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June 28, 2013

This is truly a stock picker’s market: Chen Lin focuses on self-funded miners #Gold

Some of his picks are: Orvana, Alacer, Pretium, Petaquilla, Ocena Gold 
The gold and silver miners are going through a terrible time. Some of the problems are due to the weak gold and silver price, but a lot are due to mismanagement. The miners could be weakened further as we head into the summer, which is the traditional weak season. This is truly a stock picker’s market because people are throwing out the baby with the bath water. Right now, I’m focused on special situations. The one thing I hope comes out of this correction is that miners learn lessons from their past failures and that they can run lean and efficiently. Then if gold and silver take off, we can have some huge rallies in the stocks, just as in 2009. -
Some of his picks are: Orvana, Alacer, Pretium, Petaquilla, Ocena Gold

Raed the whlo interview online on here: Chen Lin focuses on self-funded miners |

The MasterMetals Blog

#Inmet Bondholders Raise Question of Covenant Breach in Takeover -$FM Bloomberg

Any more news on this?

Investors and analysts are questioning whether First Quantum Minerals Ltd. (FM) created a breach in terms of $2 billion bonds of Inmet Mining Corp. when it acquired the Toronto-based miner.The bonds carried restricted-payments covenants, which limit the amount of cash an issuer may use for distributions to shareholders such as stock repurchases or dividends.In the C$5 billion ($4.8 billion) acquisition in April, Vancouver-based First Quantum employed a bridge loan to buy Inmet, using the target’s assets to support the financing, then paid off the short-term debt with cash, creating a “strong argument” that First Quantum breached the payments provision, according to a report by the researcher Covenant Review today.“It certainly raises concerns, and we’re currently examining this,” said Kevin McSweeney, portfolio manager at CI Investments Inc., which oversees about $74 billion of assets. “We know that they couldn’t have paid out Inmet shareholders directly. We have questions and doubts about how the company structured these transactions to get around the restricted-payments limits and whether compliance with this covenant was maintained.”

Read the whole article on Bloomberg:  Inmet Bondholders Raise Question of Covenant Breach in Takeover - Bloomberg

-- The MasterFeeds


"The downtrend remains for 1212/1200, but this decline is in its final stages. Bulls need a move above 1270 to indicate a base and turn.”


Business Insider Australia

If you’ve been betting on gold this year, watching it fall day after day – including a few spectacular crashes, like the one we’ve seen over the past few trading sessions – has probably not been fun.

goldClick to enlarge.
As the daily candlestick chart at right shows, the shiny yellow metal hasn’t spent many days in the green.
Today, the price of an ounce of gold dropped below $1200 for the first time since August 2010, hitting a low of $1196.10 this afternoon before bouncing back to current levels just above $1200.
BofA Merrill Lynch technical strategist MacNeil Curry argues today in a note to clients that “further gold downside [is] limited.”
“While Gold has been on a relentless downtrend, the weekly ADX (a measure of trend strength, not direction – see chart 1 for additional info) says further weakness is limited. Indeed, previous ADX readings of 50 have resulted in reversals of between 35% and 36% of the flat price,” writes Curry. “GOLD BEARS BEWARE. For now, the downtrend remains for 1212/1200, but this decline is in its final stages. Bulls need a move above 1270 to indicate a base and turn.”
The chart below shows the ADX, or “Average Directional Index,” that Curry references.
Gold and ADX
The second chart shows the potential support levels flagged by Curry.
gold support 
BofA: 'GOLD BEARS BEWARE' | Business Insider Australia

The MasterMetals Blog

OSC survey finds 40% of Canadian NI 43-101 reports ‘unacceptable’; only 20% are in compliance

A sampling of NI 43-101 Technical Reports filed with Ontario Securities Commission reveals mining investors should not necessarily rely on the documents to be reliable sources of information: only 20% of NI 43-101 reports are actually in compliance; 40% are unacceptable.

