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Check out that picture of the F-135 engine, what an engineering and mechanical marvel! To have a mechanical fan forward, producing enough thrust to lift half of that plane being run off a shaft spinning at well over 20,000 rpm through a 90 deg gear box. That gear box must be a work of art!
Stan Druckenmiller seems poised to make a killing on gold
Published
Gold futures have gained about 8% in 2017, outstripping stocks by a healthy margin; A popular gold miner ETF is up 22%
Stanley Druckenmiller likes gold again.
By
MARK
DECAMBRE
Remember Stanley Druckenmiller? He’s the hedge-fund titan who dumped his holdings of gold the night before Donald Trump was elected president.
Well, Druckenmiller is back and now he’s bullish on the yellow metal, and that may be a telling piece of news for investors making bets that the Dow Jones Industrial Average DJIA, -0.25% S&P 500 index SPX, -0.09% and the Nasdaq Composite Index COMP, -0.10% will continue to maintain cruising altitude in record territory.
In a Bloomberg interview on Tuesday, Druckenmiller said he dipped back into gold GCJ7, +0.67% in December and January. His rationale is fairly simple. “I wanted to own some currency and no country wants its currency to strengthen,” He continued: “Gold was down a lot, so I bought it.”
Check out: MarketWatch’s snapshot of the markets
In fact, gold, viewed as a haven asset which often trades in the opposite direction of equities, has been on an upswing lately. Gold futures have climbed 2.9% in February and have gained about 7.8% year to date, according to FactSet data. April gold is trading at the highest level for a most-active contract since Nov. 10. Comparatively, the S&P 500 is up a meager 0.9% in February and about 2.2% so far this year. The Dow has gained 0.9% so far in February and 1.5% year to date. Only the Nasdaq Composite, on pace to ring up a 5.1% return this year, is even close to gold’s golden gains.
So-called animal spirits were kindled when Trump won on Nov. 8, driving stocks higher on promises of a raft of pro-business policies. However, stocks which have crept into record territory in recent trade, have been mostly moving sideways amid confusion about the president’s legislative agenda. That includes his ability to prioritize tax cuts over controversial executive orders to ban travel from predominantly Muslim countries.
Read: Fear in a time of Trump: How Wall Street thinks about risk
The fact that gold is in ascendancy along with stocks is an oddity. But the precious metal is garnering some support from a number of factors.
Inflation expectations are rising and gold tends to be used as hedge against inflation, or rising prices. Weakness in the dollar has also benefited dollar-priced metals, which tend to draw interests from buyers using other currencies. The dollar, as measured by the ICE U.S. Dollar DXY, -0.27% is down 2% year to date after reaching a more than 14-year high in early January.
Meanwhile, interest rates have been inching lower, with the benchmark 10-year Treasury yield at 2.36%. Shrinking yields can decrease the opportunity costs of owning assets with higher yields because metals don’t offer a yield.
Geopolitical uncertainty, with elections in France and other parts of Europe threatening to destabilize the eurozone, also have played their part in lifting gold, which benefits in times of confusion and tumult.
Some pundits and financial bloggers are forecasting big returns for gold, with Daily Reckoning blogger, Greg Guenthner, predicting a 20% rise for the yellow metal over the next several weeks as MarketWatch’s Barbara Kollmeyer points out in Need to Know.
Investor takeaway: To be sure, it isn’t likely that a professional investor like Druckenmiller has all of his proverbial eggs in one basket. His Bloomberg interview doesn’t reveal the composition of his entire portfolio, but it may be worth noting that pros like Druckenmiller use commodities to hedge their bets. And, as he has demonstrated, he may not be eager to stay long gold for an extended period.
But if Druckenmiller really wanted to make a play on metals he’d dump his dough in silver, gold’s sister metal. Silver futures SIH7, +0.28% are outstripping gold and equities, and are up 11% so far this year. The exchange traded iShares Silver Trust also is showing an early nearly 12% year-to-date gain, while gold’s counterpart, the SPDR Gold Trust GLD, +0.79% is up about 7.9%. That said the gold miner ETF VanEck Vectors Gold Miners ETF GDX, +1.22% is up a whopping 22% in 2017.
http://www.marketwatch.com/story/stanley-druckenmiller-seems-poised-to-make-a-killing-on-gold-2017-02-08?siteid=bigcharts&dist=bigcharts
Yeah, He's been there for 26 years and apparently thinks bombing the f**k out of the Middle East and killing hundreds of thousands of people is sane. That trying to provoke Russia into war is sane. That importing the dregs of other nations societies into the US and paying them to do nothing is sane.
S~P, oops, after some thought, let me clarify, I booked 600% total on my investment in CGR not all of it was last year.
Quote from Trish in IR department in response to questions asked by fellow blogger.
"I contacted Trish from Investor Relations..I asked some questions ...this is what she said:"
Sorry for my tardiness. We are down at the big annual mining conference in South Africa and have been meeting with investors since we landed on Sunday morning.
With respect to why Teranga has been lagging the recent rise in gold price, we do not know of any large investors who are selling. We believe that we have lagged since we announced our 2017 guidance because of program trading. These programs would have read our AISC as $1,000-$1,075. However, we clearly highlighted that $100 of those costs are non-cash. We have met with many investors in person since our announcement on January 30th and AISC have not been raised as an issue. The downside of computer trading is that they interpret results in black and white.
