Tag Archives: Barrick Gold

Business, Finance, Occupation & Industry

South African Miners No Longer Willing to Pay to Play

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By Rich Duprey, The Motley Fool

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Considering the work stoppages and violent clashes that have become the norm at South African precious-metals mines, perhaps the miners were wondering exactly what they were getting for their money. An expose by South Africa‘s Daily Maverick has uncovered a system where miners such as AngloGold Ashanti and BHP Billiton surreptitiously paid for the salaries of the heads of the local mining unions to keep the mine workers in line, and it’s only because the miners sought to end the “uncomfortable arrangement” with the unions that the matter came to light.

Mining in mineral-rich South Africa has been contentious for years, but in recent months, clashes have become particularly violent, with a strike last August at Lonmin’s Marikana platinum mine leaving 44 people dead and bringing the crisis to the forefront.

Much of the violence is said to be a result of the unions’ competition to represent the workers as the new Association of Mineworkers & Construction Union seeks to unseat the powerful National Union of Mineworkers, which is closely tied to the African National Congress political party. AngloGold Ashanti paid the salary of NUM‘s president, while BHP paid the salary of the deputy president. The Lonmin clash was in part a result of workers who no longer wanted to be represented by NUM, as they saw a conflict of interest between the union representatives and the miners.

Mining operations have long been subject to the vagaries of strikes and violence in South Africa. Harmony Gold suspended its operations at Kusasalethu because of security concerns, Gold Fields lost 35,000 ounces of production and had its credit rating reduced by Standard & Poor’s because of labor unrest (and reduced its full-year production forecast by 200,000 ounces), and Xstrata has had to halt activity several times as a result of union violence.

From Barrick Gold to Kinross Gold, miners have been looking to exit from their South African holdings — partially as a result to bring costs under control as commodity prices have plunged, but also as a means of insulating themselves from the vagaries of the country’s labor problems.

The Daily Maverick indicated that jealousy over the payouts may have been a contributing factor to the violence, as unions on the outs wanted in on the lucrative stipends the others were receiving. Since the payments were said to be originally enacted to create a more harmonious relationship with the unions, the escalating level of clashes may have left the miners wondering what they were getting for their money.

It was a relationship that was bound to be problematic considering the inherent conflicts of interest, and ending the system may help to ameliorate, even if it doesn’t eliminate, the violent and bloody protests of labor unions.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Barrick Battles Rage on 2 Fronts

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By Rich Duprey, The Motley Fool

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Underscoring the turmoil ripping through the world’s biggest gold miner in the wake of a court order suspending its Chilean Pascua-Lama project, Barrick Gold reported that three top executives from its South America operations have resigned, including the president, Guillermo Calo, who was appointed to the position just last July.

Pascua-Lama is one of the world’s largest gold and silver resources, with nearly 18 million ounces of proven and probable gold reserves, 676 million ounces of silver, and an expected mine life of 25 years. It was expected to produce an average of 800,000 to 850,000 ounces of gold and 35 million ounces of silver in its first five years of operation.

Earlier this month, the Chilean court agreed with the concerns of local indigenous tribes that Barrick is mining in pristine glacial regions and causing environmental damage. It ordered the project suspended until the miner addresses those concerns. The Reuters report of the executive resignations indicated that it was part of a larger effort by Barrick to shake up the project and meet the regulatory mandates necessary to get it back on track.

South America has become an unsettled region to mine in. Newmont Mining had its Peruvian Conga project brought to a short stop over environmental concerns, while Vale recently abandoned an Argentinean project because of the country’s policies. Costs for Pascua-Lama have ballooned over the past decade and now stand at about $8.5 billion, putting it at risk of becoming an albatross around the miner’s neck even before the court decision. Barrick even resorted to bringing in engineering specialist Fluor to expand the scope of its project management before the court order.

Barrick now says it is reviewing all options available to it, warning that if construction activities in Chile did not resume before the end of the year, it could suspend the project altogether.

Investors are also becoming restless with management, which sought to give its co-chairman, John Thornton, a massive $11.9 million “signing bonus.” An equally massive 82% of those voting on the non-binding referendum at the annual shareholders’ meeting the other day rejected the payout, even as they approved all the directors that stood for re-election.

Although management isn’t required to follow the shareholder statement, it would probably be a wise move to placate investors until it can also mollify Chilean regulators. With falling gold prices eating into profits, Barrick can’t afford to fight a war on two fronts.

