures contracts planned for the Shanghai Futures Exchange.
Gold exchange-traded funds, hugely popular in Western markets, are widely expected to be the next precious metals product launched in China.
The Shanghai Stock Exchange could launch gold ETFs early next year if it receives government approval by the end of this year, the state-run China Securities Journal said last week, citing an exchange official.
ETFs have been a major source of demand for physical gold since the first gold ETF was launched in 2003. In the third quarter of this year, global gold demand from ETFs rose 56% from the same period a year earlier, WGC data showed.


China Moves Forward in Opening Gold Market - MarketBeat - WSJ

The MasterMetals Blog

#MuddyWaters weighs on #commodities traders

Short seller's allegations surrounding #Olam are hitting investor appetite for the sector as a whole

Muddy Waters weighs on commodities traders
Financial Times, 8:22am Monday December 3rd, 2012--
By Javier Blas, Commodities Editor
--
Industry executives worry that the US short seller's allegations surrounding Olam are hitting investor appetite for the sector as a whole

Read the full article at: http://www.ft.com/cms/s/0/ee2cf2e8-3d10-11e2-9e13-00144feabdc0.html




November 30, 2012

#Gold: Solution to the Banking Crisis - Sprott Asset Management

Gold: Solution to the Banking Crisis

By: Eric Sprott & David Baker

The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world's largest financial institutions. It is part of the Bank of International Settlements (BIS) and is often referred to as the Central Banks' central bank. Ever since the financial meltdown four years ago, the Basel Committee has been hard at work devising new international regulatory rules designed to minimize the potential for another large-scale financial meltdown. The Committee's latest 'framework', as they call it, is referred to as "Basel III", and involves tougher capital rules that will force all banks to more than triple the amount of core capital they hold from 2% to 7% in order to avoid future taxpayer bailouts. It doesn't sound like much of an increase, and according to the Basel group's own survey, the 100 largest global banks will only require approximately €370 billion in additional reserves to comply with the new regulations by 2019.1 Given that the Spanish banks alone are believed to need well over €100 billion today simply to keep their capital ratios in check, it is hard to believe €370 billion will be enough protect the world's "too-big-to-fail" banks from future crises, but it is indeed a step in the right direction.2

Initial implementation of Basel III's capital rules was expected to come into effect on January 1, 2013, but US banking regulators issued a press release on November 9th stating that they wouldn't meet the deadline, citing a large volume of letters (ie. complaints) received from bank participants and a "wide range of views expressed during the comment period".3 It has also been revealed that smaller US regional banks are loath to adopt the new rules, which they view as overly complicated and potentially devastating to their bottom lines. The Independent Community Bankers of America has even requested a Basel III exemption for all banks with less than $50 billion in assets,"in order to avoid large-scale industry concentration that would curtail credit for consumers and business borrowers, especially in small communities."4 The long-term implementation period for all Basel III measures actually extends to 2019, so the delays are not necessarily meaningful news, but they do illustrate the growing rift between the US banking cartel and its European counterpart regarding the Basel III framework. JP Morgan's CEO Jamie Dimon is on record having referred to Basel III regulations as "un-American" for their favourable treatment of European covered bonds over US mortgage-backed securities.5 Readers may also remember when Dimon was caught yelling at Mark Carney, Canada's (soon to be former) Central Bank Governor and head of the Financial Stability Board, during a meeting in Washington to discuss the same topic.6 More recently, Deutsche Bank's co-chief executive Juergen Fitschen suggested that the US regulators' delay was "hurting trans-Atlantic relations" and creating distrust... stating, "when the whole thing is called un-American, I can only say in disbelief, who can still believe in this day and age that there can be purely European or American rules."7 Suffice it to say that Basel III implementation has not gone as smoothly as planned.