With respect to the "value trap" comment, you need to look at that analyst's thesis. He sees our value in a heap leach operation and we have said that at this point, this is not on the table. We have a top quality mill at Sabodala. We have offered to meet with this analyst several times and he has refused to talk to management.
The important thing to focus on is our future. We are in a very different and better place than we were 12 months ago. We have more opportunities and the potential to achieve more catalysts in 2017 than in any prior year. There should be a fair bit of news flow this year as we issue our technical report for Banfora and announce whether we will proceed to construction. We also have exploration underway in three jurisdictions and the strongest exploration team we have ever had.
As for confidence in management, I think we have come along way since missing guidance in 2015. We said that most of the missed production had been deferred and it was. As a result we had record production in 2016 and significantly de-risked our Sabodala operations. We are miles from the penalty box we were in last year and are working diligently to deliver on our promises and create shareholder value.
We would be happy to set up a telephone call to discuss in more detail, XXXX. Let me know if this of interest.
Trish
Geo, thanks, it is looking real good. Could you enlighten me as to why TGZ stock price is SUCH a laggard? I do remember saying the same thing about CLGRF for the longest time.
You guy's want to make an easy 10% ? Buy SSRI (very good company) before their earnings release on February 23rd, they always see a 10% bump on the day.
MUX and EXK have been kicking butt since December, should have bought at their $3 marks.
S~P, In case you are interested...I became a contrarian investor after losing some coin in the general stock market during the 2008 crash, after getting laid off I began my mining stock journey by investing in Rob Mcewan's MNEAF back in 2009, I was green, got impatient and sold too early with a small gain before his merger with UXG back in 2010 and subsequent run up to $3 during that gold bull year. I dabbled in options and a couple more loser miners while learning the ropes along the way through blogging and research (hence "Conferred Diligence"). I came across CRG (and you can look at my earlier posts to verify) in the blogs, bought in big at .54 in I believe 2013, vowed not to sell too early this time and rode it down to .12, basically "all in" while averaging down along the way. I actually had almost tripled my money well before the buyout was announced due to the company having already recovered nicely under new management along with their new high grade discovery at Santoy gap. Actually the timing of the SSRI buyout in a new gold bull year is what was lucky. I firmly believe the gold bull market has resumed this year and I expect multi-baggers with my two current picks TGZ and GSS, time will tell.
Oh yeah, economist's are real experts.
Hogwash.
Yeah Cork, that whole meltdown is nothing but an ongoing epic disaster surrounded by lies and cover ups, the people be damned, they don't give a shit about theirs or anybody else's populous.
$GSS another +5% day.
News Out! Should break $1 today.
http://finance.yahoo.com/news/golden-star-announces-closing-bought-154100861.html
Treasury yields tick higher as Fed official says March hike ‘still on the table’
Gold drops, its off the table, gold rises, its on the table, gold drops, its off the table, gold rises, its on the table, gold drops, its off the table, gold rises, its on the table, gold drops, its off the table, gold rises, its on the table, gold drops, its off the table, gold rises, its on the table.
HA,HA,HA,HA, what a bunch of corrupt, manipulating, lying ass clowns.
Bob Moriarty: There Are Some Extraordinary Opportunities Out There Right Now
CEO Technician: With precious metals and mining shares rallying as Bob Moriarty predicted at the end of December, after the sector reached the worst sentiment in 29 years, we thought it would be a good time get Mr. Moriarty’s latest thoughts on things. A wide ranging discussion ensued which included Bob’s thoughts on President Trump, a few individual stock picks, and even some timeless investment wisdom. Without further ado here is Energy & Gold’s first conversation of 2017 with 321gold editor & founder Bob Moriarty.
CEO Technician: The market’s honeymoon with Trump seems to be fading. What do you think about Trump’s first 10 days in office?
Bob Moriarty: I’m not a big believer in news causing market moves. Sometimes we can look at a specific news event such as a company releasing big drill results and say “that’s why people bought that stock that day!” but there are many more instances in which markets move around a lot and trying to explain the moves is a fool’s errand.
Just look at the election night when Trump won everyone was saying gold was going to go up $100 on a Trump victory and gold ended up getting clobbered. Also look at what happened with Mexico, Trump said we’re going to build the wall with Mexico and the meeting with the Mexican President got cancelled and the Mexican Peso went up! I don’t worry about news. It’s noise, not signal.
I don’t know if the Dow and S&P have topped, I’m not seeing the kind of extreme bullish sentiment that we see at major market tops yet. I think the market could go a little bit higher. Meanwhile, in December we had the best sentiment for gold (if you’re a contrarian) in 29 years and I think we had a major bottom. Everybody is still talking about how much gold is going to go down, that it’s due for a correction, yet we’ve had a bigger rally this year than we had last year at this time and nobody has noticed.
CEO Technician: That’s a great point you make about news. Every time you turn on CNBC the commentators try to have a narrative for everything going on in the market but it’s simply just not the case. There are so many factors which move markets and there are a multitude of spurious correlations which the talking heads love to repeat ad nauseum. Longer term trends are the only things which I find to truly be of value.
Bob Moriarty: There is so much random noise in the market. I don’t know anyone who can tell you what the market is going to do 10 minutes from now or one day from now. The Fake Stream Media has to come up with a story for why things are moving the way they are but it simply isn’t true most of the time.
CEO Technician: Many North American mining companies have operations in Mexico. What are your thoughts on Trump’s pledge to renegotiate NAFTA, build a wall, etc.? Are any of the large mining operations in Mexico going to be affected?