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The article Barrick Battles Rage on 2 Fronts originally appeared on Fool.com.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

The World's Top Bank Tells Investors to Shun Gold

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By Doug Ehrman, The Motley Fool

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For the second time this year, Goldman Sachs slashed its forecasts for gold prices for both 2013 and 2014, adding to the pressure on gold prices lately. So far, 2013 has seen the Dow Jones Industrial Average up nearly 11%, the S&P 500 up nearly 9%, and gold prices down more than 5%. Even with the global and U.S. economies continuing to show signs of weakness, gold prices have moved very little since late 2011. Given the negative view that Goldman is taking of gold, the bank now suggests shorting the commodity. While I don’t see things for gold as being quite that weak, significantly reducing your exposure to gold seems prudent.

Gold Price in U.S. Dollars data by YCharts.

Goldman’s case against gold
In the current round of price reductions, Goldman lowered its average price per ounce outlook for 2013 from $1,610 to $1,545. The investment bank now sees the price contracting to $1,350 in 2014, which is a significant reduction from the $1,490 price target it once held. For the rest of the year, Goldman sees plenty of negative pressure: “While there are risks for modest near-term upside to gold prices should U.S. growth continue to slow down, we see risks to current prices as increasingly skewed to the downside as we move through 2013. In fact, should our expectation for lower gold prices continue to prove correct, the fall in prices could end up being faster and larger than our forecast.”

One of the potential catalysts for the above-mentioned increased decline is an accelerating deterioration in investor confidence. A great number of gold investors piled into the commodity on a speculative basis to not miss the expected move. As prices continue to stagnate and fall, investor capital is likely to look for greener pastures more and more quickly. As speculative positions are unwound and more stop-losses at triggered, the move lower could be sharp.

Spikes lower are actually a hallmark of commodities. Prices usually trend gradually higher, or even sideways, but when moves lower happen, they tend to be violent and expensive. This is one of the reasons so much risk is often associated with commodities trades — the move lower can occur before you have a chance to get out. Owning shares of ETFs such as the SPDR Gold Trust can mitigate some of this risk, but large speculative positions in GLD may have contributed to gold’s run, making the relative protection of the ETF somewhat diminished.

Is there safety in miners?
For an extended period, gold miners such as Barrick Gold have underperformed the pure commodity play. Over the past year, Barrick is down more than 40%, while GLD is down about 7%. Over the long term, you would expect this relationship to normalize, meaning miners should outperform at some point. When this happens, however, there’s no guarantee that either investment will be headed higher — the miners

From: http://www.dailyfinance.com/2013/04/14/the-worlds-top-bank-tells-investors-to-shun-gold/

Business, Finance, Occupation & Industry

Aloca's Stock Loses Luster Along With Gold

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By Rich Duprey, The Motley Fool

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Following a week that saw the Dow Jones Industrial Average gain 275 points despite horrendous economic data, the index closed out Friday unchanged from the day before. The biggest loser on the day, however, was aluminum producer Alcoa‘s  stock, which pulled back 1.2%, putting it within striking distance of its 52-week lows again.

Although I’ve been (incorrectly) calling a top for a while now, perhaps it was the lack of consumer confidence as measured by the University of Michigan’s survey that finally did in the index’s inexorable climb. The survey plunged to 72.3 from 78.6, the lowest level in nine months, and said to be the biggest miss to expectations in the survey’s history. Of course, retail sales for March also fell, adding to the drumbeat of negativity we’ve seen, which is why the stock market‘s continued rise is so incongruous. Apparently the Federal Reserve‘s pumping of tens of billions of dollars into the economy, along with Japan‘s recent opening of the floodgates, is all that’s necessary to artificially levitate the markets.

I maintain it’s all going to end badly, and sooner rather than later. In the meantime, commodities are getting crushed, and gold has officially reached bear-market territory, but Alcoa’s own earnings — and not just macroeconomic issues — have played a role in its performance since they were released. It may have beaten estimates for profits, but revenues came in weak and guidance seemed a head-scratcher, leading analysts to question whether the aluminum producer wasn’t wearing rose-colored glasses.

Commodities crushed
Since Alcoa’s unofficial kickoff to the earnings seasons, its stock is down 2%. Yet year to date it’s off 5%, a wide divergence from the overall performance of the Dow, which is up 13%, and that’s just a torrid pace that can’t be maintained.

As I mentioned before, though, gold is now in bear territory, having fallen 21% from its peak. It fell more than $63 an ounce on Friday, or more than 4%, to close trading at just over $1,500 an ounce (intraday it was as low as $1,480 an ounce). That’s a level it hasn’t seen since July 2011, as traders seek better returns elsewhere.

