August 25, 2015

Monday was murderous for miners @Mineweb #MiningStocks



Picking through the wreckage

HALIFAX – To set the scene briefly: Monday was murderous for miners. A rout in Asia and renewed bearishness regarding China’s slowing economy served as a double whammy, especially in bulks and base metals. Spot copper flirted with $2.20/lb and there were eye-popping sell-offs in the world’s biggest miners on all the world’s major exchanges. The sell-off spared no major category: diversified, base metal miner, gold miner – all were slaughtered. Indeed, it didn’t matter what the metal price did on the day.

Taking a look at the 100 worst performances of miners (excluding microcaps) on the NSYE, LSE, TSX and ASX on Monday confirms the view. The top ten of the losers on Monday were a broad slice of the mining sector. Glencore – a diversified miner – was down 13%, putting in the worst performance among the largest miners. Gabriel Resources – a gold developer sitting on the controversial Rosia Montana project in Romania – was down 15%. First Quantum Minerals, the copper miner, had a 13% loss. A slew of gold and silver miners were among the worst losers: McEwen Mining (down 14%), GoGold (14%), Kinross Gold (13%), Centerra Gold down (12%) and Coeur d’Alene Mines (11%).

And this “100 worst” list was not top heavy. The median loser on it – just to give a sense of the distribution here – was down 7.8%. The average was down 8%. The range was -4.3% to -16.4% encompassing all the big names like BHP, Rio, Cameco, Barrick, Goldcorp. So yes, it was a very bad day.

Interesting too, as the sell-off was agnostic. It punished pretty well any kind of miner regardless of what they mined, where they mined, or who they primarily sold their products too. (Fertilizer miners were notably absent.) The sellers were not interested in the fact that the miners have had an awful few years and now trade at, in many cases, near or at historic lows.

The conspicuous presence of the gold miners was perhaps most notable. For on the day, gold held steady, more or less, and this after a string of gains that has brought at least a smidgen of optimism back to the sector. But the gold companies withered along with the rest anyway. Indeed, they posted among the worst performances – strange, perhaps, given that the sell-off in miners was ostensibly due, in part, to an emerging bearishness on China and largely, a slowdown, in its need for mostly industrial metals like copper. Hence copper flirting with $2.20/lb from closer to $2.30/lb within the day, building on a multi-year decline.

In this respect – for the gold companies – you can reasonably wonder if a rebound is inevitable, at least in the short term. Otherwise put, was there really a good reason to hit down the likes of Barrick or Goldcorp 9% (and you could likely insert any number of other gold mining names here)? If not quite right on the day, Kerry Smith, over at Haywood Securities, was thinking that way. In an email to Mineweb he wrote, “Initially the reaction by everyone is just sell everything, especially when you get the Dow down 1 000 points. But after a bit, the smarter ones look at the metal price (up) and start to buy gold stocks. I expect gold shares generally will be up today.” The rebound was largely absent Monday – so maybe Tuesday?

Indeed, the same argument might be deployed for other metals where the storyline of the day – China’s market meltdown, China’s slowing industrial economy – doesn’t have an obvious direct or heavily bearish effect. Uranium comes to mind. The top 100 losing miners on Monday included many a uranium name, from developer to miner. Yet it’s hard to argue that any news recently from China negates a growth story, ultimately, of reactors and demand for uranium oxide to, the hope is, tip the balance in favour of the miners. Cameco, the top uranium miner, was down 5%; Paladin, another miner, was down 8%; and NexGen, a leading junior, was down 9%, for some examples.

It will be tempting to take this view more broadly of course and include the big guns like BHP, Rio, Teck, and so on, the many other names among the withering base and bulk miners on Monday. If there is a rebound it may be longer in the coming, however. You wonder, with the fall of base metals still in process and some of the negative views growing on China, if the market will be less willing to flock back to them.

Sure – it seems to me – there’s been over zealous selling of names that otherwise might jump back for strong cash flows. That as always will be hard to ignore. Ray Goldie noted over the phone that surely the market went too far among the base metal miners Monday. Indeed, he noted that recently China imports of copper and other metals ticked up (June over July), suggesting healthy or at least not falling copper demand. Still, back over at Haywood, Smith advised staying out of the way of base metal miners. Was there overreaction on the market? Smith answers, “Nope – copper going to $2/lb I think… so stocks still a bit expensive.”