Bob Moriarty: I’m going to backtrack for a moment and ask you a question. It’s not a trick question, it’s a simple question. What do you call the form of government where one person makes all the rules?
CEO Technician: Authoritarianism or totalitarianism.
Bob Moriarty: No, it’s a dictatorship. You can have a benevolent dictatorship but in fact 99% of dictatorships are not benevolent, they’re actually malevolent. Trump is doing some things that are exceptionally dangerous. Anyone who has fired a weapon knows that there is a blowback, a recoil with every weapon you fire. So if you go out insulting other countries there is going to be blowback. If you tell other countries that their citizens are not welcome in the US then they are going to say “who do you think you are? We can do the same thing.”
Now Mexico is a good friend to the United States, they are a large trading partner with the United States, so just because the US doesn’t enforce its immigration laws it’s not Mexico’s fault. Likewise China is a great country, why would you insult them? I think it’s exceptionally foolish to tell China what they should do in their backyard.
I’m on record saying that Donald Trump will either be the best President the United States has ever had or the worst President, and I’m honestly not sure which will be the case. Flip a coin.
The good news for mining companies in Mexico is that most of them are Canadian. Canada doesn’t go around telling other countries what they should do all the time. But I think it could be very bad overall, there could be a tit for tat. Business in general could become more difficult for American companies as a form of blowback to Trump’s policies.
CEO Technician: It seems that Donald Trump didn’t really learn economics, particularly in terms of international trade and comparative advantages between countries. Detroit shut down its auto manufacturing for a reason, it was much too high cost and had lost its competitiveness on a global scale. Attempting to reset the global economics ‘equation’ by force will surely have far reaching consequences right?
Bob Moriarty: What’s important to understand about trade is that it’s always advantageous to both parties. Trump is acting like he’s going to make sure that the U.S. has all the advantages. His career has consisted of being a bully and as a bully he’s often been able to get his way. Being a bully or being a dictator is not a good form of government.
CEO Technician: We’ve seen a rally in precious metals and mining stocks since we reached that 29-year low in sentiment in mid-December. We’re now seeing many individual breakouts in junior mining stocks and people are starting to take notice of this sector after wanting to have nothing to do with it in December. Is this the real deal and have we just gotten started?
Bob Moriarty: All throughout November and December I was saying this was going to be the greatest buying opportunity in history and I firmly believe that’s true. Sentiment reached a contrarian’s dream on December 15th and we have the HUI (Gold Bugs Index) up 33% since then. The rally up until now is better than it was last year at this time and I don’t think many people have noticed, and that’s always a good thing.
Gold mining shares aren’t as cheap as they were a year ago but in relative terms compared to the last 10 or 15 years they are still very cheap. I believe the current rally could last for months before the next major correction.
CEO Technician: Gold mining shares aren’t as cheap on an absolute basis as they were a year ago but in many ways they are in much better shape than they were a year ago. Their balance sheets are much stronger and they have improved their cost structures.
Bob Moriarty: You make a very good point. Although the stocks aren’t as cheap, the companies are far healthier. Let me give you an example: Silvercorp (TSX:SVM) was C$.60/share last January and it went all the way to C$4.75, now obviously it’s not as cheap as it was last January but the company is far healthier. It’s not going to go back to C$.60. That was a once in a lifetime buying opportunity.
There are some great companies and great opportunities out there. There is one company I talked to over the weekend that I won’t identify that’s got a C$3 million market cap, a 50/50 JV with Goldcorp, and they’ve got C$2 million in the bank. Now how much risk is there in a stock like that?
There are some extraordinary opportunities out there right now if people would just take the time to look for them.
CEO Technician: What was the last stock that you bought? And you know I love to ask you for a couple of your favorite stock ideas right now.
Bob Moriarty: Did you actually read my book Nobody Knows Anything?
CEO Technician: Yes.
Bob Moriarty: In the book I said that investing is very simple, you buy things when they’re cheap and sell them when they’re dear. Somebody contacted me a couple weeks ago about a company that has a process for separating lithium, magnesium, and silica from oil waste water. Now a lot of people don’t know this but when you pump out a barrel of oil you may pump 10 barrels of water or you may pump 100 barrels of water. That’s waste water and you have to do something with it.
So this company developed a way to do something with the water, after all it’s nothing but saltwater, it’s brine. The company is MGX Minerals (CSE:XMG). They were C$.72/share when I found out about them and I looked at it and said I want to own some of those shares. I ended up buying shares at C$.95 and the stock ended up hitting C$2.75 less than a week later.
Bob Moriarty: Now if you were staring at a 150% profit in less than a week what would you do?
CEO Technician: Sell at least ½.
Bob Moriarty: I sold the whole thing. I made a 140% profit in less than a week. I was a little early, I sold at $2.35. I’ll do that all day long. Now if it goes back to C$1.50 I’ll buy twice as much as I did at C$.95 before.
CEO Technician: I recall you mentioned Bonterra (TSX-V:BTR) in our December interview. Do you have any news on that name?
Bob Moriarty: They were C$.22 the last time we talked…. I just wrote about them after some extraordinary drill results recently. The shares shot up to $.345 from $.28 but they were $.51 back in March of last year. I am pretty sure they are going to go back there and a lot more. Their drill results have been brilliant.
Another company which I think is a slam dunk is Rise Resources (CSE:UPP). Rise bought the Idaho Maryland Mine in California which has 2 million ounces of gold for US$2 million. As many problems as California has as far as permitting goes that mine is going to go back into production and that mine has US$2.5 billion of gold and the entire market cap of the company is C$10 million which is chump change.
