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Tungsten - China
China aims to build up strategic reserves of minerals such as
uranium, copper, and aluminum to help meet rising demand and provide a buffer against supply disruptions, the Ministry of Land and Resources said.
The nation aims to have "sufficient reserves" of uranium, and will start to build stockpiles of copper, aluminum, manganese, tungsten, and other minerals in the next few years, the ministry said in a statement on its Web site, citing a five-year government plan. The term "sufficient reserves" was not defined, and there were no specific targets for the eventual size of the mineral holdings.
thanks basserdan, much appreciated.
from LMC:
The weekly ECB statement of condition reported a gold sale of E916Mm last week, 59.05 tonnes at the current book value. Four banks were reportedly involved. Almost certainly, 57 tonnes of this was the sale announced by the ECB itself on March 31, which had not previously shown up in the accounts. Exactly the same thing happened last year. This leaves 2.05 tonnes to be split amongst 3 banks – so small as to suggest calls being exercised. At 25 year highs, the ECB group of Central Banks appear to have flinched from selling.
All we know is that some folks bought over US$1.15 billion in gold last week. Could be a combination of Arabs with excess oil $, Barrick/other majors covering their hedges, hedge funds themselves, or possibly a central bank outside the EU commmunity.
All we know is that 60 tonnes of gold lapped up quickly last week and POG continues to rise...
Put this into perspective, MSFT has market cap of $241 billion vs this measley one billion dollar purchase of physical gold: not much money in the grand scheme of investment dollars
Check out European Central Bank Sales today!!
European central bank gold sales announced today through the roof, appears the hedge funds just lapped up 60 tonnes of gold last week, no problem... appears to be largest weeklyy ECB gold sales in at least 3 years.
we now stand at 289 tonnes actual gold sales
versus 308 tonnes expected sales per agreement
that baffles me as well, i.e. Morgan Stanley involvement... certainly not a negative.
HL mentioned Hollister only very briefly and really said nothing... was hoping they would say something new...
Reviewed the HL 10Q and little mention on Hollister this quarter...
martin m
Martin Murenbeeld, of M. Murenbeeld & Associates Inc., cites numerous reasons why "the gold price is likely to be in a bull market for some years to come."
First of all, there is little new supply. Exploration waned during the 1990s as real gold prices fell sharply, and mine output is unlikely to rise significantly for years to come, Murenbeeld says.
But new production isn't the major factor influencing gold. While mines churn out about 2,500 tonnes per year, there are about 30,000 tonnes of gold sitting in central bank vaults, and 15 of those banks have agreed to limit gold sales, Murenbeeld says.
On the flip side, some central banks are rumoured to be looking at buying gold to diversify their assets. For example, only 1.2 per cent of China's reserves are currently made up of gold.
At the same time, many economists expect the US dollar to decline. "Historically, all else equal, the dollar price of gold rises as the dollar itself weakens," Murenbeeld says.
Finally, demand continues to expand.
Last year, demand for gold jewellery rose five per cent to 2,736 tonnes, industrial demand rose two per cent to 419 tonnes, and investment demand rose 26 per cent to 600 tonnes, according to the World Gold Council.
"The fourth quarter in particular saw substantial inflows of institutional investment into gold," the council stated. "Investment in Exchange Traded Funds increased by 79 tonnes during Q4 alone and it is estimated that other institutional investment in the period approached 200 tonnes."
Did you sell your DY.to (Dynatec)? Please advise, I am still holding this one.
Did sell my PAL however at a nice gain. Thanks.
Welcome back Frank, I was getting lonely...
central bank gold sales
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
now 69 tonnes below planned sales
actual tonnes sold = 229
planned sales tonnes = 298
Because I think you are likely more knowledgeable than van Eeden in regard to LBMA/COTS/Gold Supply & Demand statistics. If I thought van Eeden was likely more knowledgeable than you, I would not bother to ask... Van Eeeden is likely more knowledgeable
Paul van Eeden is very knowledgeable on many subjects but on physical/paper gold trading I often defer to your opinion. Van Eeeden is likely more knowledgeable than you (and me) on many subjects, but I respect/value your opinion on physical/paper gold stats.
You're right, should have specified on what:
Your opinion on this statement:
However, the price of gold is almost completely insensitive to jewelry demand, scrap sales, mine production, producer hedging or central bank sales.
(I disagree, your opinion?)
Your opinion on this statement
Jewelry demand is important to jewelers but it makes no difference to the gold price.
(I disagree, your opinion?)
Yes, this is the what I really desire your comments on:
The bulk of international gold trading occurs through the facilities of the London Bullion Market Association (LBMA) and from their website we learn that the average DAILY volume of gold trading was 513 tonnes during 2005. Now let me explain what that number means. True The LBMA only reports the net amount of gold transferred between its clearing members at the end of the day. Is this True, you seem not to know? So if two members trade 100 tonnes five times during the day (total trading volume is therefore 500 tonnes), and at the end of the day one member owes the other member 200 tonnes of gold (i.e. net position at the end of the day) then only 200 tonnes is reported by the LBMA. The LBMA trading volume reflects the net amount of gold transferred between clearing member accounts at the end of the trading day. Is this True, you seem not to know? It is estimated that the actual volume of gold trading is possibly as much as 4 to 6 times larger than the net positions reported by the LBMA. What does this mean?Remember, these are not derivative trades; these are the settlement numbers for actual gold trades.
I guess if you believe above comments are accurate, then this is logical conclusion:
Now, if the volume of gold trading through the facilities of the LBMA is in the order of 500 tonnes per day, then I am afraid that a 640 tonne annual shortfall between mine production and fabrication demand is totally irrelevant. In fact, the entire 2,736 tonnes of annual jewelry demand are irrelevant: they represent less than 6 days of trading through the LBMA. It makes no difference to the gold price whether India had a good harvest or a poor harvest, even though, again, it is probably important to the jewelers.
Your opinion here (gold is money, commodity or both)?:
Gold is money; it is not a commodity. Its value relative to fiat currencies is purely a function of the relative inflation rates of gold and other currencies. The gold price may fluctuate based on investor psychology, just like the price of any financial asset, but it will always revert back to its fundamental value, which is determined by relative inflation rates.
(I view gold as both a commodity and as money. As a commodity, POG will always trade above its cash costs [maybe not its full production cost but always its cash cost], hence the case as trading as a commodity is a fact IMO)
I do like this analysis (inflation rate of gold vs. inflation rate of currency whereby inflation rate of gold calculated as increase in supply):
Just like the inflation rate of money is the increase in money supply, the inflation rate of gold is the increase in the above-ground stock of gold, i.e. mine production as a percentage of all the gold that has ever been mined. If we know what the inflation rate of a particular currency is we can calculate its relative value to gold, assuming we have a starting point at which we knew what the fair value of the currency was. This can be done for the US dollar. In 1933 the gold price was defined by the fact that a $20 gold coin contained 0.9675 ounces of gold. From this we know that the gold price in US dollars during 1933 was $20.67. If we now take in consideration the inflation rate of the US dollar (as defined by M3 and the Consumer Price Index for those years that M3 did not exist), and the inflation rate of gold (annual mine production) we can calculate that the gold price in US dollars should be around $850 an ounce.
Any comments on this article by Paul van Eeden...?
When you are in a place such as Dubai, where so much trade in physical gold takes place, it is easy to understand why people think jewelry production is important to the gold price. However, the price of gold is almost completely insensitive to jewelry demand, scrap sales, mine production, producer hedging or central bank sales.
Total jewelry consumption during 2005 was 2,736 tonnes of gold. Industrial and dental demand added another 419 tonnes for a total of 3,155 tonnes of primary gold demand. Mine production during 2005 was about 2,515 tonnes. Some people believe that this 640 tonne primary shortfall of gold mine production relative to fabrication demand is relevant to the gold price. They also seem to think that net investment demand, official sector sales and purchases, etc. are important. Jewelry demand is important to jewelers but it makes no difference to the gold price.