One of the more relevant aspects of Basel III for our portfolios is its treatment of gold as an asset class. Documents posted by the Bank of International Settlements (which houses the Basel Committee) and the United States FDIC have both referenced gold as a "zero percent risk-weighted item" in their proposed frameworks, which has launched spirited rumours within the gold community that Basel III may define gold as a "Tier 1" asset, along with cash and AAA-government securities.8,9 We have discovered in delving further that gold's treatment in Basel III is far more complicated than the rumours suggest, and is still, for all intents and purposes, very much undecided. Without burdening our readers with the turgid details, it turns out that the reference to gold as a "zero-percent risk-weighted item" only relates to its treatment in specific Basel III regulation related to the liquidity of bank assets vs. its liabilities. (For a more comprehensive explanation of Basel III's treatment of gold, please see the Appendix). But what the Basel III proposals do confirm is the regulators' desire for banks to improve their liquidity position by holding a larger amount of "high-quality", liquid assets in order to improve their overall solvency in the event of another crisis.

Herein lies the problem, however: the Basel III regulators have stubbornly held to the view that AAA-government securities constitute the bulk of those high quality assets, even as the rest of the financial world increasingly realizes they are anything but that. As banks move forward in their Basel III compliance efforts, they will be forced to buy ever-increasing amounts of AAA-rated government bonds to meet post Basel III-compliant liquidity and capital ratios. As we discussed in our August newsletter entitled, "NIRP: The Financial System's Death Knell", the problem with all this regulation-induced buying is that it ultimately pushes government bond yields into negative territory - as banks buy more and more of them not because they want to but because they have to in order to meet the new regulations. Although we have no doubt in the ability of governments' issue more and more debt to satiate that demand, the captive purchases by the world's largest banks may turn out to be surprisingly high. Add to this the additional demand for bonds from governments themselves through various Quantitative Easing programs… AND the new Dodd Frank rules, which will require more government bonds to be held on top of what's required under Basel III, and we may soon have a situation where government bond yields are so low that they simply make no sense to hold at all.10,11 This is where gold comes into play.

If the Basel Committee decides to grant gold a favourable liquidity profile under its proposed Basel III framework, it will open the door for gold to compete with cash and government bonds on bank balance sheets – and provide banks with an asset that actually has the chance to appreciate. Given that US Treasury bonds pay little to no yield today, if offered the choice between the "liquidity trifecta" of cash, government bonds or gold to meet Basel III liquidity requirements, why wouldn't a bank choose gold? From a purely 'opportunity cost' perspective, it makes much more sense for a bank to improve its balance sheet liquidity profile through the addition of gold than it does by holding more cash or government bonds – if the banks are given the freedom to choose.

The world's non-Western central banks have already embraced this concept with their foreign exchange reserves, which are vulnerable to erosion from 'Central Planning' printing programs. This is why non-Western central banks are on track to buy at least 500 tonnes of net new physical gold this year, adding to the 440 tonnes they collectively purchased in 2011.12 In the un-regulated world of central banking, gold has already been accepted as the de-facto forex diversifier of choice, so why shouldn't the regulated commercial banks be taking note and following suit with their balance sheets? Gold is, after all, one of the only assets they can all own simultaneously that will actually benefit from their respective participation through pure price appreciation. If banks all bought gold as the non-Western central banks have, it is likely that they would all profit while simultaneously improving their liquidity ratios. If they all acted in concert, gold could become the salvation of the banking system. (Highly unlikely… but just a thought).

So far there have only been two banking jurisdictions that have openly incorporated gold into their capital structures. The first, which may surprise you, is Turkey. In an unconventional effort to increase the country's savings rate and propel loan growth, Turkish Central Bank Governor Erdem Basci has enacted new policies to promote gold within the Turkish banking system. He recently raised the proportion of reserves Turkish banks can keep in gold from 25 percent to 30 percent in an effort to attract more bullion into Turkish bank accounts. Turkiye Garanti Bankasi AS, Turkey's largest lender, now offers gold-backed loans, where "customers can bring jewelry or coins to the bank and take out loans against their value." The same bank will also soon "enable customers to withdraw their savings in gold, instead of Turkish lira or foreign exchange."13 Basci's policies have produced dramatic results for the Turkish banks, which have attracted US$8.3 billion in new deposits through gold programs over the past 12 months - which they can now extend for credit.14 Governor Basci has even stated he may make adjusting the banks' gold ratio his main monetary policy tool.15

