Gold, Silver Shares Tumble, Precious Metals Dip

Thursday, January 19, 2012, 2:59pm EST Written by GoldAlert Staff.

Gold and silver shares extended their losses in Thursday afternoon trading despite only modest declines in precious metals futures.

The Philadelphia Gold & Silver Index (XAU) tumbled 2.4% to 186.68, its lowest level in more than a week. The XAU had been lower by just 0.5% for most of the morning, but accelerated to the downside as precious metals headed south.

COMEX gold futures, which traded near $1,660 per ounce this morning, settled lower by $5.40, or 0.3%, at $1,654.50 per ounce. The yellow metal later slid below $1,650 in electronic trading.

Silver futures finished the COMEX session lower by just $0.03 at $30.51 per ounce, but had risen to as high as $30.90 early in the day.

The modest sell-off in precious metals came despite further weakness in the U.S. Dollar Index, which dipped 0.3% to 80.231.

Among gold stocks, two of the worst performers were Gold Fields (GFI) and Harmony Gold (HMY). GFI dropped 4.1% to $15.30 per share while HMY retreated 7.3% to $11.11 per share. As for silver companies, First Majestic Silver (AG) fell 3.3% to $17.17 per share and Hecla Mining (HL) slid 2.5% to $4.71 per share.

Mines Management Expands into Peru

Mines Management (MGN) announced it has signed a letter of intent (LOI) with Estrella Gold Corp. for an option to acquire up to 75% of the La Estrella gold and silver project. La Estrella is located in central Peru approximately 230 kilometers southeast of Lima and contains approximately 2,500 hectares of land within the Central Peru polymetallic belt. It is also 130 km south of Huancayo in the Department of Huancavelica, a region with a history of silver mining dating to the 1500's.

La Estrella is in an area of established infrastructure, with roads and electricity, and lies within 30 km of Minera Buenaventura's historic Julcani Silver Mine which began operation in 1955. Estrella Gold has established and maintained constructive community agreements with all stakeholder communities, and the property is already fully permitted for additional drilling. Full Mines Manegement Press Release.

HIGHLIGHTS:

The terms of the LOI allow Mines Management through its subsidiary, Minera Montanore Peru, SAC, to earn 75% of the La Estrella project by expending $5 million over four years on exploration activities
The LOI allows MGN to conduct a period of additional exclusive due diligence until March 1, 2012, during which time definitive agreements are expected to be negotiated and executed
La Estrella is an advanced exploration stage project which contains an epithermal, volcanic-hosted gold-silver system with associated base-metal mineralization extending over a strike length of at least 1,200 meters

Glenn Dobbs, President and CEO of Mines Management:

"The La Estrella exploration project represents Mines Management's step into one of the most prolific silver and gold regions in the world. The Project is in a favorable district, and possesses a number of very positive attributes including previous exploration success, and a permitted drilling program which may afford us the ability to move forward expeditiously."

Roth Capital:

Buy rating and $5.00 price target on MGN

Mines Management Interactive News:

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Gold, Silver Shares Tumble, Precious Metals Dip

Mines Management Expands into Peru