OSC survey finds 40% of Canadian NI 43-101 reports ‘unacceptable’

A sampling of NI 43-101 Technical Reports filed with Ontario Securities Commission reveals mining investors should not necessarily rely on the documents to be reliable sources of information.
Author: Dorothy Kosich
Posted: Friday , 28 Jun 2013
RENO (Mineweb) - 
A survey by the Ontario Securities Commission staff has found only 20% of National Instrument 43-101 reports filed by mining and exploration companies with the OSC are actually in compliance, while 40% are unacceptable.
Designed and implemented to protect mining investors, NI 43-101 reports govern all disclosures of any mining-related scientific or technical information—especially mineral resources and reserves—and requires mining and exploration companies to file a technical reported prepared or approved by a “qualified person.”
To be considered a qualified person under NI 43-101, mining engineers or geoscientists must have at least five years of experiences in mineral exploration, mine development or operation or mineral project assessment; and be a member in good standing of a professional engineering or geoscience association.
Commission staff said there were 460 technical reports by 238 Ontario mining issuers filed in SEDAR between June 30, 2011, and June 29, 2012. The scope of the OSC review was limited to a sample of 50 technical reports chosen according to certain characteristics including the main exchange listing of the issuer, the location of the mineral property, type of mineral deposit and the stage of development of the property.
The sample included 27 technical reports listed on the TSX and 16 listed on the TSX-V. Half of the issuers had a market cap of over $25 million with 25% of these having a market cap of greater than $100 million. The majority of the issuers (59%) were at the mineral resource stage. Most of the properties were located in North America (44%) while the largest percentages of the others were located in South Africa (22%) and Africa (20%). The three primary commodities discussed in the NI 43-101 reports were gold (46%0, copper (12%) or iron ore (10%).
Approximately 40% of the Technical Reports had at least one major non-compliance issue, which the OSC considered “unacceptable”.
“We are particularly concerned with the major non-compliance issues noted in the Technical Reports reviewed as these deficiencies may have a significant impact on investors,” said the OSC. “Technical Reports are a key disclosure document for mining issuers and investors and their advisors may place significant reliance and make investment decisions based on the disclosure in Technical Reports.”
The “significant deficient” discovered by the OSC included mineral resource estimates; environmental studies, permitting and social or community impact; capital and operating costs; economic analysis; and interpretation and conclusions.
Other sections of the Technical Report with frequent disclosure deficiencies include: summary; history; and certificate of the qualified person. Mining and exploration companies most frequently had deficiencies in their interpretation and conclusions (38%), histories (28%) and mineral resource estimates (25%).
Of the 19 Technical Reports related to advanced properties, the OSC noted that 37% were not in compliance with their economic analysis, while 32% did not adequately disclose information related to environmental permits or the social or community impacts of developing the mineral project.
The OSC discovered many Technical Reports did not clearly disclose how reasonable prospects for economic extraction were achieved, or what grade was used to estimate the mineral resource.
Capital and operating cost disclosure requirements were also deficient in 26% of the Technical Reports on advanced properties. “In some cases, the main components of the capital cost estimate were not provided,” the commission observed. “In other cases, the Technical Report did not provide justification for how the operating cost estimate was determined or why certain costs were assumed.”
The OSC review also found that 36% of the Technical Report reviewed “did not disclose project specific risks and uncertainties such as the availability of water rights, use of a novel mineral processing technology or the potential impact of a civil war in the region.”

To read a copy of OSC Staff Notice 43-705 Report on Staff’s Review of Technical Reports by Ontario Mining Issuers, go to

Read the article online here: OSC survey finds 40% of Canadian NI 43-101 reports ‘unacceptable’ - MINING FINANCE / INVESTMENT - Mineweb

June 27, 2013

Who “murdered” the #gold price? Ian Gordon - Mineweb

The old highs of $1,900/oz will be surpassed by a long shot over the medium to long term.