The bulk of international gold trading occurs through the facilities of the London Bullion Market Association (LBMA) and from their website we learn that the average DAILY volume of gold trading was 513 tonnes during 2005. Now let me explain what that number means. The LBMA only reports the net amount of gold transferred between its clearing members at the end of the day. So if two members trade 100 tonnes five times during the day (total trading volume is therefore 500 tonnes), and at the end of the day one member owes the other member 200 tonnes of gold (i.e. net position at the end of the day) then only 200 tonnes is reported by the LBMA. The LBMA trading volume reflects the net amount of gold transferred between clearing member accounts at the end of the trading day. It is estimated that the actual volume of gold trading is possibly as much as 4 to 6 times larger than the net positions reported by the LBMA. Remember, these are not derivative trades; these are the settlement numbers for actual gold trades.
Now, if the volume of gold trading through the facilities of the LBMA is in the order of 500 tonnes per day, then I am afraid that a 640 tonne annual shortfall between mine production and fabrication demand is totally irrelevant. In fact, the entire 2,736 tonnes of annual jewelry demand are irrelevant: they represent less than 6 days of trading through the LBMA. It makes no difference to the gold price whether India had a good harvest or a poor harvest, even though, again, it is probably important to the jewelers.
Gold is money; it is not a commodity. Its value relative to fiat currencies is purely a function of the relative inflation rates of gold and other currencies. The gold price may fluctuate based on investor psychology, just like the price of any financial asset, but it will always revert back to its fundamental value, which is determined by relative inflation rates.
Just like the inflation rate of money is the increase in money supply, the inflation rate of gold is the increase in the above-ground stock of gold, i.e. mine production as a percentage of all the gold that has ever been mined. If we know what the inflation rate of a particular currency is we can calculate its relative value to gold, assuming we have a starting point at which we knew what the fair value of the currency was. This can be done for the US dollar. In 1933 the gold price was defined by the fact that a $20 gold coin contained 0.9675 ounces of gold. From this we know that the gold price in US dollars during 1933 was $20.67. If we now take in consideration the inflation rate of the US dollar (as defined by M3 and the Consumer Price Index for those years that M3 did not exist), and the inflation rate of gold (annual mine production) we can calculate that the gold price in US dollars should be around $850 an ounce.
However, gold is not unique to the United States; it is an international form of money and so we also have to take into consideration the US dollar exchange rate, since anything we price on international markets in US dollars will fluctuate along with changes in the US dollar exchange rate. We know from the US trade deficit that the US dollar is over-priced on foreign exchange markets and the US is putting considerable pressure on China to help devalue the dollar. The only reason gold is not $850 an ounce (or thereabout) today is that the US dollar is over-priced. As the US dollar exchange rate falls the gold price in US dollars will rise.
A Look Into Jim Rogers' Crystal Ball
By Lindsay Williams
01 May 2006 at 09:38 AM EDT
JOHANNESBURG (Business Day) -- Jim Rogers shoots to prominence as co-founder of Quantum with U.S. multi-billionaire George Soros. The international best-selling author more recently achieves investment cult status with prophetic views on commodities. Below is an interview with Classic Business Day on the current state of the market.
LINDSAY WILLIAMS: Jim Rogers has been on Classic Business Day a few times, and his preference for commodities has proved spectacularly correct - maybe more correct than even Jim thought! Jim, as I said in my introduction, commodities continue moving up, but it seems to be gathering momentum - have these moves surprised you at all?
JIM ROGERS: Not in general terms - it has more than tripled in the last seven-and-a-half years. As you may remember I started a commodities index fund on 1 August 1998 - it’s up maybe 250% since then, which is a pretty hefty move - but it’s seven-and-a-half-years. In the end - as with all bull markets - when we get to the end in five, 10 or 15 years it’s going to startle everybody, including me, and I’m the bull. But that’s the way bull markets are - who would’ve thought that the Nasdaq would have gone up 10 times, who would’ve thought that Cisco would’ve gone up 100 times in the stock bull market - but that’s what happens in bull markets.
LINDSAY WILLIAMS: The bull market in oil has continued to surprise people it got very close to $75 a barrel the other day, maybe we could start with that - has it still got legs?
JIM ROGERS: Sure, and how. There may well be some setbacks - there should be - but adjust it for inflation and oil should be over $100 a barrel, and it’s going to go there because nobody’s discovered any giant oil fields in over 35 years. We just don’t have any oil - maybe there’s a lot of oil out there, but nobody knows where it is - so until somebody comes up with a lot of new supply of everything, the prices are going to be amazing.
LINDSAY WILLIAMS: Talking about inflation-adjusted prices - somebody suggested that the gold price should be over $2,000 an ounce. It’s currently around $650 - do you think there’s any chance we could get anywhere near that number?
JIM ROGERS: There’s no question that in every bull market, and in any asset class throughout history - in the end nearly everything makes a new all-time high. Gold’s old all-time high was $875 - unadjusted for inflation - so we’re certainly going to go to $900 or $1,000 and that’s in the cards. I’m we will get to $2,000 on an adjusted basis, but not this year or next year, but certainly in the next 10 years everything is going to go to astonishing levels. By the way, I’m probably less bullish on gold than I am on most things - but most mines are depleting, and every other kind of mine - so there are problems brewing in all raw materials.
LINDSAY WILLIAMS: When you say that you’re not as bullish on gold as others, that’s all relative - what would be your chosen commodity if it’s not gold?
JIM ROGERS: I’m not smart enough to tell you which is the best one right now - I can tell you if I were looking for new opportunities, it would be looking in the agricultural area. Those are the places where they haven’t moved up nearly as much on a historic basis, and where there are positive fundamental changes taking place - so that’s where I would be looking.
LINDSAY WILLIAMS: Sugar has done very well indeed -we spoke about that about six months ago. It has gone to about 18 cents per pound from its low not that long ago of 2.5 cents a pound. The corn market seems to have gone completely flat - maize as we call it in South Africa - is that one you’d pick?
JIM ROGERS: Yes, I would definitely be looking at maize - there’s no question about that, especially given that the US is about the throw huge amounts of money at maize to turn it into ethanol. It’s absurd - because it’s uneconomic, and it’s just a huge subsidy to buy some votes from the Republicans - but who cares? They’re going to throw the money whether I like it or not - so certainly there’s going to be great opportunities in maize.
LINDSAY WILLIAMS: Apart from the fundamentals that I know you’ve been very keen on - the Chinese economy, and the Indian economy - there other things out there as well. The last few days has seen a tumble in the U.S. dollar, also we’ve seen political considerations start to raise their head again with the Iran nuclear stand-off - are those things you watch very carefully?
JIM ROGERS: I try to watch everything very carefully - if you’re going to be an investor you’d better watch everything very carefully, and even then you’re probably going to make mistakes, I certainly do. Yes, geopolitical considerations are major - whether we like or not the oil is in the Middle East, and that’s where there are potential problems - but there are also potential problems in other oil countries. Equally important is that all the oil fields in the world are in decline because there haven’t been any gigantic discoveries in over 35 years.
LINDSAY WILLIAMS: Yes, and statistics from the U.S. government says there were 11,000 terror attacks last year - 14,600 people dying, more than 30 a day - and that doesn’t look as though it’s going to get any better. What’s the general feeling from the American public about the situation with Iran? Do you think that Donald Rumsfeld and US president Bush might actually do something about this situation?
