Wholesale gold bullion prices hovered around $1650 an ounce Friday morning in London, having earlier hit fresh four-month lows, while stocks edged lower and US Treasuries gained despite little evident progress in Washington to avoid the so-called fiscal cliff.

Silver traded either side of $30 an ounce meantime, having yesterday dipped below that level for the first time since August, while oil prices dipped slightly and copper ticked higher.

“Precious metals continued to stall overnight,” says a note from refiner MKS.

“Sentiment has clearly…as a result of a number of key support levels being tested or coming into play…[although] gold did not decline any further overnight buoyed by physical bids from both Europe and Asia…there is still a strong drive by the speculative side of the market to short and is evident by the heavy selling into rallies on Comex.”

Heading into the weekend, gold looked set for its biggest weekly loss since June by Friday lunchtime in London, and its fourth in a row, with gold trading 2.7% below last Friday afternoon’s London Fix price.

Earlier in the day, gold and silver hit four-month lows, extending yesterday’s losses that followed news of an upward revision to US GDP growth for the third quarter.

Silver meantime looked set for its biggest weekly drop since September 2011, down 7.7% on the week.

Gold in Sterling is below where it started 2012, trading as low as £1006 an ounce this morning, while gold in Euros is also below where it was by the first week of January, despite setting a new all-time high as recently as October.

Over in Asia however, “China and especially Indian demand has jumped,” said a senior Swiss logistics executive, speaking to BullionVault late Thursday.

Indian importers, he said, after shipping relatively low volumes of gold and silver bullion around Diwali – typically the busiest season for the world’s #1 consumers – are using the drop in prices to help wholesalers replenish their stockpiles, slowly run down over 2012.

The Chinese New Year falls in 2013 on 10 February. “This feels like the jump in demand we got in 2010/2011,” our Swiss contact says, pointing to the supply-chain problems of January last year, when strong Chinese demand met New Year holidays at the leading Swiss suppliers.

Indian gold demand improved Friday, newswire Reuters reports, while the Shanghai Gold Exchange had one of its busiest days of 2012 in terms of volumes traded.

In Washington meantime there was no House of Representatives vote on speaker John Boehner’s so-called ‘Plan B’ for dealing with the US deficit and thus avoiding the so-called fiscal cliff of tax cut expiries and spending cuts, worth around $600 billion, currently due to begin at the end of this month.

“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” said Boehner last night.

“Now it is up to the president to work with Senator [Harry] Reid [Democrat Senate majority leader] on legislation to avert the fiscal cliff.”

Boehner’s proposal included allowing tax cuts to expire for anyone earning more than $1 million a year. Obama, who initially called for the cuts to expire for anyone earning more than $250,000, has said he wants the threshold to be at $400,000.

In the UK meantime, third quarter GDP growth was revised lower this morning, from 1.0% over the three months to end September to 0.9%.

UK public sector net borrowing meantime was  £17.5 billion in November, 7.4% up from a year earlier, official figures published Friday show.

“The disappointing November public finance data fuel mounting expectations that at least one of the credit rating agencies will strip the UK of its triple A rating in 2013,” Howard Archer, economist at research firm IHS Global Insight, told the Financial Times this morning.

Brazil added 14.7 tonnes to its gold bullion reserves last month, the third month running it has bought gold, data published Thursday by the International Monetary Fund show. Brazil’s gold reserves now stand at 67.2 tonnes, double their level back in August.

Belarus, Russia and South Korea  were also among those countries that added gold to official reserves last month, the IMF data show, while Iraq’s gold reserves quadrupled to over 31 tonnes between August and October.

“The central banks in emerging economies have thus been continuing their policy of diversifying their currency reserves,” says today’s commodities note from Commerzbank.

“In our view this trend is likely to continue next year, meaning that central banks will play a considerable part in the price increase we envisage in 2013.”

The wholesale gold bullion price rose to $1693 per ounce during Monday morning’s London trading, but remained slightly below where it ended last week following falls in Asia, where the Yen opened sharply lower against the Dollar before recovering some ground following the result of Japan’s general election.

“Gold is continuing to trade below the psychologically important threshold of $1700,” says a note from Commerzbank.

“There are signs that the current price weakness is not sustainable, however, and we envisage prices climbing significantly again in the medium term.”

Silver meantime hovered around $32.20 an ounce this morning, a few cents off Friday’s close, while stocks and commodities were little changed on the day.

“Participation is really low right now,” one Hong Kong trader told newswire Reuters this morning.

“It hasn’t been a very exciting year for most people and I don’t think they want to stick around for the last week and a half. People want to put away everything before starting on a totally clean slate in 2013.”

“For 2013 we expect principally similar supporting factors [for gold] as in 2012,” says a note from refiner Heraeus.