 CompanyTickerChange (Aug. 24)
1Aureus Mining IncAUE.TO-16.4%
2Gabriel Resources, Ltd.GBU.TO-14.6%
3Mcewen Mining IncMUX.TO-13.9%
4Gogold Resources Inc.GGD.TO-13.6%
5Glencore Xstrata PlcGLEN.L-13.0%
6First Quantum Minerals Ltd.FQM.L-12.7%
7Kinross Gold CorporationKGC-12.6%
8Centerra Gold Inc.CG.TO-11.9%
9Peabody Energy Corp.BTU-11.8%
10Coeur d`Alene Mines Corp.CDE-10.8%
11ST Barbara Ltd.SBM.AX-10.8%
12Yanzhou Coal Mining Co. Ltd.YZC-10.6%
13IAMGOLD Corp.IMG.TO-10.5%
14Yamana Gold, Inc.YRI.TO-10.3%
15Denison Mines Corp.DNN-10.2%
16Dominion Diamond CorporationDDC-10.1%
17Gold Fields Ltd.GFI-10.1%
18Endeavour Silver Corp.EDR.TO-10.0%
19Anglo American plcAAL.L-9.9%
20Compania de Minas Buenaventura SABVN-9.8%
21Endeavour Mining CorporationEDV.TO-9.7%
22Sibanye Gold Limited American DSBGL-9.6%
23New Gold, Inc.NGD-9.5%
24Freeport-McMoRan Copper & Gold Inc.FCX-9.4%
25Fortuna Silver Mines Inc.FVI.TO-9.3%
26Hecla Mining Co.HL-9.3%
27Whitehaven Coal LimitedWHC.AX-9.3%
28BHP Billiton plcBLT.L-9.2%
29Nexgen Energy LtdNXE.V-9.2%
30Torex Gold Resources IncTXG.TO-9.2%
31Barrick Gold CorporationABX.TO-9.0%
32Harmony Gold Mining Co. Ltd.HMY-9.0%
33Lundin Mining CorporationLUN.TO-9.0%
34Timmins Gold CorpTMM.TO-9.0%
35Kazakhmys PLCKAZ.L-8.9%
36Tahoe Resources Inc.THO.TO-8.8%
37Goldcorp Inc.GG-8.7%
38Capstone Mining Corp.CS.TO-8.6%
39Syrah Resources LimitedSYR.AX-8.5%
40TNG LimitedTNG.AX-8.5%
41Metals X LimitedMLX.AX-8.3%
42Pan American Silver Corp.PAA.TO-8.1%
43Silver Wheaton Corp.SLW.TO-8.1%
44China Gold International Resources Corp LtdCGG.TO-8.0%
45Eldorado Gold Corp.ELD.TO-8.0%
46HudBay Minerals, Inc.HBM.TO-8.0%
47Nautilus Minerals Inc.NUS.TO-7.9%
48Paladin Energy LtdPDN.AX-7.9%
49Perseus Mining LimitedPRU.AX-7.9%
50Primero Mining Corp.PPP-7.9%
51Alamos Gold Inc.AGI.TO-7.7%
52B2Gold Corp.BTO.TO-7.7%
53First Majestic Silver Corp.FR.TO-7.7%
54Independence Group NLIGO.AX-7.6%
55Teck Resources LimitedTCK-B.TO-7.5%
56NovaGold Resources Inc.NG.TO-7.4%
57PH&N US Multi-Style All-Cap Equity Sr CP.TO-7.4%
58Sirius Resources NLSIR.AX-7.4%
59Royal Gold, Inc.RGL.TO-7.3%
60Energy Fuels Inc.EFR.TO-7.2%
61Ivanhoe Mines LtdIVN.TO-7.1%
62Asanko Gold Inc.AKG.TO-7.0%
63OceanaGold CorporationOGC.TO-7.0%
64Resolute Mining LimitedRSG.AX-7.0%
65Newmont Mining Corp.NEM-6.9%
66Rio Tinto PLCRIO.L-6.9%
67Romarco Minerals Inc.R.TO-6.9%
68CONSOL Energy Inc.CNX-6.8%
69Imperial Metals Corp.III.TO-6.8%
70Suncoke Energy Partners L.P.SXCP-6.8%
71Western Areas NLWSA.AX-6.8%
72Gem Diamonds LimitedGEMD.L-6.3%
73SEMAFO Inc.SMF.TO-6.2%
74Silver Standard Resources Inc.SSO.TO-6.2%
75Hochschild Mining PLCHOC.L-6.1%
76Mineral Resources LtdMIN.AX-6.0%
77OZ Minerals LimitedOZL.AX-6.0%
78Katanga Mining Ltd.KAT.TO-5.9%
79Petropavlovsk PLCPOG.L-5.9%
80Asanko Gold IncAKG-5.8%
81Dundee Precious Metals Inc.DPM.TO-5.7%
82Aquarius Platinum LimitedAQP.AX-5.6%
83Natural Resource Partners LPNRP-5.6%
84Richmont Mines Inc.RIC.TO-5.6%
85Fresnillo PLCFRES.L-5.5%
86Altius Minerals Corp.ALS.TO-5.4%
87Cameco Corp.CCO.TO-5.4%
88Seabridge Gold, Inc.SEA.TO-5.4%
89Antofagasta PLCANTO.L-5.3%
90Gold Road Resources LimitedGOR.AX-5.3%
91Franco-Nevada CorporationFNV.TO-5.2%
92Iluka Resources Ltd.ILU.AX-5.2%
93Lake Shore Gold Corp.LSG.TO-5.2%
94New Hope Corporation LimitedNHC.AX-5.2%
95Rubicon Minerals CorporationRMX.TO-5.1%
96Agnico-Eagle Mines Ltd.AEM.TO-5.0%
97Pretium Resources Inc.PVG.TO-4.6%
98Centamin PLCCEE.TO-4.6%
99Alacer Gold CorpASR.TO-4.3%
100Turquoise Hill Resources Ltd.TRQ.TO-4.3%


