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Jennings 11/1/05 analyst report
http://www.jenningscapital.com/pdfs/RNC11012005Q305ResultsInLine.pdf
thanks for posting your charts on this board.
fwiw, I picked up some DROOY shares this past week at $1.28
Canadian Gold stocks stronger than HUI for past 30 days or so...
I don't recall you recommending Linear...?
what, no guarantees...??!@@!?!!
thanks much basserdan. Louis has/is critiquing my graph and I will likely be adding footnotes to incorporate his comments.
thanks, but no thanks...
Already read it, I read Hartman each Wednesday as soon as it is hot off the press... Always a disappointment to me when they have someone substitute for Hartman...
How about articles from Martin M or Marc Faber...? Have not seen any recent articles penned from them here recently!!
nothing special except the known unknown...
"To fund this [San Andres] transaction, RNC expects to undertake a financing in the near future. The Company will release details of the financing once final arrangements have been made."
Valuation of RNC depends on how many new shares plus warrants, and especially if full or 1/2 warrant issued...
EPM - Charlemagne purchases 2.8M more last week...
The Company received a notification today that investment funds under the management of Charlemagne Capital (IOM) Limited have increased their aggregate holding to 29,524,078 common shares of no par value representing 15.06% of the issued share capital.
EPM-Charlemagne Capital Purchases
23-Aug...18,748,012
23-Sep...19,691,114
19-Oct...22,561,578
25-Oct...26,840,578
01-Nov...29,524,078
Central Bank Gold Sales
Current Year To Date (Sept 2005 - Sept 2006)
Prior Year to Date September 2004 - June 2005 (Virtual Metals)
updated Central Bank Sales Chart
now includes each weekly Euro Sales amount; all tonnes are cumulative amounts
Thus, for the current week central banks sold 31.74 tonnes for the week which brings the total cumulative tonnes to 59.74 for the year to date as shown on the chart blue line. Purple line is the planned sales which equals 48.08 tonnes cumulative for the year to date (total = 500 tonnes for year). Yellow line is the Euro Weekly total, i.e. amount of Euros involved in selling the gold, this week it was 398M versus about 104M for the prior 3 weeks.
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4 percent.
Elevated energy prices and hurricane-related disruptions in economic activity have temporarily depressed output and employment. However, monetary policy accommodation, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity that will likely be augmented by planned rebuilding in the hurricane-affected areas. The cumulative rise in energy and other costs have the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained.
The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.
Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.
In a related action, the Board of Governors unanimously approved a 25-basis point increase in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Central Bank Gold Sales - Chart
Central Bank Gold Sales = 31.74 Tonnes for week ending 10/28
Cummulative Gold Sales = 59.74 Tonnes for this fiscal year
Expected Gold Sales pro-rata Fiscal YTD = 48.08 Tonnes, thus now ahead of planned sales
10/28/05...€ 398,000,000...€ 390...€ 1,020,513...31.74...59.74
Hecla has its conference call on 11/8 @ 11:15AM
http://phx.corporate-ir.net/phoenix.zhtml?c=63202&p=irol-irhome
Q3 2005 Hecla Mining Earnings Conference Call
11/08/2005 at 11:15 a.m. ET
We should get news on Hollister then... Venezuela giving Hecla some serious difficulties here lately, so with any luck we may see Hecla increase their exploration/development activities at Hollister going forward...
Appears La Libertad may have escaped the wind, but we don't know yet about the rain/possible flooding... At 10PM Beta was right over La Libertad with maximum sustained winds of 25mph.
from accuweather 10:26PM expert summary:
"As of 10:00 p.m. EST Sunday, Tropical Depression Beta was centered near 12.7 north and 85.3 west, or about 70 miles east-northeast of Managua, Nicaragua. Beta is moving west at about 9 mph. Beta continues to weaken and has maximum sustained winds of 25 mph."
from RNC website:
"La Libertad is located 115 km [69 miles] east of Managua , the capital city of Nicaragua."
The U.S. Treasury Quarterly Refunding press release will be of interest. This press conferences will be held on Wednesday morning Nov 2nd.
The US Treasury web site is updated shortly after the press conference around 9:00 AM on November 2, 2005.. I like looking at the charts... http://www.treas.gov/offices/domestic-finance/debt-management/qrc/
From the August 05 Fiscal Year charts:
"• FY 2005 Q4 and FY 2006 Q1 Outlook:
– Estimated net marketable borrowing of $59 billion this quarter and $97 billion next quarter.
Thus, the number to watch is how actual refunding amount compares to $97B projection made in August... Katrina/Rita has likely made this funding requirment considerably above $100B this quarter. We'll see...
Considerable economic news coming out this next week that can impact the markets... Will be a busy week.
http://www.marketwatch.com/news/story.asp?column=Economic+Preview&siteid=mktw&dist=
The 'I's' have it...
http://www.arseiam.com/fx/08.htm
Rand POG Technical Commentary
South African Gold Price - Technical Commentary:
The Rand gold price rallied strongly this past week, testing the 3,250 resistance for the first time since early 2003! We have thus reached our first upside target and should the dollar gold price remain strong and rally more here, we could see 3,500 before consolidation. Thus, in this zone marked on the chart (3,250 – 3,500) we should short-term peak. These multi-year record levels are very bullish for SA producers, who were several months ago dealing with multi-year lows on the rand gold price.
Support now exists around 3,000-3,100, then again around 2,750. With global gold prices breaking out to new levels, the Rand gold price is just “joining the party.”
From Julian Phillips
http://news.goldseek.com/GoldSeeker/1130708528.php
EDV
Per page 4 of annual report:
"Our share price remains at a discount to net asset value (NAV) per share. The Board of Directors is addressing this situation and considers the discount to be unjustifiable."