“Low interest rates, monetary policy measures by central banks, fear of inflation, purchases by central banks, recovered demand from India as well as increasing demand from China.”

Over in Japan, the Liberal Democratic Party won Sunday’s general election, gaining a so-called supermajority of two-thirds of the lower house of parliament, which will allow it to block decisions made by the upper house.

“The LDP’s landslide election victory gives it a virtually free hand in policy,” says Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities.

“The macro[economic] stance will shift to ‘print and spend.'”

During the election campaign LDP leader Shinzo Abe, who will now become Japan’s prime minister for the second time, called on the central bank to adopt an “unlimited” Yen policy to fight deflation.

“It is very unusual for monetary policy to be a focus of attention in an election,” Abe said Monday following his victory.

“But there was strong public support for our calls to beat deflation…I hope the Bank of Japan takes that into account.”

BoJ policymakers meet on Wednesday and Thursday this week to discuss the latest monetary policy decision. Abe said that after he has formed his cabinet next week, his government will issue a joint statement with the BoJ  which will include a 2% inflation target for the central bank – double the current target.

In Washington meantime, Republican House of Representatives speaker John Boehner has said he will consider raising tax rates for people earning more than $1 million a year. President Obama has said he wants the income threshold for higher taxes to be lower, at $250,000 a year.

Boehner has also offered to remove the subject of the debt ceiling from the debate for a year, according to US press reports Sunday.

The US government is expected to hit the current $16.4 trillion debt limit in early February next year. In August last year, ratings agency Standard & Poor’s stripped the US of its AAA credit rating after negotiations to raise the previous limit continued without agreement until the limit was hit.

The ongoing lack of agreement on the fiscal cliff “will likely leave investors somewhat at a loss as to what they can expect heading into the year-end,” says Edward Meir, precious metals analyst at brokerage INTL FCStone.

“At this stage of the game, we would welcome a broad multi-market retrenchment over the course of this week, as it may finally nudge the politicians towards a badly-needed compromise. However, should we get a sell-off, we suspect gold will be caught up in the resulting downdraft.”

The difference between bullish and bearish contracts held by Comex gold futures and options traders – known as the speculative net long – gained slightly in the week ended last Tuesday, weekly data from the Commodity Futures Trading Commission show.

The data do not however cover gold’s price drop that began Wednesday last week.

NEWS RELEASE.

December 17, 2012: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported today that the  additional broad, high-grade gold intercepts from the Bug Lake area of the Company’s Detour Gold Trend Project in Quebec. Drill hole MDE-12-72 returned the highest grade intercept to date from the Bug Lake Zone – 6.73 metres grading 23.82 g/t gold – from a vertical depth of only 25 metres. The same hole intersected the Footwall Zone which returned a similarly high-grade intercept of 16.53 g/t gold over 6.21 metres (at a vertical depth of only 49 metres).

Drilling continues to confirm the continuity of at least three closely spaced, high-grade gold zones, the Footwall, Bug Lake and Hanging Wall Zones, within the Bug Lake Fault corridor. The Bug Lake Zone continues to demonstrate good overall widths including intercepts of 8.54 g/t gold over 19.08 metres and 1.98 g/t gold over 44.48 metres, frequently with higher grade sub-intercepts. The Hanging Wall Zone, located approximately 60 metres east of the Bug Lake Zone, continues to return high grade values including 36.01 g/t gold over 2.07 metres from hole MDE-12-70. Results for an additional 11 holes completed during the fall 2012 drill program remain pending. Winter road construction is now underway in preparation for the next phase of drilling which is slated to begin in early January 2013.

Click HERE to read the full release.

CompanyFeed™

As we begin to count down the remaining days in 2012 many investors in junior mining stocks are faced with the same decision – do I sell my shares for a tax loss or do I hold onto hope for 2013?

Yes, that is the scope of the carnage in the junior mining markets today.

2012 was, without question, one of the worst years in history for venture-based mining companies. Across the board exploration and development stage mining companies were crushed this year. If you, as an investor in the sector, managed to stay even during the year consider yourself smarter than the average bear.

For Canadians, investors have until December 24th to record a capital gain or loss for the 2012 tax year on Canadian-listed stocks and until December 26th for U.S. equities. U.S. investors have until December 31st to lock in their gains and losses.

According to Canaccord Capital analyst Nicholas Campbell, “Leading up to these dates, we could see increased selling pressure, which can often, but not always, lead to a bounce in equity valuations after the date of record has been passed as investors repurchase equities sold for a tax loss.”

Mr. Campbell warned that frustrated junior mining investors could see more selling pressure in December, regardless of a company’s underlying fundamentals.