JIM ROGERS: I would be dumbfounded, amazed if they did - because it would be such a foolhardy thing to do - but these guys have proven themselves very capable of doing foolhardy things, so I would not put it past them. It would be a major disaster for the world, for the rand, for the U.S. - for all of us - but that doesn’t mean these guys won’t do it, because they really believe that they’ve got the message and nobody else does.
LINDSAY WILLIAMS: One thing that seems to surprise people over here is the resilience of the U.S. stock market - we’ve seen a little bit of a crack today with Microsoft coming down, but even then the major indices all hovering near multi-year highs - what’s your view on U.S. equities?
JIM ROGERS: First, let me just point out that the last couple of years they’ve been flat. They were very good in 2003 but in 2004 and 2005 they were essentially flat - they were up a bit this year, but over the past two-and-a-half years they were not up very much. Maybe some are, but the general averages are not. I expect a U.S. general recession sometime later this year - or certainly within a year - and you’re going to see bad things happening in the stock market as result. I would not be buying U.S. stocks.
LINDSAY WILLIAMS: So we stick with commodities?
JIM ROGERS: Yes, if you got to own something - and I guess we all do - one of the things that you should consider owning is commodities, especially agricultural commodities. If there is a recession commodities may go down, but they’ll go down less than everything else - and they will be the first thing to start rising again, just as they have in the past seven-and-a-half years.
Martin M
ZURICH (Reuters) - Gold has a 25-30 percent chance to breach its record high of $850 an ounce next year on growing demand, new investment products and wider world economic trends, a leading analyst said.
"The trend is up. I have a 50 percent probability that we will get to $800 next year and a 25-30 percent probability to take that up to $850," Martin Murenbeeld told Reuters on the sidelines of the European Gold Forum, which ended on Thursday.
Spot gold was quoted at $639 in morning trade, just below last week's 25-year high of $645.75 and still some way off the record high hit in early 1980.
Prices have risen nearly 50 percent over the past 12 months and doubled in three years.
The analyst with consultant M.Murenbeeld & Associates said worries about the dollar, tight metal supply and high oil prices were positive factors for gold.
And investment products such as exchange-traded funds (ETFs) were attracting more investors into the market, while longer-term institutional players such as pension funds had been looking to the metal to diversify their portfolios.
"The ETF has opened the gold market to a lot of people who had a latent interest in gold. ETFs will continue to grow in the future," he said.
The funds, traded on stock exchanges, allow investors to buy gold without taking physical delivery. Promoters buy the metal on behalf of investors and keep it in vaults. ETFs have accumulated nearly 500 tonnes since their launch more than two years ago.
"We are at the early stages of gold and commodities becoming an asset class in a portfolio. So how much money could potentially go to the commodities side? I say the sky is the limit."
UNSTABLE CURRENCY MARKET
Instability in the currency market was also likely to encourage buying of gold, he said.
"Most of us...are not always that comfortable with our own currency unit -- we don't agree with the way the government is spending the money."
He added: "People in Iran are obviously very concerned about what the geopolitical risks they are facing could do to the value of their currency."
Tensions between Iran and the West have risen as western countries accuse Tehran of pursuing a programme to acquire nuclear weapons, which Tehran denies.
Iran said on Friday it would ignore pressure to halt its nuclear programme.
Murenbeeld said investors saw gold as protection against political risk, adverse monetary policies and dollar losses, which made gold cheaper for holders of other currencies.
"The dollar refused to decline last year but signs of fatigue are creeping back into the technical picture as of late...our view is that the dollar must decline further."
He said the U.S. current account deficit released nearly $4 billion a day in foreign exchange markets and the dollar tended to fall if that was not fully absorbed.
Murenbeeld saw world political tensions persisting, which meant more demand for bullion.
"Today's world is more risky than the days in early 1990. We are just in an early stage of a very serious geopolitical development in the world."
He pointed out that gold was still relatively cheap.
According to consultant GFMS Ltd, the record price paid for gold in early 1980 would correspond to $1,456 now after factoring in inflation.
european central bank gold sales
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
Montealegre Leads Lewites in Nicaragua
April 21, 2006
(Angus Reid Global Scan) – Presidency secretary Eduardo Montealegre remains the top contender in Nicaragua’s presidential race, according to a poll by CID-Gallup published in La Prensa. 22 per cent of respondents would vote for Montealegre in this year’s election.
Former Managua mayor Herty Lewites is second with 18 per cent, followed by former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) with 16 per cent, and José Rizo of the Constitutionalist Liberal Party (PLC) with 13 per cent.
Montealegre is a former PLC member who has formed the Nicaraguan Liberal Alliance (ALN). Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February. Lewites has assembled the Herty 2006 Alliance (AH).
In 2001, the PLC’s Bolaños won the presidential election with 56.3 per cent of the vote. The president lost the support of the PLC in January 2002, when his government decided to take legal action against Arnoldo Alemán. In 2004, Alemán—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Yesterday, Montealegre welcomed the result of the latest survey, declaring, "These polls are important to see where we have weaknesses, because they represent a snapshot, and we must study to see which weaknesses must be overcome."
The next presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election?
Eduardo Montealegre (ALN)
22%
Herty Lewites (AH)
18%
Daniel Ortega (FSLN)
16%
José Rizo (PLC)
13%
Other
4%
None / Would not vote
13%
Undecided
14%
Source: CID-Gallup / La Prensa
Methodology: Telephone interviews with 1,238 Nicaraguan adults, conducted from Apr. 3 to Apr. 9, 2006. Margin of error is 3 per cent.
ARQ/ANO-Grandich comments 4/20
Anooraq Resources (ARQ-TSX-$1.27, ANO-AMEX $1.44 ) – Today is my 25th wedding anniversary. If Anooraq doesn’t demonstrate my belief that a much bigger and better relationship with Anglo Platinum ends up being reality versus fantasy- and soon, I may not have a 26th.
Hmmm, found this article of interest...
Maybe GBN using their exploration permit to build the decline will then allow them to qualify under the new environomental laws being proposed.
______________
"Minister posts new set of quicker enviro-impact regulations
South Africa's Minister of Environmental Affairs and Tourism, Marthinus van Schalkwyk on Wednesday launched a new set of Environment Impact Assessment (EIA) regulations, which will see a change in the way that mining applications are handled.
The new regulations aim to reduce the amount of time it takes for the government to deal with the process of processing applications and will replace similar regulations that currently deal with environmental issues in mining law.
However, the mining and minerals aspects will only come into effect on April 1, 2007, as aligning the two different aspects of law will require legislative changes that must go through parliament.
The net result will be that the Department of Minerals and Energy will conduct assessments in terms of the new legislation and will be able to issue records of decision.
Before this can happen, existing legislation needs to be phased out, and this law-reform process is expected to take about a year.
The new regulations come into effect for all other industries on July 1.
The Department of Environmental Affairs and Tourism has been in consultation with the mines ministry over items such as definitions and the listing of certain activities.
This should result in a developer being able to undergo one EIA process, instead of three, streamlining the process to first ore."
____________
Find it amusing that Enviromental & Tourism both under the same SA government branch...
Martin M
Economist Martin Murenbeeld at Victoria-based M. Murenbeeld & Associates Inc. said he has been bearish on the greenback since last year. He expects the U.S. dollar will finish 2006 at between 130 and 135 versus the euro. The greenback declined to $1.2386 against the euro on Wednesday from a close of $1.2347 the previous day.
Mr. Murenbeeld said that what happens to the Chinese currency will be key for the future of the U.S. dollar. “The question is whether there will be any action post this meeting,” he said.