Current Fee Structure of Investment Advisor per Annual Financials Footnote 6(b):
"Investment Advisor Agreement
The Corporation has an Investment Advisory Agreement with Endeavour Securities Corporation (the “Investment Advisor”). The Corporation pays a monthly investment advisory fee to the Investment Advisor at the annual rate of 2% of the first $50 million of the net asset value of the Corporation, 1.5% on the next $50 million up to $100 million and 1% on the excess over $100 million. The investment advisory fee payable at August 31, 2004 is $115 (August 31, 2003 - $75). In addition, the Investment Advisor is entitled to an annualized performance fee calculated as 20% of the consolidated net income from operations(before such performance fee) in excess of a 15% return on equity."
Current Fee Structure of new Investment Advisor US Global Investors:
...................Gold Shares Fund..... World Precious Minerals Fund
Management Fees.....0.75%..... 0.96%
Other Expenses.....1.18%..... 0.51%
Total Annual Fund Operating Expenses...1.93%..... 1.47%
It will be interesting to see exactly how EDV and US Global join forces, and I am hoping this has more to do with reducing fees of Investment Advisor and/or decreasing the discount than acquiring intellectual capital... We'll soon see on November 1 at 11AM EST...
http://www.investorcalendar.com/IC/CEPage.asp?ID=97180
Hey Frank, Re: EDV, did you see this press release...
http://www.sedar.com/csfsprod/data61/filings/00845324/00000001/p%3A%5CSEDAR%5CEDV%5CUSg.pdf
One possibility is EDV has plans to convert from closed end to open end fund. Nov 1st conference call... If so, that 34% discount to NAV would disappear overnight upon conversion to open end fund... That's a big if...
Hurricane Beta vs. Hurricane Mitch
Appears to me RNC mines should fare ok (largest risk is at Bonanza = 31K oz/year), given north/northwest current path of Hurricane Beta.
Beta path apparently will not be heading south toward La Libertad (70K oz/yr) & San Andres (80K oz/yr) as Hurricane Mitch did... See chart below for Mitch path. Beta has already missed Cerro Quema Panama (48K oz/yr). And eye of Beta will pass to the west of La Libertad and apparently much further north, so La Libertad also looks ok at this time. San Andres still not out of the woods yet, Beta needs to start tracking more north, and definitely not south.
Beta Path Projected:
Mitch Path Actual:
RNC Mine Locations:
If Beta starts heading south like Mitch, then RNC mines are in trouble..., albeit Mitch was Category 5 while Beta likely to be a strong Category 2.
Central Bank Gold Sales = 28 tonnes
and 28 tonnes agrees with my analysis:
http://www.investorshub.com/boards/read_msg.asp?message_id=8231426
"The second year of the new Central Bank Gold Agreement is now four weeks old and the figures from the European Central Bank for the year-to-date imply sales of 28 tonnes, which is below the weekly average that the banks would require if the full 500 tonnes quota is to be sold this year."
page 6
http://www.gfms.co.uk/Publications%20Samples/PMMB_Upd_Oct27.pdf
time to name names... which central banks...
Alberta prosperity cheques carry stirring messages of national unity...
http://www.resourceinvestor.com/pebble.asp?relid=14068&t=57
you can try this...
http://www.coorslight.com/iceswipe/
Palladium rising
Posted: Wed, 26 Oct 2005
[miningmx.com] --PALLADIUM rose to its highest level in eleven months and looks set to continue rising, reported Reuters.
"There is a wave of new money coming into the commodities complex and this trend will probably continue" Jeremy East, global head of precious metals at Commerzbank, told the news wire.
Palladium, a precious metal mainly used in jewellery and to clean car exhaust fumes, has managed to gain in strength, trading at $217/ oz.
According to Reuters, gains amongst the other precious metals, including gold which reached an all time high 2 weeks ago, has led to increased fund buying in thinly traded palladium.
"Relatively less liquid metals such as palladium could move dramatically higher with a comparatively lower investment," East said, noting a definite rise in physical demand for the precious metal.
take a lookie at these charts in SA Rand
Palladium
Platinum
Gold
thanks for your post Louis, now I understand your comments better...
Care to speculate which 2 central banks are selling...? I would guess it is France & Netherlands.
It would further appear that France is selling with a vengence, apparently over 7M tonnes per week (my speculation)...? If so, how do you think the French people will react when they learn of this...?
Please read pages 6-10, excerpt below:
http://www.virtualmetals.co.uk/PDF/FortisMetalsMonthlySep05.pdf
And then please explain to me your rationale why Central Banks will sell under 500 tonnes this fiscal year.
______
September sees the end of the first year of the second round of the European Gold Agreement, the five-year arrangement between European central banks under which they have agreed to limit their annual sales of gold reserves to 500 tonnes. Matthew Turner examines the development of the first year, and considers the prospects for the future. European central banks are selling their huge gold reserves in greater quantities and at a faster pace than ever before. Yet the gold market is aking it all in its stride. That's the lesson one can draw from the first year of the second European Gold Agreement, which draws to a close on September 26th. The longer-term implications however are more worrying for the gold market; it looks like a number of central banks wish to exit the gold market altogether.
When the renewal of the EGA was announced in March 2004, and even when it took force on September 27th of that year, there was much uncertainty about which central banks wished to sell gold. Unlike the first EGA, a hastily cobbled together wrapper around already announced plans by the UK and Switzerland to sell gold, the second Agreement had no obvious anchor country.
France said it wished to sell between 500-600t, Switzerland still had 130t remaining of its 1,300t sale, and the Netherlands said it would sell 165t. In total, however, this came to at most just 895t, and yet the Agreement had raised the annual sales limit to 500t, and thus the five-year total to 2,500t. When the largest gold holder in the Agreement, Germany, announced that they would only sell the 8 tonnes required for minting some gold coins, it was enough to make some analysts question whether the European central banks would actually sell the maximum 500t a year, let alone 2,500t over five years.
