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No analysis on GBU, too much country risk for my taste...
Prefer to invest in politically stable countries such as US, Canada, Mexico and hold 66% of positions for longer term, i.e. LT cap gains...
But, when value is truly compelling like it is with GBN, do venture into other risky countries...
NatGas-Robry graphs updated...
awaiting comments...
http://amarks.homestead.com/RobryNGModel.html
My calcs show $9.19 market cap per resource ounce...
PEX only has rights to 60% of the estimated 1M ounce reserve and has to raise an additional C$5 million over the next 4 years to finance the drilling... If I am incorrect on these assumptions, please advise... Have not shown PP proceeds into working capital, just reduced the C$6M drilling cash required to C$5M.
FWIW, much prefer to invest with AGI at $16.72 (w/o recovery %) per reserve ounce than with PEX at this time. Will keep my eyes on it and have a small order in for C$.14, figuring I can get it below the C$.15 PP price without the 1/2 warrant...
jackc, any other comments why you like PEX?, are any of my assumptions incorrect? or are they likely to prove up more than the 1M ounces @ their 60% interest?...
Market Call Tonight featuring John Embry of Sprott Asset Management
ROB-TV, Canada
Tuesday, September 30, 2003
Green: Welcome back to "Market Call Tonight," John.
Embry: Thank you.
Green: You were telling me in the break that you were
surprised that gold actually went up today, because it
was the last day of the quarter. Explain that.
Embry: Well, basically gold was breaking out sharply last
Thursday. And the forces that do not want gold higher came
thundering onto the floor of the COMEX and really beat it up.
And they broke it. They got it from $393 down to about the
mid-380s on Thursday. Took it down to $380 on Friday. A lot
of negative commentary over the weekend. You know, "The
long specs were gonna get broken. They were gonna panic,
sell. ... It was going to go cascading down." Which is exactly
what these guys want. Because at the end of a quarter they've
got to mark a lot of this stuff to market. And what they don't
want is a higher gold price, because they're on the wrong side
of the market. Lo and behold, there is a big buyer in the market.
And the big buyer appears to have won this fray. Because it
started up yesterday and then it was stronger even today. It
got a little bit of help from a lot of developments. The Bank of
Japan intervened to try to weaken the yen this morning in
middle of the night our time -- and FAILED. Suddenly you
see the yen weaken and then all of a sudden it shot back up
again. Clearly the people who trade in the currency markets
know this intervention. When you're intervening against a
primary trend, you're going to lose. And the primary trend for
the yen is now UP.
Green: Who is the big buyer of gold?
Embry: I think the big buyer is coming out of China.
Green: Really?
Embry: Yes. I think the Chinese have a very passionate
interest in gold. The rumor in the pits anyway is the big
buyer may have been from China.
Green: All right, with that as a backdrop let's go to the phones. Richard in Winnipeg. Hi, Richard.
Richard: Hello, Mr. Green. Mr. Embry. I value your opinion.
Embry: Thank you.
Richard: On Bema Gold: Is it stepped up too high or is it
now contemplating a $400 gold price? Would you buy now
or would you wait until a pullback?
Embry: I was a big buyer of Bema earlier this year around a
buck-and-a-half Canadian. Subsequently it has run a long way.
But they have one of the great exploration properties. One of
the leading explorationists for one of the large companies
called it "the finest exploration prospect on the planet." And
Kupol, which is in Russia -- they've got about 75 percent of it.
This looks like they have somewhere between 5 to 10 million
ounces. Probably over an ounce grade. Clive Johnson, who is
the proprietor of this outfit, is one of the great promoters. He
has done well with very little. He's got something big this time. I would definitely be a buyer of the stock on any weakness. In fact, I might buy it here.
Green: Even at $3.42 (Canadian)?
Embry: Yes.
Green: It's pretty actively traded. It was the fourth most actively traded today.
Embry: It's very actively traded because it has a huge fan base
in the United States. That's important. I mean these people are
not too valuation-conscious. If you've got something that looks
like its got a good story to it, and gold is in favor, they'll buy it. So Bema's good.
Green: Let's go to the next caller. We've got Les in Calgary. Hi,
Les.
Les: Hi, John. I would like to know your outlook on Arizona
Star and its Cerro Casale project in Chile.
Embry: That's really interesting because Bema owns 25
percent of this. Arizona Star owns 25 percent of Cerro Casale.
Placer has 50 percent. Now Cerro Casale is a huge ore
body of not-so-hot grade. But at higher copper and gold prices
this thing is economic. And Placer has to come forward. If this
thing can be financed, Placer has to start taking this forward.
Arizona Star is a terrific proxy, in my opinion, on higher gold
and copper prices. I would definitely be a holder of the stock.
Green: $2.75, down a dime today. OK, let's move on to your
top picks of today. Top Pick No. 1, Thistle Mining. South Africa, Kazakhstan, and the Phillipines. Not a household name. Tell us about it.
Embry: Thistle's been beat up a bit because of the stronger
rand in South Africa. So the operating costs in their operating
mine, the President Steyn down there, moved up. I like the
strategy of the CEO, Willie McLucas. He has a strategy. I
think he'd love to sell some of his South African assets to
Harmony. His assets in South Africa are surrounded by
Harmony down in the Free State. And he wants to develop
his Phillipine asset, which is actually quite promising. So
it's a stock that trades well and it's been beaten down to the
mid-50s. I think it's a good leveraged play on gold here and
I've been buying it in this range.
Green: Let's keep an eye on that one. Let's go to Jerry in
St. Johns.
Jerry: John, my primary question is on Gold Reserve. I've asked you on a couple of occasions about it. I understand that you've become a fan of Gold Reserve.
Embry: This is a large, very low-grade ore body in
Venezuela that is attached to the Las Christinas property,
which is under great speculation with Crystallex. This
thing won't go forward without the Crystallex/Christinas
issue being straightened out. If you're a patient investor,
it's a good investment. You may have to wait a while for
this because this Christinas mess is going to take longer
than everybody thinks.
Green: What is a long time?
Embry: I would think you're probably talking many years
before this is in production.
Green: Like 10?
Embry: No, it wouldn't be that long. I think that you could get
it in this decade. It's just that Venezuela is also an issue. But it is a very cheap stock and I would certainly hold it in a rising gold market.
Green: All right, Rob in Cornwall, Ontario.
Rob: Great show as always. I'd really appreciate John's views
on Merdian as a value play. I've got a couple of gold stocks
already. And it seems like everybody is passing this one over.
Your opinion, please.
Embry: That's a good question because I think they ARE
passing it over. And I really think they're wrong in the sense
that the Esquel property in Argentina, which has run into
serious permitting problems, will, I believe, ultimately be
permitted. And that's the key aspect.
Green: Is that why people have been passing it over?
Embry: Absolutely. And in my view on gold, and how this is
going to unfold in the next five or 10 years, an asset in the
ground is only going to become more valuable. So if the
Esquel property is delayed --and it IS going to be delayed
probably a couple of years anyway because of these
permitting issues -- the asset's still there. And if they
eventually get it permitted, it is going to be worth a fortune
when gold is trading at a thousand dollars. So I like Meridian
a lot. In fact, I was a buyer of the stock very recently. I think the investing public is wrong on this one. Meridian has fabulous management, a great cash cow in El Pino, a very active
exploration program, and an asset that's being severely undervalued because of the permitting issue. I'd be a buyer.
Green: All right. Kevin in Vancouver.
Kevin: A quick question on Ivanhoe Resources and mainly their Mongolian play.
Embry: If you believe Robert Friedland, this is one of the monster ore bodies in the history of the world.
Green: Do you believe him?