August 21, 2015

Not all #Gold #MiningStocks are created equal


 cid:image004.png@01D0D4D1.F2C36750

Source: Scotiabank


The market is not treating everyone the same in the Precious Metals Sector. The upmove yesterday allowed three gold stocks to make a 52-week high: Centerra Gold (CG), Klondex Mines (KDX) and Alacer

Gold (ASR). Also Detour Gold (DGC) and MAG Silver (MAG) didn't have to suffer in the last downturn of the gold price.

 

The table above from Scotiabank indicates the current darlings among fund managers and the ones sitting in the "penalty box" speaking in Hockey terms.

 

 

August 13, 2015

#Exploration Geologists: “[Properties] Are Available That You Don’t See For 10 Years—And There’s No Competition” - Sprott Global Resource Investments Ltd.

From @Sprott

https://youtu.be/eyhEfKgw6tI




Exploration Geologists: “[Properties] Are Available That You Don’t See For 10 Years—And There’s No Competition”

Sprott's Thoughts

Wednesday, August 12, 2015

Tekoa Da Silva

   >>Group Discussion: Exploration Geologists (MP3)

Exploration activity in the resource sector is down dramatically.

Some of the world’s top exploration geologists are calling this an ideal time to shop for new prospects.

With fewer junior resource companies around, it’s easier to get your hands on some of the most coveted exploration targets, they believe.

Tekoa Da Silva took our recent Sprott Symposium as an opportunity to speak with a handful of highly-respected exploration geologists and junior mining CEOs.

Tekoa Da Silva: Hi. I’m Tekoa Da Silva with Sprott Global Resource Investments and I’m sitting down here today with four gentlemen who have dedicated their adult careers to natural resource exploration and prospect generation businesses.

The theme that we’re going to discuss here today is: Where are we in the resource exploration and prospect generation business markets? Where are we going? What is the path of lowest risk and highest reward?

With me here to discuss the topic is Mr. Alain Charest, VP of Exploration with Evrim ResourcesMr. Stephen Nano, CEO of Mirasol ResourcesMr. Brent Cook, Publisher of Exploration Insights and Dr. Simon Ingram, CEO of Reservoir Minerals. Gentlemen, thank you for joining me here.

So to start out, please mention a few bullet points about yourself, your background and why your perspective is significant for the person watching in the resource and exploration businesses. Mr. Charest, if you could start please.

Alain Charest: Well, I’m a geological engineer and have been working in Mexico for the last 22.5 years, basically specializing in grassroots exploration, and finding new prospects. My knowledge is based on everything that goes from finding new properties and bringing them up to a level where it’s a feasible mine, and my experience is exclusive to Mexico. I have a lot of experience in Mexico and I believe Mexico is a great country to explore.

Stephen Nano: I’m the CEO and one of the founders of Mirasol Resources, and a geologist by training. I have over 25 years of experience in exploration and the majority of it in the Americas, where Mirasol focuses its exploration. I think this is an interesting and opportune time for project generators, and so by extension I think this will be an interesting interview.