One year on few now doubt that the central banks will reach both limits. It is not just the speed at which they sold gold over this first year - the 500t allowed had been offloaded by August 12th, more than six weeks quicker than necessary, though this surely smacks of eagerness. It is also the number of central banks that have taken the opportunity to offload bullion ten of them in total. In addition to Switzerland, France, the Netherlands and Germany, there was also Portugal, Sweden, Spain, Austria and Belgium. Worse still for the belief that gold retains a special place in central bankers hearts, the European Central Bank itself, which only acquired its 769t of gold at the start of Economic and Monetary Union in 1999, got rid of 47t without explanation1 (see table below for full list of sellers and how much they have sold).
EGA II year one
Tonnes sold
Switzerland 130
France 125
Netherlands 55
Portugal 55
ECB 47
Belgium 30
Spain 20
Sweden 15
Austria 10
Germany 5
Unaccounted * 10
Total 503
Source: Virtual Metals * Unaccounted as taken from ECB data which says only 'two central banks'. It is probably France and Germany
1 When we asked the ECB its explanation for the sale we were told that the European Gold Agreement was itself the explanation.
What about the remaining four years?
Looking ahead we still don't have much by way of official statements about sales for the remaining years of the Agreement. There are three distinct categories of central banks to consider: those who have announced their sales plans, whom we can call the announced sellers; those who are selling but who have not announced their plans, the unannounced sellers; and those who have neither announced their plans nor sold any gold, the undecideds. The table on announced sales shows there have only been just over 1,000t of future sales announced in advance, from Switzerland, France, Sweden, Austria, and the Netherlands (Germany is a special case to which we will return), ofwhich 300 tonnes were sold in EGA year one. Thus there are around 700 tonnes of announced sales to go, by the announced sellers, with the exception of Switzerland, which has completed its announced sales.
It should be noted that these alone are enough to fill the annual 500t limit for next year, and even for the sale of another 200t in EGA year three. If this is what happens in EGA year two then we will see France as the major seller, with the Netherlands taking second place. It also means there do not necessarily have to be any announcements or even sales from other central banks until March 2007.
Despite this, however, we do expect other central banks to sell some gold. In the first EGA there were 200 tonnes of sales from the unannounced sellers, central banks that sold gold and which had made no prior public statements of their intentions. These central banks, Portugal, Spain, Belgium and the ECB, have not only given no indication of how much they intend to sell, but importantly they have also given no indication that they do not plan to sell more. In fact the ECB said: It is not the ECB's intention to sell more gold for the first year of the agreement;, a statement that almost implies it will sell more gold in subsequent years.
But how much gold will these banks sell? History is not much of a guide. The following table shows the sales of these countries in the 1990s, during the first EGA and the first year of the second EGA, and their current gold holdings. Only Belgium had sold gold in the 1990s, an enormous 927 tonnes, before the EGA was signed in 1999. By the time of the first EGA Belgium's sales had finished, and of these countries only Portugal sold gold during the first EGA.
ANO, think we are getting very close to an announcement, certainly before year end, maybe by end of month...? Plowing back PAL capital into ANO...
"Trahar said it was possible that Anglo American could increase its stake in Anglo Platinum further with cash derived from its restructuring. The company was also considering means of growth and investment in the platinum firm in tandem with an empowerment plan, the company said.
"This is a road map for the future. We could buy more shares in Anglo Platinum, we have a $5bn project pipeline that needs to be financed, we could consider other acquistions, pay down debt or return cash to shareholders," said Trahar on plans for cash generated from the restructuring. "
http://www.miningmx.com/mining_fin/509373.htm
_____________
"
JOHANNESBURG (Mineweb.com) -- Anglo American is planning effectively to reduce its exposure to South Africa and to non-mining interests by selling assets, repaying debt in that country and distributing part of the proceeds to shareholders by way of a $1 billion special dividend or share buy-back in 2006.
On the auction block are all or part of the group’s investment in AngloGold Ashanti, worth some $5.8 billion at present, and its shareholding in Highveld Steel & Vanadium. Away from metals, and further down the track, all or part of wholly-owned pulp and paper company Mondi will be in play as will the interest in sugar/aluminium company Tongaat Hulett.
CE Tony Trahar was not specific as to the timing or amount of the planned sales when he spoke to wire services on Wednesday. However, they form part of a tighter focus on extractive industries over which Anglo American can exercise complete or undisputed control particularly over group subsidiaries’ cash flows. And now that the restructuring has been officially disclosed, Trahar and his board colleagues are unlikely to waste time.
http://www.mineweb.net/sections/509440.htm
sold 66% of my PAL at US$6.13, thanks!
thanks basserdan... anytime you see YTD or weekly central bank sales posted, please continue to advise!
appears my calculations are correct...
http://www.investorshub.com/boards/read_msg.asp?message_id=8231426
9.62M tonnes expected each week (500 tonnes/52 weeks).
I calculated this was 8.91 tonnes vs GATA 8.86 tonnes.
FWIW, appears central bank sales are behind schedule for this fiscal year to date (3+ weeks) ...
28M actual vs. 38M planned
I will continue to post this data ASAP on this board each week when ECB issues its weekly press release, but desire confirmation from other sources.... Thus, thanks for your input.
Interesting that we have had sales this fiscal YTD from apparently only two of these banks, the others are no shows thus far...
E.C.B.
Austria
Germany
France
Netherlands
Portugal
Sweden
Switzerland
Spain
Belgium
My case would be that you should own physical gold, about 5% of your net worth, as insurance. Gold mining shares may or may not be a good proxy for physical gold, but CEF and GLD should suffice.