Embry: I would downplay it a bit. I think that it IS a major
ore body. They've got some very good results lately. The issue was grade. They've got some very high-grade results recently. So that is a big positive development. My issue would be how long it's going to take to exploit. This is a total greenfield. There is no infrastructure. There is not a great deal of water. And I think this thing won't be in production probably until the next decade.
Green: Do you own this one?
Embry: I do not own Ivanhoe. I do own QGX, which I've talked about many times on the various shows, which is my play in Mongolia. It's much much cheaper and I take the proprietor at his word.
Green: And so if you owned Ivanhoe, what would you do with it?
Embry: I would hold it because Robert Friedland is the greatest promoter on Earth. He's got a great asset but the stock is extraordinarily expensive. He's got a $2 billion market cap on something that I don't see being in production for a long time.
Green: Let's get your second pick of the evening. Top Pick
No. 2: Defiance Mining. It's 61 cents.
Embry: I think Defiance Mining is a stock that has got a lot of potential because they have a terrific ore body that has actually been drilled out in Mauritania, which is not one of the
world's garden spots.
Green: I'm not sure I could find it on a map.
Embry: Mauritania is over there with Mali and Ghana. It's
actually in a legitimate mining area. And it's beautiful topography because it's flat and dry and uninhabited. So I believe they will get this into production reasonably quickly. It's got a million ounces already and they've got a million ounces in resource. If they could drill a million ounces and prove up -- convert the resource into reserve -- we've got a serious asset here for a 50-cent stock.
Green: They have enough money to develop it?
Embry: Yes. They're well on the way. We helped save this company: myself, Fred Sturm over at Mackenzie, and John Hick, who's the CEO now. This thing was on its last legs when it was Geomaque. And we got really lucky in a series of transactions. We ended up with this prospect in Mauritania, which is the Tasiast property. And I think the stock is undervalued still. The assumption is that this thing does get into production and there's a couple of million ounces for a pretty good price.
Green: And so what is the potential hiccup here?
Embry: The hiccup is always in these things -- getting the full
financial package. It is in Mauritania but they are pretty comfortable with the idea that they can get it done. The government is very onside. They don't have a lot of industry
there. They have a very large iron ore complex. It's a moderate Islamic nation, it's not heavily inhabited, they need enterprise, and they seem to be mining-supportive. So that's a big positive in these countries. If the government's onside, you can usually get it done.
Green: All right, an e-mail. This is from Trevor. "Gold and inflation: If gold goes to 800 bucks, what would you expect corresponding inflation and interest rates to do? Can you recall historically what happened last time gold had a major run?" I think you can. You've talked about it.
Embry: Clearly I'm in the environment in which gold would take out the old high at $800. It would come, I suspect, at a period of considerable monetary debasement, which means that the values of anything you're buying would be rising. Now the rate of inflation that that would entail -- I don't know. It would be materially higher than it is now. And I suspect that long rates would be higher. Short rates, because of the debt that's all through the system, would probably be maintained at fairly low levels. We'd have a steepening yield curve in this environment.
Green: Why is there so little inflation though given that we've got so much liquidity?
Embry: It's the way inflation's measured. Very simply: Housing
is going through the roof in North America. Some of the statistics in the States recently on house price increases and volumes and everything are staggering. The stock market's recovered. Money is sort of seeking outlets. The reason you don't get high-stated inflation, like high CPI, is all these goods flooding in from China. There is this inflation/deflation battle. There are a lot of deflationary forces in the world. China, the Internet, too much debt -- and they're trying to offset this with massive injections of liquidity. It's a battle. I don't know who's going to win. Gold wins in either deflation or inflation. It doesn't win in disinflation, which we've had for 20 years.
Green: Let's go to Sergio in North York. Hi.
Sergio: John I was wondering if you could give me your long-
and short-term views on Axmin, and if you could comment on the Newsweek article on Newmont's involvement in the Mali project.
Embry: As you probably know, because I've commented on Axmin many times before, I love this company. I think the management, headed up by Jon Forster with the backing of a Swiss group, Addax, is one of the best management groups in the junior gold field. And they have a proven track record. They found Geita when they were previously Samax and sold it to Ashanti. So this is the same guys basically. And Michael Martineau is another one that's associated with us. I back people who are winners. These guys are most assuredly winners. And they've got three interesting operations. They've got this fantastic unexplored greenstone belt, which they're just drilling in the Central Africa Republic. Very promising. The first holes have been very good. They have this property in Mali, which, I'm told by certain people, is viewed very constructively. That Newmont is prepared to do business with them on that property speaks to the quality of it. And they are looking to develop a prospect in Burkina Faso. They are trying to put a mine into production with High River. So for a junior, for my money, this is one of the best ones on the board.
Green: Perry in Mississauga, Ontario.
Perry: A question for you, John, on Tanrange. I know you're a big admirer of Tan Range and I purchased it two years ago at 45 cents. I'm seeing it climb. So where do you think it's going and how about their properties?
Embry: This is a tough one for me because I was a major
shareholder in my previous incarnation. And when I got over to
Sprott the stock had moved up sufficiently that I was a little
uncomfortable with buying it. It's continued to move up.This is a play on the proprietor, James Sinclair, known in the trade as Mr. Gold, one of the finest gold traders in history. And this guy is a remarkable guy. Having said that, I'm not crazy about his assets. So people are buying the jockey here, not the horse.
Green: What's wrong with the assets?
Embry: Tthey're in Tanzania and they don't have a great deal.
But they're working away and people buy people and this guy is
fantastic. So....
Green: That's why the stock ran up?
Embry: Absolutely. I would have kept it if I were at the bank.
I just can't chin myself to the current price to buy it.
Green: Why is such a brilliant gold guy running a company with
assets that you're not crazy about?
Embry: Well, he may develop them. He was the guy behind Sutton
Resources, which sold Bulyanhulu and eventually to Barrick. So
he's got a track record and he's workin' away in the same part of
the world. He just may come up with it. It's just at this point I'm not crazy about what he's got so far. But this is the beauty of this business. One day it could be worth nothing; the next day it could be worth a billion dollars. Good guys tend to find the billion-dollar properties.
Green: Let's have your third pick: Aurora Platinum. You were telling me before: This is not platinum?
Embry: No longer. These are my great friends from Southwestern
Resources. They have about a 16 percent interest in this company
and they actually have the same people who are involved in the
management. What they have accumulated is a really interesting
series of nickel prospects in the Sudbury area. I would call this a mini-Fort Knox. And we had great success with FNX Mining
when Terry McGibbon took a bunch of ex-Inco assets. This thing
to me is a really misunderstood and not well-followed company.
On top of that they control Lakeshore Gold, which I think is one of the really exciting small gold companies.. They're doing some
wonderful things up in the Timmins area.
Green: So is it a nickel play or a gold play?
Embry: It's both. The company directly is focused on nickel
but it also has a nice play on gold because it owns 60 percent
of this subsidiary that I think is very promising. So you get two shots at this one and it's cheap.
Green: And the principal risk with this one?
Embry: The principal risk is that the whole metal complex doesn't work. I love stocks that aren't in favor. I don't believe the public or the institutions are really at this one. I've been a big buyer of this. I've been accumulating it ever since I got to Sprott. I like it very much.
Green: And you own the other two as well: Thistle and Defiance?
Embry: Oh, yeah. All of those are well represented in my fund.
Green: Let's go to Dean in Burlington.
Dean: John, I took your recommendation a number of months
ago on Wheaton River and it's grown nicely to about $2.69. But
about a week ago it was up to almost $2.90. And as the price
of the gold has gone up in the past week, the stock has dropped.
Do you think it has reached its peak? And should I be possibly
be dumping it to pick up one of your other selections?
