GOLD STOCKS NEWS – Gold stocks tumbled Thursday morning, with the Market Vectors Gold Miners ETF (GDX) falling $1.36, or 2.3%, to $57.60 per share. Gold stocks and the GDX opened sharply lower as gold futures dropped $26.40 to $1,718.40 per ounce following comments from Mario Draghi, President of the European Central Bank (ECB).
At his press conference following the ECB’s monthly monetary policy meeting, Draghi backed away from a prior statement that the central bank may initiate a more aggressive bond-buying program to stem the tide of the sovereign debt crisis. The S&P/TSX Global Gold Index, Canada’s principal composite of gold stocks, headed south by 1.5% alongside the GDX amid Draghi’s comments.
With today’s sell-off in gold stocks, the GDX extended its monthly and year-to-date losses to 4.1% and 6.0%, respectively. Gold stocks have continued to significantly underperform the price of gold in 2011, which despite today’s slide remains higher by 20.9% this year.
Many large-cap gold stocks – which comprise the vast majority of the GDX – have failed to provide investors with the gold price leverage seen during previous bull markets in gold. Two prominent examples are Barrick Gold (ABX) and Kinross Gold (KGC), which have fallen 4.5% and 27.6%, respectively. Even Newmont Mining (NEM) – one of the GDX’s best performing gold stocks this year with a 10.0% gain – has substantially lagged the yellow metal.
In contrast to many large-cap gold producers, many small- and mid-cap gold stocks have in prior gold bull markets delivered enhanced gold price leverage due to their superior growth potential. One emerging gold company that is seeking to offer leverage to gold, as well as upside through organic growth, is West Kirkland Mining (WKM.TSXV) – a North American gold company with considerable mineral rights positions in the Kirkland Lake area of Ontario, Canada and in North Eastern Nevada.
This morning, West Kirkland reported assay results at its TUG property in the Long Canyon Trend of Nevada. The Company noted that mineralization has expanded beyond the area of the historic resource to the north. The gold mineralization also extends beyond the typical host horizon of the TUG deposit and into structures adjacent and below the historic deposit host.
Highlights of West Kirkland’s results included the intersection of 2.89 grams per tonne (g/t) of gold and 112 g/t of silver over 6.09 meters at core hole WT11-007. This hole confirms the system is open for further expansion. The Company also announced that Northeast structures parallel to the Long Canyon Trend at the north end of the TUG deposit, beyond hole WT11-007, will be the focus of drilling in January 2012.
With the progress it has made over the past year, West Kirkland has generated attention from several institutional investors seeking gold price leverage from small-cap gold stocks. Several firms have acquired considerable positions in WKM.TSXV – including The K2 Principal Fund, Front Street Investment Management, and RBC Asset Management.
In Thursday morning trading, notable gold stocks moving lower included GDX components Agnico-Eagle Mines (AEM), Goldcorp (GG), and IAMGOLD (IAG). AEM retreated by 2.6% to $42.52 per share, GG by 2.1% to $50.86 per share, and IAG by 3.1% to $18.88 per share.
West Kirkland Expands Gold Mineralization at TUG Property
The TUG property is part of 1,020 square kilometers (252,000 acres) of mineral rights in the Long Canyon Trend that the Company has optioned through a transaction with Fronteer Gold – prior to its acquisition by Newmont Mining – and with Rubicon Minerals. The combined Newmont and Rubicon option agreements give West Kirkland a dominant land position within the Long Canyon Trend and will be the focus of the Company’s exploration efforts in Nevada. Full West Kirkland Mining Press Release.
* This hole confirms the system is open for further expansion
* Northeast structures parallel to the Long Canyon Trend at the north end of the TUG deposit, beyond hole WT11-007, will be the target of drilling in January 2012