As far as O&G, I have ownership and/or control via working interest and royalties directly via participation in new or re-worked oil/gas wells. Had one well that I invested $14,000 in that had a 2 month payback and will be paying $7K per month at current prices. I got lucky on that one, but have drilled others this year where the payback is over 20 years... On the average with the gusher, payback of this $75K capex will be in under 8 months... In general I much prefer owning the working interest/royalty direct rather than through a public company which is more susceptible to windfall profits tax...
As far as gold shares vs. oil/gas shares, I would suggest you have both. For example, keep 33% in gold shares and 67% in energy shares and rebalance twice each year on then current market prices. The Oil:Gold ratio is still more than 1 deviation from the mean which implies gold is still undervalued relative to gold.
Just some thoughts, but think both gold shares and energy shares should be in your portfolio along with at least 25% in cash/CD's and 5% in physical gold.
EPM - over 8M shares acquired in past 3 months, of which 4M purchased last week... Charlemagne now holds 13.69% of the issued share capital.
EPM-Charlemagne Capital Purchases
23-Aug...18,748,012
23-Sep...19,691,114
19-Oct...22,561,578
25-Oct...26,840,578
increase...8,092,566
50 day about to cross the 200 day MA:
Expecting news in near future regard the debt financing of their Kazakhstan mine.
appears about 33% of volume accounted by Charlemagne alone over this period...
news releases here:
http://www.londonstockexchange.com/en-gb/pricesnews/prices/system/detailedprices.htm?sym=CA29879A104...
ANO, the Grandich albatross...
http://www.robtv.com/shows/past_archive.tv?day=mon
1:25 PM ET
Market Call with Jim O'Connell
Peter Grandich's Top Picks
Peter Grandich, editor & publisher, Grandich Publications
No Dirty Gold
October 25, 2005
The Cost of Gold | Treasure of Yanacocha
Tangled Strands in Fight Over Peru Gold Mine
By JANE PERLEZ and LOWELL BERGMAN
SAN CERILLO, Peru - The Rev. Marco Arana drove his beige pickup over the curves of a dirt road 13,000 feet high in the Andes. Spread out below lay the Yanacocha gold mine, an American-run operation of mammoth open pits and towering heaps of cyanide-laced ore. Ahead loomed the pristine green of untouched hills.
Then, an unmistakable sign that this land, too, may soon be devoured: Policemen with black masks and automatic rifles guarding workers exploring ground that the mine's owner, Newmont Mining Corporation, has deemed the next best hope.
"This is the Roman peace the company has with the people: They put in an army and say we have peace," said Father Arana as he surveyed the land where gold lies beneath the surface like tiny beads on a string.
Yanacocha is Newmont's prize possession, the most productive gold mine in the world. But if history holds one lesson, it is that where there is gold, there is conflict, and the more gold, the more conflict.
Newmont, which has pulled more than 19 million ounces of gold from these gently sloping Peruvian hills - over $7 billion worth - believes that they hold several million ounces more. But where Newmont sees a new reserve of wealth - to keep Yanacocha profitable and to stay ahead of its competitors - the local farmers and cattle grazers see sacred mountains, cradles of the water that sustains their highland lives.
The armed guards are here because of what happened in the fall of 2004 at a nearby mountain called Cerro Quilish. For two weeks, fearing that the company's plans to expand Yanacocha would mean Quilish's desecration and destruction, thousands of local people laid siege to the mine. Women and children were arrested, tear gas was thrown, the wounded hospitalized after clashes with the police.
In the end, the world's No. 1 gold-mining company backed down. Father Arana, who runs a local group formed to challenge the mine, helped negotiate the terms of surrender. Newmont withdrew its drilling equipment from Quilish - and the promised reserves from its books. Now, in large part because of the loss of Quilish, the company says production at Yanacocha may fall 35 percent or more in two years.
The forced retreat, a culmination of years of distrust between the peasants and the mine, was a chastening blow for an industry in the midst of a boom. It underscored the environmental and social costs of the technologies needed to extract the ever-more-valuable ore from modern mines. And it showed how a rising global backlash against those costs was forcing mining companies to negotiate what has come to be known as "social license" if that boom was to go on.
But the history of Yanacocha, pieced together in a six-month examination by The New York Times and the PBS television program "FrontlineWorld," is also an excursion into the moral ambiguities that often attend when a first-world company does business in a third-world land.
Gold miners say they have no choice but to go where the ore is; they cannot choose the governments they deal with. Yanacocha shows how one company maneuvered in a country, Peru, dominated by a secret web of power under a corrupt autocracy.
Newmont gained undisputed control of Yanacocha in 2000 after years of back-room legal wrangling. Behind the scenes, Newmont and its adversaries - a French company and its Australian ally - reached into the upper levels of the American, French and Peruvian governments, employing a cast of former and active intelligence officials, including Peru's ruthless secret police chief, Vladimiro Montesinos.
Much of that arm-twisting has been dragged into the light, in secret recordings by the spy chief. The tapes, apparently intended to blackmail and manipulate Peru's powerbrokers, surfaced in 2000 and led to the downfall of Mr. Montesinos and the president he served, Alberto K. Fujimori.
The tapes captured everything from plotting to fix elections to shopping bags of money being unloaded for payoffs in Mr. Montesinos's office at the Peruvian National Intelligence Agency.
They captured Newmont's maneuverings, too. In one audio recording, the No. 3 Newmont executive at the time, Lawrence T. Kurlander, is heard offering to do a favor for Mr. Montesinos.
"Now you have a friend for life," Mr. Kurlander tells the spy chief.
"You have a friend for life also," Mr. Montesinos replies.
Last year, a Justice Department investigation into whether Newmont's victory resulted from bribing foreign officials was dropped after the Peruvian government failed to cooperate fully and the statute of limitations expired, according to law enforcement officials familiar with the case. The Peruvian government investigated the Yanacocha affair without bringing charges.