Embry: I don't know that it's reached its peak. This thing was
constructed for a bull market in gold. And they issue shares and
they buy gold assets, which I think is a fabulous strategy. Their first two acquisitions -- the Luismin mine down in Mexico and then the one in Argentina -- were brilliant strokes. Their latest acquisition hasn't impressed me as much. They tell me I'm wrong, and other people don't agree with me. It gets into a debate about whether this was a great acquisition. But what really put the cap in the stock recently was, at the Denver gold show, they gave a very aggressive presentation and then the very next morning laid a hundred-million-dollar issue in the market with no use of the proceeds. So I'm sure they've got something up their sleeve. But there's just too much stock in the market short term. So there's a little pressure on the stock. I would definitely hold it here. I think that there's further to go. But I would prefer to see them acquiring producing assets rather than things they're going to have to develop. And this last acquisition in Mexico is going to require some development. I'm not as keen on the stock. I was very keen on the stock back when it was back around $1.20 to $1.25. In the high 2s I'm not as keen but it will definitely rise with the gold market.
Green: Another one that is very active in the top 10 on the TSX.
Embry: Yes. Initially they created a lot of paper, so there's a
lot of shares on the market. I think one of the shortcomings with this thing is that you are getting too many shares on the market. Eventually, when you blow your market cap up too big, it just becomes unwieldy, and it doesn't have the same lift as other stocks. I really like companies with smaller market caps where, if news hits, or a development, you get real leverage in the stock and it moves more rapidly.
Green: Another e-mail from Andrew in Toronto on Rubicon Minerals. "What are your thoughts on Rubicon for the long- and
short-term? Would you be a buyer at these levels?"
Embry: Rubicon is a company that is very active in one of the most prolific belts in the world. It's up in Red Lake and it's got a really nice land package. To date they haven't really found anything that I think is going to turn into a mine. But they've got such a good land package, and if they keep drilling, they stand a very good chance. I would keep the stock. I do not own it in my fund at this point. I have owned it. And with anything up in Red Lake you're relatively safe with, because it's a great address and there's a lot of gold up there.
Green: One last quick call. Peter in Montreal..
Peter: A while back you mentioned you had a large stake in
Queenstake Mining. Do you still maintain that holding? Would
you recommend the stock?
Embry: Good question. Queenstake: I got very interested in it
when it was around 22 cents. And it ran to 98 cents, at which
point I was extremely uncomfortable because my stock is restricted. Now it has pulled back to 68 cents. I think this guy has done a great job of acquiring these assets at Jerritt Canyon. I believe that he is going to turn resources into reserves. I think it is a great play on gold. I think the check back from the mid-90s to the mid-60s has created a wonderful buying opportunity. I would definitely be a buyer in the 60s.
Green: John, we've got to go. Thanks for joining us.
Embry: Howard, always nice to be here.
Green: John Embry of Sprott Asset Management.
NatGas storage +100
Storage Highlights:
Working gas in storage was 2,788 Bcf as of Friday, September 26, 2003, according to EIA estimates. This represents a net increase of 100 Bcf from the previous week. Stocks were 250 Bcf less than last year at this time and 55 Bcf below the 5-year average of 2,843 Bcf. In the East Region, stocks were 44 Bcf below the 5-year average following net injections of 64 Bcf. Stocks in the Producing Region were 23 Bcf below the 5-year average of 778 Bcf after a net injection of 30 Bcf. Stocks in the West Region were 12 Bcf above the 5-year average after a net addition of 6 Bcf. At 2,788 Bcf, total working gas is within the 5-year historical range.
of WHT and GBU, sure like the sound of $120/per ounce as a going rate...
http://www.mips1.net/mgdg3.nsf/UNID/TWOD-5RWVL8?OpenDocument
Burnstone Maps & Press Release...
Great Basin Successfully Advancing Burnstone Gold Property In South Africa
VANCOUVER, BRITISH COLUMBIA, Oct 1, 2003 (CCNMatthews via COMTEX) --
Ronald W. Thiessen, President and CEO of Great Basin Gold Ltd. (TSX-GBG; AMEX-GBN) is pleased to provide an update on the progress of exploration and development at the Burnstone Gold Property in the Witwatersrand goldfield of South Africa. The Witwatersrand is the world's largest gold district with production of over 1.4 billion ounces. On-going, multi-rig drilling at Burnstone continues to define and expand gold-bearing areas of the Kimberley Reef, one of the main mineralized horizons in the Witwatersrand. At least four target areas (Areas 1,2,3,4) have been identified so far on the property (see note below), with drilling underway or planned for each area.
Since January 2003, Great Basin has carried out 32,000 metres of infill and step-out drilling in 42 core holes at Area 1. This work increased the mineral resource for the Area 1 gold deposit and upgraded the confidence level by defining it at closer drill spacing. The Company has also initiated engineering studies, including cost estimates, for development of the Area 1 deposit. An additional 6,000 metres of drilling are planned to facilitate these studies. The independent firm Turgis Consulting (Pty) Ltd. is undertaking this work and evaluating development options. An important aspect of the Area 1 deposit is that a significant part of it lies at a depth of only 250-500 metres. This should allow for lower development and operating costs than at most other operations in the Witwatersrand, typically at 1,000-3,000 metres in depth. The standard practice in South Africa with respect to resource estimates or measurement is to use a grade - thickness combination for drill results and cut-off grades. Comparisons with other similar but deeper operations indicate that a cut-off grade between 300 cm g/t and 350 cm g/t would be the most appropriate for the Area 1 deposit. (Area 1 resource at 350 cm g/t cut-off was reported in Great Basin News Release, June 18, 2003). At these cut-off limits, the diluted grades for Area 1 are 6.8 g/t and 7.5 g/t, which compare favourably with grades of 6.27 g/t, 8.08 g/t and 4.93 g/t, respectively, of the measured mineral resources at Harmony Gold's operating mines named Evander, Elandskraal and Randfontein (Harmony 2003 Annual Report).
Area 2 is located three kilometres southeast of Area 1. Great Basin has completed 25 drill holes, totaling about 19,000 metres, at Area 2. Results received to date are shown in the table (attached) and on the map. Visible gold was identified in 12 holes with intersections from 1.7 g/t over 61.1 cm or 104 cm g/t in drill hole SGG061 to 9.9 g/t over 54.2 cm or 535 cm g/t in drill hole SGG050. The objective of drilling at Area 2 is to further define and delineate the gold deposit so that a new resource can be estimated and incorporated into the development planning currently underway on Area 1. The Company estimates that an additional 7,000 metres of drilling are required to delineate the deposit to allow integration into the overall engineering studies and mine planning with the goal to increase project production rates and gold output. This drilling is currently underway.
Area 3, located approximately four kilometres southeast of Area 2, hosts some of the best drill hole intersections on the property. For example, reef intersections in two historic drill holes at Area 3 returned 27 g/t over 61 cm yielding 1,314 cm g/t in DDH 3090 and 36 g/t over 27.5 cm to yield 984 cm g/t in DDH 2985. Initial results for Hole SGG064 intersected 82.3 g/t over 16 cm to yield 1,317 cm g/t. Three holes, totalling about 2,100 metres, have been drilled by Great Basin in Area 3 so far, with visible gold noted in two of the holes. Five thousand metres of drilling are planned for Area 3 during the current program.
It appears that Area 1 through to Area 3 forms part of a large channel system, trending northwest to southeast across the Burnstone property. The system represents at least 15 kilometres of gold-bearing Kimberley Reef that is open to expansion.
An additional target (Area 4) has been identified about two kilometres south of the Area 1 gold deposit. At Area 4, there appears to be a series of stacked conglomerates (the gold-bearing reefs in the Witwatersrand are conglomerate units) within the sedimentary sequence. Of nine historic holes drilled over an area of three kilometres by four kilometres, eight have significant gold values, ranging from 314 to 1,480 cm g/t, as shown on the map. Drill testing is now being planned for this area.
Louis, noodling this a bit further...
