Gold climbed close to its record highs of US$1,266/oz on Friday as investors continued pouring money into safe haven assets, primarily precious metals, amid uncertainties about the ongoing economic recovery in Europe and the US after a series of mixed updates was released this week.
The stock market declines were triggered by a downward revision of Q1 US GDP growth, which was lowered to 2.7% in the final reading from an initial estimate of 3.2% and an updated 3%. Equities got some support from a positive update on the University of Michigan consumer confidence index, which reached its highest level since January 2008 at 76, compared to 73.6 in May.
Earlier in the week it was reported that new home sales plummeted 32.7% in May to an all time low of 300,000 annualised. The National Association of Realtors said on Wednesday that existing home sales dropped by 2.2% during the month. The rate of home sales was severely impacted by the end of the federal tax credit for home buyers, which ran until April 30. In other news, US house prices were reported to have increased by 5% in June compared to an annualised 4.3% rise in May.
US jobless claims data showed a decline of 19,000, but the number of people applying for benefits remained at roughly the same level as at the start of the year at 457,000.
Markets on both sides of the Atlantic were in a freefall with the Dow Jones Industrial Average plummeting from almost 10,600 to below 10,150, while the FTSE 100 tumbled 3.9%, nearly reaching the key 5,000 mark.
China’s decision to gradually switch to a more flexible rate of its national currency had a limited ipact on gold prices. It is yet unclear what effect the gradual loosening up of China’s exchange rate policy, which is expected to lead to an appreciation of the yuan and lower exports from China, is going to have on commodity prices. The move is believed to have been triggered by an increase in the inflation rate, which has already reached the government’s annual target of 3%, and the high growth rate, suggesting an overheating economy.
A strong national currency would make dollar-denominated commodities including oil and metals cheaper for China, boosting imports.
Gold was in demand late in the week prior to the start of a G-20 summit in Canada with the world’s leading economic powers expected to discuss various measures to solidify the ongoing economic recovery, find a resolution to Europe’s debt woes and look for common ground on reforming the financial regulatory system.
Gold stood at US$1,255/oz, while silver and platinum improved to US$19.10/oz and US$1,569/oz respectively.
Major mining stocks were mixed. Gold miner Randgold Resources (LON:RRS) improved from 6,430 pence to 6,480 pence. Silver miner Fresnillo (LON:FRES) dropped from 1,060 pence to 1,003 pence, while platinum miner Lonmin (LON:LMI) slid from 1,664 pence to 1,523 pence.
Midcaps were in decline. Gold producer Petropavlovsk (LON:POG) slipped from 1,314 pence to 1,234 pence. Silver producer Hochschild Mining (LON:HOC) retreated from 324 pence to 310 pence and Aquarius Platinum (LON:AQP) fell from 386 pence to 360 pence.
Small Cap News
Finders Resources (ASX:FND, LON:FND) expects to complete its current reverse circulation drilling program at the Ojolali gold-silver project in Sumatra by Friday 25th June and aims to increase open-pittable oxide resources to a level sufficient to support a viable start–up mining operation.
In light of its positive long-term global macroeconomic outlook for the global metals, mining and resources sector, a new resource-focused group, Vallar Plc is set to join the London Stock Exchange with a proposed £600m IPO.
Australian based miner Allied Gold (LON: AGLD, TSX: ALG, ASX: ALLD) will stay hedge free after completing project funding for the Gold Ridge project in the Solomon Islands, with a US$35 million loan from the International Finance Corporation (IFC), a member of the World Bank Group.
In its final results statement, DiamondCorp (LON:DCP, JSE:DMC) said it has emerged from the global financial collapse in better shape than it would have expected only a year ago, when the company started underground mine development at the Lace mine in South Africa, following the cessation of surface mining activities.
JSC Polymetal (LON:PMTL, MICEX, RTS: PMTL) looks set to acquire the mining license for the Svetloye gold deposit in the Russian Far East with a US$9.25m cash deal with Fortress Minerals Corp (TSX-V:FST). The JSC proposal was accepted by Fortress as a superior proposal to a pre-existing arrangement with MacRitchie Metals Pte Ltd.