The point I was making is GBN Burnstone mine will have a large labor content per prior feasibility. GBN mine plan was for labor intensive operation per my recollection, not mechanized. Hence this article piqued my interest.
interesting comments on Energy Costs for SA Mines:
JP Morgan analyst Steve Shepherd is looking for improved earnings from the gold companies because of the higher average rand gold price received. JP Morgan’s latest "Golden Goose" research report released yesterday highlights again the advantage held by the major South African gold producers over their international competitors in terms of the impact of high energy costs. Worries over energy costs are once more to the fore with the oil price back at record levels above $70/barrel.
The South African mines have lower exposure to the impact of rising oil prices because they are predominantly deep-level, labour-intensive operations with low levels of mechanisation. Labour typically accounts for between 40% and 50% of the working costs on an SA gold mine.
By contrast, most major gold mines in the rest of the world are open cast operations using fleets of diesel-powered haul trucks and other earth-moving equipment.
Last September, JP Morgan estimated that energy costs could amount to between 20% and 30% of operating costs on open pit mines at oil prices around US$50/bbl and highlighted Gold Fields with its relatively low energy exposure.
The firm now points out that the Gold Fields share price is up 94% since early September compared with a 40% rise in the XAU index which tracks 12 precious metals companies listed on the Philadelphia stock exchange. Shepherd expects the cost pressures facing the SA gold companies to be "considerably less" than their offshore peers and picks out Harmony and Gold Fields as the least affected. Harmony gets 90% of its production from SA and Gold Fields around 65%.
But there is a drawback because of the power of SA’s labour unions which in recent years have consistently negotiated pay increases above the country’s ruling rates of inflation. Operating costs will drop on an open cast mine when energy prices fall but higher wage levels on SA underground mines will not be reduced.
"This represents a danger for SA mines’ cost structure relative to offshore mines. While less labour intensive/more oil/commodity dependent mines would likely benefit from any reduction in oil prices, South African mines cannot claw back wage increases that have been institutionalised."
European Central Bank Gold Sales
currently about 21% below "plan" = 60 tonnes
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
Hmmm, one European central bank actually bought gold this week...
"In the week ending 14 April 2006, the decrease of EUR 39 million in gold and gold receivables (asset item 1) reflected both the selling of gold by two Eurosystem central banks (consistent with the Central Bank Gold Agreement of 27 September 2004) and the purchase of gold coins by another Eurosystem central bank."
thanks Box, your comments much appreciated.
tax season now over, so I can get back up to speed on GBN...
WHERE OH WHERE IS FRANK...?
New Shine Behind 25-Year High for Gold: Changes From Ground to Market
Technology and Strong Demand
Alter Its Odd Economics;
Inside a Secret Vault
Trading In Jewelry for Cash
By E.S. BROWNING
April 12, 2006; Page A1
After gold soared above $500 an ounce a few months ago, tub after plastic tub of gold jewelry from the Middle East and India began arriving at Darren Morcombe's refinery in southern Switzerland. In a part of the world where gold jewelry is as much an investment as an adornment, consumers and jewelers had decided the shiny bracelets, necklaces and belts -- many never worn -- were suddenly too valuable to keep.
As prices skyrocket for one of the oldest forms of money, the rules of normal economics don't apply. Fears about inflation, terrorism and a possible dollar decline are driving gold's price up. But production is down, because mining companies cut back capital investment during a 1990s price slump.
Some central banks, the biggest gold investors, sold when the price was low, and now a few are buying when the price is high. The jewelry industry buys the bulk of each year's output, but price today is driven more than ever by a much smaller slice of the market -- professional investors -- whose appetite lately has soared. After years of being squeezed, gold miners are making fortunes, while refiners and gold bankers are getting pinched.
The price, in retreat for almost two decades after peaking at $847 in 1980, has more than doubled in the past five years, closing yesterday in New York at $595.20 a troy ounce, near a 25-year high. Purchases by investors jumped more than 25% by weight in 2005 alone.
Gold is the only major commodity that isn't produced primarily to be consumed in the economy -- like iron, copper, pork bellies or oranges -- but simply to be owned and admired. It is too heavy, soft and rare to have many practical uses outside of electronics and dentistry. Yet it is one of the earth's most prized objects, valued mostly because it is considered valuable.
A look at gold's circuitous journey from the ground to refiner to bank vault to jewelry store -- and sometimes back again -- shows how the ancient world of gold is being shaken up by both markets and technology.
The Gold Chain
At the start of the gold chain stand people like Joel Lenz. He runs two Nevada gold mines for Newmont Mining Corp., the biggest U.S.-based gold producer. Mr. Lenz works, lives and serves on a local school board in the mile-high desert of Nevada, where the bulk of U.S. gold is unearthed.
As recently as the 1970s, 70% of the world's gold was taken from South Africa's deep underground mines. South Africa remains the world's largest producer, but its output in tons now is one-third of what it was, and it represents 12% of the world's expanded production. Australia and the U.S. follow with 10% each, China 9%, Peru 8% and Russia and Indonesia 7% each, according to London-based researcher GFMS Ltd.
The gold mined in most parts of the world, including at Mr. Lenz's Lone Tree Mine, differs significantly from the stuff that lured prospectors west 150 years ago. Visible sources of gold -- gleaming mountainside veins or nuggets and powder lying in riverbeds -- are becoming rarer. The Lone Tree Mine is an open pit two miles long and almost 1,000 feet deep, a monstrous gash that some day will be turned into a large lake. The gold Mr. Lenz removes from it consists of microscopic particles laced through earth and rock.
"I've been here for 14 years," says Mark Evatz, who supervises Lone Tree Mine's digging and transport, "and I have never seen an ounce of gold that I have mined."
To find the gold, modern-day prospectors like Newmont's Wayne Trudel pore over old drilling reports, set up computer models and theorize about which mineral formations are likely to contain fine gold particles. The process can take years, at a cost of $19 per ounce of discovery. The geologists drill out samples from various strata and examine them under microscopes. The results are plotted on three-dimensional computerized maps that outline twisting underground gold veins. As the price of gold rises, the areas on the maps considered worth mining expand.
At Lone Tree, each ounce of gold is sprinkled through 75 tons of rock and soil. Miners use Global Positioning System consoles to make sure they are digging in the right spot -- since ore-rich rock looks little different from other rock. The gold is separated from rock and other metals through a variety of technologies that employ heat, pressure, cyanide and charcoal.
In all, Lone Tree produces about 600 ounces of gold a day, in the form of a damp, cake-like sludge that is 50% to 75% gold and also includes silver and other metals.
World gold production peaked at 2,621 metric tons in 2001 -- just as the price was falling below $260. As prices finally rose, output actually fell. Last year, less than 2,500 tons was produced. The reason: Opening or expanding mines can take a decade of exploring, investing and seeking environmental approvals, and shell-shocked companies cut such spending heavily during the long price decline. Some were slow to invest again when prices started climbing.
Fearing further price declines, many mining companies in the 1990s made matters worse by contracting with large banks to sell future production in advance, at then-current prices. To pay the miners, the banks borrowed gold from central bank reserves, sold it and replaced it later with the mines' output. That flooded the market with gold, depressing the price. Newmont shunned such hedging and quickly boosted capital spending when prices rose, but the cutbacks forced people to leave the high desert in search of work.
With Lone Tree running out of ore and its jobs now slated to disappear, Mr. Lenz spent months in 2003 helping persuade Newmont to reopen the nearby Phoenix Mine. It had produced gold and copper off and on since the 1860s, and its best ore was long gone. Newmont figures it can make money from the mine if gold sells for $340 or more an ounce, and it agreed in late 2003 to reopen it after gold crossed that price threshold.
Environmental Concerns
To keep the pit from flooding, Lone Tree pumps out 45,000 gallons of water a minute, lowering the water table in an already dry area. Environmentalists say that mercury emitted when gold is separated from other metals turns up in fish, wildlife and water supplies. Nevada regulations adopted this year require gold miners to use advanced technologies to control mercury emissions, formalizing a voluntary program. Critics say the rules don't solve the problem.
