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Gold is a highly sought-after precious metal which, for many centuries, has been used as money, a store of value and in jewelry. The metal occurs as nuggets or grains in rocks, underground "veins" and in alluvial deposits. Modern industrial uses include dentistry and electronics, where gold has traditionally found use because of its good resistance to oxidative corrosion.
Fresnillo, Lonmin, Hochschild and Aquarius rise as silver and platinum rally
Even better than expected US jobs figures released by the Labor Department on Friday failed to weaken gold, which remained close to US$1,250/oz and just US$20 away from the all time high of US$1,266/oz.
Investors have been pouring money into safe haven assets all week due to concerns about the pace of the economic recovery, fuelled by recent jobs and manufacturing data released in the US. This week’s jobless claims update failed to inspire optimism in the markets, showing a smaller than expected decline of 6,000 in initial unemployment benefit claims, which now currently stand at 472,000.
Friday’s non-farm payrolls figures were much better, revealing a decline of 54,000 in August, while analysts expected to see more than 100,000 jobs lost during the month. Meanwhile, the private sector added 67,000 jobs, more than double the projected increase of 30,000.
The FTSE 100 got a boost from the US jobs figures, rising 1.1% on friday to post a weekly gain of 4.3%. The Dow Jones Industrial Average tacked on nearly 3% during the past five days of trading.
Gold, which is viewed as a safety asset and normally moves inversely to equities, slipped below US$1,240/oz immediately after the data was released, but climbed back to US$1,246/oz later in the day after the US dollar fell against the euro.
While the jobs data suggested that the recovery wasn’t running out of steam as quickly as thought and recent upbeat statements from the Fed that the economy was strong enough to show growth next year, double dip fears and concerns about the strength of the economy still remain, serving as the main support factor for gold.
Gold was almost completely unresponsive to this week’s positive updates from China and Australia that came out middle through the week. China’s PMI (purchasing managers index) rose from 51.2 to 51.7, signalling a faster rate of the expansion of the country’s manufacturing sector, while Australia’s GDP grew at an annualised rate of 1.2% in Q2, marking the fastest growth in three years.
Also on Wednesday, the Institute of Supply Management (ISM) reported that its US manufacturing index unexpectedly moved up to 56.3 in August.
Gold stood at US$1,246/oz, unchanged from Tuesday’s levels, while silver rallied from US$19.24/oz to US$19.85/oz and platinum climbed from US$1,518/oz to US$1,551/oz.
Gold miners were headed in different directions this week. Randgold Resources (LON:RRS) slid from 5,925 pence to 5,910 pence, while African Barrick Gold (LON:ABG) climbed from 596 pence to 602 pence and midcaps Petropavlovsk (LON:POG) inched higher from 1,033 pence to 1,038 pence
Silver and platinum producers did better.
Silver miner Fresnillo (LON:FRES) rallied from 1,056 pence to 1,109 pence. Another FTSE 100 constituent, platinum miner Lonmin (LON:LMI), improved 1,529 pence to 1,598 pence.
Midcap silver producer Hochschild Mining (LON:HOC) rose from 322 pence to 369 pence and Aquarius Platinum (LON:AQP) climbed from 269 pence to 303 pence.
Small Cap News
West African-focused gold mining company Cluff Gold (LON:CLF) has appointed its technical director Douglas Chikohora as a non-executive director and consultant to reflect its focus on development.
Noventa (LON:NVTA) has secured over £5 million in new capital, with a £3.2 million equity placing and a separate £1.9m share subscription agreement. The company said that the funds will be used for a combination of capital expenditure and general working capital purposes.
Prosperity Minerals (LON:PMHL) told investors that it continued its share buy-back programme yesterday, with purchases worth over £2.7 million. The company bought a further 1.92 million shares at 145.5 pence each, in on-market transactions, adding to the 1.35m shares it bought on the 1st September.
Churchill Mining (LON:CHL) confirmed that it has held discussions with third parties regarding its East Kutai Coal Project in Indonesia, but “no firm offer has been agreed at this time”.
The only area of African Aura Mining (LON:AAAM) operations that has not moved ahead is the share price, according to Evolution Securities mining analyst Charles Kernot. In a note to investors, Kernot examined this 'anomaly of the market’, highlighting that the company’s proposal to split into two entities - to focus on its gold and iron assets separately - “should help the market to recognise the substantial value” inherent in both sides of the business.
