GOLD STOCKS NEWS – Gold stocks slid Thursday as the Market Vectors Gold Miners ETF (GDX) lost 0.5% to $58.88 per share. Weakness in gold stocks and the GDX came despite another new all-time record high for COMEX gold futures, as the December contract hit $1,684.70 per ounce this morning.
The S&P/TSX Global Gold Index, Canada’s leading basket of gold stocks, dipped 0.3% alongside the GDX. The broader gold stocks sector and GDX were dragged down by further widespread liquidation in financial markets, stemming from escalating concerns over the state of the U.S. and European economies.
Gold stocks in the news Thursday included Yamana Gold (YRI.TSX, NYSE: AUY), which announced second quarter financial and operating results. The Canadian-based gold miner reported that production increased 10% to 278,737 gold equivalent ounces, at cash costs of negative $80 per ounce. Yamana achieved record quarterly net earnings of $194.7 million, a 178% increase over the second quarter of 2010.
Peter Marrone, Yamana Gold’s Chairman and CEO, commented that “Our operational successes resulted in records in revenue, cash flow and earnings both on an absolute basis and on a per share basis. This allowed us to increase our dividend in the quarter by 50%.”
Tony Lesiak, analyst at Macquarie Research, wrote in a note to clients that “We maintain our C$18 target price and reiterate our Outperform rating. Yamana remains a top pick among the North American precious metals producers with the company trading at a 30% discount to NAV and at a 22% discount to the group average on both PE and PCF.” In morning trading, YRI.TSX bucked the trend of lower gold stocks, as it spiked 5.2% to C$13.97 per share.
Randgold Resources (GOLD) released its second quarter earnings report, which included a 253% rise in profits over the prior year period. Gold production came in at 184,711 ounces, a 97% increase over the second quarter of 2010. GOLD was one of the top performing names in the gold stocks sector this morning, as it surged $6.01, or 6.6%, to $96.74 per share.
Mark Bristow, CEO of Randgold Resources, commented that “With all the fundamentals in place and performing to plan, we’re confident that the positive trends on production, profit and costs will be sustained in the third and fourth quarters and consequently the company will comfortably be within its guidance for the year. It’s also worth noting that our net cash position has improved, and that we are building our capital resources despite considerable capex demands.”
Notable gold stocks moving lower in concert with the GDX included Barrick Gold (ABX), Goldcorp (GG), and Newmont Mining (NEM). ABX, GG, and NEM fell 0.9%, 0.5%, and 0.4%, respectively.
Spanish Mountain Gold Advances Flagship Project
The acceptance of the Project Description indicates that the Project has now entered the Pre-Application phase of the Environmental Assessment and Permitting process. Spanish Mountain Gold expects that public meetings will be scheduled shortly in connection therewith. The Company has already held initial public meetings in the communities of Likely, Big Lake and Williams Lake and has held several meetings with both the Williams Lake Indian Band and Soda Creek Indian Band. Full Spanish Mountain Gold News Release.
- The Company anticipates that the formal commissioning of a pre-feasibility study (PFS) for the Project to begin in September 2011.
- The PFS will refine the estimates of capital and operating costs that form the basis for the Preliminary Economic Assessment (PEA) completed by the Company in 2010.
- Spanish Mountain Gold currently has ongoing geotechnical, metallurgical and power supply studies underway, the results of which will be incorporated in the PFS.
- The Company expects that the PFS will also examine the optimal mill throughput at the beginning of potential commercial production from the Project.