A new world-class zinc mine may soon be identified in southwest Ireland, according to independent merchant bank Beaufort International. In a research note on Connemara Mining (LON:CON), Beaufort highlighted that Connemara controls one of two adjacent licence blocks, from which Beaufort said exceptional recent drilling results and much anticipated resource estimates are likely to have just scratched the surface of prospects which are still over 60% unexplored.
In its interim results, Stellar Diamonds (LON:STEL) was upbeat on its progress after a transformational six-months in which it joined the AIM market through the reverse takeover of West African Diamonds. “With an improving diamond sector I feel that the future outlook for Stellar is good as we ramp up production and position the company to become one of the largest diamond producers in West Africa and on AIM”, Stellar Chairman Lord Daresbury stated.
Prosperity Minerals Holdings Ltd (LON:PMHL) announced an increase in the cap of the ‘Master Off-take Agreement’ to buy up to US$1bn of iron ore from Grace Wise - an associated company of its co-founder, CEO major indirect shareholder, David Wong.
Irish zinc miner Connemara Mining (LON:CON) narrowed losses in 2009 significantly and noted the operational progress made during the year at the the Stonepark zinc discovery in Limerick which continued to grow in size and importance, with recent results showing an extension of a high grade mineralisation.
Auzex Resources (ASX: AZX) has commenced a diamond drilling program at the Bullabulling Gold Project in Western Australia to intersect known mineralisation over a 2.5km portion of the Bullabulling Trend between the Bacchus and Phoenix pits.
Nyota Minerals (LON, ASX:NYO) said deputy chairman David Pettman has bought 100,000 Nyota ordinary shares and he now holds 320,000 Nyota shares and 2 million options exercisable at A$0.15.
Red Rock Resources (LON:RRR) has reported new results from prospecting at the Macalder gossan, hosted on the 68 km Migori greenstone belt in South West Kenya, with 35 grab samples indicating the presence of significant grades of easily recoverable gold. The samples were taken from artisanal underground workings, and the highest grade sample contained 35.8g/t gold.
Frontier Mining (LON:FML) has begun the construction of the open pit mine at its Benkala copper project in Kazakhstan. The company is permitted to remove a total of 3 million cubic metres in 2010, and the initial stripping operations are now underway. Frontier is targeting initial production in the first half of 2011.
Thor Mining (AIM, ASX: THR) is seeking to raise £2.7 million (AUD $4.9), before costs in capital raisings in the UK and Australia.
Mariana Resources (LON:MARL) is set to raise £6.75 million through a placing of at least 24.1 million new shares at 28p each. The new capital will primarily be used to fast-track exploration drilling at Mariana’s flagship Las Calandrias gold discovery in southern Argentina, to define a resource and show the project’s economic potential.
South America focused junior miner Herencia Resources (LON:HER) has said that mineralisation intersected during the course of the ongoing drilling campaign at its Paguanta zinc-lead-silver-gold project in Chile signaled either a 300 metre eastern continuation of the New Vein that was previously announced to the market or an entirely new mineralised vein.
Noventa (LON:NVTA) has reported that a Glasgow University project, which included extensive mineralogical, textural and chemical work, indicates that “some simple and low-cost measures have a significant impact on improving tantalum recovery levels” at the Marropino tantalum mine in Mozambique.
Regency Mines (LON:RGM) has released further details from Phase 1 of its reconnaissance air core drilling program on the Munglinup North Project in Western Australia. The air core drilling found traces of base and precious metals, and significantly it encountered an unexpected sulphide mineralisation (average grade of 10.06%) which may indicate potential for base and precious metal zones at depth.
A day after announcing plans to diversify its operations into oil & gas projects in West Africa and South America, Persian Gold (LON:PNG) told investors that its declared force majeure on its two joint ventures with local Iranian partners. The company was recently granted Foreign Investor approval in Iran, and it said today it will continue to work in the country.
