first majestic silver

Gold SWOT: Spot Gold Traded In a Narrow Range Last Week

CEO & Chief Investment Officer @ U.S. Global Investors
January 30, 2024

Strengths

  • The best performing precious metal was platinum, up 1.56%. Both platinum and palladium were up this week despite hedge funds boosting their net short position to record highs on palladium and flipping to net short on platinum. According to RBC, Iamgold Corp. fourth quarter attributable production of 136,000 ounces was 20% above consensus of 113,000 ounces. At Essakane, outperformance was driven by higher tonnage and grades following increased stripping activities and supply disruptions in the third quarter. Westwood also had a strong close to the year, driven by higher grades, exceeding fiscal year guidance.
  • Cour Mining, Inc. released an extremely high-grade intercept from its Silver Tip deposit. Results have been received for almost half of the total 2023 drilling at the Southern Silver Zone, including the highest-grade intercept ever received in the zone.
  • Harmony Gold says gold output rose to range of 820,000 ounces to 835,000 ounces in the first half through December 31. All-in sustainable costs for the period are 830,000 rand per kilogram to 855,000 rand per kilogram, below the guidance of 975,000 rand. The increase was driven by South African underground recovered grades exceeding the upper end of the guided range, a strong performance by the South African surface-source operations, and an “excellent” operational performance from Hidden Valley in Papua New Guinea.

Weaknesses

  • The worst performing precious metal for the past week was gold, down 0.55%. Mixed data is keeping the debate alive over the timing of the Fed’s next interest rate change as gold has chopped sideways but remains above $2,000 per ounce in price. Endeavour Mining reported fourth-quarter 2023 gold production of 280,000 ounces, down from 294,000 ounces in the year-ago quarter. For the full year 2023, Endeavour posted gold production of 1.07 million ounces, an 8% decrease from 1.16 million ounces in 2022.

  • More than 70 people were killed after a tunnel collapsed at an unregulated private Malian gold mining site last week, a local gold mining group leader and a local official told AFP on Wednesday.
  • B2Gold’s share price dropped as much as 11% this week, the most intraday since March 2020. The fall came after the miner forecast full-year gold production of 860,000 to 940,000 ounces and higher-than-expected capital expenditures at its Goose project.

Opportunities

  • According to Raymond James, Perseus Mining announced it has made an all cash, off-market takeover offer for OreCorp. The A$0.55/share cash offer is a 4% premium to Silvercorp’s offer of A$0.19/share + 0.0967 SVM share based on last Friday’s closing price. OreCorp has notified Perseus that the offer is not considered to be a superior proposal and the Board has not changed its existing unanimous recommendation in favor of Silvercorp’s current offer.
  • Arizona Metals Corp. said Monday that it plans to create two new companies by spinning out the Sugarloaf Peak Gold Project and two newly-created royalties on its Kay Mine Project. The first company, expected to be called "Sugarloaf Gold Corp.," will be transferred shares of the company's wholly-owned subsidiary, which holds Arizona Metals' Sugarloaf Peak Gold Project. The second company, expected to be called "Arizona Royalties Corp.," will hold a newly-created 2% net smelter royalty on any potential future mineral production at Arizona Metals' Kay Mine Deposit, as well as a newly-created 2% NSR royalty on all future potential mineral production (from any new deposits discovered through Arizona Metals' ongoing exploration activities at the Kay Mine Project).
  • In Johannesburg, illegal miners and mining companies are in a race to tap golden riches hidden in hundreds of heaps of mine waste, many taller than a 20-story building, reports Yahoo! Finance. The hills that scar the city's landscape are now coveted by South African mining companies whose underground gold deposits have become harder to exploit with every passing year. The region is dotted with slag heaps, shafts and deep trenches left by generations of miners, whose arrival in a gold rush in the 1880s led to the birth of the city.

Threats

  • Workers at Endeavour Mining Plc’s second-biggest gold mine have downed tools and blocked roads at the site in Burkina Faso, in the latest setback for a company that recently fired its chief executive, reports Bloomberg. An “unplanned” and “illegal” stoppage began disrupting operations at the Hounde gold project on January 21, according to an internal memo sent to mine employees on Monday and seen by Bloomberg. Endeavour was yet to receive a list of grievances that “would enable negotiations to take place,” the document said.
  • According to Scotia, for Hecla Mining, attributable silver production of 14.2 million ounces in the fourth quarter of 2023 came in 10% below the group’s 15.8 million ounces forecast. Gold production of 152,600 ounces increased 15% quarter-over-quarter but declined 9% year-over-year and fell 3% short of the156,900-ounce estimate.
  • CIBC has little clarity on whether the outcome of B2Gold’s constructive discussions with the Government of Mali will yield a viable option for the Fekola Regional ore which would impact the NAV for Fekola. The Fekola uncertainty, in combination with headwinds associated with a heavy-lifting year at Goose, causes them to await further visibility on Fekola, progress on the Goose 2024 ice road shipping and 2024 sealift, and finally the Gramalote PEA in the second quarter of 2024.

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Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999. Under his guidance, the company’s funds have received numerous awards and honors including more than two dozen Lipper Fund Awards and certificates. In 2006, Mr. Holmes was selected mining fund manager of the year by the Mining Journal. He is also the co-author of “The Goldwatcher: Demystifying Gold Investing.” Mr. Holmes is engaged in a number of international philanthropies. He is a member of the President’s Circle and on the investment committee of the International Crisis Group, which works to resolve conflict around the world. He is also an advisor to the William J. Clinton Foundation on sustainable development in countries with resource-based economies. Mr. Holmes is a native of Toronto and is a graduate of the University of Western Ontario with a bachelor’s degree in economics. He is a former president and chairman of the Toronto Society of the Investment Dealers Association. Mr. Holmes is a much-sought-after keynote speaker at national and international investment conferences. He is also a regular commentator on the financial television networks CNBC, Bloomberg and Fox Business, and has been profiled by Fortune, Barron’s, The Financial Times and other publications.  Visit the U.S. Global Investors website at http://www.usfunds.com.  You can contact Frank at: [email protected].


The first use of gold as money occurred around 700 B.C., when Lydian merchants (western Turkey) produced the first coins
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