Gold in US$ has gone up 17%
US$ Index has declined 7.25% (92.75 vs 100.0), inverse (1 /.9275) = 7.8%
So Gold has gone up 17% in US$, and thus only 9.2% as a basket of other currencies as represented by the US$ Index (17%-7.8%=9.2%)
Is this a satsifactory and accurate interpretation?
thanks!
Thanks Louis, much appreciated, but could you give a bit better interpreation of what the $Gold to US$ Index ratio graph really means...
Whatever it is, agree that it is indeed inconsistent BUT surely it can be explained somehow..., but it is baffling me as well...
To wit (per prior post):
from graphs here:
http://www.investorshub.com/boards/read_msg.asp?message_id=1521301
"What I wanted to see was the price of gold relative to a weighted basket of other currencies (i.e. besides the US$).
per the charts, over the past 6 months:
$Gold has gone up 17% ($386/$330)
$Gold to US$ Index up 28% (4.16/3.25)
$Gold to Euro up 8.5% (3.31/3.05)
$Gold to Yen up 10% (430/390)
$Gold to Can$ up 8.5%
$Gold to UKPound up 9.5%
Euro+Yen+Can$+UKPound make up over 85% of US$ Index...
So what exactly is my $Gold to US$ Index graph telling me... What comprises this 28% return, how do you reconcile this with POG only going up 17%???"
What I wanted to see was the price of gold relative to a weighted basket of other currencies (i.e. besides the US$).
per the charts, over the past 6 months:
$Gold has gone up 17% ($386/$330)
$Gold to US$ Index up 28% (4.16/3.25)
$Gold to Euro up 8.5% (3.31/3.05)
$Gold to Yen up 10% (430/390)
$Gold to Can$ up 8.5%
$Gold to UKPound up 9.5%
Euro+Yen+Can$+UKPound make up over 85% of US$ Index...
So what exactly is my $Gold to US$ Index graph telling me... What comprises this 28% return, how do you reconcile this with POG only going up 17%???
try this link..., Frank/Louis a bit of help!!
http://www.investorshub.com/boards/read_msg.asp?message_id=1521301
Trying to determine what the Gold to US$ Index really means... The POG in Euro, Yen, Pound, etc. all show around a 10% increase in POG in their respective currencies... Thus, I would expect the Gold to US$ Index to show the same 10% increase rather than the 25% plus it is showing for the year...
This chart not yielding what I had expected or common sense, guess I need an inverse US$ index..., someone please interpret this $Gold to US$ Index graph?
thanks, that did it...
perfect symmetry now...
Gold vs US$ Index and other currencies...
someone, please help me with stockcharts...
Cannot get rid of a ">" that shows up on this message:
http://www.investorshub.com/boards/read_msg.asp?message_id=1521024
shows up between the first two charts at top..., how do I get rid of the ">" ??
http://messages.yahoo.com/?action=q&board=CWEI
Robry forecasting build of +91
stratfor weekly, Frank a bit tardy on posting it...
29 September 2003
by Dr. George Friedman
The Unpredictability of War and Force Structure
Summary
In the United States' open-ended war against al Qaeda and militant Islam, two factors are driving up requirements for the size of the U.S. military. One is the unpredictability surrounding the number of theaters in which this war will be waged in the next two years, and the second is the type of warfare in which the United States is compelled to engage, which can swallow up huge numbers of troops in defensive operations. However, for several reasons, U.S. defense personnel policies have not yet adjusted to this reality.
Analysis
Prior to the beginning of the Iraq campaign, U.S. Defense Secretary Donald Rumsfeld was asked how long the war would last. His response was both wise and true: He said that he didn't know, because the enemy got to vote. Much of the discussion about the length, cost and requirements of U.S. military operations in Iraq should be answered the same way --there is no answer because the other side gets to vote. The Iraqi command decided to abandon conventional warfare and shift to guerrilla warfare. It is as unreasonable to ask how long this will last and how much it will cost as it would have been to ask Abraham Lincoln in 1862 when the Civil War would end and how much it would cost. It is an unanswerable question.
War is extremely predictable, with 20-20 hindsight. It is easy to say now that the Soviets would defeat the Germans in WorldWar II. All of us know now that the North Vietnamese had the advantage in Vietnam. We all know now that the Normandy invasion would work. That's the easy part of military analysis; predicting the future is the hard part. It is possible to glimpse the outlines of the general forces that are engaged and to measure their relative strength, but the finer the granularity sought, the harder prediction is. The only certainty to be found is that all wars end eventually, and that the war you are fighting is only occasionally the war you expected to fight.
No one, therefore, knows the course of the U.S.-militant Islamist war. The CIA has produced no secret papers nor uncovered any hidden plans in the caves of Afghanistan that reveal the truth. War is about the difference between plans and events: Nothing goes according to plan, partly because of unexpected failures among the planners and partly because the enemy gets a vote. Carl von Clausewitz, the father of modern military theory, had a word for that: friction. The friction of war creates an ever-widening gap between plans and reality.
That means that the first and most important principle of military planning is to plan for the worst. No general was ever condemned for winning a war with too many troops. Many generals -- and political leaders -- are reviled for not using enough troops. Sometimes the manpower is simply not available;
demographics limit the number of troops available. But the lowest ring of the military inferno must be reserved for leaders who take a nation to war, having access to massive orce but choosing to mobilize the least numbers they think they can get by with, rather than leaving a healthy -- even unreasonable -- margin to make up for the friction of war. Calibrating force to expected requirements is almost always going to lead to disaster, because as we all know, everything comes in late and over-budget.
Washington is engaged with the question of what constitutes sufficient force structure. As one might imagine, the debate cuts to the heart of everything the United States is doing; the availability of force will determine the success or failure of its war. And here, it appears to us, the adminstration has chosen a radical course -- one of maintaining a narrow margin of error on force structure, based on plans that do not necessarily take into account that al Qaeda gets to vote.
Last week, while speaking at the National Defense University, Rumsfeld repeated his conviction that the United States had deployed sufficient force in Iraq and that with additional deployments it would be able to contain the situation there. Last week, U.S. officials announced the mobilization of additional reserve and National Guard units for 18 months of duty.
The reality is this: The United States went to war on Sept. 11, 2001, and since that date, it has not increased the aggregate size of its armed forces in any strategically significant way. It has raised the effectively available force by reaching into its reserve and National Guard units. That short-term solution has served well for the first two years of the war. However, deployment requirements tend to increase over the course of a war, so the needs in the first year were relatively light and increased progressively as additional theaters of operation were added.
The problem with this structure of forces is simple. People can choose to leave the military and its reserve and National Guard components -- and they will. Following extensive deployments, or anticipating such deployments, many will leave the active force as their terms expire or leave the reserve components when they can. In order to replace these forces, the pipeline should be full of recruits. This is not World War II. The requirements for all specialties, including combat arms, will not be filled by basic training and a quick advanced course. Even in the simplest specialties, it will take nearly a year to develop the required expertise -- not just to be deployed, but to be deployed and effective. For more complex specialties, the timeline lengthens.
U.S. leaders appear to be giving some attention to maintaining
the force at its current size, although we think the expectations on retention in all components are optimistic. But even if they are dead on, the loss of personnel will be most devastating among field-grade officers and senior noncommissioned officers -- who form the backbone of the military. These are men and women in their 30s and 40s who have families and mortgages -- none of which might survive the stress of a manpower plan designed in a way that imposes maximum unpredictability and disruption on mature lives. The net result is that the military might keep its current size but become thin-waisted: lots of young people, lots of gray hair, not nearly enough in between.