Gold miners have been accused of more severe environmental damage in developing countries. In February Newmont agreed to pay Indonesia $30 million to terminate a civil lawsuit charging it with causing disease by polluting a bay with arsenic and mercury. Newmont officials face a separate criminal action over the same alleged pollution, which the company denies.
When the miners at Lone Tree in Nevada are done producing gold sludge, gun-toting guards cart it off in armored trucks. The delivery schedule is kept secret even from senior mine executives.
The sludge is delivered to a Newmont plant in another mining town, Carlin, about an hour away. Technicians run an electrical current through the sludge, separating out more base metals. The gold is formed into 100-pound "buttons" shaped like Hershey's kisses, now finally gold-colored but tinged with red, green or black (depending on how much copper, silver or nickel remains).
A Valcambi worker pulls a metal bar containing gold out of a chemical bath as part of the refining process.
About three times a week, when 2,000 ounces to 4,000 ounces have accumulated, workers melt the buttons into 55-pound to 60-pound bars. The bars, between 60% and 95% gold, are known as "doré," a French word meaning "gilded" or "golden."
The gold now heads toward the world of jewelry and high finance, via a refinery, where the doré bars become almost pure gold. There's an independent refinery nearby, in Utah, but Newmont sends its Nevada doré by commercial airliner (no one will say from what airports) to Valcambi SA, the Swiss plant where Mr. Morcombe is chairman, because the mining company has a major stake in that refinery.
Although high gold prices make mining quite profitable, other parts of the business have become jammed with competition and margins are tight. Some countries maintain refineries for nationalistic reasons, a bit like airlines, and the excess capacity is now keeping refining charges well under a dollar an ounce. Swiss banks, which helped make Switzerland a gold-refining center after World War II, have been pulling back, including Valcambi's former owner Credit Suisse.
At Mr. Morcombe's refinery, in Balerna, just north of the Italian border, the high price of gold is affecting business. Recycled jewelry is still pouring in the door, while gold demand from jewelers is falling since the high prices make it tough for them to turn a profit.
Doré bars from mining operations continue to arrive. They are melted and formed into thin rectangular plates that then can be slotted into a bath of chemicals in a nearby room. Another electric current is passed through, separating the gold from other metals. Depending on its initial composition, the doré can go through that and similar processes several times until it reaches a high level of purity -- from 99.5% to 99.99%. Before long, at a new higher-tech wing, the refinery plans to produce gold as pure as 99.9999% (a rare level known as six nines).
Once refined, gold heads to manufacturers, investors or retailers.
Jewelers use more than 70% of gold supplies every year. Italy long was the leading jewelry maker. Lately, lower-cost Turkey has taken a lot of business from Italy, and even-lower-cost India is taking some of Turkey's business. The world's biggest jewelry retail chain is Wal-Mart Stores Inc. But as a nation, India is the world's largest gold-jewelry buyer.
In India and elsewhere in Asia, gold jewelry is used for dowries and major gifts. When people have extra savings, they buy jewelry, which can be sold either in times of need or when prices soar.
"We are selling old gold because the price is high," said Hemani Shah, a customer recently in a Mumbai shop. "During the monsoons when the market goes down, we'll buy."
Gold also is used in electronics because it is a fabulous conductor. It is present in virtually all computers. Gold's use in dentistry has been falling for years, but last year alone Americans and Canadians had a total of 34 million teeth repaired or replaced with fillings, caps, bridges, crowns and other dental appliances containing gold, according to Dentsply International Inc., a dental supply company. World-wide, dentistry eats up nearly 70 metric tons of gold a year, says GFMS, the research group. All these business uses account for another 15% of yearly gold supplies.
Most of the remaining gold -- 12% to 15% -- goes to private or government investors. Much of that ends up as large rectangular bars weighing 27 pounds or 28 pounds each, the mainstays of government and commercial bank vaults.
When times are good, gold seems a waste of money compared with more modern investments, such as the stocks of fast-growing companies. In troubled times, such as during the recent bear market and following the 2001 terrorist attacks, broader groups of investors stash part of their nest eggs in safer places -- and gold is often seen as such a haven. Some bearish investors, called gold bugs, tend to stick with the metal through thick and thin.
Wild Card
One wild card in the gold market is the world's central banks, which, because of gold's traditional role as a store of value, long have been the largest gold hoarders. They still own about 19% of the world's gold, according to GFMS. European central banks, however, have been selling gold for years. Central bank sales mounted in the late 1990s, as gold prices fell to multiyear lows. Now, faced with criticism that they sold too cheaply, some central bankers are thought to be buying again, including those of Russia and some Middle Eastern oil countries -- reflecting the temptation even among experienced financiers to sell low and buy high.
The U.S. went off the gold standard under President Nixon, but it still has by far the world's largest gold reserves at more than 8,000 metric tons, valued at about $153 billion. The U.S. hasn't sold significant amounts since the Carter administration, putting off any debate about the proper role of gold in backing a currency.
A pair of exchange-traded gold funds created in 2004 and 2005 are helping to drive investor interest in the metal. These funds, which are set up like mutual funds and trade on stock exchanges, allow institutional investors and even individuals an easy way to bet on gold. As more money flows into the funds -- which total about $7.3 billion today -- more gold must be purchased to back them.
The gold from those funds, like much of the world's investment gold, is stored mainly in London, where nine secretive bullion banks finance the trade. Financial institutions that own shares in the funds occasionally ask to see the gold backing their investments, but the two banks holding the funds' gold, HSBC Bank and Bank of Nova Scotia, have a policy of refusing such requests. Investors must take the word of auditors that it actually exists.
J.P. Morgan Securities in London, an arm of U.S. banking group J.P. Morgan Chase, is another of the nine banks. It occasionally allows visitors. Gold comes and goes from its vault with surprising frequency, moving among miners, refiners, jewelers and investors.
It often arrives at freezing temperatures after riding in a plane's hold. The gold is fork-lifted into a cavernous vault the size of a basketball court, deep below the ground. Stacked on mundane wooden pallets are billions of dollars in gleaming gold bars.
Even amid all this accumulated wealth, competition has eroded profit margins.
On a recent morning, the phone rang at the desk of Peter Smith, who helps run the gold business at J.P. Morgan. A bank in Dubai needed 600 bars, each 99.9% pure and weighing 10 tolas (an Indian measure). Sitting in front of a computer with three screens, Mr. Smith phoned a Swiss refiner and found his client some bars. The price he quoted included a refiner's markup of 50 cents an ounce, including shipping. The 2,250-ounce order totaled well over $1 million. The bank's cut was five cents an ounce -- or just $112.
Agree. You can assume 70% debt to 30% equity financing. SA Banks typically give 70:30 financing, may require some hedging however...
Central Bank Gold Sales
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
Great Basin Gold Announces Financings for Growth Projects
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No 1/2 warrants...? Sure looks that way. That's positive.
Now if we could figure out if $2.25 is C$ or US$, judging by the share price this is C$...?
Would appear to me that most all of these shares going to institutions/funds, on a bought deal basis...?
____________________
08:59 EDT Tuesday, April 11, 2006
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 11, 2006) - Great Basin Gold Ltd. (TSX:GBG)(AMEX:GBN) ("GBG" or the "Company") has entered into an agreement with an underwriter (the "Underwriter"), pursuant to which the Underwriter has agreed to purchase for resale to the public, on a bought-deal basis, 6,700,000 common shares of GBG at a price of $2.25 per share, for gross proceeds of $15,075,000 (the "Offering").