Mr. Kurlander has agreed to speak out publicly about his meeting for the first time. He says he regrets seeking out Mr. Montesinos, now in jail charged with everything from corruption to gun running and drug trafficking. But Mr. Kurlander and Newmont are adamant that no bribes were paid, nothing illicit done, at least not by them or their allies.
"Everybody involved on the American side, in the American government, that went to see him or spoke to him, asked for a level playing field," said Mr. Kurlander, who retired in 2002. "Not a single person asked for him to influence the outcome of the case."
Newmont's senior executives declined repeated requests for interviews for this article, though they did allow Times reporters to make an extensive visit to the Yanacocha mine. But in a written statement, Newmont said of its legal battle for the mine, "We are satisfied that the company complied in all respects with applicable laws."
Whatever the past environmental problems, Newmont says Yanacocha now meets all Peruvian and international standards. And the company says it is committed to gaining and maintaining the approval of the community.
Still, to many of the local people, the continuing struggle for Yanacocha evokes a tale of treachery nearly any Peruvian school child can recite.
In 1532, the Spanish conquistador Francisco Pizarro captured the last Inca emperor, Atahualpa, in Cajamarca, the provincial capital 28 miles from Yanacocha. The young Inca, a god to his people, was held for months while he scrambled to amass a ransom: enough gold to fill a room as high as his arm could reach.
He turned over his gold, expecting to be freed. But Pizarro killed him anyway.
Living on Water
At first, people here saw possibility in the mine. Yanacocha - "black lake" in the indigenous Quechua tongue - sits in one of the poorest agricultural regions of Peru.
"When Yanacocha began its operations, we would only hear about how everyone was happy," Father Arana said. "The mine was going to bring jobs, improve roads." No one thought much, he said, about the inevitable collisions.
The collisions began almost immediately.
In the Andean peasants' universe, water is the heart of the land. The people depend on it - for their animals, for drinking, for bathing. Community life is organized around it.
But the mine lives on water, too. The bits of gold here, so small they are called "invisible gold," can be mined profitably only by blasting mountains, then culling the gold with vast quantities of cyanide diluted with similarly vast quantities of water.
It was not long before the peasants began to complain. Streams and canals were drying up, they said. They were filled with murky sediment. The water smelled foul.
But on the ledger books, Yanacocha was a fast success.
The mine had started with 1.3 million ounces of reserves in the ground. Within a year, it claimed over 3 million. It was the biggest foreign investment in Peru.
"Everywhere we drilled and looked, there was gold," said Len Harris, Yanacocha's first general manager.
Dueling Companies
Celebration soon gave way to strife.
A year before, a partnership had been formed to develop the mine: Newmont; a Peruvian partner, Buenaventura; and a French government-owned company, Bureau de Recherches Géologiques et Minières (BRGM). No partner had a controlling interest. The World Bank's investment arm, the International Finance Corporation, later took a 5 percent stake, hoping to promote development in a country plagued by economic chaos and roiled by a Maoist insurgent group, Shining Path.
With the mine expanding and the guerrilla leader captured, BRGM announced plans to sell a large part of its increasingly valuable stake to an Australia-based company, Normandy Poseidon. Newmont, considering the involvement of another major mining company unacceptable, sued, arguing that the partnership agreement gave it and Buenaventura first right of refusal on any sale.
Twice, Peruvian courts agreed. Then, in September of 1997, the Peruvian Supreme Court issued a startling ruling, agreeing to review a case Newmont thought it had definitively won. Stunned and suspicious, the company called in Mr. Kurlander.
Mr. Kurlander, then 56, had spent most of his life in government, as a prosecutor and as chief criminal-justice adviser to Gov. Mario M. Cuomo in New York. He later moved to corporate work and was recruited by Newmont in 1994. He had no experience in mining, but in an industry known for its rough edges, he became a top Newmont executive, valued for his political contacts and easy ability to walk between the halls of government and the corporate suite.
On his arrival in Peru, Mr. Kurlander says, he was told by Newmont's lawyers and security chief that the French were "behaving inappropriately in the litigation."
"The mere fact that they were doing this," he said in an interview, "was unseemly at best and corrupt at worst."
Newmont, he said, was at a distinct disadvantage: the Foreign Corrupt Practices Act forbids American companies to pay anything of value to a foreign official in exchange for a "result." By contrast, in 1997, most European countries, France included, did not prohibit paying bribes.
The French ambassador to Peru at the time, Antoine Blanca, said in an interview that no one connected to the embassy had ever offered bribes or otherwise acted improperly.
Still, what emerges from documents and interviews with participants is a picture of three years of increasing pressure and intimated threats by Normandy and the government of France.
In the Peruvian press, the French ambassador insinuated corruption of the judiciary; French government emissaries suggested to Peruvian officials that there would be consequences if Newmont was awarded the disputed shares.
Normandy recruited Patrick Maugein, a well-connected French businessman. By phone, fax and letter, Mr. Maugein placed Newmont and Buenaventura on notice that the dispute had become a "matter of state"; the French, he warned, "had every intention of fighting it to the bitter end." Mr. Maugein had ties to the French president, Jacques Chirac, and soon Mr. Chirac wrote to President Fujimori, urging a Supreme Court review and his personal intervention.
Mr. Maugein declined to be interviewed for this article, but in a letter wrote that any allegations of illicit activity "come from people who have been paid to make them."
From Lima, in the days after the Supreme Court agreed to take the case, Mr. Kurlander headed to Washington to enlist help on the American side. By the end of October 1997, Stuart E. Eizenstat, under secretary of state for economic affairs, wrote Peru's prime minister to press for "a fair and impartial hearing," according to documents released under the Freedom of Information Act.
"A politically tainted decision would adversely affect U.S. investment in Peru," he wrote
On Jan. 5, 1998, Peru's Supreme Court came back with a preliminary decision; 3 to 2 for the French, one vote shy of victory.