The problem, however, is that keeping the force stable is not enough by a long shot. The United States is involved in two significant conflicts, in Iraq and Afghanistan. It is also
operating in smaller deployments throughout and on the periphery of the Islamic world. Added to this are immediate and potential requirements for homeland security, should al Qaeda strike again, as the U.S. government consistently predicts is likely. When these requirements are added up and compared to the kind of force planning and expectations that were being discussed prior to Sept. 11, it is obvious that the U.S. force is at its limit, even assuming that the complexities of reserve units weren't added to the mix.
The strategic problem is that there is absolutely no reason to elieve that the demands on the current force represent the aximum. The force level is decided by the administration; the orce requirement is decided by a committee composed of senior entagon officials, Congress and al Qaeda. And on this committee, al Qaeda has the decisive vote.
Al Qaeda's strategy is to expand the conflict as broadly as possible. It wants to disperse U.S. forces, but it also wants U.S. forces to intrude as deeply into the Islamic world as possible in order to trigger an uprising not only against the
United States, but also against governments allied with the United States. There is a simple-minded answer to this, which is to refuse to intervene. The flaw in that answer is that it would serve al Qaeda's purpose just as well, by proving that the United States is weak and vulnerable. Intervention carries the same cost as non-intervention, but with the upside that it might produce victories.
Therefore, the United States cannot easily decline combat when it is offered. Al Qaeda intends to offer as much combat as possible. From the Philippines to Morocco, from central Asia to central Africa, the scope -- if not the tempo -- of operations remains in al Qaeda's hands. Should Indonesia blow sky high or Egypt destabilize, both of which are obviously among al Qaeda's hopes, U.S. forces will be required to respond.
There is another aspect to this. In Iraq and Afghanistan, the
United States is engaged in guerrilla wars. The force required to combat a guerrilla army is not determined by the size of the guerrilla forces, but rather by defensive requirements. A very small guerrilla force can menace a large number of targets, even if it cannot hit them all. Those targets must be protected for military or political reasons. Pacification cannot take place when the population is exposed to guerrilla forces at the will of the guerrillas. A narrow defensive posture, as has been adopted in Afghanistan, cedes pacification. In Iraq, where ceding pacification is not a political option, the size of the force is determined not by the enemy's force, but by the target set that must be protected.
Two factors, therefore, are driving up requirements for the size of the U.S. armed forces. First, no one can define the number of theaters in which the United States will be deployed over the next two years. Second, the type of warfare in which the United States is compelled to engage after the initial assault is carried out is a force hog: It can swallow up huge numbers of troops in duties that are both necessary and parasitic -- such as patrolling 15 bridges, none of which might ever be attacked during the war, but all of which must be defended.
Rumsfeld's reassurances that there are enough forces in Iraq miss the key question: Are there enough troops available and in the pipeline to deal with unexpected events in two years? Iraq might be under control by then, or it might not. Rumsfeld doesn't know that, Iraqi National Congress leader Ahmed Chalabi doesn't, Osama bin Laden doesn't. No one knows whether that is true. Nor does anyone know whether the United States will be engaged in three or four other theaters of operations by that time. It is certainly al Qaeda's intention to make that happen, and so far al Qaeda's record in drawing the United States into difficult situations should not be discounted.
The problem is that on the one hand, the Defense Department is in the process of running off critically needed troops with
unpredictable and spasmodic call-ups. Second, the number of men and women in the training pipeline has not taken a quantum leap forward in the course of the war. The United States is engaged in a global war, but its personnel policies have not adjusted to that reality. This is the first major war in American history that has not included a large expansion of the armed forces.
There are a number of reasons for this. At the beginning of the war, the administration envisioned it as a primarily covert war involving special forces and some air power. Officials did not see this war as a division-level conflict. They were wrong. They did not count on their enemy's ability to resort to effective guerrilla warfare. They did not expect the old manpower hog to raise its ugly head. In general, Rumsfeld believed that technology could substitute for manpower, and that large conventional formations were not necessary. He was right in every case but one: large-scale guerrilla warfare. Or more precisely, the one thing the United States didn't want to be involved in is the one thing the enemy dealt up. When you think about it, that makes sense.
The assumption on which this war began was that there was ample U.S. force structure for the requirements. At this point, that is true only if one assumes there are no further surprises pending. Since this war has been all about surprises, any force structure built on that assumption is completely irresponsible.
We suspect that Rumsfeld and his people are aware of this issue. The problem is that the Bush administration is in an election year, and increasing the force by 50 percent or doubling it is not something officials want to do now. It cannot be done by conscription. Not only are the mechanisms for large-scale conscriptions missing, but a conscript army is the last thing needed: The U.S. military requires a level of technical proficiency and commitment that draftees don't bring to bear.
To keep the force at its current size, Congress must allocate a large amount of money for personnel retention. A father of three with a mortgage payment based on his civilian income cannot live on military pay. Military pay must not be permitted to rise; it must be forced to soar. This is not only to retain the current force size but to increase it. In addition to bringing in raw recruits and training them, this also means, as in World War II, bringing back trained personnel who have left the service and -- something the military will gag over -- bringing in trained professionals from outside, directly into the chain of command and not just as civilian employees. Thinking out of the box is something Washington always talks about but usually does by putting a box of corn flakes on top of their heads. That's all right in peacetime -- but this is war, and war is a matter of life and death. In the end, this is the problem: While American men and women fight and die on foreign land, the Pentagon's personnel officers are acting like this is peacetime. The fault lies with a series of unexpected events and Rumsfeld's tendency to behave as if nothing comes as a surprise.
The defense secretary needs to understand that in war, being
surprised is not a failure -- it is the natural commission. The measure of a good command is not that one anticipates everything, but that one quickly adjusts and responds to the unexpected. No one expected this type of guerrilla war in Iraq, although perhaps in retrospect, everyone should have. But it is here, and next year will bring even more surprises. The Army speaks of "A Force of One." We prefer "The Force Ready for the Unexpected." The current U.S. force is not.
AGI moving up nicely, this time around on better volume as it goes toward a new 52 week high hopefully...
Not sure what could be moving it..., I do expect an AMEX listing announcement in the near future... Don't think there is any exploration news forthcoming... Could be resolution of the ejido issue..?
METALLIC VENTURES INC. (MVG : TSX : C$6.15) - BUY - 12-MONTH TARGET PRICE: C$6.50
Brian Christie
Comment: NEW HIGH-GRADE DRILL RESULTS FROM PROSPECTUS UNDERGROUND PROGRAM
New results reported from underground drilling at the Propsectus vein on the Esmeralda property in Nevada. Highlights include: 7.7 feet averaging 0.50 opt gold and 3.82 opt silver, 2.5 feet averaging 0.24 opt gold and 1.7 opt silver, and 2.8 feet averaging 0.36 opt gold and 1.8 opt silver.
The Prospectus vein has now been outlined along 1,200 feet of strike length, and we anticipate a significant expansion of the resource base when new calculations are carried out later this fall. Drilling has also commenced on the Martinez vein at Esmeralda. We are maintaining our BUY recommendation and C$6.50 target price
GBN vs. HMY vs. AvGold
see prior message, this includes AvGold metrics which should be materially correct, SA financial statement data not as good as US/Canada disclosures, IMO...
GBN vs. Harmony Metrics
Time to compare GBN metrics to another SA stock, Harmony, to determine whether GBN is under or over valued...
Harmony is already producing and has the best mining team in S Africa, IMO. HMY has a substantially higher cash cost than GBN ($288 vs $167), and it also has HUGE mineral resources but most of this resource will require $400+ price of gold (and better Rand/$ exchange rate) to justify the required capex to put these resources into production...
Assuming GBN progresses as I assume, it appears that GBN should achieve a $34 per measured/indicated ounce valuation by 2006, given $380 price of gold, in line with the HMY valuation...
Another metric on how much GBN Burnstone mines are worth will be known if and when HMY purchases the rest of Avgold... Avgold's main asset, the Target mine, has 3.9 million ounces of M&I reserves, total mineral reserves of 75 million ounces, and a cash cost of US$180.