Anglesey Mining (LON:AYM) today reported a breakthrough for its 41% owned Labrador Iron Mines (TSX:LIM), which can finally now proceed with mine and plant construction after striking a deal with local First Nations. The agreement with the Quebec Innu calls for an immediate removal of the barriers that had restricted normal access from the town of Schefferville to adjacent mining properties.
Noventa (LON:NVTA) has decided to accelerate the assessment of its new ‘potentially significant’ tantalum discovery, which was found near the Marropino mine in Mozambique. Separately, the company also announced that it has secured over £5 million (US$8m) in new capital, with a £3.2 million (US$5m) equity placing and a separate £1.9m (US$3m) share subscription agreement.
Firestone Diamonds' (LON:FDI) takeover of Kopane Diamond Developments (LON:KDD) took another step forward this afternoon, after the company’s shareholders approved the deal. At a general meeting in London, Firestone’s shareholders voted on the proposed acquisition, and the ‘Scheme of Arrangement’ - which sets out the terms of the share-based transaction - was duly passed.
Kryso Resources (LON:KYS) has announced that China Nonferrous Metals International Mining (CNMIM) has completed the due diligence process necessary to proceed with the £10.99 million investment in the company. The company said that CNMIM confirmed that it had concluded its legal, financial and technical due diligence on Kryso “to its satisfaction”.
Prosperity Minerals (LON:PMHL) has made another significant transaction as part of its ongoing share buy-back programme. Yesterday, the company bought 1.35 million shares on-market for 145.5p per share.
Firestone Diamonds' (LON:FDI) shares have jumped over 15% following an upbeat statement, ahead of tomorrow’s general meeting. The company highlighted that it has made significant progress with the development of the BK11 kimberlite and production is ahead of schedule. Following the Phase 1 commissioning in July, the BK11 plant is currently running with the average throughput of 185 tonnes per hour (tph), 23% ahead of the initial 150tph target.
China-focused iron ore trading business and real estate investor Prosperity Minerals Holdings (LON:PMHL) has received all the necessary approvals for the acquisition of a 25% interest in Liaoning Changqing Cement and the deal was completed today.
Shanta Gold (LON:SHG) said today it had been granted a mining licence for its Chunya Gold Project in southern Tanzania. The company said that the licence allows for construction to start as soon as the detailed planning has been completed - currently scheduled for the last quarter of this year.
Orosur Mining (LON:OMI, TSX-V:OMI) has reported a 1.04 million ounce (Moz) maiden NI43-101 gold resource for the Pantanillo Norte deposit in Chile.
The positive news-flow from Noventa’s (LON:NVTA) Marropino mine continued today with the confirmation of last week’s tantalum discovery, which the company said had the potential to extend the life of mine and resource.
Orosur Mining (LON:OMI, TSX-V:OMI) has appointed a new Chief Operating Officer - Luis Albano Tondo - who will join the company on the 1st September 2010.
Red Rock Resources (LON:RRR) said Jupiter Mines is to fast-track its Mount Ida Magnetite Project in Western Australia. AIM-listed Red Rock is a 5.23% shareholder in Jupiter, which has a tie-up with Brian Gilbertson’s Pallinghurst Resources and Korean giant Posco.
Increased production at its flagship Co-O mine and higher gold prices have helped Medusa Mining (LON:MML) to record-breaking results in the last financial year .
While focusing on development to boost future performance, Norseman Gold (LON:NGL) was still able to produce enough gold to remain profitable, beating investor expectations with its full year results.
Stronger gold demand made up for a rise in production costs and better grades offset a brief mining stoppage, driving Pan African Resources’ (LON:PAF, JSE:PAN) full year revenues up 30%.
African Aura Mining (LON:AAAM, TSX-V:AUR) has released results for the quarter ended June 30, 2010 and also announced that it is considering splitting the firm into two separate companies.
Initial drill results from Ovoca Gold’s (LON:OVG) Olcha project comfortably achieve commercial status, according to Davy’s resource expert Job Langbroek. In a note to investors, the Dublin-based resource analyst reflected on Olcha’s significant drilling results. Langbroek emphasised that the ‘commercial’ grades would even support underground projects.
Finders Resources (ASX, LON: FND) has received firm commitments from investors for a placement of 75 million new ordinary shares issued at A$0.28 per share to raise gross proceeds of AUD$20.95 million.
Large and Mid Cap News
Xstrata Zinc, a division of Xstrata Plc (LON:XTA), has ended discussions with Canada`s Noranda Income Fund (TSX:NIF.UN) about a possible acquisition of the fund. The two companies had entered into a non-binding letter of intent about the potential acquisition of the fund by Xstrata, initially at a cash price of C$3.40 per unit.