Who “murdered” the gold price? Ian Gordon


Ian Gordon, chairman and founder of the Longwave Group, speculates on what happened to the gold price on April 15, the biggest one-day loss ever for the yellow metal.
Author: Brian Sylvester
Posted: Thursday , 27 Jun 2013 
The Gold Report  - 
The gold price may have taken a tumble, but Ian Gordon, chairman and founder of the Longwave Group in British Columbia, is watching for a recovery. As bullishness in gold reaches some of its lowest levels, Gordon, in this interview with The Gold Report says he believes that is indicative of a turn.
The Gold ReportOn April 15, the gold price plunged about 9%—the biggest one-day loss ever for the yellow metal. Many gold investors got "murdered" that day. Has your personal investigation revealed any suspects? 
Ian Gordon: I suspect it was akin to what happened in 1999. The then-governor of the Bank of England, Edward George, supposedly said that "any further rise in the gold price would take down one or more trading houses." He said the rising price of gold was curtailed through the work of the Federal Reserve and the Bank of England. It appears that a bullion bank was caught offside on the short side and they had to take the price of gold down quite dramatically to allow it to cover. 
I think something similar happened in April. I think it was manipulated to the downside. Goldman, Sachs & Co. encouraged its clients to short sell gold two days before this occurred.
TGR: Could it have just been an error?
IG: I always suspect the worst. There's so much manipulation in all the markets as I see it.
TGR: That one-day drop caught even long-time gold investors off guard and shook their confidence. Is being a precious metals investor at this point simply about having the resolve to stay the course, or should even the ardent investors make adjustments to their gold portfolios? 
IG: I'm extremely bullish on gold. Bullishness in gold, according to the website Market Vane, is at 40%, the lowest it has been since 2001. Bullishness in the stock market is at 70%, which is almost the highest it has been since Market Vane began tracking it. I see a reversal occurring here, for the gold price to the upside and the stock market to the downside.
TGR: There's no way to sugar coat the disappointing performance of gold and silver in 2013. But has the current global economic backdrop provided some new and compelling reasons to own gold and precious metal equities? 
IG: There are compelling reasons to be bullish on gold particularly, simply because there is a real worldwide crisis in fiat money. The unfolding crisis is similar to the 1930s, when the whole monetary system collapsed. We're envisioning something quite similar to that collapse is now occurring. 
We can see that there's this huge move to gold, not only by countries like China and Russia and even the small "-stan" countries, but major investors are also taking up the physical metal because they can see this crisis unfolding.
TGR: Most of what I'm reading says that there just aren't a lot of bids in the market right now for precious metals. Investment demand has waned, with gold falling consistently lower since its high in 2011.
IG: Investment demand is huge. The output of American Eagle gold bullion coins by the U.S. Mint is at record highs. Demand by the small investors for gold and silver is at unprecedented levels. The amount of gold that's being imported through Hong Kong into China is at a record level. 
TGR: Yet, at the same time, India, which is the world's biggest gold consumer, increased the royalty from 6% to 8% on gold imports.
IG: It has, but India is notorious for gold smuggling. Most people are going to look for a way to go around those taxes. I suspect that there will be the same amount of gold imported into India through Dubai, but most of it won't be declared.
TGR: You say you're seeing strong demand for the physical metal, but investors have been getting out of exchange-traded funds (ETFs) and equities in mass numbers.
IG: With regards to the gold ETFs, I suspect that many investors are cashing in their paper claims to take possession of the physical. Yes, gold stocks, particularly the juniors, have been slaughtered, but once bullishness returns to gold, bullishness will return to gold equities. When you get this overly bearishness in markets, it's usually indicative of a turn. I'm confident that we're going to see a turn to the upside. I also believe that the turn in the stock market to the downside is about to begin.
TGR: I get the sense that there's a prevailing sentiment that we haven't hit a bottom yet in the mining equity space and that there's another leg down before we see a move to the upside. Do you see that as well?
IG: That is always a possibility and it can't be ruled out, but the precious metals' fundamentals are as compelling today as they have ever been.
TGR: Could it be seasonality due to the summer? 
IG: I don't think so and anyway I am a long-term investor and I am essentially not concerned by short-term price machinations. As I have said, the most compelling reason to own gold is the crippling debt crisis, which has brought about the probability of a catastrophic end to fiat currencies. 
TGR: Sean Boyd recently told Bloomberg that gold could reach about $1,800/ounce ($1,800/oz) within a year. What's your medium-term outlook for gold and silver? 
IG: The market is going to have to go through a consolidation that could last for weeks. However, I'm much more bullish on gold than I am on silver because gold has traditionally been recognized as money sine qua non. Industrial demand is going to drop quite precipitously as the world goes into the depression stage of the cycle. Nevertheless, it is likely that silver will take on the role of poor man's gold.
My belief is we're going to see a decoupling between the paper markets and the physical markets. The demand for physical is going to grow dramatically. It's going to make the paper markets irrelevant.
I'm not sure if it's going to be a year as Sean says, but it's going to be extremely strong and the move will be very dramatic once it starts. The old highs of $1,900/oz will be surpassed by a long shot over the medium to long term.
TGR: Do you think silver will fall below the $20/oz level in the next six months to a year?
IG: We're as oversold as we were in 2008, although the price isn't as low as it was then. I see a consolidation in the price, but I don't forecast much lower prices occurring in either of the precious metals. Once this consolidation is over, I see a resumption of the bull market.
TGR: Is there any good news among the juniors? 
IG: In the junior sphere, you can buy some companies for nearly $10/oz of gold in the ground.
TGR: How do you determine cheap? 
IG: Relative to where it was formerly priced and the value I place on the company's assets. I started to buy gold and silver stocks in 2000 because they were cheap and no one wanted them. We are in the same position in the market today. We know the bullish consensus numbers for gold are at the same levels that they were in 2001. You can buy these things really cheap. 
The only reason anybody wouldn't be buying them is because they don't believe that the price of gold is going to rise. I believe that the price is going to rise substantially because the chaos in the financial markets is going to be horrendous.
TGR: Thanks, Ian.
A globally renowned economic forecaster, author and speaker, Ian Gordon is founder and chairman of the Longwave Group, which comprises two companies—Longwave Analytics and Longwave Strategies. The former specializes in Gordon's ongoing study and analysis of the Longwave Principle originally expounded by Nikolai Kondratiev. With Longwave Strategies, Gordon assists select precious metal companies in financings. Educated in England, Gordon graduated from the Royal Military Academy, Sandhurst. After a few years serving as a platoon commander in a Scottish regiment, he moved to Canada in 1967 and entered the University of Manitoba's History Department. Taking that step has had a profound impact because, during this period, he began to study the historical trends that ultimately provided the foundation for his Longwave theory. Gordon has been publishing his Longwave Analyst website since 1998. Eric Sprott, chairman, CEO and portfolio manager at Sprott Asset Management, describes Gordon as "a rare breed in the investment-adviser arena." He notes that Gordon's forecasts "have taken on a life force of their own and if you care to listen, Gordon will tell you how it will all end." 
This article is an edited version of the original and is republished here courtesy of The Gold Report 

