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Indications that the Indian government could ease restrictions on gold imports hiked bullion prices today.
India is the top consumer of gold but recent restrictions by the Indian government to curb bullion imports, in an effort to narrow the current account deficit, have squelched gold buying and that has put pressure on the price. The Times of India however reports that the Indian government is considering easing restrictions, including a 10 percent import duty imposed last year. That rumor was strengthened today when Sonia Gandhi, leader of India’s Congress Party, said she has written to the central government asking for a cut in the import duty and an easing of other restrictions.
The bullish price action for gold on Thursday echoed the metal’s movements on Monday, when it neared the previous 6-week peak of $1,259.85. However, that sentiment changed mid-week, with gold futures sliding $10.20 to $1,241.70 on Tuesday, on technical selling, and February gold edging down $2.70 on Wednesday.
Two further positive indications for gold were reported this week by Sharps Pixley. The London-based bullion dealer noted that speculators ahead of the next Fed meeting on January 28-29 have increased their net long gold positions by 7.6 percent; and that gold futures so far this year have outperformed the S&P 500, (INDEXSP:.INX) the Euro Stoxx 50 Index, and the U.S. dollar index.
While gold bulls were out in force this week especially due to the news from India, Thomson Reuters GFMS dampened enthusiasm with an updated report on its 2013 gold survey, released Thursday. On the upside, the report confirms the widely held view that gold flowing out of ETFs in the West “moved dramatically eastwards during the middle of 2013 as professional investor disgorged metal, for it to be snapped up by rampant demand in Asia and the Middle East. “
And while that trend is likely to continue in 2014, keeping the market in “fundamental balance,” the report authors speculate that the average gold price is expected to average $1,225 an ounce this year — 13 percent below 2013.
Company news
Barrick Gold (NYSE:ABX,TSX:ABX) is unloading more gold mines, announcing on Wednesday that it will sell its Kanowna gold mine in Western Australia to Northern Star Resources (ASX:NST) for AUD$75 million. Barrick, which recently regained its position as the world’s largest gold company by market value, has been ditching unprofitable operations in an effort to reduce debt and regain the confidence of investors. The Toronto-based company has sold $850 million worth of non-core assets in the last six months, Reuters reported, including three high-cost gold mines in Australia last summer.
Last week’s unsolicited bid by Goldcorp (NYSE:GG,TSX:G) for Canadian gold miner Osisko (TSX:OSK) has been given a frosty reception by the company’s management team. Montreal-based Osisko said it is reviewing other options and urged shareholders to reject the CAD$2.6 billion offer because the offer undervalues its flagship Canadian Malartic mine, which began producing in 2011.
“The Goldcorp offer has been opportunistically timed to occur before Canadian Malartic enters what Osisko expects will be its most productive years,” Osisko said in a statement. “The true strategic value of the company’s assets will be demonstrated as the review of value-maximizing alternatives progresses.”
Junior company news
ABC News reports that the Tomingley gold mine being developed by Alkane Resources (ASX:ALK) is nearing completion. Alkane managing director Ian Chalmers told the publication the first gold pour is expected in late Feburary, and that the company plans to extend the life of the mine from 7 years to 10 by incorporating another gold deposit found at the site. The mine located in New South Wales, Australia, contains about 800,000 ounces and is expected to produce at a rate of 50,000 to 60,000 ounces a year.
Mexico-focused Torex Gold Resources (TSX:TXG) said this week that it has done a $125 million financing deal underwritten by BMO Capital Markets. Net proceeds will be put towards its El Limón-Guajes mine, which started construction last October and is expected to begin producing in the first quarter of 2015 at a rate of 128,000 ounces per year.
Premium Exploration (TSXV:PEM) gained 3.1 percent today upon releasing assay results from its Friday gold deposit in Idaho. Highlights from one drill hole included 15.19 grams per tonne over 9.14 meters. The drilling is being done to support a preliminary economic study.
Estrella Gold (TSXV:EST) has regained 100 percent interest in the La Estrella property in Peru, after its joint venture partner, Mines Management Inc., terminated its option for 75 percent of the property on January 20. “Given the historical data and the amount of excellent work performed by Mines Management during its option period, the Company is excited to get the La Estrella Project back,” said Estrella president and CEO John Wilson, adding: “The mineral system at La Estrella is quite large, and we feel that it has significant upside tonnage potential. Estrella will now actively move ahead on advancing the project and initially, we will focus on reviewing the data compiled by Mines Management over the past 2 years.”
Corvus Gold (TSX:KOR) reported results from the last 10 core holes drilled during the 2013 campaign at its North Bullfrog project in Nevada. Highlights included 37 meters at 3.2 grams per tonne gold and 30 g/t silver, 42 meters at 4.9 g/t gold and 30 g/t silver, and 28 meters at 2.9 g/t gold and 7 g/t silver. “The consistency of these results is remarkable and shows the potential for the system to get larger, with higher grades, at depth,” said Corvus CEO Jeff Pontius.
Brazil Resources (TSXV:BRI) reported the NI 43-101 resource estimates for the São Jorge, Boa Vista and Surubim gold projects it acquired last year through the acquisition of Brazilian Gold. The estimates confirm previous calculations done before the acquisition, and are now compliant with National Instrument 43-101 (“NI 43-101″) – the accepted industry standard for reporting resource estimates.
Securities Disclosure: I, Andrew Topf, hold an equity position in Goldcorp.
Related reading:
What Goldcorp’s Osisko Bid Means
PROJECT UPDATE: Brazil Resources Confirms Resource Estimates for Recently Acquired Projects