Precious Metals Weekly Round-Up: Gold Recovers from Six-month Low

Both gold and silver made rebounds on Friday (June 29) after investors took profits on the back of a down US dollar. 

At 10:25 a.m. EST on Friday, gold was up 0.27 percent, trading at US$1,251.40 per ounce — that’s up from the six-month low it experienced earlier in the week, but far from the crucial US$1,300 mark.

As for the white metal, it climbed 0.66 percent and was trading at US$16.08 per ounce as of 10:27 a.m. EST, down 2 percent for the week.

Despite their Friday upticks, analysts have warned the increases in gold and silver prices may not last. “We’re receiving only a couple of dollars bounce on the back of a pretty decent weakening of the dollar, so gold’s not showing any signs of strength,” said Ole Hansen of Saxo Bank. 

“The shorts are still in control and the momentum is negative. The dollar and U.S. treasuries have taken over the role of safe haven this month and as long as the trade war is creating uncertainty then that will probably prevail,” he added.

Both platinum and palladium were also up for the week, trading at US$852 per ounce and US$947 per ounce, respectively, as of 10:57 a.m. EST.

Precious metals top news stories

Our top precious metals stories this week dealt with Yamana Gold (TSX:YRI,NYSE:AUY) beginning commercial production of high-grade gold and silver at its Cerro Moro mine, Acacia Mining (LSE:ACA) and its majority shareholder Barrick Gold (TSX:ABX,NYSE:ABX) deciding not to provide a new deadline for the end of negotiations over a tax dispute in Tanzania and a new preliminary economic assessment( PEA) for Sierra Metals’ (TSX:SMT,NYSEAMERICAN:SMTS) Yauricocha silver-lead–zinc–copper–gold mine.

1. Yamana Gold Starts Commercial Production at Cerro Moro Mine

Yamana Gold began commercial production of high-grade gold and silver at its Cerro Moro mine in Santa Cruz, Argentina, the company announced on Tuesday (June 26). The first pour of gold and silver doré at Cerro Moro took place in mid-May of this year.

“We are pleased that Cerro Moro, an operation that we expect to contribute significantly to our production, has reached this important commercial milestone,” said Daniel Racine, Yamana’s executive vice president and COO.

Now that commercial production has been announced, Yamana’s focus at Cerro Moro will shift to optimizing operations and ensuring operating costs reach guidance levels. 

2. Acacia Won’t Provide Deadline for Tanzanian Tax Dispute Talks

Acacia Mining and its majority shareholder Barrick Gold decided they will not provide a new deadline for the end of negotiations over a tax dispute in Tanzania, the companies announced on Monday (June 25).

The decision came after Barrick, which is negotiating on behalf of Acacia, failed to meet a mid-year target to complete talks surrounding the ongoing tax issue.

“In order to allow the process to continue in an orderly manner and without an arbitrary deadline, Barrick is not providing a timetable for the completion of the discussions at this time,” the company noted in a press release.

3. Sierra Metals to Boost Yauricocha Mine Output by 66 Percent

A new PEA for Sierra Metals’ Yauricocha silver-lead-zinc-copper-gold mine in Peru shows the company will be able to expand output by 66 percent to 5,500 tonnes per day.

According to a Thursday (June 28) release, Sierra will increase the mine’s production from the current 3,000 tonnes per day to 3,600 tonnes per day in Q1 2019, and then to 5,500 tonnes per day in 2021.

The 66-percent expansion will bring Yauricocha’s return on investment to 486 percent. The PEA places its after-tax NPV at US$393 million at an 8-percent discount, and sets the mine’s life at 10 years.

“The expansion of our capacity is a natural step that follows mineral resources increases in recent years. The expansion adds to the value of our resources by accelerating its production timing and also adds to the potential value to future resource increases, which we expect to continue due to the on-going aggressive exploration campaign at the mine,” said Igor Gonzales, president and CEO.

In other precious metals news

Also making news this week was Kirkland Lake Gold (TSX:KL,NYSE:KL), which is pursuing arbitration over Centerra Gold’s (TSX:CG) royalty portfolio sale. Centerra is looking to sell the portfolio to Triple Flag Mining Finance Bermuda. 

Kirkland has stated that its Australia-based Fosterville gold mine has the right of first offer, or first refusal, in the event of the sale of Centerra’s 2-percent royalty on the asset. For that reason, Kirkland believes the sale to Triple Flag is contrary to the royalty agreement, unless Fosterville is offered an opportunity to exercise its rights.

In additional gold news, the Canadian government rejected the proposed Ajax mine in BC, citing significant adverse environmental effects.

The plan to develop the site had been put forward by KGHM International, a unit of Polish miner KGHM (FWB:KGHA). The BC government last December rejected an environmental certificate for the project

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