CEO Technician: What is the most that a long term investor should allocate to a single junior resource investment? Say if someone has $100,000 they want to invest for 20-30 years how much would you put in each stock? How many stocks are too many for a portfolio?
Bob Moriarty: If I was investing for a 30 year period, all I would do is trade the silver/gold and platinum/gold spread entering when we were at a 3 year extreme. I talk about those trades in my book. Resource stocks have to be traded, they have expiration dates. They are all lottery tickets. Buy cheap sell dear and go on to the next big thing.
CEO Technician: Do you pay attention to insider buys/sells? And if so, which site do you go to for the latest insider transactions?
Bob Moriarty: Of course. https://www.canadianinsider.com (Editor’s note: CEO.ca also has an excellent #insiders channel with insider transactions updating as soon as they are made public)
CEO Technician: We have covered a junior oil explorer by the name of Jericho Oil (TSX-V:JCO) for the last year and in the last week the stock has finally gotten some attention and staged a technical breakout. What are your thoughts on Jericho?
Bob Moriarty: Jericho is one of the finest run companies I have ever seen. They did everything they said they would and the shares will go much higher as the market gets it. Trump is very good for resources of all sorts.
We would like to thank Bob for his time and insights. 2017 is shaping up to be an interesting year filled with opportunity and i’m sure we will talk again soon.
That's pretty interesting, let her rip!
Thanks, I'll check those out, I've got SBGL on my watch list. GSS is higher cost but, after the new underground projects are both 100% in production, they have a projected 30% AISC decrease by 2019. They have already increased guidance for 2017 to 255,000-280,000 oz.
Yes sir Geo, my big gainer was GSS +11%. I'd be interested to know why you got out?
Nice +11% day, last bought deal closes tomorrow, should see a bump!
$GSS +11% today.
SP, I think you are wrong about that, I booked a 600% gain last year with CLGRF/SSRI after holding CLGRF through some pretty rough times for 3yrs, there are a whole slue of miners that are currently up 30% since December 2016 after dropping with gold but, well shy of their 2016 lows, and will be moving higher with the price of gold in this and next year. The risk is high but, if you can get in on a growth stock at near the lows, your risk will be greatly mitigated along with your gain potential being vastly increased, you have to have enough shares to make a difference and a stomach for the risk. Quality mining stocks are not static, good ones have cash, are paying down debt or have none, increasing reserves and production while lowering their AISC, plus have inside buying. I am currently involved with GSS and TGZ, both are in good mining districts, have good management and are accomplishing the above, both produce over 200,000oz/yr, GSS is actively on target for increasing production by 60% and reducing AISC by 29% by 2019 and is currently .85. TGZ acquired a new property and will have a new mill in production by 2019 producing 325,000oz/yr with much lower AISC and is currently .88. Although there are many others, IMO both of these miners will be $2-$3 by 2019.
srm4u, Great article and comment section!
Dip, where are you, did you bail?
USD Update – Failed Daily Cycle
Forex KongFebruary 2, 2017
The U.S Dollar has now breached the low from the previous daily cycle….confirming that this “next cycle” will also manifest as a “left translated cycle” and take the dollar decidedly lower.
But first we bounce.
We bounce higher in a confirmed downtrend so…you don’t go buying this dip in USD bonehead. You wait 4-6 days ( 6 at most I imagine ) and “sell the rip” as we are in a downtrend. Patience is everything when trading, as you’ve got to fight that “urge” to get in there…and be involved every minute of the day.
I can honestly say that these days ( having long since been through the emotional torment experienced when learning ) I spent more like 85% of my time plotting / scheming / observing markets than I do “actually trading”.
Magically…..the less I trade – the more money I make…but don’t confuse this with “investing”. Yes I believe that gold and silver have bottomed, the Euro will rise and USD will fall…JPY will surge and U.S equities will soon take a substantial hit so….
Investing is 100% totally / absolutely / without question OUT! I trade…..and I trade assets I believe to be in longer term trends. I don’t consider it investing.
Most of the standard correlations are looking pretty good right now ie…USD down has The Euro and commodities ( priced in USD ) moving higher…and The Japanese Yen flying cuz money borrowed some years ago is now repatriating to the place of its origin. Yen up = U.S equities down.
The fact that this thing has traded sideways for this long must have many of you looking at your portfolios and wondering – why haven’t I done so well this past year?
How much “higher” can you really expect anything to climb in the face of a dramatically waning “appetite for risk”.
The planet is completely freaked out about Trump. Good or bad….I have no opinion, but I can tell you this….markets hate uncertainty, and the future looks “more than uncertain” to say the least.
Wouldn’t you agree?
"Kaiser Sousa" market wrap, zerohedge 2/2/2017...
"Well lets see… exactly how many ramps of the Dow Jones Propaganda Index did they execute today before the Fed & Exchanged Stabilization Fund stick save’s finally stuck???
the first one was a 100 point ramp…
the second was a 50 point ramp…
the third a 30 plus ramp…
and the “grand finale” was another 50 point ramp just to make sure “we” ended nearly "positive” for the day…
and when again did the final fraudulent fucking pump commence??? wait for it - EXACTLY AT 3:00 AS WE ALL KNOW THE LAST HOUR OF “TRADING”… is there anyone out here who still doesnt accept the FACT that they r using the DJPI, NASCRAP, and S&PISS as propaganda tools to shape sentiment in this bankrupt, insolvent, completely socio-economically divided banker corrupted banana republic??? fucking pathetic fucking Ameridumb…
hey - and then theres this perpetual bullshit…
I’m sure theres a perfectly justifiable & logical explanation based on “market fundamentals” that was behind the selling of non-existent physical ounces of one of the only 2 forms of REAL MONEY SOLEY THROUGHOUT THE ENTIRETY OF “TRADING” ON SCUM STREET the north ameridumb capitol of fraud and manipulation….right???
answer - FUCK OFF U BANKER FUCKS…
DEATH TO THE FUCKING MONEYCHANGERS."