The other banking jurisdiction is of course that of China, which has long encouraged its citizens to own physical gold. Recent reports indicate that the Shanghai Gold Exchange is planning to launch an interbank gold market in early December that will "pilot with Chinese banks and eventually be open to all."16 Xie Duo, general director of the financial market department of the People's Bank of China has stated that, "[China] should actively create conditions for the gold market to become integrated with the international gold market," which suggests that the Chinese authorities have plans to capitalize on their growing gold stockpile.17 It is also interesting to note that China, of all countries, has been adamant that its 16 largest banks will meet the Basel III deadline on January 1, 2013.18 We can't help but wonder if there is any connection between that effort and China's recent increase in physical gold imports. Could China be positioning itself for the day Western banks finally realize they'd prefer gold over Treasuries? Possibly – and by the time banks figure it out, China may have already cornered most of the world's physical gold supply.

If global banks' are realistically going to improve their balance sheet diversification and liquidity profiles, gold will have to be part of that process. It is ludicrous to expect the global banking system to regain a sure footing through the increased ownership of government securities. If anything, we are now at a time when banks should do their utmost to diversify away from them, before the biggest "crowded trade" of all time begins to unravel itself. Basel III liquidity rules may be the start of gold's re-emergence into mainstream commercial banking, although it is still not guaranteed that the US banking cartel will adopt all of the Basel III measures, and they still have years to hammer out the details. If regulators hold firm in applying stricter liquidity rules, however, gold is the only financial asset that can satisfy those liquidity requirements while freeing banks from the constraints of negative-yielding government bonds. And while it strikes us as somewhat ironic that the banking system may be forced to turn to gold out of sheer regulatory necessity, that's where we see the potential in Basel III. After all – if the banks are ultimately interested in restoring stability and confidence, they could do worse than holding an asset that has gone up by an average of 17% per year for the last 12 years and represented 'sound money' throughout history.
 

Appendix: Gold's treatment in Basel III

Basel III is a much more complex "framework" than Basel I or II, although we do not claim to be experts on either. It should also be mentioned that Basel II only came into effect in early 2008, and wasn't even adopted by the US banks on its launch. Post-meltdown, Basel III is the Basel Committee's attempt to get it right once and for all, and is designed to provide an all-encompassing, international set of banking regulations designed to avoid future bailouts of the "too-big to fail" banks in the event of another financial crisis.

Without going into cumbersome details, under the older Basel framework (Basel I), the lower the "risk weighting" regulators applied to an asset class, the less capital the banks had to set aside in order to hold it. CNBC's John Carney writes, "The earlier round of capital regulations… government-rated bonds rated BBB were given 50 percent riskweightings. A-rated bonds were given 20 percent risk weightings. Double A and Triple A were given zero risk weightings — meaning banks did not have to set aside any capital at all for the government bonds they held."19 Critics of Basel I argued that the risk-weighting system compelled banks to overweight their exposure to assets that had the lowest riskweightings, which created a herd-like move into same assets. This was most evident in their gradual overexposure to European sovereign debt and mortgage-backed securities, which the regulators had erroneously defined as "low-risk" before the meltdown proved them to be otherwise. The banks and governments learned that lesson the hard way.