The consequence, however, is that precious-metals miners and streamers are being taken down, too. The world’s largest gold miner, Barrick Gold tumbled 9% yesterday, but it has the added problem of having its huge Pascua-Lama project in Chile being placed on hold as it looks at delays measured in months (at least) before it’s able to start up again.

The worst performer in the sector was NovaGold Resources , which fell 13% yesterday as it scrambles to make sense of its Donlin Gold project in Alaska, the biggest known undeveloped gold deposit anywhere. The joint venture with Barrick has essentially been in limbo since NovaGold’s partner said last year it no longer made economic sense to pursue it.

About the only positive thing the miner can hang its hat on

From: http://www.dailyfinance.com/2013/04/13/alocas-stock-loses-luster-along-with-gold/

Business, Finance, Occupation & Industry

Is South America Losing Its Luster for Miners?

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By Rich Duprey, The Motley Fool

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After Barrick Gold became the latest miner to have a development project halted in South America, investors need to ask whether the continent will lose its sheen as an attractive haven for mining.

A Chilean appeals court ordered Barrick to stop development at its Pascua-Lama gold and silver project on the Argentinean border after approving complaints from local indigenous groups until it addresses their environmental concerns. 

Mining collapse
Last year, Newmont Mining saw its Conga gold project in Peru brought to a standstill after environmental concerns were also raised. The government says it’s on the “back burner” now and with most of the locals opposed to it going forward, a project that was once estimated could yield some $2 billion annually in gold is now collecting cobwebs. Vale abandoned an iron ore project in Argentina after the country’s fiscal policies caused costs to soar and government and labor unions made untenable demands while Yamana Gold previously had operations suspended at its Agua Rica project in Argentina after violent clashes with locals and suspended export sales — since restarted — from Alumbrera after the country adopted revenue repatriation laws.

Sticker shock
Barrick, as the world’s biggest gold miner, had been looking to the $8.5 billion Pascua-Lama mine to carry it forward, but under development for a decade, the cost and scale of the project has escalated beyond its ability to control it. It subsequently outsourced much of the work to engineering and construction firm Fluor following the successful completion of its development of Pueblo Viejo, a joint venture between Barrick and Goldcorp.

Yet there’s trouble brewing there as environmentalists contend Barrick is violating the law against mining on or near glacial areas. Ejecting the gold miner from the country completely would not upset the groups arrayed against it.

Sic semper tyrannis
In the end, it becomes a question of whether the cost of doing business in South America is worth the risk. As many industries saw in Venezuela during strongman Hugo Chavez‘s rule, and as they’re witnessing now under his protege Cristina Kirchner, livelihoods will be expropriated on a whim or the cost of doing business will be raised to such a degree as a result of ruinous fiscal policy that it no longer makes economic sense to do business there.

Investors will not only need to question what the price of gold and silver will be in determining whether Barrick or Yamana or Goldcorp is a worthwhile investment, but considering geographic risk will become just as big a component of one’s due diligence.

Goldcorp is one of the leading players in the gold mining market. For the last several years, investors have been the beneficiaries of several successful acquisitions and strong organic growth. Goldcorp’s low-cost production of one of the most sought-after metals in the world continues to make this stock an attractive choice for long-term investors. To learn everything you need to know about this mining specialist, you’re invited to check out The Motley Fool’s premium

From: http://www.dailyfinance.com/2013/04/12/is-south-america-losing-its-luster-for-miners/

Business, Finance, Occupation & Industry

Dangerous Times Ahead for Gold

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By Doug Ehrman, The Motley Fool

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Whether you invest in the SPDR Gold Trust ETF or prefer a direct allocation to gold miners like Barrick Gold or Goldcorp , global macroeconomic issues are swirling to push gold prices into a volatile period. Pressures out of China and the fallout from the Cyprus bailout in the EU are just beginning to be understood. While the pure play of the ETF may be safer, the recent underperformance of the miners has some investors convinced that despite ballooning production costs, these embattled companies are the smarter play.

In the following video, Fool.com contributor Doug Ehrman discusses two of the most important global macro catalysts affecting gold today. While the full ramifications of these developments are hard to gauge, he points to certain factors that should remain on the minds of gold investors in the coming months.