"What's the FED actually plan to do with the $4.5 Trillion in junk mortgage debt they've been holding for Uncle Sam since the last bubble went pop?"
one word -
R
E
S
E
T!
Glad this board is showing signs of life again...$1226
Dollar Dumps Most In 30 Years As Trump Raises Doubt Over "Strong Dollar Policy"
The key to higher gold & silver this year...
The US dollar is having its worst start to a year in decades...
"As the Trump Administration is breaking from a long-standing, bipartisan policy of supporting a strong dollar, the greenback has fallen against its peers by 2.7%, the worst start to a year since 1987, after Ronald Reagan engineered a decline in the dollar to combat a flood of Japanese imports."
Yeah, thanks Geo. This isn't the first time they've screwed up a PR and caused a sell off. Remember this carelessly worded retraction of "Banfora Gold Project Resource and Reserve Estimate" after they had carelessly jumped the gun and re-stated the estimate in an earlier PR in non-compliance? I'm starting to see a pattern here, who continually makes elementary mistakes like this if they are truly interested in increasing share holder value?
After further review of the source information, the Company is unable to re-state the estimate in compliance with NI 43-101 requirements; consequently, the Company retracts the estimate described therein in its entirety. The Company advises and cautions readers that the retracted disclosure may continue to be found in the public domain.
Dollar trading like a penny stock again...what an utter farce global markets have become.
They provided their 2016 production numbers in the January 5th release.
Geo, here you go, I feel better after reading this, please let us know what you think.
Edited Transcript of TGZ.TO earnings conference call or presentation 30-Jan-17 1:30pm GMT
Thomson Reuters StreetEvents•January 30, 2017Comment
Q4 2016 Teranga Gold Corp Earnings Call
TORONTO Jan 30, 2017 (Thomson StreetEvents) -- Edited Transcript of Teranga Gold Corp earnings conference call or presentation Monday, January 30, 2017 at 1:30:00pm GMT
TEXT version of Transcript
================================================================================
Corporate Participants
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* Trish Moran
Teranga Gold Corporation - Head of IR
* Paul Chawrun
Teranga Gold Corporation - COO
* Richard Young
Teranga Gold Corporation - President and CEO
* Navin Dyal
Teranga Gold Corporation - CFO
================================================================================
Conference Call Participants
================================================================================
* Andrew Breichmanas
BMO Capital Markets - Analyst
================================================================================
Presentation
--------------------------------------------------------------------------------
Operator [1]
--------------------------------------------------------------------------------
Good morning and welcome to Teranga Gold's conference call for the fourth quarter and year ended December 31, 2016. As a reminder, this conference call is being recorded.
Your host for today is Trish Moran, Head of Investor Relations. Ms. Moran, please go ahead.
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Trish Moran, Teranga Gold Corporation - Head of IR [2]
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Thank you and good, morning, everyone. Before we get started I would like to highlight that under ASX rules, we are obligated to provide a summary of all mining and exploration activities, including expenditures, to the market within one month of each quarter-end. Therefore, all references to annual financial results should be considered anticipated annual results, given they are based on unaudited financial information. We expect to issue our full-year audited financial statements and MD&A during the week of February 20.
I'd also like to remind everyone to please view page 2 of our operating highlights presentation, which is posted on our website, to view our cautionary language regarding forward-looking statements and the risk factors pertaining to these statements.
Slide 3 outlines the agenda for today's discussion. Paul Chawrun, our Chief Operating Officer, will review the highlights of Sabodala's 2016 performance and discuss how we reduced our operational risk at Sabodala. Richard Young, Teranga's President and CEO, will then discuss our newest assets and outline our guidance and roadmap for 2017. Following management's presentation, we will open up the call to questions.
And now over to you, Paul.
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Paul Chawrun, Teranga Gold Corporation - COO [3]
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Thank you, Trish. Let's turn to slide 5. 2016 was a very rewarding year for Teranga. In Senegal, our Sabodala operation performed well, achieving record production, coming in at just above the higher end of our guidance range; record plant throughput; and lower unit costs.
As importantly, we made strides to reduce Sabodala's operating risk as outlined on slide 6. To achieve this, first we installed a second primary pressure and screening station for the plant. This mill optimization project, completed under budget and ahead of schedule, not only increases throughput and lowers costs, but also creates operating flexibility and reduces throughput risk. After being in commission for only a few months, we are already seeing the added benefits of increased throughput and reliability of feed for the grinding circuit.
The second initiative, to mitigate operating risk, relates to the new grade control procedures. These controls are proving to be highly effective in reducing dilution, increasing ore recovery, particularly as we have transitioned out of the Sabodala deposit and moved into higher-grade load vein structurally controlled ore bodies. Last year we recovered more than 30,000 ounces than was estimated in the reserves models.
And, finally, we built up an inventory of high-grade ore to assist with natural fluctuations in the quarterly production and to mitigate the impact of any operating issues on our annual production targets.