1 year lease rates up a bit...
Da boyz may have found some more gold to sell into the market...
New Market Cap per Resource Oz with Recovery Rate..., fully diluted
Okay, just because a gold company has found gold resource ounces does not mean they can get it all these ounces out of the ground. A recovery rate % is thus used to reduce the mineral resource ounces identified to those ounces that can be actually be produced...
Have also included mine cash costs in the spreadsheet, which helps to explain why MFN is trading at a higher level than AGI. AGI cash costs are actually $173 for the first 1.75M ounces and I am assuming $193 average for all 3.48M ounces...
Now you can noodle these numbers through your head, but if you believe POG is going above $400/oz., then IMO AGI still represents better value than CBD and MFN... One reason is because AGI can increase their cash costs further and more than offset this with an increased recovery rate % (i.e. more grinding/crushing expense increases recovery rate %).
The greatest value still is GBN, IMO. But GBN does have 90% of its reserves in S Africa, so there is political risk here. FWIW, my belief is GBN will prove up more than 12M ounces rather than the 10M ounces indicated above. We will know more by 1Q 2004 in regard to GBN... Moreover, GBN does have 10% exposure to USA/Nevada via the Ivanhoe Mine. FWIW, my opinion is the Ivanhoe mine which will begin producing in 1Q05 or possibly late 2004, offsets much of the SA risk, and has a cash cost of just $114. Hecla, the JV partner, will be mining at Ivanhoe and the incline drilling should begin in 4Q03. All Ivanhoe mining permits expected to be approved by November 2003 and HL incline drilling begins shortly thereafter.
Updated again, see:
http://www.investorshub.com/boards/read_msg.asp?message_id=1506008
New Market Cap per Resource Oz with Recovery Rate..., fully diluted
Okay, just because a gold company has found gold resource ounces does not mean they can get it all these ounces out of the ground. A recovery rate % is thus used to reduce the mineral resource ounces identified to those ounces that can be actually be produced...
Have also included mine cash costs in the spreadsheet, which helps to explain why MFN is trading at a higher level than AGI. AGI cash costs are actually $173 for the first 1.75M ounces and I am assuming $193 average for all 3.48M ounces...
Now you can noodle these numbers through your head, but if you believe POG is going above $400/oz., then IMO AGI still represents better value than CBD and MFN... One reason is because AGI can increase their cash costs further and more than offset this with an increased recovery rate % (i.e. more grinding/crushing expense increases recovery rate %).
The greatest value still is GBN, IMO. But GBN does have 90% of its reserves in S Africa, so there is political risk here. FWIW, my belief is GBN will prove up more than 12M ounces rather than the 10M ounces indicated above. We will know more by 1Q 2004 in regard to GBN... Moreover, GBN does have 10% exposure to USA/Nevada via the Ivanhoe Mine. FWIW, my opinion is the Ivanhoe mine which will begin producing in 1Q05 or possibly late 2004, offsets much of the SA risk, and has a cash cost of just $114. Hecla, the JV partner, will be mining at Ivanhoe.
Updated market cap per resource ounce, fully diluted...
updated market cap per resource ounce, fully diluted...
What this spreadsheet shows is how much you are paying for a resource ounce of gold when you purchase the stock. Resource ounce includes inferred ounces. AGI comparable is to MFN, both in Mexico, but cash cost is significantly less for MFN vs. AGI... Also, based on WHT recent Mexico acquisition, the market rate appears to be $30/oz for a company such as AGI...
MINEWEB: John, we saw gold give up nine dollars today. Do you think we are beginning to see the end of the bull run?
JOHN CLEMMOW: Good question there. I think in the short term, yes. And we've been saying this for some time. Firstly, the Denver Gold Forum is normally the top of the gold price, because people come away from that having just noted how many projects are being announced. But move that aside, there were very good reasons for the price coming off. And that's principally that the Washington agreement, Washington One, which still has another year to run, operates in six-month tranches. And the one closes on September 30th. Thereafter, the central bank free stock coming back into the market. And the Portuguese and a few others have indicated that they would come back in the market in that period. The fundamental price of gold is being set at the moment, by Comex traders. Physical demand is really not there. So if you speculate that you're in Comex, you are seeing a big long position, but you know that there's a lot of physical metal coming on fairly soon in the early weeks of October. I don't think you are going to try and run that. So, at least in the short term, the Comex longs are going to be get filled by physical coming out of the central bank. But by about the middle of October, towards the end of October, that should be out of the way. Thereafter, bullion ... we think you could still go a bit higher afterwards.
MINEWEB: That was John Clemmow from Investec in London.
Yes, he is very bullish on AGI...
However, do not freak out if you see insider sales as well.
some bunny humor and to test my new signature...
Trading Portfolio is now...
37.3% Cash
7.9% NatGas
54.8% Gold & Silver
Listing on the Toronto Stock Exchange
Following the Closing, the Corporation may not be able to maintain the listing of the Common Shares on the TSX as the Corporation will no longer have an advanced property for the purposes of the TSX’s listing requirements. In order to maintain the listing of the Common Shares on the TSX, the Corporation will be required to obtain an advanced property. There is no assurance that the Corporation will be able to acquire an advanced property on terms acceptable to it, if at all.
PART VI – FUTURE PLANS FOR THE CORPORATION
As previously stated, the Corporation intends to distribute to its shareholders the net cash proceeds resulting from the disposition of 600,000 Newmont Common Shares. The remaining 200,000 Newmont Common Shares will be available for working capital, after payment of fees and expenses in respect of the Transaction, the payment of outstanding indebtedness of the Corporation to third parties and the setting aside of a reserve to pay any taxes which may be owing as a result of the Transaction or otherwise. See ‘‘Information Concerning the Transaction – Details of the Transaction.’’ It is anticipated that working capital will amount to approximately $9,000,000, assuming the exercise of certain options and warrants, a Newmont Common Share price of US$38.00 and a Canadian dollar exchange rate with the American dollar of 1.37038 being the exchange rate on September 8, 2003. Moydow management is currently reviewing a number of projects with a view to acquisition or investment. The Corporation presently intends to remain focussed on gold mineral projects within the regions of West Africa and North America. In the immediate future, Moydow intends to continue with exploration efforts on the True Grit project in Newfoundland, reactivate its exploration activities at its Kanyankaw East property (Ghana) and commence more aggressive exploration activities at its Hwidiem property (Ghana). The Hwidiem property is adjacent to the Ntotoroso project and less than three kilometres from the E-Zone deposit. The property is largely alluvial covered which does not lend itself to normal early stage exploration activities. Subsequent to the injection of working capital as a result of the Closing of the Transaction, Moydow will have the funds to conduct drilling on the property in order to better assess its mineral potential.
On August 7, 2003, Moydow announced the results of its first phase drilling program at the True Grit project in Newfoundland. This first phase of drilling comprised a 1,251-metre, 22 hole diamond drilling program. All drill holes except TG3 and TG4 were drilled to a depth of approximately 50 m at azimuths ranging 295-300 degrees and inclined at –45 degrees. TG3 and TG4 were drilled vertically to depths of 103 and 121.3 m, respectively. The drilling was designed to test a broad zone of low-grade gold mineralization hosted within a sequence of thinly bedded pelites and lesser phylites and characterized by finely disseminated arsenopyrite-pyrrhotite-pyrite mineralization and numerous narrow quartz veinlets and stringers. Previous drilling in two diamond drillholes (TG1 and TG2) by the property vendor Alex Turpin, a local prospector, had returned 0.48 g/t Au over 42.7 m. The zone occurs within a 2600 m by 800 m coincident gold, arsenic and antimony soil anomaly. High-grade arsenopyrite-bearing quartz veins located approximately 1.2 km to the northwest of this low-grade zone assayed 15.9 g/t Au over 1.0 m and 189.0 g/t Au over 0.5 m from saw-cut channel samples. The 2003 drilling program has confirmed the results obtained in holes TG1 and TG2, and has outlined similar mineralization along two sections located approximately 200 m and 350 m to the north-northwest. The best intersection 27 was obtained in hole TG4, which returned 0.6 g/t Au over 117 m including a 26 m wide section grading 0.83 g/t Au from TG4. Intersections ranging from 16 to 46 m with grades of 0.45 to 0.75 g/t Au were encountered in holes TG3, 11, 12, 22 and 23. Gold grades across the mineralized sections are very consistent with the highest individual assay reported being 15 g/t Au. The true width and attitude of the mineralization has not been determined at this time. A second follow-up diamond drill program of 1,300 metres began on August 26, 2003.