Who “murdered” the gold price? Ian Gordon - INDEPENDENT VIEWPOINT - Mineweb

June 26, 2013

Registered #Gold at the #Comex LT Chart on Jesse's Café Américain

Does this mean JPM has been accumulating all the ounces that have been sold out by the GLD ETF held by HSBC?

Jesse's Café Américain: Registered Gold at the Comex Long Term Chart: Someone asked me about this, and while I do not keep a history of it, I found a decent historical chart of the registered gold inventory a...
For your reference the number of registered ounces in the COMEX warehouses yesterday (June 24, 2013) was approximately 1,360,000.

Marc Rich: A legend of the #Commodities sector died today

 The model on which every commodities trading house since has been built on.

Controversial commodities trader Marc Rich dies -


Marc Rich, the colourful and controversial commodities trader and founder of Glencore who fled the US to avoid federal indictments, has died in Switzerland aged 78.

“Marc Rich died in Lucerne in a hospital as a result of a brain stroke,” said Christian König of the Marc Rich Group in a statement. He is expected to be buried in Tel Aviv on Thursday.

Ivan Glasenberg, the CEO of Glencore Xstrata, said: “We are saddened to hear of the death of Marc. He was a friend and one of the great pioneers of the commodities trading industry, founding the company that became Glencore. Our deepest sympathies and condolences are with his family at this time.”

Rich, born in Antwerp, Belgium, was an oil trader who fled to Switzerland in 1983 hours before being indicted on more than 50 charges of trading with Iran during an embargo, wire fraud, racketeering and evading more than $48m in income taxes – at time the largest tax evasion case in US history.

He remained one of the US’s most wanted fugitives until Bill Clinton pardoned him on his last day as US president in January 2001. Mr Clinton said such cases should be settled in civil not criminal courts and also cited clemency pleas from Israeli officials, including Ehud Barak, the then prime minister.