Basel III (and Basel II) takes the same idea and complicates it further by dividing bank assets into two risk categories (credit and market risk) and risk-weighting them depending on their attributes. Just like Basel I, the higher the "riskweight" applied to an asset class, the more capital the bank is required to hold to offset them.

tier1.gif 

It is our understanding that gold's reference as a "zero percent risk-weighted asset" in the FDIC and BIS literature only applies to gold's "credit risk" - which makes perfect sense given that gold isn't anyone's counterparty and cannot default in any way. Gold still has "market-risk" however, which stems from its price fluctuations, and this results in the bank having to set aside capital in order to hold it. So for banks who hold physical gold on their balance sheet (and we don't know of any who do, other than the bullion dealers), the gold would not be treated the same as cash or AAA-bonds for the purposes of calculating their Tier 1 ratio. This is where the gold community's conjecture on gold as a "Tier 1" asset has been misleading. There really isn't such a thing as a "Tier 1" asset under Basel III. Instead, "Tier 1" is merely the ratio that reflects the capital supporting a bank's risk-weighted assets.

HOWEVER, Basel III will also be adding an entirely new layer of regulation concerning the relative liquidity of the bank's assets and liabilities. This will be reflected in two new ratios banks must calculate starting in 2015: the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

tier1-2.gif

Just as Basel III requires risk-weights for the asset side of a bank's balance sheet (based on credit risk and market risk), Basel III will also soon require the application of risk-weights to be applied to the LIQUIDITY profile of both the assets and liabilities held by the bank. The idea here is to address the liquidity constraints that arose during the 2008 meltdown, when banks suffered widespread deposit withdrawals just as their access to wholesale funding dried up.

This is where gold's Basel III treatment becomes more interesting. Under the proposed LIQUIDITY component of Basel III, gold is currently labeled with a 50% liquidity "haircut", which is the same haircut that is applied to equities and bonds. This implicitly assumes that gold cannot be easily converted into cash in a stressed period, which is exactly the opposite of what we observed during the crisis. It also requires the bank to maintain a much more stable source of funding in order to hold gold as an asset on its balance sheet. Fortunately, there is a strong chance that this liquidity definition for gold may be changed. The World Gold Council has in fact been lobbying the Basel Committee, the Federal Reserve and the FDIC on this issue as far back as 2009, and published a paper arguing that gold should enjoy the same liquidity profile as cash or AAA-government securities when calculating Basel III's LCR and NSFR ratios.20 And as it turns out, the liquidity definitions that will guide banks' LCR and NSFR calculations have not yet been finalized by the Basel Committee. The Basel III comment period that ended on October 22nd resulted in the deadline being pushed back to January 1, 2013, and given the recent delays with the US bank regulators, will likely be postponed even further next year. Of specific interest to us is how the Basel Committee will treat gold from a liquidity-risk perspective, and whether they decide to lower gold's liquidity "haircut" from 50% to something more reasonable, given gold's obvious liquidity superiority over that of equities and bonds.

The only hint we've heard thus far has come from the World Gold Council itself, which suggested in an April 2012 research paper, and re-iterated on a recent conference call, that gold will be given a 15% liquidity "haircut", but we have not been able to confirm this with either the Basel Committee or the FDIC.21 In fact, all inquiries regarding gold's treatment made to those groups by ourselves, and by other parties that we have spoken with, have been met with silence. We get the sense that the regulators have no interest in stirring the pot by mentioning anything related to gold out of turn. Given our discussion above, we can understand why they may be hesitant to address the issue, and only time will tell if gold gets the proper liquidity treatment it deserves.