Another standout in 2016 that requires mention is our ongoing health and safety performance. As you can see on slide 7, we are now well past three years. That's 1,241 days and more than 12 million man-hours worked without a lost time incident. This ongoing achievement is a credit to the operating team at site and demonstrates Teranga's commitment to health and safety as a core value. On behalf of the Board and management team, I want to congratulate our employees for a tremendous and safe year.
So, turning now to slide 8, during the first quarter of 2016 we updated the 43-101 technical report for Sabodala. Since then we've made some changes to the pit sequencing to better optimize the operation. But overall total material mined and ore processed remain largely in sync with the technical report.
That said, I would like to point out that the total mine production costs in 2017 are expected to be slightly higher due to higher fuel prices and some additional unanticipated taxes. Instead of $148 million in the technical report, our outlook for total mine site production cost is in the range of $155 million to $165 million. On sustaining capital, we expect to spend between $15 million and $21 million compared to $9 million in the technical report. But all of the additional expenditures were in the 43-101 but scheduled for later in mine life, other than reserve development expenses of $3 million to $4 million which is not included in the 43-101 because those do not relate to the existing reserves.
The expenditures brought forward in the mine life include $3 million for the purchase of three new production drill rigs, which will be on site in May, and help reduce maintenance costs associated with the current fleet; $1.5 million to optimize the TSF embankment, and this potentially defers the contraction of TSF2; and a further $0.5 million for relocation discussions with the village of Niakafiri as we drill there.
The sequencing changes in the mine plan that I mentioned a moment ago will have a minor impact on costs. However, it should also result in about a 10% to 20% increase in ounces mined, which furthered de-risks our operation.
Moving now to slide 9, while we have historically replaced reserves at Sabodala, we have not had a major discovery with a regional exploration program other than the high-grade Gora discovery. However, based on the extensive work completed on our large land package, we remain optimistic. So during 2016, we implemented a number of changes to improve our probability of success.
We hired a new VP Exploration who has a solid track record of discoveries to lead the charge and refine our approach. We adopted some new exploration techniques. And we further strengthened our exploration team with the addition of several more seasoned professionals as a result of the Gryphon acquisition.
It's noteworthy to mention that in December, we began a drill program at Niakafiri. For those of you who have been following the Company, you know this is an area we've been looking to access for some time. We've already approximately 0.25 million ounces in 2P reserves for Niakafiri included in our technical report and believe there is more yet to be discovered in this area. Depending on the quantum, this may also provide the catalyst to reinitiate the potential for a heap leach facility.
In summary, it was a great year at Sabodala. The ingredients are there for another strong performance in 2017.
Over to you, Richard.
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Richard Young, Teranga Gold Corporation - President and CEO [4]
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Thank you, Paul. Turning to slide 11. We believe that when we look back, 2016 will mark a watershed in the history of Teranga. We increased our opportunities for growth. We enhanced our optionality, and we diversified our asset base with the acquisition of Gryphon Minerals and a large prospective land package in Cote d'Ivoire.
Turning to slide 12. With the Gryphon acquisition, we acquired three prospective assets in Burkina Faso. The first is the fully permitted Banfora gold project. The 43-101 technical report for Banfora remains on track for completion by the end of the second quarter, the time frame provided at the time of acquisition last June. Assuming attractive project economics, we anticipate seeking Board approval of construction and financing by midyear. Our goal is to be in production in 2019.
As part of the technical report, a resource-focused drill program commenced last summer at three of the four deposits included in Gryphon's initial feasibility study for the project in January of 2013. The results we released in late October were in line with what we were looking for when we designed that program. Since October, drilling at Banfora has continued on the fourth deposit, Stinger, as well as 11 other targets which have undergone exploration work. These results are expected to be included in our technical report.
I'd like to highlight that without a current technical report for Banfora, we are not permitted to provide either a resource or reserve estimate. However, we expect to provide such estimate by the end of the second quarter with the release of our technical report.
While we are still working through the feasibility study, our current plan anticipates replicating the Sabodala plant. First, this lowers our development risk because we know that it works. Second, it reduces capital and operating costs. A second producing Gold-Mine would be a game changer for us, and we will ensure all necessary resources are in place to facilitate that objective.
In addition to Banfora, the Gryphon acquisition brought us two prospective exploration properties in Burkina Faso: Golden Hill and Gourma. On slide 13, you can see where they are each located relative to Banfora. The first is Golden Hill, which has a great address on the eastern side of the prolific Hounde Belt and is situated along strike of Roxgold's recently commissioned high-grade Yaramoko mine, along trend of the Siou deposit of SEMAFO's Mana mine, and close to the recently commenced construction of Endeavor's Hounde project.
We are very excited about Golden Hill. Previous exploration work has defined a number of robust, high-quality prospects. We have prioritized 10 for more advanced work, and that work is underway. Gourma is also an attractive property, [albeit] at an earlier stage.
Moving to slide 14, beyond Burkina Faso, the other West African country we wanted most to gain access to was Cote d'Ivoire. That opportunity arose last year through David Mimran, our cornerstone investor. While we call it a joint venture, the large prospective land package we acquired is wholly owned by Teranga. In exchange, David Mimran's company, Miminvest, receives a royalty. While our land package is earlier stage than what we have been Burkina Faso, we've already identified a very promising gold anomaly. As a result, we have consolidated our land position around this property and we expect to begin a drill program this year.