The terms of the Offering provide for an option pursuant to which the Underwriter may increase the size of the Offering by up to 4,500,000 additional common shares (the "Over-Allotment Option"). The Over-Allotment Option may be exercised in whole or in part by written notice to the Company not less than 48 hours prior to the closing of the Offering. If the Over-Allotment Option is fully exercised, the gross proceeds raised pursuant to the Offering, will be $25.2 million.
ok Lewis, time for an update...
and stop denigrating we Dallas folks...
Hecla Earn In Agreement
______________________________
EARN-IN AGREEMENT AMENDMENT
This Earn-in Agreement Amendment (“EIA Amendment”) is made as of February 28, 2006 between HECLA VENTURES CORP., a Nevada corporation duly qualified to do business and in good standing in the state of Nevada, whose principal address is 6500 Mineral Drive, Coeur d’Alene, Idaho 83815-8788 (hereinafter referred to as “Hecla Ventures”) and its Guarantor and parent company, Hecla Mining Company and RODEO CREEK GOLD INC., a Nevada corporation whose address is c/o Richard Harris, Ste. 260-6121 Lakeside Drive, Reno, NV 89511 (hereinafter referred to as “Rodeo Creek”) which is qualified to do business and is in good standing in the State of Nevada and its Guarantor and indirect parent company, Great Basin Gold Ltd.
RECITALS
A. WHEREAS the Parties entered into an Earn-in Agreement effective August 2, 2002 (the “Earn-In Agreement”) which the parties desire to amend hereby;
B. AND WHEREAS the Parties are engaged in a legal dispute in connection with the Earn-in Agreement which this EIA Amendment will resolve and settle;
NOW, THEREFORE, in consideration of the payments provided for herein and the mutual promises set forth below, the Parties hereby agree to the provisions of this EIA Amendment.
PART I
DEFINITIONS
1.1 Capitalized terms herein shall have the meanings set forth in the Earn-in Agreement except as hereby amended.
1.2 “Feasibility Study” the existing definition in the Earn-in Agreement is hereby amended by adding to the existing definition the following sentence: “The Feasibility Study shall
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be either produced by, or endorsed by, an internationally recognized mining engineering firm which is independent of the parties.”
1.3 “Commercial Production” the existing definition in the Earn-in Agreement is hereby deleted and replaced with the following: “Commercial Production” means the establishment of a mine on the Properties in the manner and at the production level recommended by the Feasibility Study and achievement of Commercial Production shall be deemed to occur upon the first operation of such mine at a minimum of 75% of the life of mine scheduled average production rate provided for in the Feasibility Study during any consecutive 30 day period.
PART II
TERM OF EARN-IN AGREEMENT
2.1 Article III of the Earn-in Agreement is amended by substituting the following in its entirety:
“ARTICLE III
TERM OF EARN-IN AGREEMENT
The Term of this Earn-in Agreement shall commence as of the Effective Date and shall automatically terminate on the earlier of (i) August 2, 2009 or (ii) the date that Hecla Ventures vests in its 50% Interest pursuant to Article V, unless this Earn-in Agreement is earlier terminated pursuant to Article VIII, or earlier terminated pursuant to Article XIII on account of Hecla Ventures failing to meet the requirements of Article V, or unless this Earn-in Agreement is extended by amendment hereof upon the Parties’ mutual written agreement.
The parties hereby agree deadlines included in this article shall be extended for a period of time equal to the time that Hecla Ventures determines, acting reasonably, it is prohibited from advancing or completing the requirements of this article (for example, lack of legal access), by the action or inaction of Great Basin Gold, Rodeo Creek, or any third party who holds an interest in or a contractual right effecting any portion of the
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Properties. During any period in which Hecla Ventures determines, acting reasonably, it is prohibited from advancing the activities associated with Stage II and/or vesting by lack of legal access to any portion of the Properties due to action or inaction of Great Basin Gold or Rodeo Creek or any third party who holds an interest in or a contractual right effecting any portion of the Properties, Rodeo Creek will pay 100% of the Project’s holding costs, as well as all costs during a 60-day remobilization period at the recommencement of operations.
The language in the preceding paragraph shall also apply to Hecla Ventures’ obligations under section 3.1 below, and any other provisions in the Earn-in Agreement. The provisions in section 2.1 shall not restrict or preclude Hecla Ventures’ from exercising any other rights or remedies provided for at law or under the Earn-in Agreement.
2.2 Section 8.4 of the Earn-in Agreement is hereby deleted from the Agreement and Hecla agrees that completion by it of the Attachment A activities is no longer optional but a commitment and that material changes from Attachment A (which supersedes Exhibit E to the EIA) will only be made with Rodeo Creek’s consent.
PART III
INITIAL CONTRIBUTION AND REQUIRED EARN-IN EXPENDITURES
3.1 Section 5.1(c) of the Earn-in Agreement is hereby deleted and substituted with the following:
“5.1 (c) Hecla Ventures hereby commits to complete and fund, at whatever cost, 100% of the remaining Stage I Earn-in Activities and to complete all such activities (except preparation and delivery of the Feasibility Study) by March 31, 2007, failing which Rodeo Creek may, in addition to any other rights it may have, terminate Hecla Ventures’ Earn-in rights hereunder pursuant to Article XIII. Hecla Ventures also agrees that it is a condition to Hecla Ventures vesting in a 50% Participating Interest in the Properties that it achieves Commercial Production by
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August 2, 2009 failing which Hecla Venture’s Earn-in rights under this Agreement may also be terminated by Rodeo Creek pursuant to Article XIII.
Each party will be obligated to fund its share of the Stage II Earn-in Activities. However, Hecla Ventures shall fund Rodeo Creek’s portion of Stage II Expenditures towards achieving Commercial Production until the later of (i) 30 days after Hecla has delivered to Rodeo Creek the Feasibility Study and (ii) the date on which the amount Hecla Ventures’ Stage II Earn-in Expenditures, when aggregated with its Stage I Earn-in Expenditures, exceeds $21.8 million. Thereupon Rodeo Creek shall be obligated to pay its portion of Hecla’s Ventures’ Stage II Expenditures. In addition, no later than 120 days after Hecla has delivered to Rodeo Creek the Feasibility Study, Rodeo Creek will be obligated to repay Hecla Ventures for any and all Stage II expenditures that Hecla Ventures funded on behalf of Rodeo Creek. Hecla Ventures will send Rodeo Creek invoices for 50% of Stage II costs following the submission of the Feasibility Study. If Rodeo Creek fails to remit full payment of the invoices within 30 days of the invoice date for their share of Stage II Expenditures, the failure to pay will be deemed a default in making a cash call and Hecla Ventures shall have all rights and remedies as provided in section 10.3 and 6.4 of Exhibit F to the Earn-In Agreement (the Joint Operating Agreement). In lieu of the rights and remedies provided in sections 10.3 and 6.4, Hecla Ventures shall have the right to elect to be repaid for any amounts due and in default from Rodeo Creek hereunder by retaining and marketing Rodeo Creek’s first share of production under the Joint Operating Agreement until Hecla Ventures has received four times the amount of the default. In the event Rodeo Creek funds 100% of any Stage II activities and Hecla Ventures does not pay its portion, Rodeo Creek retains the same rights and remedies against Hecla Ventures as stated above. All expenditures incurred by Hecla Ventures in furtherance of Commercial Production, other than those expenditures specifically
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incurred in connection with the completion of the Stage I Earn-in Activities described in Attachment A, shall be deemed to be incurred for Stage II Earn-in Activities and they (plus the Feasibility Study) shall require the prior approval of the Management Committee as if Article VII of the Joint Operating Agreement were in effect and notwithstanding that Hecla Ventures has not yet vested and the Joint Operating Agreement is not otherwise effective. On approval of a Stage II development budget, and commencement of Stage II underground excavations or construction of Stage II infrastructure by Hecla Ventures, it shall, within ten (10) days thereafter, issue to Great Basin one million (1,000,000) Hecla Mining Warrants, (“Tranche 2”) in the form of the Warrant Agreement in Exhibit G exercisable at the Exercise Price and in accordance with the terms and conditions of the Warrant Agreement.”