November 29, 2012

#Turkey sees no clash with U.S. over #Iran “#gold for #gas” : euronews


More on the Gold for Gas Deals between Turkey and Iran




Reuters, 29/11 12:47 CET
By Evrim Ergin
ISTANBUL (Reuters) – Turkey’s energy minister said on Thursday that he sees no conflict between Ankara and Washington over U.S. plans to widen trade sanctions against Iran, including Turkish-Iranian “gold for gas” trade.
U.S. senators and aides told Reuters this week that new sanctions aimed at reducing global trade with Iran in the energy, shipping and metals sectors may soon be considered by the U.S. Senate as part of an annual defence policy bill.
One senior aide said the move would end “Turkey’s game of gold for natural gas”, referring to Iran’s conversion of Turkish payments for gas into gold because of the sanctions.
Iran sells oil and gas to Turkey, with payments made to Iranian state institutions. U.S. and European banking sanctions ban payments in U.S. dollars or euros, so Iran is paid in Turkish lira – of limited value for buying goods on international markets, but ideal for buying gold in Turkey.
Asked about the planned new sanctions, Turkey’s Energy Minister Taner Yildiz said: “I’m not of the view that there will be any negative situation, a clash with the USA, regarding natural gas, oil and mining. We are talking with the USA.”
Couriers carrying millions of dollars worth of gold bullion in their luggage have been flying from Istanbul to Dubai, where the gold is shipped to Iran, industry sources with knowledge of the business told Reuters last month.
Turkey’s Deputy Prime Minister Ali Babacan said last week that the lira Iran received from Turkey for its gas was being converted into gold because sanctions meant that it could not transfer the cash into Iran.
Official Turkish trade data suggests that nearly $2 billion in gold was sent to Dubai on behalf of Iranian buyers in August. The shipments help Tehran to manage its finances in the face of Western financial sanctions.
The sanctions, imposed over Iran’s disputed nuclear programme, have largely frozen it out of the global banking system, making it hard to conduct international money transfers. By using physical gold, Iran can continue to move its wealth across borders.
As the banking sanctions began to bite in March, Tehran sharply increased its purchases of gold bullion from Turkey, according to the Turkish government’s trade data.
Turkey’s gold exports as a whole jumped more than fourfold to $11.2 billion in the first eight months of 2012.
More than 90 percent of Iran’s gas exports go to Turkey under a 25-year supply deal. Turkey imports about 10 billion cubic metres of gas a year from Iran, making it the country’s second-largest supplier behind Russia.
(Writing by Daren Butler; Editing by Nick Tattersall and David Goodman)
euronews provides breaking news articles from Reuters as a service to its readers, but does not edit the articles it publishes.
Copyright 2012 Reuters.


NewsWires : euronews : the latest international news as video on demand

The MasterMetals Blog

Gold Fields spinoff shows decline of South Africa's #gold sector | Reuters $GFI

1 share in #Sibanye, or "We are one" in Zulu, for every Gold Fields share.  Sibanye Gold to be listed on the JSE

 Gold Fields spinoff shows decline of South Africa's gold sector

JOHANNESBURG | Thu Nov 29, 2012 10:00am EST
(Reuters) - Gold Fields (GFIJ.J), the world's fourth-largest bullion producer, is spinning off its two oldest South African mines in the latest sign of the country's once mighty gold industry succumbing to declining output and soaring costs.
In a move that nearly severs its ties with South Africa, Gold Fields' 70-year-old KDC mines near Johannesburg and its Beatrix operations near the central city of Bloemfontein will be renamed Sibanye Gold and floated on the Johannesburg stock exchange in February.
The deal leaves Gold Fields with just one mine in South Africa, the highly mechanized South Deep operation on which it has pinned the bulk of its hopes for growth. The rest of its mines are in Ghana, Peru and Australia.
Gold production in South Africa has halved in the last seven years, knocking Africa's biggest economy off its perch as the world's top bullion producer, a position it held throughout most of the 20th century.

Gold Fields spinoff shows decline of South Africa's gold sector | Reuters

November 28, 2012

#Gold crashing

http://www.kitco.com/images/live/gold.gif

Gold crashes as the markets rally on fiscal cliff hopes...


The MasterMetals Blog

Turkey Swaps #Gold for Iranian #Gas

Loophole in Western Sanctions Allows Iran to Buy Gold in Turkey With Turkish Payments for Gas Imported From Iran

Turkey Acknowledges Gold Exports Tied to Iran Gas Purchases - WSJ.com


ISTANBUL—Turkey on Friday acknowledged that a surge in its gold exports this year is related to payments for imports of Iranian natural gas, shedding light on Ankara's role in breaching U.S.-led sanctions against Tehran.
The continuing trade deal offers the most striking example of how Iran is using creative ways to sidestep Western sanctions over its disputed nuclear program, which have largely frozen it out of the global banking system.
The disclosure was made by Turkey's Deputy Prime Minister and top economic policy maker Ali Babacan in answers to questions from the parliamentary budget committee.