Comparative Transactions
A number of recent transactions involving the sale of gold properties have been reviewed and compared with the sale of the Moydow interest in the Ntotoroso property. The review was focused on transactions that would have as much in common with the Ntotoroso transaction as possible and, therefore, would preferably be transactions involving undeveloped gold properties in Africa, and specifically in Ghana if possible. The common denominator in making a comparison between such transactions is usually the transaction cost per ounce of gold reserves with allowance for the fact that gold reserves do vary in quality.
1. Mampon, Ghana
In April 2003 Golden Star Resources Ltd. acquired the undeveloped Mampon property in Ghana from Ashanti Goldfields Company Limited for $9.5 million. The Mampon property is located about 30 kilometres from the Bogosu mine and processing plant operated by Golden Star, and is reported to have probable mineral
reserves of 1.5 million tonnes grading 5 grams per tonne (g/t) gold for in-situ gold reserves of about 240 000 ounces. After allowing for the ten percent carried interest for the Government of Ghana, the cost per ounce of gold in the transaction was about $44.
2. Tarkwa-Damang, Ghana
In January 2003 IAMGOLD Corporation acquired Repadre Capital Corporation for $218 million. The major gold assets of Repadre were an 18.9 percent interest in each of the Tarkwa and Damang operating gold mines in Ghana. After deduction of the value of the royalty interests and liquid assets held by Repadre, the value placed on the interests in the Tarkwa and Damang mines would be about $120 million. Gold reserves at the two mines for the account of IAMGOLD are approximately 2.0 million ounces resulting in a cost of about $60 per ounce.
3. Yamfo-Sefwi, Ghana
In late 2001 following announcement of an offer by AngloGold to acquire Normandy, an independent detailed evaluation of all of the Normandy assets was carried out on behalf of the Normandy shareholders. Included in those assets were undeveloped properties on the Yamfo-Sefwi belt in Ghana, including the 50 percent Ntotoroso 13 interest, but for which feasibility studies had been completed. The range of values for those properties was $94 to $115 million. The Normandy share of ore reserves for those properties was 50 million tonnes grading 2.3 g/t gold for 3.6 million contained ounces of gold, for an appraised value of $27 to $33 per ounce of gold.
Several other transactions related to gold projects in Africa, and particularly Mali and Tanzania, were also reviewed and compared with the proposed Ntotoroso transction. The range of values of $23.0 to $29.1 million determined in this Fairness Opinion for the consideration being offered by Newmont for the purchase of the 50 percent interest of Moydow in the Ntotoroso property would reflect a value of $50 to $65 per ounce for the Ntotoroso gold reserves attributable to Moydow after allowance for the carried interest of the Ghanaian government. After considering the quality of the gold reserves at Ntotoroso, and the stage of development of the project, relative to other transactions and valuations reviewed for comparison, the Ntotoroso sale transaction is being done under terms that compare reasonably with other recent transactions of a similar nature.
NEM Circular released...
FWIW, at NEM = $39, now value the distriubtion alone at C$1.55, fully diluted
http://www.moydow.com/circular0903.pdf
HUI, worse case..., looks to be around 169 ?
Red Alert...
Have broken the HUI weekly Wm%R
Added to my PAA warrants @ US$4.00 ...
Details:
D) On February 20, 2003, the Company acquired a 100 percent interest in Corner Bay Silver Inc. ("Corner Bay"). The consideration paid to the shareholders of Corner Bay was 7,636,659 common shares of the Company (a "Pan American share"), representing 0.3846 of a share of the Company for each share of Corner Bay and 3,818,329 warrants (the "Pan American warrant") to purchase common shares of the Company, representing 0.1923 of a warrant for each share of Corner Bay. The common shares issued were valued at $54,203,000, which was derived from an issue price of Cdn$11.30 translated at $0.6595 for each U.S. dollar, less a deemed 5% issue expense of $2,707,000. The share purchase warrants were assigned a value of $8,889,000, which was derived from a warrant valued at $2.328 per warrant.
Each whole Pan American warrant allows the holder to purchase a Pan American share for a price of Cdn$12.00 for a five-year period ending February 20, 2008.
1 year lease rates up today, looks like da boyz may have found some gold to sell into the market...
NatGas-Robry graphs updated
http://amarks.homestead.com/RobryNGModel.html
Most bullish article I have read on gold this entire year...
how to make your trade surplus go away...
Focus: China's gold rush
( 2003-09-25 11:10) (China Daily HK Edition)
Prominent gold experts and officials are urrging the government to lift the ban on individual trading in the precious metal as soon as possible, as quoted prices at the Shanghai Gold Exchange (SGE) continually hit record highs this month amid a surge in buying enthusiasm.
A woman shows a bar of gold in Wuxi, Jiangsu Province. Enthusiasm for individual investment in gold has always been high in China. [newsphoto.com.cn]
The introduction of individual traders, they say, would kill four birds with one stone, by invigorating flagging consumption, slashing the foreign trade surplus, trimming conspicuous foreign exchange reserves and easing international pressures on China to appreciate its currency.
It is "safe and feasible" for China to spend part of its foreign exchange reserves on gold imports, as well as place such purchases on the domestic market and open the market to individual players at the earliest possible opportunity, said Xi Jianhua, Bank of China's gold business expert.
About 20 per cent of respondents to a recent national survey said they were willing to spend 10 to 30 per cent of their savings in gold investment, indicating a huge potential demand for gold.
Outstanding individual bank savings in China hit 10.61 trillion yuan (US$1.28 trillion) at the end of July. After trying in vain for years to encourage a high growth rate in private spending, China has had to rely on proactive fiscal policies, marked by heavy government investment since the Asian financial crisis in 1997, to maintain fast gross domestic product growth.
Based on the survey results, Xi estimated that a possible injection of as much as 300 billion yuan (US$36.15 billion) in private money could flow into the gold market.
The money would create demand for about 3,000 tons of gold, he said. It would then only be natural for the country to expand imports as China currently has just 600 tons of gold reserves at its disposal, far from enough to cope with the potential gold rush.
In the initial stages, individual investors would create a market demand for 300 to 500 tons, according to analysts, and further growth would be gradual.
Spending on such a scale for gold imports would not have a significant impact on China's foreign exchange reserves, they said. Even if the anticipated 300 billion yuan worth of private investment was made right away, the country's US$356.5 billion worth of foreign exchange reserves at the end of July could cater for the demand with ease.
Using the reserves to purchase foreign gold would not only help withdraw billions of yuan now in circulation, but also boost the overall national import volume, Xi said, and thus "ease pressures on the appreciation of the yuan".
Xi's suggestions were echoed by Xu Shouxin, vice-director general of the China Gold Association.
Xu said the association has long proposed promoting individual ownership of gold, adding that the best way would be to allow commercial banks to start individual gold investment services at the earliest possible date.
He also stressed the need to spend part of the country's foreign exchange reserves on gold imports once the domestic market is opened to individual investors.