As the Peruvians prepared to assign two more judges to the case, Mr. Kurlander says, he and Buenaventura's chief, Alberto Benavides, appealed to Mr. Fujimori.
Soon after, Mr. Kurlander said, the president's office sent word about the man to see.
Spy Chief's Favor Bank
Vladimiro Montesinos's titles never matched his stature. Officially, he was "counselor" to Mr. Fujimori and de facto head of the National Intelligence Service. In reality, he was the second-most-powerful man in Peru - "Rasputin, Darth Vadar, Torquemada and Cardinal Richelieu" rolled into one, according to an American Army intelligence report.
The National Intelligence Service was also on the payroll of the C.I.A., which gave Mr. Montesinos a million dollars a year for his supposed help in combating the narcotics trade, according to former C.I.A. officials who approved the payments.
This was the man Mr. Kurlander headed to see alone on Feb. 26, 1998. While he says he knew that Mr. Montesinos was "an extremely bad man," he maintains that the extent of the government's corruption and human rights abuses were not well known at the time. There was, however, one case he was aware of.
Not long before, the Fujimori government had seized the television station of a Peruvian-Israeli businessman, Baruch Ivcher, after it began broadcasting reports tying the intelligence chief to drug trafficking and corruption. Mr. Kurlander knew that publicity about the case was threatening to become a headache for Peru's government.
As the secret tape rolls, Mr. Montesinos says he is aware of Mr. Kurlander's problems and is "very glad to do whatever I can for you."
Mr. Kurlander describes his own links to the intelligence community and how he has enlisted "friends" - two former C.I.A. officials - to assist him, because the French side "has been acting quite strangely."
Their conversation is interpreted by Grace Riggs, a lawyer and former lover of the spy chief who had a child with him.
Soon Mr. Kurlander raises the Ivcher case. Mr. Montesinos assures him that the pursuit of Mr. Ivcher is not an anti-Semitic "persecution," and Mr. Kurlander offers to help by lobbying his fellow Jews in the United States and abroad.
"Tell him I going to help him with the voting," Mr. Montesinos directs his translator. He is well aware of the "tricky practices of the French government," he says, making a joke about "The French Connection."
The reference, in English, gets the men laughing. Soon spy chief and executive are pledging friendship for life.
The spy chief then proceeds to discuss with another man, who has never been identified, the lawyers and judges who may need to be influenced. The conversation is in Spanish, which Ms. Riggs does not translate.
Finally, she tells Mr. Kurlander that because he helps Mr. Montesinos "without expecting anything in return," the spy chef "wants to do the same thing for you."
"I appreciate that," Mr. Kurlander replies.
"Amor con amor se paga," Mr. Montesinos exclaims.
Love is repaid with love.Still, Mr. Kurlander says, he had doubts. In the following weeks, "nothing happened," he said. "I was very worried that we were lost." In fact, the channel between Mr. Montesinos and the Americans was open and bustling.
Peter Romero, then assistant secretary of state for Western Hemisphere affairs, acknowledged in an interview that he had twice called Mr. Montesinos to show that the case was being "monitored" in Washington.
"He seemed to be a nice enough fellow," he recalled.
The "compelling reason" to get involved, he said, came from Peruvian and American Embassy officials who confirmed the direct involvement of President Chirac and others at the top of the French government.
"We wanted to ensure that that was neutralized," Mr. Romero said.
Two and a half years later, Mr. Romero left government and was hired by Mr. Kurlander as a consultant on Peru for Newmont, where he remained for 18 months.
On April 14, six weeks after the Montesinos-Kurlander meeting, the video cameras were rolling for a visit from the C.I.A. station chief, Don Arabian.
As the meeting nears its end, Mr. Montesinos says he has been collecting information on the French attempt to influence the case and will not let them use "extortion, blackmail and other gangster" methods.
"I'm not working with the telephones, but we will if necessary," Mr. Montesinos says, an apparent reference to wiretapping. "We'll sort out the technical support." The men laugh.
Mr. Arabian, who recently retired, declined a request for an interview.
On May 8, the sixth Supreme Court justice voted in favor of Newmont and Buenaventura. With the vote deadlocked, 3-3, the court administrator appointed a final judge, Jaime Beltrán Quiroga. He was summoned the next day by Mr. Montesinos.
A videotape shows the justice settled on the couch as Mr. Montesinos talks about how, as a lawyer he, too, would normally "keep a distance" from events. But "in these cases," he says, "one has to intervene directly."
Mr. Montesinos avoids direct pressure - "as if we are imposing on you" - but reminds the judge that the case is a matter of national interest: the United States is a key guarantor of coming deliberations over Peru's border conflict with Ecuador.
There is no discussion of payoffs, but the spy chief does question the judge about his professional ambitions. The men reminisce.
"Well, doctor, you have a friend here," Judge Beltrán says.
"My dear, Jaime, then, a pleasure to see you, brother," Mr. Montesinos replies, assuring his guest that he will soon be transferred to Peru's Constitutional Court.
Judge Beltrán's vote was announced two weeks later: Newmont and Buenaventura were awarded BRGM's share - at the purchase price set in 1993: $109.7 million.
When the final transfer was negotiated a year later, the stake was valued at more than five times that.
Today Mr. Kurlander says that whatever his reservations at the time about meeting Mr. Montesinos, he went ahead because nearly everyone told him, "If the French were to be stopped, he was the only one in Peru who would dare to do it."
The transcript is "terribly unfair," Mr. Kurlander says, and leaves out a number of his statements that all he wanted was a "level playing field."
Mr. Kurlander's name has been attached to the meeting and his reputation harmed, he says, though he insists the meeting was no secret. He says his Newmont superiors and his partners in the Benavides family were thoroughly briefed.
"It was my government who recommended - strongly - that we speak with him," Mr. Kurlander said at his home outside Denver. "Tell me what my option is at that point. Do I lay down and just fold, fold up and go home? Or do I fight for what I think is right and fair and just?"
