Wednesday, December 05, 2007

Precious Metals Market Roundup

Some recent news items that caught my eye:

1. NovaGold (NG)'s stock price was cut in half in one day after NG announced that estimated mine construction costs at its Galore Creek project would be around $5 billion, up from the $2 billion previous estimated at the time of the feasibility study. I bet some NG shareholders must be regretting not tendering their shares to Barrick. Although NG's joint venture partner in the project, Teck Cominco (TCK) agreed to spend more money to investigate the viability of the project, apparently, Clive Maund recently warned that NG may possibly end up being delisted. I bet Barrick execs must be snickering in delight... but probably not too loudly because NG and Barrick recently agreed to put their differences in the past regarding the development of their joint Donlin Creek project, which reportedly contains around 30 million ounces of gold reserves.

Actually, the Galore Creek news is generally bullish for Gold prices, because it raises the specter that not as many gold mining projects may be coming on line as previously expected and highlights again the tremendous cost pressures faced by the industry which should help to keep a floor for the gold price.

2. It appears that OPEC won't raise oil output until at least January. That may help to keep a floor for oil prices. This may be partly offset, at least in the short term, by the fact that a U.S. intelligence report was recently released stating that Iran has had no weapons of mass destruction program since 2003. Another embarrassing blow for the Bush administration and for U.S. foreing policy. Iran will probably be emboldened by this development, already saying that it amounted to a "declaration of victory" for Iran. As a result, I would not expect oil prices to slide too low on this news as it will probably put the U.S. on an even firmer collision course with Iran. Condi Rice was quoted as saying "that frankly is good news", in a laughably glib response to the intelligence release.

3. Rob McEwen, Chairman and CEO of US Gold Corp (UXG) exercised warrants to increase his shareholding in UXG to 21.5% in a likely effort to shore up UXG's falling share price. Some shareholders have likely been concerned by what appears to be a management shakeup recently at UXG. I would not bet against Mr. McEwen however. In a sector where good management is quite hard to find, I believe that Mr. McEwen is one of the best. UXG may be enjoying a washout bottom on huge volume the last couple of days.

4. This was announced on November 6, but only recently caught my eye: GSS's total cash costs were an awe-inspiring $707 for Q3, accoridng to GSS's Q3 report in which they announced another loss to the tune of $12.7 million. $707! Unbelievable...

2 comments:

Unknown said...

Nice stuff!!..All the comments in your post are seem very nice.We’re all eagerly waiting for your next post....Thanks for insight.....



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