GOLD STOCKS NEWS - Gold stocks were mixed on Tuesday, with the Market Vectors Gold Miners ETF (GDX) higher by $0.03, or 0.1%, at $47.67 in mid-day trading. For the second consecutive day gold stocks were the top performing sector in the equity markets, as the gold price advanced on fresh sovereign debt fears across Europe and escalating tensions in North Korea. Financial markets succumbed to severe selling pressure, with the Dow Jones Industrial Average (DJIA) falling as much as 292.09 points, or 2.9%, before recovering approximately one-third of the decline in mid-day trading. For the week the GDX is now higher by 1.0%, but remains lower by 5.6% in May.
While the gold price has climbed over 9% year-to-date, gold stocks as a group have significantly lagged the price of gold. GDX, the most liquid gold stocks ETF, has risen just 3.2% in 2010 as shares of large-cap gold stocks have continued to underperform the yellow metal. However, one investment bank predicted Tuesday that this trend is nearing completion. In a research reports to clients Deutsche Bank increased its price target on four large-cap gold stocks, including Barrick Gold (ABX) - the world’s largest gold producer - on which it also raised its rating to “Buy” from “Hold.”
The firm lifted its target price on shares of Barrick to $45 from $43, on Goldcorp (GG) to $40 from $34, on Kinross Gold (KGC) to $20 from $19, and on Newmont Mining (NEM) to $74 from $72. In mid-day trading, shares of ABX, GG, KGC, and NEM were higher by 1.0%, 1.1%, 0.2%, and 0.1%, respectively. While each of these large-cap gold stocks have significantly underperformed the gold price in recent years, several small- and mid-cap gold stocks have fared considerably better.
Two companies that released news on Tuesday are Premier Gold Mines (PG.TSX) and Spanish Mountain Gold (SPA.TSX) - which have climbed 78% and 44%, respectively, over the past 52 weeks.
Premier Gold announced that it has started a summer drill program at its Rahill-Bonanza joint venture Project in Canada. The Canadian-based gold company stated that the program will focus on delineating the recently identified PG70 Gold Zone, the West Granodiorite Deposit and will test the projected north-south fault structures that are host to the main gold zones at the adjoining Cochenour (Bruce Channel) Mine complex. Shares of PG.TSX were higher by 0.2% at C$4.40 in mid-day trading.
Spanish Mountain Gold (SPA.TSX) announced that one of its Directors, Ian Watson, purchased 1,125,000 common shares of the company - representing approximately 0.92% of the issued and outstanding common equity. The shares were acquired at a price of C$0.41 per share, for a total consideration of C$461,250.
As a result of this purchase Mr. Watson now beneficially owns 11,893,640 common shares, representing approximately 9.75% of the issued and outstanding common equity of Spanish Mountain. Mr. Watson also beneficially holds a total of 10,403,640 warrants, which entitle him to purchase 10,403,640 common shares. In mid-day trading SPA.TSXV climbed 5.1% to C$0.41 per share.
Another noteworthy headline in the gold stocks sector emerged from Gabriel Resources (GBU.TSX), which announced the appointment of Jonathan Henry as President and CEO effective June 7, 2010. Most recently Mr. Henry was CEO and Managing Director of Avocet Mining PLC, a UK based gold company with operations and advanced development and exploration projects in West Africa and South East Asia.
Gabriel Resources, a Canadian-based gold explorer in which hedge fund magnates John Paulson and Thomas Kaplan hold significant stakes, is currently seeking to develop its 80.46%-owned Rosia Montana gold project in Romania, the largest undeveloped gold deposit in Europe and one of the largest in the world. Shares of GBU.TSX dropped 1.2% to C$3.99 in mid-day trading.
Notable decliners in the gold stocks sector included Freeport-McMoRan Copper & Gold (FCX) and IAMGOLD (IAG), which fell 1.9% and 0.6%, respectively.