In an interview at his Lima offices, Mr. Benavides, now Buenaventura's chief executive, insisted, "We didn't know what Mr. Kurlander was doing," and added that he did not learn about the Montesinos meeting until the tape was made public several years later.
The Mercury Spill
At Yanacocha, year after year, the mine's geologists had kept striking gold. And with every ton of earth sifted, it became ever clearer that the mine had not just ripped up the landscape; it had remade the social architecture, too.
There were growing class divisions, between the many campesinos who had received well-paying jobs - Yanacocha would eventually employ as many as 2,200 people, two-thirds locals, full time, and up to 6,000 on shorter-term contracts - and the tens of thousands more who had not. People migrating to the region in pursuit of work brought overcrowding and rising crime.
In June 2000, a truck contracted to carry canisters of mercury, a byproduct of mining, spilled 330 pounds of the poisonous metal over 25 miles of road around Choropampa, 53 miles from the mine.
The villagers believed that the mercury was mixed with gold. They scooped it up. Some took it home to cook on their stoves. A World Bank report later said the mine delayed reporting the accident to the national authorities and initially played down its seriousness to the bank.
In the end, the Peruvian government fined the mine $500,000; the company says it has paid $18 million more. A class-action suit has been filed against Newmont in Denver, charging that more than 1,000 people were harmed, some for life.
The extent of that damage has been in dispute from the start. Even so, the spill left deep psychic scars. It became common mythology that mercury had killed newborn babies and caused cancer and other diseases, Dante Vera, a former Peruvian Interior Ministry official hired in 2004 as an adviser to Newmont, wrote in a report to company executives.
At Newmont, it was becoming increasingly clear that the social turmoil was a business problem. The spill, Mr. Kurlander said in a speech a year later, "served as a wake-up call for us."
Soon, he was headed back to Peru, to lead an environmental audit of the mine.
Newmont kept the audit's results within the company, never acknowledging them publicly - either to its shareholders or to the local people. Mr. Kurlander found "a high level of mistrust" of the mine.
But the 44 findings of Mr. Kurlander's audit, which was given to The Times, also confirmed many of the villagers' specific complaints: that fish were disappearing and that lakes, streams and canals were being contaminated, at least one with cyanide.
One stream, Quebrada Honda, had 13 fish per kilometer in 1997, but none by 2000, the audit said. Thousand of tons of rock not processed for gold recovery were generating dangerous acidic runoffs.
In a letter after the audit, Mr. Kurlander says that as the mine expanded, "we eliminated many environmental safeguards that were in the construction and environmental management plans." In all, he wrote to Newmont's new chief executive, Wayne Murdy, the findings were so serious that they could jeopardize the mine's continued operation and leave senior executives subject to "criminal prosecution and imprisonment."
Mr. Kurlander's tough words came on the heels of another memo to Mr. Murdy about the spill: On Jan. 18, 2001, Mr. Kurlander recommended that all the top executives, including himself and his boss, take cuts in their bonuses, of 50 to 100 percent, and that the punishment be made public. Mr. Kurlander singled out the company's environmental team, saying that despite public pledges, Newmont had failed to adhere to American environmental standards.
To his disappointment, Mr. Kurlander said, some bonuses were indeed reduced, but without public notice and much more modestly than he had recommended.
In a letter to Mr. Kurlander three years later, Mr. Murdy said the company had learned from the accident and the audit. Newmont, he said, spent $100 million to fix the environmental problems, including $50 million for a water-treatment plant and $20 million on two dams to prevent sediment from clogging streams and canals. Mercury is now shipped inside triple-sealed, stainless-steel containers and escorted by a convoy of cars.
To Mr. Kurlander, the spill showed the folly of a company ignoring the people, particularly the people most set against the mine. In a memo, he warned that with the mine sunk so low in the peasants' esteem, Newmont would never be able to mine Quilish.
"We have come to this because we have been in denial," he wrote. "We have not heeded the voices of those most intimate with our mine - those who live and work nearby."
It was less than a year after the audit that he retired.
The Peasants Protest
The protests began not long after people began seeing the drilling machines up on the cone-shaped hill above Cajamarca.
Quilish had long been on Newmont's drawing boards. Last year, Newmont mined three million ounces at Yanacocha, its most profitable single source of gold. But the more it pulls from the ground, the more it must replace to remain No. 1.
Back in 2000, the local government had passed an ordinance declaring Quilish and its watershed a protected natural reserve. But Newmont had persuaded a Peruvian court that it had the right to mine because it had acquired the concession years before. In August 2004, the machines moved in.
To many people, that was the final betrayal, said Mr. Vera, the former Newmont consultant. He quit this summer, saying his advice had been ignored.
On Sept. 2, deploying boulders, vehicles, anything they could find, hundreds of campesinos blockaded the narrow mountain road that runs from Cajamarca to the mine.
Several hundred armed officers, including 150 special operations police officers from Lima, were sent in to guard the mine.
The first day was the most violent; protesters were arrested, many of them women and old people, according to Father Arana's colleague, Jorge Camacho. At times during the siege, the police used tear gas. One man was shot in the leg. The company kept the gold coming out of Yanacocha, but only by helicoptering the workers in.
On Sept. 15, there was a regionwide strike, with street demonstrations in Cajamarca. The message, on one of the blizzard of placards in town, was: "Listen Yanacocha. Cajamarca is to be respected."
The protests were organized by the peasants themselves, Mr. Camacho and others say. But the 43-year-old Father Arana, son of teachers from Cajamarca, had been nurturing the movement for many years, even before he founded his group, Grufides, in the late 1990's. (These days, it receives financial assistance from Oxfam.)
The campesinos call him Father Marco, and he is a devoted adherent of liberation theology and its doctrine of social activism for the poor.