The time is now perfect for the government to make the move, say analysts, citing potential room for further hikes in gold prices, both in the domestic and international markets.
Rising prices
Gold prices in China have risen more than 15 per cent since the Shanghai Gold Exchange started operating last October, initiating free trade in gold for the first time in the history of the People's Republic of China. But its members are limited to 108 institutions, including producers, processors and traders of gold and gold products, plus commercial banks.
Staff at the Shanghai Gold Exchange follow closely the international gold prices. [newsphoto.com.cn]
The price of Au99.95, the type of gold used in the manufacturing of ornamental items, which was 83.5 yuan (US$10.10) a gram last October, climbed to a record high on September 22, closing at 102.21 yuan (US$12.31). Meanwhile, the price of Au99.99, gold reserved for investment-oriented speculation, which was 84 yuan (US$10.16) a gram last October, closed at 102.45 yuan (US$12.34) on September 22.
Analysts note that trade at the Shanghai Gold Exchange, dominated by Au99.95 in the beginning, is now marked by heavy transactions in Au99.99.
Meanwhile, prices of gold jewellery in Shanghai and other major Chinese cities also increased by 2 to 3 yuan (24-36 US cents) per gram this month.
Some SGE members have been increasing their stocks in anticipation of heightened demand once the market is open to individual investors, said an industry insider who declined to be identified. "These investors have been very active, taking every possible chance to buy in."
A gold analyst with the Industrial and Commercial Bank of China said the domestic gold market is following the appreciation trend of gold against the US dollar, predicting that prices will further rise following an influx of new capital at the Shanghai Gold Exchange.
International gold prices recently hit a six-year high of US$390 per ounce, exceeding the previous record of US$388 set in February when the US invasion of Iraq was imminent. Prices dipped to US$318.75 an ounce on April 7 in anticipation of a quick end to the war but started to bounce back as it dragged on, and the rising trend has gained strength since the beginning of this month.
Local analysts say the complicated situation in the Middle East, the world's oil barrel, and a sluggish international economy are the two main forces driving the increase in gold prices.
The slow restoration of peace and order in Iraq, escalating tensions between Israel and Palestine and the weaker-than-expected economic recovery in the United States, Europe and Japan have blunted consumer confidence and diverted a large amount of capital into the gold market, said Li Xisheng, an analyst with Qilu Securities.
Sluggish stock markets worldwide have also driven investors to the gold trade, Li said.
Xi noted that Japanese investors have been buying in substantial amounts of gold since the beginning of this month, while the appreciation of the euro against the US dollar has produced more opportunities for European investors in the gold market.
Other analysts even predict that international gold prices may surpass US$400 an ounce before the end of the year.
Short supply
As the world's third largest gold consumer and fourth largest gold producer, China is suffering from a long-term shortage of gold, said Li Xisheng.
The country's annual consumption is about 200 tons, while its production equals roughly 180 tons a year.
The Shanghai Gold Exchange, initiating free trade in gold last year for the first time since 1949, so far serves only institutional traders, rather than individuals. [newsphoto.com.cn]
According to the China Gold Association, national gold output hit 88.12 tons in the first half of the year, an annualized increase of 13.21 per cent. The industry created a profit of 974 million yuan (US$117.35 million), up almost 60 per cent from the same period last year due to rising gold prices and soaring demand.
However, analysts say, it is difficult for China to maintain major long-term growth in gold production because of limited natural resources and production capability.
In China, some 800 producers, each equipped to handle a daily capacity of more than 50 tons of ore, employ a workforce of 400,000. Their combined annual gold production capacity is 150 tons.
However, Li said, 80 per cent of these producers have a daily ore processing capacity of less than 200 tons each.
Small-scale production, a lack of the latest technology and management techniques, and low production efficiency keep most Chinese gold producers from being competitive enough, as do high production costs, he said.
Meanwhile, strong growth is expected in domestic gold demand over the long term, Li said, as individual incomes continue to increase.
-- First, per capita annual gold consumption in China is only 0.2 grams, far below that in Western and other Asian countries. The figure for India is one gram, while the United Arab Emirates averages the highest at 30 grams.
China is the largest potential jewellery market in the world, said Chu Xiangyin, an official with the China Council for the Promotion of International Trade. Consumption of ornamental objects topped 80 billion yuan (US$9.65 billion) in 2002 and has been growing by 15 per cent annually.
The market value should grow 10 times in 10 years, Chu said.
China is also on course to become a major manufacturer of gold jewellery in 2010 as a result of increased private spending power and lowered import tariffs, said Kang Xingzhou, vice-chairman of the China Gold Association.
Kang predicted that China's annual gold jewellery sales volume would reach 189 billion yuan (US$22.78 billion) by 2010, accounting for more than 10 per cent of the world's total.
-- Second, the demand for gold for industrial use will also increase rapidly as China becomes the world's manufacturing centre.
Currently, 90 per cent of the gold consumed in China is used to make jewellery.
-- Third, the potential for individual investment in gold as an option to currencies to maintain private wealth is almost unlimited.
Uncertainties about worldwide political stability and economic growth have strengthened this function of gold, Li said.
For instance, global investment in gold rose by 8 per cent in the fourth quarter of 2001 following the September 11 terrorist attacks, while growth for the previous three quarters was only 4 per cent.
Closer to home, gold prices in China surged amid plunging stock markets during the SARS outbreak earlier this year.
Such uncertainties may also bring about adjustments to China's foreign exchange reserves.
When China's foreign exchange reserves grow to US$400 billion and the ratio of gold in the reserves is brought to 5 per cent, according to Merrill Lynch, a new demand for 122 tons of gold will result. Gold comprised just 2.6 per cent of the US$286 billion worth of reserves at the end of last year.
For thousands of years, the Chinese have traditionally saved gold and worn gold ornaments, analysts reason. If the government does decide to allow individual investors into the sector, the landscape of the entire gold industry worldwide could change completely.
China's gold rush
The introduction of individual traders in the gold market will, according to gold experts and officials:
-- invigorate flagging consumption;
-- slash the foreign trade surplus;
-- trim conspicuous foreign exchange reserves;
-- ease international pressures on China to appreciate its currency.
As much as 300 billion yuan (US$36.15 billion) in private money is estimated to flow into the gold market, creating demand for about 3,000 tons of gold.
A market demand for 300 to 500 tons of gold will be created by individual traders in the initial stages.
Gold prices in China have risen more than 15 per cent since the Shanghai Gold Exchange started operating last October.
Prices of gold jewellery in Shanghai and other major Chinese cities increased by 2 to 3 yuan (24-36 US cents) per gram this month.
Eva et. al., learn to use Favorites (up at the top). i-Hub has much more functionality than SI, IMO... Recommend that you make Favorites your main page for following all posts:
http://www.investorshub.com/boards/favorites.asp
First add Mostly Classical as a favorite board, go the bottom and choose "Add Board Mark", if you like Canuck Dave then click on one of his posts and choose "Add Person Mark". Repeat for each board and person you like... Other boards you can select from include these:
http://www.investorshub.com/boards/boards.asp?cat_id=136
Yes, I agree and prefer one board (i.e. Mostly Classical) for precious market comments, brief stock comments, and idle chit chat. But when Canuck Dave, Frank, Kastel, TF, loantech, etc. has a lengthy research post, fundamental insights, or significant TA data relating to a specific stock such as CBD, Alamos, Chesapeake, MOY, etc., then post it at the main i-Hub Mining Boards. This makes it easier to keep up and follow up with an individual gold company's progress...
If one spends 10 minutes setting up favorites you will likely prefer this format of navigating i-hub... You can also post a favorites link to SI, Kitco 24 hour gold, and/or elsewhere which is nifty.
Just my opinion...
in regard to torque... borrowed it from Frank...
will take credit for toquester however...