Clinton critics pointed to the large donations Rich and his then wife, Denise Eisenberg, had made to both the US Democratic party and the Clinton library.

His career began at Philipp Rothers, a metals dealer, in the early 1970s. He worked as a commodities trader for his father and then founded Marc Rich + Co in 1974, initially focusing on marketing ferrous and non-ferrous metals and minerals, and crude oil.

During the 1973-74 embargo on Arab oil he circumvented the restrictions, buying oil cheaply and selling it for almost double the price to US oil companies desperate for supplies.

Iran supplied Rich with oil for more than 15 years, both before and after the 1979 Islamic revolution. Glencore was formed in 1993 through a management buyout of Rich’s stake.

Rich diversified into myriad other sectors in the 1980s, buying 20th century Fox in 1981 with industrialist Marvin Davis. After Rich fled the US, Mr Davis sold Rich’s stake to Rupert Murdoch in 1984 for $250m.

Forbes reported in 2012 that his net worth was $2.5bn.

Rich married Ms Eisenberg, an heiress to a shoemaking fortune, in 1966. They had three children before divorcing in 1996. He is survived by two daughters, Ilona Schachter-Rich and Danielle Kilstock Rich

Rich established various foundations, among them the Swiss Foundation for the Doron Prize and the Marc Rich Foundation for Education, Culture and Welfare. He also received numerous honours for his charity work, including honorary doctorates from the Bar Ilan University, Ben Gurion University and Tel Aviv University.

Additional reporting by Javier Blas

Copyright The Financial Times Limited 2013

Controversial commodities trader Marc Rich dies -

The MasterMetals Blog

#Canaccord likens the late 90s downturn to ongoing #junior #mining stock dump on #MasterMetals

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June 18, 2013

#Gartman: #Gold Is A Broken Commodity

"People forget that the high in gold is now almost two years behind us,” says Gartman. “We’ve broken all trend lines. We’ve broken all support. Gold, in dollar terms, is a broken commodity.”

#Gartman: #Gold Is A Broken Commodity
Dennis Gartman, Founder and Publisher of the Gartman Letter, has some thoughts on gold and gold bulls.
Dennis Gartman, Founder and Publisher of the Gartman Letter, thinks gold is going down.
“People forget that the high in gold is now almost two years behind us,” says Gartman. “We’ve broken all trend lines. We’ve broken all support. Gold, in dollar terms, is a broken commodity.”
To those cheering on the yellow metal, Gartman has bad news. “It’s probably going to head lower, not higher, despite all of the news that the monetary authorities are expanding the supply of reserves to the system,” he says. “Every gold bull knows that. Every gold bug reiterates that. Every gold bug continues to buy gold. And, they continue to lose a lot of money.”
Gartman has particular levels he’s watching. “The first signs of support may well be $1,200. If it starts to break under $1,200, I’m sorry but there’s not much support until you do get to $1,000,” he says. “The trend seems to be downward and those who are buyers find themselves in a very uncomfortable position.”
“Like an aging athlete, [gold] just keeps faltering. It cannot just quite get across the line to catch that pass any longer than it used to be able to do very readily,” says Gartman. “Even with all of the news that is supposedly as bullish of gold as you can get – a weakening dollar at times, continued monetary expansion by every central bank in the world – gold can’t rally.”
What’s a gold bull to do? Gartman has an idea.
“The oldest rule in commodity trading is, when something can’t rally when the news is bullish, it’s a bear market.”
Follow us on Twitter:@CNBCNumbersLike us on

Gartman: Gold Is A Broken Commodity | Talking Numbers - Yahoo! Finance

The MasterMetals Blog

June 17, 2013

Chart of the Week: #India Declares War on #Gold Sprott

Chart of the Week: India Declares War on Gold

David Franklin

Sprott Asset Management LP

With the Indian rupee plumbing new lows against the US dollar and the country’s current account deficit at record levels, the Reserve Bank of India (RBI) is taking the easiest route to tackle both; it has declared a war on gold. Our Chart of the Week shows the Indian current account deficit from 1970 to the end of 2012. As you can see, it has hit a record deficit level and continues to weaken. Put simply, a current account deficit occurs when a country's total imports of goods is greater than its total export of goods; this situation makes a country a net debtor to the rest of the world. India is the largest consumer of gold, almost all of which is imported and is a significant contributor to this deficit.