3.2 Sections 5.2, 5.4 and 5.5 of the Earn-in Agreement are hereby deleted and substituted with the following:
“5.2 Reasonable Earn-in Activities. Hecla Ventures’ Stage I Earn-in Activities shall be conducted in accordance with Attachment A hereto. The Parties hereby approve the program and budget for Stage I Earn-in Activities
5.4 Completion of Required Earn-in Expenditures. Upon completion of Stage I Earn-in Activities, excluding preparation and delivery of the Feasibility Study, Hecla Ventures shall provide notice to Rodeo Creek that it (i) has completed Stage I Earn-in activities, (ii) intends to begin Stage II activities, and (iii) submits a proposed budget for Stage II activities. Together with the notice, Hecla Ventures shall provide to Rodeo Creek with a certification of expenses incurred during Stage I activities. Rodeo Creek may, at its own expense, commence an audit of Hecla Ventures’ Stage I expenditures by a licensed accounting firm. If Rodeo Creek chooses to audit Stage I expenditures, Hecla Ventures must be given
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written notice of Rodeo Creek’s intent to audit within 30 days of delivery of the Feasibility Study, and the audit engagement must commence within 45 days of delivery of the Feasibility Study. Unless such notice is received within 30 days, all expenditures for Stage I activities are deemed approved. Hecla Ventures shall provide a similar certification, and Rodeo Creek shall provide similar notices and abide by the same time frames upon the completion of Stage II Earn-in Activities.
5.5 Stage II Earn-in Activities and Transfer of Property. Hecla shall have earned a vested undivided Participating Interest in the Properties subject to the Joint Operating Agreement by (i) completing all Stage I Earn-in Activities (except the Feasibility Study) by March 31, 2007,
(ii) delivering the Feasibility Study,
(iii) achieving Commercial Production by August 2, 2009, and (iv) issuing to Great Basin an additional one million (1,000,000) Hecla Mining Warrants (“Tranche 3”) the date Commercial Production is achieved, in the form of the Warrant agreement in Exhibit G. The Tranche 3 warrants will be exercisable at the Exercise Price and in accordance with the terms and conditions of the Warrant Agreement and dated and priced on the date that Hecla gives notice under Section 5.4 to Rodeo Creek that Commercial Production has been achieved. Upon Hecla Ventures vesting:
(a) Rodeo Creek shall convey to Hecla Ventures an undivided fifty percent (50%) of Rodeo Creek’s interest in the Properties, by executing, acknowledging and delivering to Hecla Ventures a good and sufficient conveyance in the form of Exhibit C to this Earn-in Agreement;
(b) Rodeo Creek and Hecla Ventures shall cause to become effective the Joint Operating Agreement in the form of the attached Exhibit F, which shall include the Properties and shall have an effective date as of the date of the above-described vesting; and
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(c) Rodeo Creek shall issue to Hecla Ventures the Great Basin Warrants set forth in Exhibit E and H.
PART IV
OPERATIONS AND GOVERNANCE
4.1 Section 9.1(a), Management Committee – Organization and Composition, of the Earn-In Agreement, is hereby amended by deleting the second sentence of Section 9.1(a) and substituting the following:
“The Management Committee shall consist of two (2) members appointed by Rodeo Creek, one of whom shall be Mr. Walter Segsworth or other person acceptable to Hecla, and two (2) members appointed by Hecla Ventures, one of whom shall be Mr. Art Brown or other person acceptable to Great Basin.”
4.2 Section 9.5, Parameters for Hecla Ventures’ Earn-in Activities, of the Earn-In Agreement is hereby amended by deleting the last two sentences thereof and substituting the following:
“Except as otherwise provided in section 5.1(c), proceeds from all Products (to a maximum of fifty thousand (50,000) gold ounces or equivalent) produced from the Area of Interest during the term of this Earn-in Agreement shall be distributed to Hecla Ventures and Rodeo Creek as follows: (i) one hundred percent (100%) of ounces recovered in connection with Stage I Earn-in Activities, to Hecla Ventures up to the aggregate of Hecla Ventures’ actual costs of Stage I Earn-in Activities, not to exceed $21.8 million plus fifteen percent (15%) and (ii) all other Stage I ounces and all of the ounces recovered in connection with Stage II Earn-in Activities, as to fifty percent (50%) to each of Hecla Ventures and Rodeo Creek. All ounces produced after the first 50,000 ounces shall be distributed according to the Participating Interests of the parties, subject to the Purchase Price Royalty.”
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PART V
SETTLEMENT OF LITIGATION AND MUTUAL RELEASES
5.1 On execution of this EIA Amendment, Hecla Ventures and Hecla Mining shall dismiss with prejudice the legal proceedings initiated by them against Rodeo Creek and Great Basin in Nevada. By execution hereof, all the Parties agree that there are no longer any outstanding claims or allegations of default or breaches of the Earn-In Agreement, by or in respect of any of the Parties, and this EIA Amendment shall constitute a mutual general release by each of the Parties of each other Party from any action or claim arising to the date hereof in connection with the Earn-In Agreement. Thereupon, the only rights and obligations existing between the Parties are as contemplated by the Earn-In Agreement, as amended by this EIA Amendment.
PART VI
CONFIRMATION OF OTHER EARN-IN AGREEMENT TERMS
6.1 In all other respects the representations, warranties and covenants of the Parties contained in the Earn-in Agreement and the terms and conditions therein provided are hereby confirmed by the Parties to be in full force and effect, unamended.
IN WITNESS WHEREOF the Parties have executed this EIA Amendment as of the date first above written.
HECLA VENTURES CORP.
RODEO CREEK GOLD INC.
By: _______________________________ By: _______________________________
Authorized Signatory Authorized Signatory
Phillips S. Baker, Jr. Ferdi Dippenaar
Print Name Print Name
Director
Title Title
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IN WITNESS WHEREOF the Guarantors have executed this EIA Amendment as of the date first above written.
HECLA MINING COMPANY
GREAT BASIN GOLD LTD.
By: _________________________ By: _________________________
Authorized Signatory Authorized Signatory
Phillips S. Baker, Jr. Ferdi Dippenaar
Print Name Print Name
President and CEO President and CEO
Title Title
EXHIBIT A
Stage I Activities:
Listed below is a summary of the Phase I activities that remain to be completed between January 2006 and March 31, 2007. Further detail of each of these activities is included in the program and budget submitted to the Management committee in December 2005.
All physical work associated with Phase I Exploration is scheduled to be completed before March 31, 2007. The feasibility study document and the external review of the document may not be completed by March 31, 2007.
1. Underground Exploration: Lateral development, I-drifting and underground diamond drilling are scheduled to be completed before March 31, 2007.
a. Approximately 2,300 feet of Lateral Development
b. Approximately1,000 feet of I-drifting
c. Approximately 55,000 feet of diamond drilling
i. Lateral Development: Includes provisions for grouting, ground support, and services.
ii. I-Drifting: The crosscut and I-drifts will most likely be located on the west end of the Clementine vein, however this is subject to change once a part of the diamond drilling results are in hand.
iii. Diamond Drilling: The drills will collect 55,000 feet of drill core. The drilling contract has been awarded to Connors. Activities include assays, administration expenses, and accommodations for the contract core loggers.
2. Access Road: The access road will be maintained for the period of time that is required to complete the physical Phase I activities.
