Precious Metals Weekly Round-Up: Gold Hits One-year Low

Both gold and silver prices dropped on Friday (August 3), after the US Dollar showed its resilience against a variety of major currencies and hit a 14-month peak versus the Chinese yuan.

The greenback was supported by ongoing trade tension concerns between the United States and China.

As of 8:52 a.m. EST, the yellow metal was trading at US$1,214.40 per ounce and headed for its fourth straight weekly loss. As for the white metal, it was trading at US$15.42 per ounce as of 8:59 a.m. EST, and was on track for weekly decline for the eighth straight week in a row, its longest losing streak since at least late 2000.

This week’s declines have left many market insiders believing that it will get worse before it gets better for the precious metals.

“Support for gold disappeared as a stronger US dollar weighed on investor appetite,” said ANZ analysts.

“Gold prices fell below US$1,210 per ounce and now appear destined to break below the key psychological barrier of US$1,200 per ounce in the coming days,” they added.

For their part, platinum was flat for the week and palladium rose slightly, trading at US$833 per ounce and US$912 per ounce respectively as of 9:23 a.m. EST. 

Precious metals top news stories

Our top precious metals stories this week featured Excellon Resources’ (TSX:EXN,OTC:EXLLF) impressive Q2 2018 production results, Sibanye-Stillwater (NYSE:SBGL) securing a 38.05-percent stake in DRDGold (NYSE:DRD,JSE:DRD) and Mandalay Resources (TSX:MND, OTCQB:MNDJF) selling off its Challacollo silver-gold project to Aftermath Silver (TSXV:AAG.H).

1. Excellon’s Silver Production Up 120 Percent in Q2

Mexico-focused Excellon Resources’ (TSX:EXN,OTC:EXLLF) second quarter silver equivalent production jumped 120 percent year-on-year, with output reaching 637,205 ounces compared to 289,566 ounces this time last year.

The company also noted that its sales increased from 249,733 ounces of silver equivalent to 568,370 ounces, boosting revenue by 177 percent to US$9.9 million and posting a net profit of US$1.3 million, which is up year-on-year from US$0.5 million.

“We saw strong improvements in all areas of operational and financial performance during the second quarter. Most importantly, we realized all-in sustaining costs per silver ounce payable of less than US$10, greatly improved cash flow and added cash to our balance sheet while internally funding exploration programs on both of our projects,” stated Brendan Cahill, president and CEO.

2. Sibanye-Stillwater Successfully Acquires Stake in DRDGOLD

Sibanye-Stillwater (NYSE:SBGL,JSE:SGL) officially claimed ownership of 38.05 percent of the issued share capital of DRDGold (NYSE:DRD,JSE:DRD), which is currently worth R895.7 million.

As per the agreement, which was entered into on November 22, 2017, Sibanye agreed to exchange selected surface gold-processing assets and tailing storage facilities (TSFs) for shares in DRDGold. More specifically, Sibanye invested into DRDGold’s West Rand Tailings Retreatment project (WRTRP).

“We are excited about the partnership with DRDGOLD which unlocks value for our under-utilized surface infrastructure and TSFs, while retaining upside to the West Rand Tailings Retreatment project and future growth in DRDGOLD,” said Neal Froneman, CEO of Sibanye.

3. Mandalay to Sell Challacollo Silver-Gold Project to Aftermath

Mandalay Resources (TSX:MND, OTCQB:MNDJF) entered into a non-binding agreement with Aftermath Silver (TSXV:AAG.H) with the intention to sell Minera Mandalay Challacollo Limitada (MMC), owner of the Challacollo silver-gold project in Chile, for C$11,625,000.

As per the agreement, Aftermath will pay Mandalay C$1 million upon closing the transaction, with an additional C$1.25 million within the 18 months following. The remainder of the funds will be provided in the months after a feasibility study of the Challacollo project is performed, but no later than November 30, 2019.

“We are pleased to announce the proposed sale of the Challacollo project to Aftermath Silver. One of Mandalay’s key strategic objectives for 2018 was to maximize the value of our portfolio through the sale of non-core assets,” stated Dominic Duffy, president and CEO of Mandalay.

Also in the news

Also making news this week is McEwen Mining (TSX:MUX, NYSE:MUX) and how it increased its gold-equivalent ounce (GEO) production by 45 percent in Q2.

McEwan revealed that in addition to the 45 increase in the company’s GEOs during Q2, the production of GEOs in the first half of 2018 (H1) increased by 47 percent and all-in sustaining costs per ounce increased by 1 percent compared to H1 2017.

“A total investment of US$26.3 million was made to further our long-term production growth plans at the Gold Bar, Black Fox, El Gallo Fenix and Los Azules projects,” the company noted in a press release.

Finally, Silver Mines (ASX:SVL) announced that it will raise AU$3.85 million through a rights issue to fund exploration at its Barabolar project in New South Wales.

The company stated that it will undertake a one-for-four renounceable pro-rata entitlement offer, priced at 3 cents a share, to raise the funds.

The proceeds of the agreement will be used to fund the Copperstone mine into production by Q4 2019. Additionally, the company will begin its 2018 drilling program that will convert a significant proportion of measured, indicated and inferred resource into proven and probable that will extend the mine life as well as its cash flows.

Eligible shareholders will also receive one free attaching new option for every two new shares subscribed for, which will have an exercise price of 6 cents each and an expiry date three years from issue.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.