In his Top Mining Minds interview with MiningFeeds, Rick Rule, Chairman of Sprott US Holdings, an investment management firm active across the entire spectrum of the natural resource industry states, “The junior market will bifurcate. The lower quality companies (at least 70% of the TSXV) will continue lower, as they strive to reach their intrinsic value ($0.00) in the absence of market support and financing. The strong will begin to rebound sharply, driven by seller exhaustion, increased merger activity, and what we believe will be a very strong discovery cycle.”

The question is, do you own one of the 70 percent destined for a share consolidation? If so, maybe it’s time to realize your losses and identify one of the 30 percent that will “rebound sharply” after seller exhaustion – perhaps towards the end of December on the heels of tax loss selling.

As one mining executive reminded me during a lunch meeting – a project is either going to be a mine or it’s not going to be a mine… there’s no in between. So pick wisely.

NEWS RELEASE.

December 11, 2012: Montreal, Quebec – Stornoway Diamond Corporation (Stock Profile – TSX:SWY) announced that it is pleased to announce that during the ongoing processing of the Renard 65 bulk sample at Stornoway`s North Vancouver diamond recovery facility, a 9.78 carat diamond has been recovered that, with a preliminary valuation of $7,000 per carat, is one of the most valuable stones ever discovered at the Renard Diamond Project.

The 9.78 carat stone is an unbroken white octahedral gem. The next largest diamond in the sample is 6.41 carats in size and is also a white octahedral gem of high quality, with a preliminary valuation of $4,700 per carat. Approximately one third of the Renard 65 bulk sample’s heavy mineral concentrate has now been processed and a total of eleven diamonds larger than 1.8 carats in size have been extracted. Sample processing is continuing.

Matt Manson, Stornoway’s President and CEO, commented: “Our expectation for the Renard 65 bulk sample was that, as with the other Renard kimberlites, we would have recovered a number of high quality large stones given the size of the sample and its likely diamond size distribution. To have obtained two such large diamonds so early on, both of exceptional quality, is highly encouraging.”
The objective of the current sampling program at Renard 65 is the recovery of a parcel of diamonds large enough for valuation purposes, with a view to the conversion of material that is currently classified as an Inferred Mineral Resource to an Indicated Mineral Resource and then, if warranted, to a Mineral Reserve for inclusion in the project’s mine plan. The field portion of the bulk sample program was completed in November, and final diamond recovery results are expected in Q1 2013. Given the estimated diamond content at the sampling site, it is expected that approximately 1,000 carats of diamonds will be recovered, which will be sent to Antwerp, Belgium for valuation.

Within the larger Renard Mineral Resource inventory, Renard 65 contains an Inferred Mineral Resource of 3.7 Mcarats (representing 12.9 mtonnes at an average grade of 29 cpht) to a depth of 290m, with an exploration potential estimated at between 6.8 and 13.7 Mcarats (29.5 to 41.6 Mtonnes at between 23 and 33 cpht) from 290m to 775m in depth. The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. In addition, the potential quantity and grade of any exploration target is conceptual in nature, and it is uncertain if further exploration will result in it being delineated as a mineral resource.

To learn more about this major milestone – CLICK HERE.

CompanyFeed™

Gold bullion prices rose to one-week highs above $1710 an ounce Monday morning, while European stock markets fell following news that Italy’s prime minister plans to resign.

“Gold continues to consolidate its gains from August-September, and is still respecting its long term uptrend,” says the latest technical analysis from bullion dealing Scotiabank.

Italy’s FTSE MIB index was down more than 3% on the day by Monday lunchtime, after technocrat Italian prime minister Mario Monti announced over the weekend his intention to resign once Italy’s next budget is passed by parliament.

Monti’s announcement comes after members of former prime minister Silvio Berlusconi’s People of Liberty party last Thursday declined to support a package of economic measures proposed by Monti’s government.

Berlusconi wrote on his Facebook page Saturday that he intends to contest next year’s elections. “Everybody agrees that we need an acknowledged leader to win,” he said.

“Such leader, a replica of what Berlusconi was in ’94, has not been found. It is not a matter of not having searched: we have indeed searched for one, but he does not exist…it is with desperation that I am returning to take interest in public affairs, and once again I am doing so out of a sense of responsibility.”

Over in Athens meantime, the Greek government has extended until noon tomorrow London time the deadline for bondholders to participate in its bond buyback, through which Greece hopes to buy back debt with a face value of around €30 billion, spending €10 billion since the bonds are trading below par.

“Investors should bear in mind that even if Greece accepts all bonds tendered in the Invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path,” says a statement from the Greek finance ministry.

“Future measures may not involve an opportunity to exit investments in Designated Securities at the levels offered for this buy back.”

Greece was close to reaching its target for the buyback by Sunday, according to an unnamed finance ministry official quoted by news agency Bloomberg.

“They call this debt sustainability, but it’s only [sustainable] on paper,” says Commerzbank chief economist Joerg Kraemer.