With this in mind, let's take a look at our outlook for 2017 which is outlined on slide 15. In terms of production guidance, our range is 205,000 to 225,000 ounces. Mining activities will continue to focus on higher-grade and higher strip ratio deposits including Gora, Kerekounda, Golouma South, and Golouma West. The production profile through the first three quarters should average about 50,000 ounces per quarter, with an expected stronger fourth quarter largely due to nearing the bottom of Gora Phase III. We are guiding to grades from the mill in the range of 1.7 to 1.9 grams per ton, as most of the ore milled is expected to be drawn from our low-grade stockpiles, with the balance from the high-grade material mined during the year.
Moving on to cost, please note that the cost guidance for Banfora includes only the capital cost required to complete the feasibility study, maintain our social license, upgrade the camp, and essentially keep the lights on until we have the approval to move forward. Assuming we received the go-ahead to commence construction, we'll issue an update on 2017 project capital expenditures with the issuance of the technical report.
I'd like to highlight two important points related to cost. First, while our focus on reducing costs will continue in 2017, any savings are likely to be offset, at least in part, by higher anticipated fuel prices. Therefore, we are guiding to marginally higher unit costs and an increase in gross cost as we mine and process more material relative to 2016.
Second, as I mentioned earlier, the majority of the mill feed, likely in excess of 2.5 million tons, of which 2 million tons will come from low-grade stockpiles -- this will result in a large non-cash charge related to the amortization of historic mining costs. This non-cash charge has the effect of increasing two cash metrics: total cash cost, and all-in sustaining cost per ounce. Therefore, the four non-cash inventory movement and amortization of advanced royalties are all-in sustaining costs on a cash basis are expected to be between $9 and $9.75 per ounce. The comparable number for 2016 is anticipated to be less than $275 per ounce. With the inclusion of these non-cash items, we're looking at a range of $1,000 to $1,075.
On slide 16, we outline our 2017 exploration budget of $12 million to $15 million, which is similar to last year. The majority of our exploration dollars in 2017 will be directed to Burkina Faso, with $3 million to $4 million for the Banfora exploration program, more than $3 million allocated to drilling the prospective Golden Hill target, as well as $0.5 million to explore Gourma.
Additionally, we have earmarked $3 million to $4 million to exploration on the Sabodala mine license, focused primarily on converting resources to reserves at Niakafiri and continuing delineation of the recently discovered Goumbati West resource; a further $2 million on our regional land package in Senegal; and $500,000 for Cote d'Ivoire. However, we may increase or decrease our exploration budget for one or more of these programs based on the results. Based on where we stand today, I cannot help but appreciate how different Teranga's prospects look since last year, at this time.
As shown on slide 17, we have strengthened our balance sheet, with $95 million in cash at the end of the year. This is up from $44 million at the end of 2015.
Turning to slide 18, we have demonstrated that we understand the importance of having a strong social license. Similar to our health and safety, our commitments to CSR and mining responsibly are inherent core values to our business. And it is for this reason that we are extremely gratified, with last year, the work that has earned recognition of several highly respected international organizations, including the UN Global Compact, Corporate Knights, and Capital Finance International. More recently, Teranga received the 2017 environmental and social responsibility award from the Prospectors and Developers Association of Canada.
These awards validate our efforts in community relations and provide us with the confidence that we are on the right path. And we'll be taking our programs and lessons learned in Senegal to Burkina Faso, and, ultimately, we hope, to Cote d'Ivoire.
As you can see from the map on slide 19, Africa was the second-largest gold-producing region in the world in 2015. And what may come as a surprise to you is that West Africa accounted for 1/2 of Africa's total production. We have increased our growth prospects and optionality in one of the fastest-growing regions for gold in the world. Needless to say, we think we are in the right place at the right time.
In summary, we believe we tick each of the boxes shareholders look at when considering a gold investment. We have a lot to look forward to in 2017, which has the potential for one or more potential game-changing catalysts.
Operator, you may now open up the line for questions. And we are also joined by Navin Dyal, our Chief Financial Officer. Thank you.
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Questions and Answers
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Operator [1]
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Andrew Breichmanas, BMO Capital Markets.
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Andrew Breichmanas, BMO Capital Markets - Analyst [2]
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A few questions here. First, following the plant expansion, I think there may have been an expectation that processing costs would decrease somewhat on a per-ton basis. But the guidance actually suggests higher costs than last year. I think I heard that the fuel price assumption may have impacted that. Is that correct? And is that the only factor affecting that?
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Navin Dyal, Teranga Gold Corporation - CFO [3]
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It's Navin. Yes, primarily it's related to fuel in terms of the price that we are using for 2017. There's a little bit on consumption, as well, in terms of power usage.
And maybe Paul perhaps can talk about that.
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Paul Chawrun, Teranga Gold Corporation - COO [4]
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Yes. Last year, we had a fairly high percentage of oxides. So a little bit is on reagent consumption of steel, but primarily it's HFO.
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Andrew Breichmanas, BMO Capital Markets - Analyst [5]
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Okay, thanks. The second question, the CapEx guidance excludes capitalized stripping. I just wanted to make sure; but I assume those costs are included in your all-in sustaining cost guidance, and it's just an accounting decision as to how much is capitalized versus expensed. Is that correct?
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Navin Dyal, Teranga Gold Corporation - CFO [6]
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That's correct, Andrew. We even put out deferred stripping costs. It's included in our total production costs that we have given guidance for: the $155 million to $165 million. And as you know, deferred stripping is really just an accounting adjustment that moves cost -- removes cost from operating cost and capitalized it. So we've not shown guidance for that.