The RBI has drawn the battle lines and targeted gold imports as the main culprit. The central bank has announced a series of measures over the past month, including restraining lending against gold-backed assets, and restricting gold imports. The hike in gold import duty to 8% this month is the most recent announcement in this drive and doubles the duty that was applied at the beginning of this year.1 The RBI has asked bank trading houses not to import gold on a consignment basis for domestic sales, further insisting on 100% cash margin for letters of credit. The restrictions were invoked after imports soared to 162 tonnes in May from 142 tonnes in April on the back of weak international prices. In their campaign against gold imports the Indian finance minister P. Chidambaram has even urged banks to advise their customers not to invest in gold. “I think the Reserve Bank has advised banks that they should not sell gold coins,” said Chidambaram, while speaking at an event in Mumbai.2

Gold is synonymous with savings and security for many of India's 1.24 billion people. Only about 36,000 of India's 650,000 villages have a bank branch, which mean the working class hold much of their assets in gold coins and jewelry. Further increasing demand is gold’s cultural significance which makes it essential for weddings and other ceremonies. We suspect that there is very little the RBI can do to supress the consumption of gold and the central bank’s efforts will serve only to push the gold trade underground through smuggling and off-shore trading centres.

Source: Bloomberg, Sprott Asset Management LP



Read this article online >

Chart of the Week: India Declares War on Gold Sprott

June 11, 2013

#BMO: #Kinross #Gold: Development of Fruta del Norte Ceased

Kinross announced today that it would not proceed with the development of the 100%-owned Fruta del Norte (FDN) project in Ecuador, after being unable to reach an agreement with the Ecuadorian government following more than two years of negotiations.

Development of Fruta del Norte Ceased






Potentially Positive




Details & Analysis


Kinross announced today that it would not proceed with the development of the 100%-owned Fruta del Norte (FDN) project in Ecuador, after being unable to reach an agreement with the Ecuadorian government following more than two years of negotiations. BMO Research assumptions for FDN's development were already tentative, with FDN representing ~5.5% of KGC's project NPV10% at spot prices. BMO Research considers the event as potentially positive for Kinross as it introduces savings in capital expenditures of ~US$1.4B over the project's life of mine and strengthens the company's focus on its key assets, including the development of Dvoinoye in H2/13 and the expansion of Tasiast from 2017. The government indicated that it would not support efforts by the company to sale the project or find a new partner, despite the fact that Ecuadorian law permits an extension of the economic evaluation phase for up to 18 months (beyond the Aug'13 deadline). Therefore, on August 1, 2013, the entire FDN mineral resource should return to the government, triggering a write-down of ~US$720M that will be impacting Q2/13 results; including a ~US$700M non-cash charge against the net carrying value and ~US$20M for accrued severance and closure costs. Kinross is trading at 2.0x estimated NPV (10% discount rate, spot prices), compared to 1.8x for the senior producers average

June 7, 2013

Daily #chart: #Commodities Prices since 1950

The price of commodities "in the ground" have boomed while resources that can be grown have trended downwards

Daily chart

Vital ingredients

IN HIS 1968 book “The Population Bomb”, Paul Ehrlich, a biologist, argued that rising populations would inevitably exhaust natural resources, sending prices soaring and condemning people to hunger. In a new paper David Jacks, an economist at Simon Fraser University, assembles figures on inflation-adjusted prices for 30 commodities over 160 years. It turns out Mr Ehrlich was not entirely off the mark. Over the very long run commodity prices display a marked upward trend, having risen by 192% since 1950, and by 252% since 1900. But that upward trend has clearly not translated into global famine, and not all commodities are alike. Long-run rises have been most pronounced for commodities that are “in the ground”, like minerals and natural gas. Energy commodities especially have boomed, soaring by roughly 300% since 1950. In contrast, prices for resources that can be grown have fallen. The inflation-adjusted prices of rice, corn and wheat are lower now than they were in 1950. Although the global population is 2.8 times above its 1950 level, world grain production is 3.6 times higher. See full article.