In a statement, Sundance Resources (ASX: SDL) said there were no survivors of the crashed plane in West Africa that was carrying its entire board of directors.
Kryso Resources (LON:KYO) told investors that it is now in talks with a major Chinese mining company in relation to a potential investment in the company. Kryso has entered into an exclusivity period, until 11:59pm BST on Friday 25 June 2010, to discuss the potential investment.
Chaarat Gold Holdings (LON:CGH) said that the ongoing drilling programme at its flagship Chaarat gold property in Kyrgyzstan has returned a new set of “encouraging” results with the gold grades reaching 6.74 g/t (grammes per tonne) over 43.5 metres.
Red Rock Resources (LON:RRR) offered its condolences to the family, friends and colleagues of Jupiter Mines' (ASX:JMS) late chairman Geoff Wedlock, who died in a plane crash on Saturday in West Africa. Pallinghurst (JSE:PGL) chairman Brian Gilbertson, has joined the board as a non-executive director and temporarily assumed the position of acting non-executive chairman, to ensure corporate stability and continuity for JMS over this difficult period.
Persian Gold (LON:PNG) is set to expand its asset base with increased diversity in terms of both its resource base and its geographic setting. The company has agreed the terms of a reverse-takeover of un-listed Hydrocarbon Exploration (HyEx), increasing its existing stake in a Ghanaian oil concession and adding interests in Bolivia and the United States.
Thor Mining (ASX, LON: THR) has requested a trading halt in Australia on the company's quoted securities for a period of 48 hours until the opening of trade on Wednesday 23 June, 2010 when an announcement concerning a planned placement and offer to shareholders will be made by the company.
Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (LON:CGH) is looking to expand its presence in Kyrgyzstan, intending to acquire Guernsey-incorporated Kyrex Ltd, which holds four large license areas in the north west of the Kyrgyz Republic.
Fiji focused Vatukoula Gold Mines (AIM: VGM) said that mine net earnings for the first three quarters amounted to £7.3 million compared to a loss of £1.2 million for the equivalent period of 2009 after gold recoveries and sales from its flagship Vatukoula gold project increased along with the average realised gold price.
Latin America focused precious metal miner Minera IRL (LON, BVL:MIRL, TSX:IRL) has cancelled its proposed share offering due to the recent volatility in the equity markets, opting for another method of financing, by agreeing to a US$20 million finance facility with investment banking group Macquarie (ASX:MQG) to fund principally the ongoing development at its Ollachea and Don Nicolas gold projects.
In its Q3 statement, Rambler Metals & Mining (LON:RMM, TSX-V:RAB) reported its progress at the Ming copper-gold mine on the Baie-Verte peninsula, Canada, where the company is aims to start gold production in the 2011 fiscal year.
Irish zinc miner Connemara Mining (LON:CON) said that its Stonepark North discovery was getting “bigger and better” after intersecting high-grade zinc-lead mineralisation 400 metres to the southwest, which it said suggested either an extension to the discovery or a new zone.
The development of Frontier Mining’s (LON:FML) Benkala copper project has taken another step forward, with the contracting of the technical design work to Calder Maloney Pty Ltd. The company’s 50%-owned subsidiary, KazCopper hired the engineering contractor to design the project’s proposed SX-EW (Solvent extraction/electrowinning) plant.
Ovoca Gold (LON:OVG) has reported a 344,000oz maiden JORC inferred gold resource at its Olcha gold project in the North Eastern part of the Magadan Region of Russia. The company highlighted that the maiden resource was generated from historic drilling and trenching data, and the 2010 drill program is designed to in-fill gaps in the data to potentially expand the resource.
Large and Mid Cap News
Mining giants Rio Tinto (LON:RIO, ASX:RIO, NYSE:RTP) and BHP Billiton (ASX:BHP, LON:BLT) have agreed to new mining royalties for fine and lumpy iron ore production from their operations in the state of Western Australia, subject to ratifying legislation by the Western Australian parliament.