Read the rest of the article online (Subs. required): Turkey Acknowledges Gold Exports Tied to Iran Gas Purchases - WSJ.com

See our previous note on the Iran-Turkey Gold-gas situation:  MasterMetals: Iran’s Neighbors Act as Gold Funnels | Gold Investing News:
in the first six months of 2012, [with] gold exports to Iran, we are talking about a gold export figure in excess of $6 billion. So, compared to past trends, we are definitely talking about something extraordinary here,” he said.

In July, Turkish gold sales to Iran reached nearly $2 billion. That trade that did not go unnoticed or unreported; Turkish and international media began to hone in on this relationship.

As the spotlight grew brighter, Iran’s demand for gold from Turkey seemed to decline. Simultaneously, an enormous appetite for gold erupted in the United Arab Emirates (UAE).

Some believe that the players, aiming to mask the trade, switched up their game a bit.

November 27, 2012

#Canadian junior #energy producers look like income trusts | Financial Post

But can they afford it?


Canadian junior energy producers look like income trusts | Investing | Financial Post

November 27, 2012
Canadian junior oil and gas companies seem to be reinventing their business plans in order to once again gain access to capital after three producers last week announced they will switch to an income-and-growth model not unlike the former income trusts that dominate the larger-sized intermediate exploration and production companies.
Pinecrest Energy Inc. and Spartan Oil Corp. announced their intent to merge and institute a dividend of approximately 8%, while Whitecap Resources Inc. announced plans to implement a monthly dividend early next year that will yield about 7%. The announcements come after two others — Twin Butte Energy Ltd. in 2011 and Renegade Petroleum Ltd. earlier this year — also converted into yield-and-growth companies.
Historically, junior oil and gas companies received capital from investors looking for high growth rates. It was not unusual to see such companies spend two to three times their annual cash flow trying to achieve growth rates in excess of 20% to 25% per year.
Investors since the 2008 recession, however, have turned away from high-growth companies, focusing instead on perceived lower-risk dividend-paying companies. But very few of the intermediates have delivered on the growth side of the equation and many have also been equally challenged to sustain their dividend.
Thanks to higher-cost resource plays, capital budgets have more than doubled since 2006 when measured as a percentage of cash flow, said a recent TD Securities report.
In other words, capital budgets have expanded while cash flow has remained somewhat flat for oil producers and down for gas producers.
While investors may be partially forgiving on missed production-per-share growth targets, they are not as kind when it comes to dividend cuts. For example, the share prices of both Enerplus Corp. and Pengrowth Energy Corp. more than halved this year after large dividend cuts.
Therefore, we believe it is very important investors understand the risks and ask how and if these junior companies can do a better job of managing growth and sustaining yields than their larger peers.
A great starting point is to look at a company’s payout ratio, which represents its ability to pay a dividend over the longer term. This is done by taking the planned dividend payment and capital expenditures and dividing by estimated cash flow.
Anything more than 100% means the company will be using debt to pay its dividend to investors. Interestingly, the intermediates on average have had payout ratios above 100% since the federal government’s decision to tax income trusts back in 2006.
We also recommend looking at a company’s balance sheet strength, capital efficiencies, production decline rates, netbacks and hedging activity.
The greater the decline rate and the weaker the capital efficiency, the more money required to maintain production rates, cash flow and, subsequently, the dividend. In addition, the stronger the netback (lower cost structure and higher priced commodities), the easier it is to generate free cash flow and sustain the dividend.
A strong balance sheet also affords a company time to meet its objectives without having to immediately cut its dividend. Finally, commodity hedging is important to minimize the risk of diminished cash flow from a correction in oil and/or natural gas prices.
In conclusion, we think this could end up being a win-win scenario for the sector, because junior producers may now have the option of either growing into dividend companies and raising capital as part of that plan, or selling out to an existing dividend-paying junior producer.
That said, the jury is still out on whether the income model will work for smaller producers. To that end, investors should at least undertake some diligence and not base their decisions to invest solely on the attractive yields being offered.
Martin Pelletier, CFA, is a portfolio manager at Calgary-based TriVest Wealth Counsel Ltd.