Brent Cook: I’m an economic geologist, and have been doing this for over 30 years now. Mostly I worked as a consultant to many major mining companies up until 1997 when I joined Rick Rule as his mining analyst. I was there until 2002. Subsequent to that, I started an investment letter called Exploration Insights which covers what I’m doing with my money in the exploration sector -- what I’m buying, what I’m selling, and what I am avoiding. I don’t get paid by anyone to say anything, but rather I earn money based on my investments and paying subscribers of the service.

Dr. Simon Ingram: I’m the CEO and founder of Reservoir Minerals. We’re a project generator that has been working in the Tethyan Belt for nearly a decade now. We have probably one of the best discoveries made in the last decade in that region, and I think we can clearly demonstrate the value of the prospect generator model at this time.

Tekoa Da Silva: Simon you recently made a comment to me that, “[Exploration] ground is coming up that you don’t see for 10 years and there’s no competition.” For the person reading that may be new to the resource exploration market—why is that the case? What’s the current climate?

Dr. Simon Ingram: The climate is we’re going through another downturn. We have an industry that is a cyclical industry. We’ve been through quite a long boom and we’re going through quite a long bust right now. So commodity prices are falling to all-time lows and the appetite for commodity exploration is low. The appetite to build new mines is low right now. And with that, there’s less money coming into the sector. In some cases, there is no money coming into the early stage exploration sector.

So is a company able to continue to explore in this sector and at this time? We, as an example, have the opportunity to go out and pick up ground because there’s just no competition. There are few people exploring for that ground and companies are giving up ground because they can’t afford to hold it. So this is a time of opportunity. People get very negative in downturns and can’t see the light at the end of the tunnel, but the reality is this is a time of superb opportunity if you have the courage and the financial backing to take advantage of it.

Brent Cook: Certainly Simon makes a good point, and what I’ve realized is the mining industry is cyclical. It has always been cyclical and the commodities are cyclical as well. It’s the supply and demand fundamentals, but what’s really interesting this time (as compared to the past) is that we are now consuming so much metal— 90 million ounces a year of gold and 19 million pounds of copper -- and we’re not replacing it.

A supply demand pinch is coming, and where it’s going to get interesting is that we’re not finding enough new deposits to replace what we’re mining. There’s not enough exploration, and with this downturn going on now, the pinch point will be much more severe. When we consider it takes 10 to 20 years to go from discovery to production, it’s going to get really interesting.

So I’m very positive on the space despite it being ‘bad’ out there now. I think it’s going to stay ‘bad’ for a while in terms of share prices, but this is when you make your money—by buying during times like these. As an example, during the 1997 to 2002 bust was when I made most of my money, by buying resource stocks when it was the hardest thing in the world to do. So I’m positive here.



August 7, 2015

When even Cargill Inc., the world’s largest grain trader, decides to liquidate its own hedge fund, that’s a sign that commodity speculators are in trouble

Hedge Fund Losses From Commodity Slump Sparking Investor Exodus

by Javier Blas
When
even Cargill Inc., the world’s largest grain trader, decides to
liquidate its own hedge fund, that’s a sign that commodity speculators
are in trouble.

Hedge funds focused on raw materials lost money on
average in the first half, the Newedge Commodity Trading Index shows.
Diminishing investor demand spurred Cargill's Black River Asset
Management unit to shut its commodities fund last month. Others enduring
redemptions include Armajaro Asset Management LLP, which closed one of
its funds, Carlyle Group LP's Vermillion Asset Management and Krom River
Trading AG.

While hedge funds are designed to make money in both
bull and bear markets, managers have a bias toward wagering on rising
prices and that’s left them vulnerable in this year’s slump, said Donald
Steinbrugge, managing partner of Agecroft Partners LLC. The Bloomberg
Commodity Index tumbled 29 percent in the past year and 18 of its 22
components are in a bear market.

“No one wants to catch a falling
knife, and demand for commodity-oriented hedge funds is very low,” said
Steinbrugge, whose company helps funds find investors.


The
amount of money under management by hedge funds specializing in
commodities stands at $24 billion, 15 percent below the peak three years
ago, according to data from Hedge Fund Research Ltd.

The Newedge
index, which tracks funds betting on natural resources, suggests
managers have lost money for clients during much of the past four years.
A dollar invested in the average commodity hedge fund in January 2011,
when values reached a reached a record, had shrunk to 93 cents by the
end of June. Investing in the S&P 500 index would have returned 80
percent, including dividends.


Commodity
profits tumbled in 2012 and 2013, prompting the first wave of closures,
including funds run by Clive Capital LLP and BlueGold Capital
Management LLP.