3. Site Services: Hecla Ventures will maintain the existing infrastructure during the period that is required to complete the physical phase I activities.
i. Buildings and other east pit facilities
ii. Fresh and process water handling facilities
iii. Underground infrastructure
4. Equipment Leases: The fleet of mobile equipment, as well as some of the fixed plant equipment that has been purchased in a separate account and is being leased to the project, will be maintained for the period of time that is required to complete the physical Phase I activities.
Page 1 of 2
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5. Environmental and Permitting: Hecla Ventures will maintain and comply with all existing permits for the period of time that is required to complete the physical Phase I activities.
6. Administration: Hecla Ventures will maintain reasonable employee levels necessary to complete the physical Phase I activities. Hecla Ventures will continue to pay property taxes, claim fees, appropriate insurance, office expenses, and vehicle expenses including transportation to the site until the completion of the physical Phase I activities.
Feasibility Study Activities
The following activities will be completed to support preparation of a Feasibility Study Document of sufficient quality to support financing of the project, if warranted. In general, those activities are listed below.
1. Resource Estimate: A reserve and resource estimate will be prepared in accordance with SEC requirements and will be of a quality to support financing by the partners if the project is feasible.
2. Mine Planning and Engineering:
a. Evaluate and determine appropriate mining methods.
b. Investigate and analyze rock mechanics, appropriate excavation and ground support methods including backfill.
c. Engineer secondary access.
d. Engineer mine service and dewatering facilities.
e. Determine the productivity capacity of the ore body and schedule mining to achieve appropriate production levels.
3. Processing: Investigate transportation and processing alternatives. Activities may include testing to support negotiation of a processing agreement with a custom processor.
4. Infrastructure: Engineer appropriate infrastructure, water handling, transportation requirements, water treatment, office facilities etc.
5. Permitting: Determine Phase II permitting requirements, which may include Environmental Assessment or EIS as well as updating of existing permits. Estimate new bonding requirements.
6. Capital and Operating Cost Estimates: Complete an operating cost estimate to include mine operating costs, transportation costs, processing costs, administrative costs, etc.
Complete a capital cost estimate to include development of a mine that will support commercial production as determined in the feasibility study.
SA Royalty Bill
http://www.miningmx.com/mining_fin/177580.htm
“I’m sure the percentages will come down, but the government is adamant that it will not climb down from charging royalties on turnover,” said Con Fauconnier, CEO of Kumba and the former president of the Chamber of Mines.
___________________
SA miners in dark about royalty bill
Allan Seccombe
Posted: Wed, 05 Apr 2006
[miningmx.com] -- SOUTH AFRICA’S mining industry has hopes its unhappiness with the proposed royalty regime will be addressed in the second draft of the Mineral and Petroleum Royalty Bill due to be released in mid-May.
The second draft has been two years in the making, creating a level of uncertainty among mining companies, something Finance Minister Trevor Manuel apologised for when he spoke about the bill this week.
However, finding someone willing to comment on the bill is tough, with most preferring to wait until the draft is made public.
“I’m sure the percentages will come down, but the government is adamant that it will not climb down from charging royalties on turnover,” said Con Fauconnier, CEO of Kumba and the former president of the Chamber of Mines.
He stressed this was just speculation because no details whatsoever of the revised draft have yet been made public.
I’m sure the percentages will come downThe first draft was released in March 2003 and charged royalties on gross revenue ranging from one percent for deepwater oil and gas extraction to eight percent for rough diamonds. The charge would be levied on gross sales.
There was an immediate outcry from across the mining industry.
The Chamber led the charge against the bill, arguing that international precedents suggested a net-based royalty system was more favourable to investment than a gross based system. It said local mining companies also paid a relatively heavy burden in taxes and levies compared to other countries.
The royalty bill has to be flexible, recognise development projects and encourage empowerment, the industry argues.
It is likely the draft will show changes, taking cognisance of the industry’s concerns, but the scope of the changes remains a mystery to many outside the National Treasury, which has been crafting the new bill.
The secrecy around the bill appears watertight and no one contacted by Miningmx was prepared to say specifically what it might contain.
“Let’s not speculate about what will be in the draft. We will wait to see what comes out before we make any comment,” said Roger Baxter, the Chamber of Mines economist.
David Salter, managing director of Eland Platinum, which plans to start an open cast platinum next year, said a four percent royalty on platinum had been factored into the company’s equations.
“Surprisingly, there have been very few leaks this time round. No one has any information, whereas last time round there was a lot of gossip that pre-dated the release of the draft,” Salter said.
The South African mining industry is facing intense competition from other mining centres in the headlong rush into a commodity boom.
“The last thing you want to do is impose a royalty system on South Africa’s mining sector which makes it even more uncompetitive against its international peers. It undermines investment in the sector and its growth,” said a mining analyst.
“The need to put in a competitive system is vital for the interests of the industry and economy at large.”
Manuel has said the document has undergone “substantial refinements” because of the comments National Treasury had received and the results of fresh comparisons with royalty rates in other countries. It has also taken on board financial analysis done by the mining industry.
The passage of the bill will entail hearing representations from interested parties before parliamentary debate and then on to promulgation. The bill will be effective from 2009.
“We remain optimistic that this issue will be resolved and that an eminently sensible approach will be adopted,” said spokeswoman Nicola Wilson.
DRDGOLD spokesman Ilja Graulich said the bill, with a three percent royalty on gold, had to recognise companies that were starting up or experiencing tough market conditions. “There needs to be a built in flexibility otherwise the bill will trip mining companies up.”
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this latest bout of strength of Rand not good... Rand needs to weaken against US$
Managuans Like Lewites as President
April 6, 2006
(Angus Reid Global Scan) – Voters in Nicaragua’s capital area pick a former mayor to be their country’s next head of state, according to a poll by Borge y Asociados. 39.7 per cent of respondents would vote for Herty Lewites in this year’s presidential election.
Former presidency secretary Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 31.7 per cent, followed by former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) with 18.4 per cent, and Constitutionalist Liberal Party (PLC) nominee and former vice-president José Rizo with 8.1 per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. Bolaños lost the support of the PLC in January 2002, when his government decided to take legal action against Arnoldo Alemán. Last year, the former head of state—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February 2005. Lewites will represent the Sandinista Renewal Movement (MRS). Managua is home to 30 per cent of the Nicaraguan electorate.
Yesterday, former members of the FSLN youth wing threw their support behind Lewites. Coordinator Silvio Gutiérrez explained their rationale, saying, "We think the Herty alliance is the best option to destroy the pact (between the PLC and the FSLN) that has this country on the verge of a crisis." 63.7 per cent of respondents want Lewites and Montealegre to work together to offset the pact between Ortega and Alemán.
The next presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
Herty Lewites (MRS)
39.7%
Eduardo Montealegre (ALN)
31.7%
Daniel Ortega (FSLN)
18.4%
José Rizo (PLC)
8.1%
Should Eduardo Montealegre and Herty Lewites work together to offset the pact between Daniel Ortega and Arnoldo Alemán?
Yes
63.7%
No
32.6%
Central Bank Gold Sales
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
sold quite a bit this last week, still behind schedule...
actual tonnes sold = 211.93
scheduled tonnes to be sold @ this date = 259.62
Well, I tend to disagree. After the 1Q06 results from RNC operations (especially Honduras), I bet RNC would have earned US$.10 or more for the quarter, US$.40 annualized. I believe a 5x annualized PE or US$2.00 per RNC share would have been achieved shortly after these results. We will never know, but sure wish RNC would have hedged 20% of their production for 3 years and diluted a few shares. The market could not have ignored US$.10 earnings for the 1Q06, IMO.
RNC operations are largely responsible for Yamana's share price doubling...
just my opinion...
Updated Yellow Book out...
http://www.virtualmetals.co.uk/PDF/Yellow%20Book030406.pdf
Happy Easter..., BE AFRAID...
http://terrisfp.com/flash2/alayin.swf