read the article online here: Canadian junior energy producers look like income trusts | Investing | Financial Post


November 16, 2012

#Soros and #Paulson funds remain bullish on #gold

Soros raises gold ETF holdings by half, nearly triples Freeport stake
While the Soros and Paulson funds remain bullish on gold, major gold ETF shareholder Windhaven dropped its SPDR Gold holdings during the third quarter. Author: Dorothy Kosich
Posted: Friday , 16 Nov 2012

RENO (MINEWEB) -

Billionaire fund manager George Soros increased his stake by half in the SPDR Gold Trust while fellow billionaire fund manager John Paul maintained his holding in the world’s largest gold bullion-backed ETF.

However, Paulson reduced his position in Gold Fields, while Soros Fund Management nearly tripled its position in Freeport-McMoRan Copper & Gold, SEC filings showed Thursday.

During the third quarter, Soros Fund Management raised its interest in SPDR Gold shares from 884,400 shares in the second quarter to 1.3 million shares.

Over the same period, the fund also upped its holdings in the Market Vectors Gold Miners ETF from 1 million shares in the second quarter to 2,325,000 shares in the third quarter. However, the fund only maintained its holdings in Market Vectors Junior Gold Miners ETF at nearly 2.4 million shares.

Meanwhile, Soros Fund Management’s holdings in Freeport-McMoRan increased from 385,000 shares in the second quarter to 1,295,558 shares in the third quarters.

During the third quarter, Soros invested in Molycorp, but apparently sold its Newmont holdings. The fund sold its second-quarter holdings in PotashCorp , but bought 4.4 million shares in coal company Peabody Energy in the third quarter.

SEC records show that Soros also added Kinross Gold to its portfolio at 1,766,019 shares during the third quarter. However, the fund dropped molybdenum miner Thompson Creek from its portfolio during the same period.

During the third quarter Paulson & Co. maintained its holdings in Agnico-Eagle Mines, Allied Nevada Gold, Barrick Gold, Iamgold, NovaGold and Randgold Resources Ltd.

However, it reduced its holdings in AngloGold Ashanti by 13% from 32,761,921 shares in the second quarter to 28,403,545 shares in the third quarter. Nevertheless, AngloGold Ashanti remains one of the fund’s largest holdings.

Paulson also reduced its stake in Gold Fields from 18,038,600 shares in the second quarter to 6,541,600 shares in the third quarter.

The fund increased its holdings in gold junior International Tower Hill Mines from 5,103,500 shares in the second quarter to 8,949,654 shares in the third quarter.

Paulson's holdings in NovaCopper were reduced slightly from 5,995,077 shares in the second quarter to 5,921,608 shares in the third quarter.

The fund also stood pat on its SPDR Gold Trust investment at 21,837,552 shares.

Meanwhile, a third major fund, Windhaven Investment Management, substantially increased its holdings in the ISHARES Gold Trust by nearly 500% during the third quarter. Windhaven upped its investment in the ISHARES Gold Trust from 4,237,713 shares in the second quarter to 25,107,965 shares in the third quarter.

However, Windhaven substantially decreased its investment in the SPDR Gold Trust from 3,847,555 shares in the second quarter to 2,060,732 shares in the third quarter.

Read the article online here: Soros raises gold ETF holdings by half, nearly triples Freeport stake - GOLD NEWS - Mineweb.com Mineweb