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Andrew Breichmanas, BMO Capital Markets - Analyst [7]
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Sure, that makes sense. And the last question. Obviously a fairly large royalty payment to settle the amounts owing from previous periods in Q4. Going forward, can you just remind us how to think about those payments?
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Navin Dyal, Teranga Gold Corporation - CFO [8]
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Sure, Andrew. Yes. Moving forward, we are going to be moving to a quarterly in arrears payment. So what you saw in 2016 was basically payment for 2015 royalties, and three quarters of 2016. And that was so that we can move to a quarterly in arrears payment. And that's what you'll see going forward.
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Andrew Breichmanas, BMO Capital Markets - Analyst [9]
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Okay, great. Thanks.
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Operator [10]
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(Operator Instructions). We have no further questions in queue at this time.
I'll now hand the call back to Mr. Richard Young, President and CEO, for any closing remarks.
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Richard Young, Teranga Gold Corporation - President and CEO [11]
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Thank you, Carol. I just want to remind people, in terms of the guidance we've given on our all-in sustaining costs, it does include $100 of non-cash costs. And really what that represents is the drawdown of roughly about 2 million of the 13 million tons that we've got in stockpile. That's material that was mined historically over the mine life. Those costs have already been incurred and paid for. And now as we draw those out just out of stockpile, we've got to amortize those costs under accounting under GAAP to the income statement, so they are non-cash in nature. We do expect to have a strong year from a cash flow perspective. And that's going to help fund the growth capital that we've got allocated to Banfora.
So when I reflect back over the last five years, I think that we've demonstrated that we can build mines. We can operate mines with multiple deposits, and narrow vein ore bodies. We can make and integrate acquisitions, and we can pursue organic growth initiatives and grow our business profitably. We believe that we've accumulated the skills along the way, and we are in a strong position; and we are moving towards a diversified, mid-tier gold producer in West Africa.
So I ask that you stay tuned, because I think we're going to have a pretty exciting year this year. So thank you very much for joining us on the call today. Thanks.
For what it's worth...
Cormark Morning Notes 1/31/17
Teranga reported its Q4/16 operational results, with production for the quarter beating our expectations and exceeding management guidance on a full year basis. Guidance for 2017 came in below our expectations as the production guidance range is slightly below our estimate and costs have been guided higher due to marginally higher costs reflecting higher fuel prices, G&A and CSR costs. Work continues on the Banfora feasibility study that is expected to be completed by mid-2017 at which point a construction decision will be made. Trading at only 0.70x NAV and 6.6x CF currently, we believe there is considerable room for the shares to move higher as the company delivers on operational milestones at Sabodala and advances Banfora to development and ultimately production. (Morning Notes)
Teranga Gold Corp (TGZ) Given Average Recommendation of “Buy” by Analysts
Posted by David Glaser on Jan 31st, 2017
Teranga Gold Corp logoShares of Teranga Gold Corp (TSE:TGZ) have received a consensus recommendation of “Buy” from the six analysts that are currently covering the company. Three equities research analysts have rated the stock with a hold rating and three have assigned a buy rating to the company. The average twelve-month price objective among analysts that have issued ratings on the stock in the last year is C$1.15.
Several research analysts recently weighed in on the company. BMO Capital Markets lowered their price objective on Teranga Gold Corp to C$1.20 and set a “market perform” rating for the company in a research report on Friday, November 25th. Scotiabank reiterated a “sector perform” rating and issued a C$1.50 price objective on shares of Teranga Gold Corp in a research report on Friday, January 6th. Finally, Royal Bank Of Canada reiterated a “sector perform” rating on shares of Teranga Gold Corp in a research report on Monday, October 31st.
Teranga Gold Corp (TSE:TGZ) remained flat at $0.91 on Tuesday. The company’s stock had a trading volume of 384,091 shares. Teranga Gold Corp has a 1-year low of $0.38 and a 1-year high of $1.40. The stock’s market cap is $356.95 million. The firm’s 50-day moving average price is $0.87 and its 200-day moving average price is $1.05.
I heard they will be released with their audited results in late February, how ridiculous is that?
TGZ just dropped straight down .05, WTF is wrong with this POS!
Hey, Hey, its not much but...TGZ targets...
BMO raises target price from .85 to $1 and reiterates MARKET PERFORM rating
Scotia maintains $1.25 target price and SECTOR PERFORM rating
I took advantage of TPRFF too, currently holding 1M shares. Here is that TSX rule...Tablo/Mimran currently holds approx. 100M shares.
What Happens if I Become a 20% or Greater Shareholder?
Do not become a 20% or greater shareholder without first speaking with Canadian legal counsel. Canadian securities laws prohibit acquisitions of outstanding securities of an issuer that result in an investor holding 20% or more of a class of voting or equity securities of a Canadian public company without making a formal takeover bid (that is, a public tender offer). There are a few exceptions to this requirement, including purchases through private agreements and limited public market purchases, but it is important to get specific legal advice about them before increasing your ownership level to 20% or more.
https://www.osler.com/en/resources/cross-border/2013/becoming-a-10-shareholder-of-a-canadian-public-co
Let's hope so!
It is my understanding that he is maxed out legally and cannot buy anymore without acquiring the company.
If it wasn't for Tablo/Mimran buying millions of shares, I would be thinking this is dead money and would be looking for a way out at break even.