The exodus marked a shift from the boom times
before the financial crisis, when the Newedge index surged almost
sixfold from 1999 to a peak in June 2008. Since 2010, the gauge fell in
three of the next four years and is down 0.3 percent in 2015.

The
Galena Fund fell 0.8 percent in the first six months of this year,
according to data compiled by Bloomberg. The fund, which had $637
million at the end of June, is the asset management unit of Trafigura
Beheer BV, the second-largest metals trader. Officials at the unit
declined to comment.

The $230 million Singapore-based Merchant
Commodity Fund lost 3.9 percent in the first half, after returning
almost 60 percent last year, a record.

“Investor appetite in commodities isn’t high,” said the fund’s founder, Michael Coleman.


Krom
River, based in Switzerland, lost 2.9 percent in the first half,
according to a letter to investors seen by Bloomberg. Assets under
management stood at $64 million in June, from about $800 million in
2012. Chief Executive Officer Mike Cartier declined to comment.

The
Armajaro Commodities Fund, which managed $450 million, lost 11 percent
in the first half and was scheduled to close at the end of July, a
person familiar with the matter said. The company declined to comment.

The
founders of Vermillion Asset Management, the commodities hedge-fund
firm owned by Carlyle Group, left this year after losses. Assets in
Vermillion’s main fund fell to less than $50 million from a peak of $2
billion, a person with knowledge of the matter said last month.


Hedge fund manager Pierre Andurand. Photographer: Daniel Acker/Bloomberg
Hedge fund manager Pierre Andurand. Photographer: Daniel Acker/Bloomberg
Others
have fared better. Andurand Capital Management, run by Pierre Andurand,
gained 3.5 percent in July, bringing his 2015 gains to 4.8 percent,
according to a person familiar with the matter.

 The fund, which manages about $500 million, delivered a 38 percent return in 2014. The company declined to comment.


“There’s
no money going into commodities,” said Christoph Eibl, chief executive
officer of Tiberius Asset Management AG, which has $1 billion in
commodity investments.





read the article online here: Hedge Fund Losses From Commodity Slump Sparking Investor Exodus - Bloomberg Business




#Drones can considerably increase efficiency in the #mining industry- and reduce costs


How mining giant Rio Tinto is using drones

Photo: Getty Images
Mining giant Rio Tinto has figured out some interesting ways to use drone technology in its operations.

Rio Tinto group executive of technology and innovation, Greg Lilleyman, told Business Insider drones were being used on a number of the company’s mine sites for some arduous or dangerous tasks which its staff previously had to complete.

But it’s not the drone itself he’s interested in, it’s what his employees are doing with the technology.

“Drones on their own aren’t really worth much at all, in fact we’re not really excited that much by the specifics of a drone. It’s what you get it to do, that’s the interesting stuff,” he said.

Covering vast tracts of land between mines, ports and railways, Rio has been using drones to inspect powerlines which, in some cases, can run for up to 400 kilometres across the desert.

“We’re using drones for doing inspections along our powerlines,” he said, adding, “we used to have to get helicopters or people driving out in the bush to do the physical inspections.”

The company is also using the tech to check stockpile inventories and monitor for geo-technical issues within mines, especially around pit walls where putting people in the situation is either physically impossible, expensive, or perhaps even dangerous.

There are now a bunch of contractors who specialise in the drone service which Lilleyman said the company often uses.

“In some cases we bring in a contractor who brings their drone and we get them to go and do some inspections,” he said.

The company is still brainstorming other ways of implementing the tech, Lilleyman said.

“We’re investigating getting drones to do maintenance inspections around plants that are very difficult to get to,” he said.

“It’s all about what you do with the drone, the drone itself doesn’t add any value other than put you in a place you couldn’t get to.

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Read the article online here: How mining giant Rio Tinto is using drones | Business Insider




August 5, 2015

#Gold - Bullion versus gold shares



The attached chart compares the gold bullion price versus the gold share index (GDX) and the ratio. The gold shares have been underperforming the bullion since 2011.

 

The gold shares are deeply oversold and most likely will, in any rally in the gold price or turnaround, outperform the bullion price by distance.

 

If the gold bullion price can hold the US$ 1,080 per ounce level in the next few days a sharp rally in gold shares could occur.

 

The 2nd chart shows the (XGD) CAD 7.49, the ETF on the Toronto Global Gold index. The 3rd chart shows the NUGT US$ 3.09, Dirextion daily Gold Miners Bull with 3X leverage, hence highly speculative.

 

From the ShortSideofLong