Gold and silver equities held steady in mid-day trading on Tuesday despite weakness in precious metals.
The Philadelphia Gold & Silver Index (XAU) was lower by just 0.2% at 201.06, in concert with the broader U.S. market indices – as the S&P 500 Index dipped 0.2% to 1,254.06.
COMEX gold futures, per the February 2012 contract, tumbled $20.50, or 1.2%, to $1,714.00 per ounce while silver for February 2012 delivery slid $0.48, or 1.5%, to $31.90 per ounce. Precious metals extended their losses from yesterday as the U.S. dollar held firm against a basket of foreign currencies. The euro slipped 0.2% to 1.3381 against the greenback in mid-day trading.
One large-cap gold producer in the news Wednesday was Kinross Gold (KGC), which “reached a non-binding agreement in principle with the government of Ecuador regarding key fiscal and legal parameters for the exploitation of the Fruta del Norte (FDN) deposit in Ecuador’s Zamora Chinchipe province.”
Following the announcement, J.P. Morgan analyst John Bridges wrote in a note to clients that “Kinross released some detail on its planned FDN project last night. In an initial agreement the country is insisting that its minimum participation will be 52%. In a positive move, KGC has been able to agree that the price used in the windfall tax calculation is index linked. We had earlier used an even harsher 40% tax with a 10% royalty. So this new structure with the higher capex forecast has limited impact to our estimate that the FDN project is worth about $2 per KGC share based on a long term $1,150/oz gold price. However, this does give improved certainty on the terms of the project and should be seen positively by the market today.”
Bridges also reiterated his Overweight rating and $23.00 price target on KGC, which late this morning was lower by $0.07, or 0.5%, at $13.54 per share.
Among silver companies, Hecla Mining (HL) was far and away the top performer, climbing 4.5% to $6.25 per share. Although Hecla had not published any press releases today, optionMONSTER reported unusually bullish options activity in shares of HL. The firm noted that more than 50,000 January 2012 $6 calls were purchased between $0.49 and $0.72 “as investors look for upside.”
Notable gold and silver stocks moving lower included AngloGold Ashanti (AU), Goldcorp (GG), and Pan American Silver (PAAS). AU fell by 0.5% to $46.25 per share, GG by 0.4% to $50.83 per share, and PAAS by 0.5% to $24.46 per share.
Mines Management’s Montanore Project Receives Safety Award
- 7,200 feet of underground rehabilitation and dewatering in the Libby Evaluation Adit has been completed at Montanore, as well as construction of infrastructure and surface facilities at the site
- A Supplemental Draft Environmental Impact Statement (SDEIS) was recently completed by the U.S. Forest Service for the Montanore Project, a significant step forward in the final phase of the permitting process
- Montanore is one of the ten largest undeveloped silver resources in the world. The Project contains in-situ mineralization estimated at more than 230 million silver ounces and nearly 2 billion copper pounds