Goldcorp is one of the leading players in the gold mining market. For the past several years, investors have been the beneficiaries of several successful acquisitions and strong organic growth. Goldcorp’s low-cost production of one of the most sought-after metals in the world continues to make this stock an attractive choice for long-term investors. To learn everything you need to know about this mining specialist, you’re invited to check out The Motley Fool’s premium research report on the company, which comes with a full year of ongoing updates and analysis to keep you informed as key news breaks. Click here now to claim your copy today.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

NovaGold Earnings: An Early Look

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By Dan Caplinger, The Motley Fool

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Spring is finally here, and a new earnings season is right around the corner. On Wednesday, NovaGold Resources will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Gold mining stocks have gotten crushed over the past year, as a combination of weak bullion prices and cost-related struggles have led to intense pressure throughout the industry. Yet NovaGold has gotten the attention of hedge-fund investors John Paulson and Seth Klarman, who have taken sizable stakes in the company. Let’s take an early look at what’s been happening with NovaGold over the past quarter and what we’re likely to see in its quarterly report.

Stats on NovaGold Resources

Analyst EPS Estimate

($0.03)

Year-Ago EPS

$0.07

Revenue Estimate

$0

Year-Ago Revenue

$0

Earnings Beats in Past 4 Quarters

2

Source: S&P Capital IQ.

Will NovaGold Resources shine brighter this quarter?
It’s hard for analysts to get too excited about NovaGold because it hasn’t reported even minimal revenue since 2010. The single price target on the stock of $17.10 is wildly out of line with its current price, and shareholders have taken a substantial hit lately, with the stock having lost a quarter of its value since the beginning of the year.

NovaGold has several promising development-stage mining properties in its portfolio, although none of them has gotten to the production stage at this point. The company claims its Donlin Gold joint venture with Barrick Gold in Alaska is the world’s largest known undeveloped gold deposit, with project permitting having begun last August. Moreover, its Galore Creek venture with Teck Resources in British Columbia has promising prospects for copper, silver, and gold.

But the big problem that NovaGold has faced is that high production costs have made those projects less economically viable. Last summer, Barrick said that Donlin no longer met its goals for suitable investments because of substantial needs for capital, and although the permitting process has continued, it’s far from certain whether Barrick would be willing to go forward even if the project is approved. Meanwhile, NovaGold has said it would try to sell its 50% interest in Galore Creek, but the company has only been willing to enhance the project’s value on a reduced budget.

Meanwhile, NovaGold’s capital structure is becoming more precarious. Earlier this month, the company sent notice to its convertible bond holders that they could exercise their rights to sell the bonds back to NovaGold at par. NovaGold has enough cash to cover its repurchase of any bonds that investors offer, but with no revenue, it definitely …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Have Gold Miners Lost Their Luster?

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By Matt DiLallo, The Motley Fool

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It’s been an awful start to the year for investors in gold miners. Shares of both Goldcorp and Gold Resource hit 52-week lows this week while many other gold miners have seen their shares dive this year. Take a quick look at this year-to-date performance chart of a basket of gold stocks and you’ll see what I mean:

GG data by YCharts

I hope you didn’t stare at that chart too long; it’s pretty brutal. What happened, and is now time to invest in these gold miners?

Lost its luster
Gold, which is viewed by many investors as a safe haven just hasn’t been needed in recent weeks. The precious metal hit a 10-month low earlier this week as signs continue to point to a strengthening economy. It’s also quite possible that we’re becoming immune to bad news.

European fears of a contagion from Cyprus eased almost as quickly as they flared up. Even sabre rattling from North Korea hasn’t seemed to strike too much fear into the markets when that country supposedly has the capabilities to wipe Los Angeles off the map.You’d think that would have people buying gold and running for the hills. 

Amid all this, overall investor interest in gold has fallen to the point that Credit Suisse has cut its price prediction for gold to $1,580 an ounce this year and $1,500 an ounce for next year. Given that gold is the contrarian’s investment of choice, now just might be time to be that contrarian and buy a gold miner. The hard part is determining which gold miner to buy.

Now on sale
While it hasn’t fallen as far as some of the names on my dismal chart from above, Goldcorp is viewed by many as being the gold standard when it comes to gold investments. That being said, if you like income you might want to look at Gold Resource as it pays a high monthly dividend. You’re options don’t end there — Barrick Gold offers investors the opportunity to invest in one of the world’s largest pure gold mining companies. As you can see, it gets complicated very quickly.

That’s why I think a lot of investors might be drawn to a company that simply enables you to profit from the price appreciate of gold. By taking away the operational risks that can tarnish the names I just mentioned, gold streamer Sandstorm Gold is a company that’s worth a deeper look. The company has a management team that’s experienced in streaming and a diversified production base that should yield long-term returns. 

Moving away from operational risks is more important than you’d think. Take Gold Fields for example, the company’s operations at its two mines in Ghana were halted recently after a strike broke out over a pay dispute. This isn’t the first time the company has been hit by labor unrest as a 23-day strike shut the company’s South African mines …read more

Source: FULL ARTICLE at DailyFinance