He is not the easiest of men. Last spring, he met Newmont's chief, Mr. Murdy, on the sidelines of the company's annual general meeting in Denver. As the priest recalls it, Mr. Murdy tried to be conciliatory, saying he lived by his mother's motto: "We are given one mouth but two ears to listen with." Father Marco says he rebuffed the overture, replying, "In the Bible, there is a saying about some people have eyes that don't see and ears that don't hear."
As the siege ran on at Yanacocha, the priest became a key negotiator between Newmont, the peasants and the Ministry of Mines. It was not long after the demonstrations in Cajamarca that the company surrendered. The machines came down from Quilish. At Newmont's request, the ministry withdrew its permit, too.
What remains up on the mountain is a symbolic wall of mud and straw that the campesinos built to keep the miners at bay.
Standing down at Quilish, with its 3.8 million ounces of reserves, has only intensified the need for new reserves.
"The pressure feels like you're laying track and knowing there's a locomotive right behind you," said the mine's exploration manager, Lewis Teal.
So Newmont is looking elsewhere, in the highlands near San Cerillo, where the jade-green lagoons and peaty grasses act as a store of water for the peasants below.
Many people there worry about the effects of a new mine. Which is why, after Quilish, Newmont is paying for the Peruvian police units protecting the drilling team, said the mine's manager, Brant Hinze.
Even so, Mr. Hinze said, leaving Quilish was the right thing to do. "The thing that the company did - both Newmont and Buenaventura - is listen to the communities, and they said this is something we want you to stay away from," he said.
Newmont's Peruvian partner, Mr. Benavides, argued that exploration of Quilish had not been abandoned, simply suspended.
"We have the concession, and we have the land," he said. He added: "I do not understand what social license means. I expect a license from the authorities, from the minister of mines. I expect a license from the regional government. I don't expect a license from the whole community."
Still, the idea of social license is at the heart of the agreement that ended the siege: If Newmont hopes ever to mine Quilish, it first must win the community's consent.
Company Social Work
So to promote Yanacocha's well-being and expansion, Mr. Hinze has become the kind of mine manager he never imagined being. He says he had asked for the job running Yanacocha because of its sheer scale - "it's big, it's profitable," is how he puts it. Fifty years old, silver-haired and steely eyed, 6 foot 3 and 255 pounds, he is a man of scale himself. His idea of recreation, he says, is riding his Harley or swimming with hammerhead sharks.
Now, he says, he spends 70 to 80 percent of his working time on social issues. On a recent day, he ate roasted guinea pig at a lunch with a peasant group. A few days later, he attended a ceremony celebrating a gift of $500,000 for a new road around San Cerillo.
"Modern mining can coexist with cattle, agriculture and tourism," he told one gathering. "Today we begin a new history for communities around here."
Newmont says that it paid $180 million in taxes to Peru's government last year, and that under a new law, half was returned to the Cajamarca region. But to its frustration, the company says, the local government has largely been unable to use the money to benefit the people - and most of the people here remain achingly poor.
So the company, albeit ambivalently, has become something of a surrogate government. It is contributing money for schools and clinics and building some small water treatment plants in the villages. In all, the company says it will spend nearly $20 million this year on social programs.
Water remains a divisive issue: Father Arana and his allies argue that a new, every-three-weeks testing protocol is insufficiently independent. The peasants continue to complain.
But company and local officials say there have been no environmental accidents at Yanacocha in more than two years, and the mine says it manages its water to ensure there is enough for the community.
But the biggest issue is the one looming over every modern industrial gold mine: What happens when the ore that lured the miners here is gone?
Over 13 years, Newmont has moved mountains for gold - 30 tons of rock and earth for every ounce. By the time it is through, the company will have dug up a billion tons of earth. Much of it will be laced with acids and heavy metals.
Three years ago, after Newmont acknowledged that 36,700 fish were missing from a river contaminated by the mine, the World Bank hired an American geochemist, Ann Maest, to study the streams and canals flowing from the mine.
In the short term, she concluded, the water was safe for human use. But long term, she said in an interview, the company's own tests show that all the components are in place for the huge piles of rock to leak acids that will pollute surface and groundwater.
The only preventive, she said, would be "perpetual treatment."
Mr. Hinze, who was recently appointed head of Newmont's North American operations, insists that the company's plan for closing the mine will take care of long-term treatment and cleanup.
"We plan on being here a very long time," he said.
Newmont has yet to put aside money for long-term treatment, though it says it will comply with a Peruvian government requirement due to take effect in 2007. But to pay for cleanups, the company needs to keep profits high. To keep profits high, it needs to keep finding and mining more gold. Yet increasingly, the unmovable reality is that to keep mining more gold, it has to make peace with the people who will be here long after the miners leave.
Mr. Hinze and Newmont insist that that can - in fact, must - be done, even if some people may never be won over. "There will always be a level of mistrust," he said. "Unfortunately, we can't please everyone."
Mr. Vera, the former Newmont consultant, is not so confident. He says he sometimes thinks that the clash between the mine and the peasants is so fundamental as to be beyond even the best intentions.
"Mining negatively affects the Andean cosmic vision of the unity of nature," he said. "The conflict cannot be settled with money. Mining generates resentments that are difficult to heal."
ECB gold sales
http://www.ecb.int/press/pr/wfs/2005/html/fs051025.en.html
"In the week ending 21 October 2005, the decrease of EUR 112 million in gold and gold receivables (asset item 1) reflected sales of gold by two Eurosystem central banks (consistent with the Central Bank Gold Agreement of 27 September 2004)."
not as much gold sold by central banks as I thought, about 8.91 tonnes vs. 9.62 tonnes expected each week (500 tonnes divided by 52 weeks).
YTD 28M tonnes actually sold vs. 38.4M tonnes expected.
I'm wondering if some of this short position may be oil, natgas, copper, silver, sugar, etc. rather than securities...