Daily chart: Vital ingredients | The Economist

June 4, 2013

2013 a year #mining executives won’t soon forget; though most will not want to remember

‘Year of the Bear’ portends grizzly outlook for mining executives - MRG


“2013 is proving to be a year mining industry executives won’t soon forget; though most will not want to remember,” says the Mining Recruitment Group.
Author: Dorothy Kosich
Posted: Tuesday , 04 Jun 2013 
How bad is this year’s outlook for the international mining industry?
So miserable that a measly 9% of mining executives recently polled by Vancouver’s Mining Recruitment Group said they are actually bullish on the year ahead.
In his second quarter 2013 survey, Andrew Pollard, president of The Mining Recruitment Group, observed, “2013 has been a year in which most involved in the mining industry will not soon forget; thought most will not want to remember.”
“Through the eyes of mining executives, this new report provides evidence that companies of all stage and size have had to make tough decisions in the wake of nearly unprecedented market turmoil,” said Pollard. “With investors sitting on the sidelines turning a blind eye, wildly fluctuating commodities prices and having to face escalating costs, executives aren’t counting on a short term fix, though long term, their sentiment is refreshingly rosy.”
In the document MRG: Mining Executive Outlook, Summer 2013, based on a survey completed by 2010 mining leaders, Pollard called 2013, “The Year of the Bear.”
“In the eyes of mining executives the next 6-12 months will prove to be bleak with 64% taking a bearish view when asked to comment on the overall strength of the industry,” he observed. “These findings have fluctuated dramatically since our last polling in Q4 where only 11% of respondents held a bearish outlook, when asked the same question.”
However, when asked the same question with a longer-term, three-year view, 66% of the respondents were bullish as to the future of the industry. “It would appear that for most executives, the long-term fundamentals of the industry are intact, despite the view things will likely get worse before they start to get better,” said Pollard.
Gold still glitters in the eyes of mining executives. Seventy-four percent of mining executives suggest gold will make the greatest gains among commodities over the next three years. Copper was second with 63% “expecting to see a massive appreciation in the metal while uranium rounded out the top three at 53%,” he noted. “Trailing close behind was silver at 50%, which was the only other commodity that there seemed to be a long-term consensus on.”
Commodities which executives view as having the highest likelihood of depreciating in value over the next three years are molybdenum, nickel and iron ore, respectively, with 44%, 36% and 27% of the multiple selection vote.
“When asked to rate their level of concern on the following issues the resource sector may face over the next 12-24 months, it seems there is a clear and present danger,” warned Pollard. Of those executives responding, 74% were moderately to extremely concerned over a lack of investment capital.
Fifty-four percent are moderately to extremely concerned with the volatility in commodities prices, while 39% are moderately to extremely concerned with rising operating costs,” he noted.
The survey found that 80% of the executives said they have made a concerted effort to cut spending, mainly through spending less on Investor Relations and Marketing. “Almost equally dismal, only 12% of respondents said they have increased their exploration spend,” said Pollard.
Of those 80% who have reduced their overheads, 55% have laid off employees; 53% have instituted organization-wide hiring restrictions; 47% have reduced or eliminated incentive pay; and 32% have made pay cuts.
Eighty-two percent of executives indicated that the fear of a sustained downturn has impacted their budgeting and hiring. However, only 27% of the executive in the smaller mining and exploration companies are considering more layoffs, while 63% of larger company executives (over $50 million market cap) have indicated they’re considering further reductions.
The survey revealed that 62% of respondents do not expect to recruit over the next six months. “This is a major reversal in outlook from our last polling in Q4 where 66% of executives had indicated they would be hiring,” Pollard noted.
Nevertheless of those companies who are planning to recruit, 62% will be hiring geologists, while 33% hope to make additions to their executive teams and 18% are looking for mining engineers. Only 6% of those surveyed will be hiring IR professionals.
Despite their tough cost cutting measures, however, only 26% of mining executives indicated an interest in succession planning. Meanwhile, only 10% of executives said they have received a raise in base salary.
To learn more about the survey, go to

‘Year of the Bear’ portends grizzly outlook for mining executives - MRG - MINING FINANCE / INVESTMENT - Mineweb

-- The MasterFeeds