“The buyback was a success because investors do not believe in the debt sustainability.”

Silver meantime hovered above $33.30 an ounce for most of Tuesday morning, up slightly on last week’s close, while other industrial commodities ticked higher and US Treasury bonds also gained.

Over in New York, the difference between bullish and bearish contracts held by gold futures and options traders on the Comex – known as the speculative net long position – fell 18.5% in the week ended last Tuesday, according to the weekly Commitments of Traders report published Friday by the Commodity Futures Trading Commission.

“The cracks in investor confidence that we saw in the preceding week widened considerably,” says Marc Ground, commodities strategist at Standard Bank.

“[However] despite the liquidations, we still feel that the prospect of continued monetary accommodation should provide support for gold over the medium term. Coupled with fairly robust physical buying, we maintain that dips below the $1700 level represent a good buying opportunity.”

Holdings of gold bullion backing the SPDR Gold Shares (GLD), the world’s biggest gold ETF, rose to a new high of 1353.3 tonnes on Friday.

The Federal Open Market Committee meets tomorrow and Wednesday to discuss Federal Reserve policy.

“The FOMC faces a tricky task in managing the end of Operation Twist,” says a note from ING, referring to the Fed’s maturity extension program, due to end this month, through which the central bank sells shorter-dated Treasury bonds and buys longer-dated ones with the aim of lowering longer-term interest rates.

“[The Fed] will be at pains to replace it with something that markets do not interpret as hawkish.”

“Market expectation is that there could be more quantitative easing towards the end of the month, and this will be supportive of gold,” says Lynette Tan, analyst at Philip Futures in Singapore, though she added that uncertainty over the so-called fiscal cliff is likely to keep gold range bound between $1680 and $1750 an ounce.

More recycled gold bullion will flow to Singapore from next year as a result of a new refinery being built there by Swiss refiner Metalor, according to Metalor’s Robert Gilles, quoted by Singapore’s Business Times Monday.

“What is happening now is you have the scrap going out of the region and coming back in the form of good delivery bars,” says Gilles.

Because it’s expensive to transport high value materials, it makes sense to have a refinery taking up the scrap, creating fine gold and then transforming this fine gold into bars.”

South Africa’s Rand Refinery announced last month that it is building an assaying and sampling facility in Singapore.

NEWS RELEASE.

December 7, 2012: Montreal, Quebec – Stornoway Diamond Corporation (Stock Profile – TSX:SWY) announced its wholly-owned subsidiary Les Diamants Stornoway (Canada) Inc. has completed a Financing Agreement with the Québec Ministère des Finances et de l’Économie (“MFE”) under which Stornoway will be financed to complete the construction of a mining-grade access road to the Renard Diamond Project (the “Renard Mine Road”). The Financing Agreement is pursuant to a Framework Agreement and associated Letter of Intent previously executed between Québec and Stornoway and announced on November 15, 2012. The Framework Agreement and the now-completed Financing Agreement are designed to ensure all-season road access to Renard during 2013. Features of the Financing Agreement are as follows:

• Québec to provide Stornoway with a credit facility of up to C$77m (“Loan A”) to complete the road construction work, at an annual interest rate of 3.35% percent, for a term of 15 years, with repayment beginning 48 months following first disbursement, and deferrable up to 2 years due to any delay in the attainment of commercial production at Renard past July 1, 2016.

• Québec to provide Stornoway an additional overrun facility of up to C$7.7m (“Loan B”), at an annual interest rate of 6.3% percent, with repayments concurrent with Loan A.

• Stornoway undertakes to complete construction of the Renard Mine Road no later than June 30, 2015, subject to certain terms, including terms of the previously announced Framework Agreement.

On the basis of the construction schedule as currently anticipated, Stornoway expects to request an initial disbursement under Loan A during the month of December 2012.

To learn more about the Renard Mine Road – CLICK HERE.

CompanyFeed™

Gold traded in a narrow range around $1691 per ounce Thursday morning in London, rising slightly from yesterday’s 1-month low.

“Over the past 4 years December has traditionally been a poor performing month for gold,” writes Moudi Raad at Swiss refinery group MKS, “averaging a decline of around 8% over that period.”

Since 2008 the New Year has then seen what Raad calls “a solid turnaround, and with central bank buying still on the cards and ETF holdings increasing for a 13th straight session yesterday there is demand out there.”

“There is some heavy selling by fund investors and leveraged money,” agrees Miguel Perez-Santalla, vice president for the Americas here at BullionVault, speaking to Reuters. “But physical gold demand should benefit in the long run from the fiscal cliff after these short-term fluctuations.”

“Risks to our [economic] growth outlook remain elevated,” said a widely-reported gold price forecast from investment-bank Goldman Sachs on Wednesday, “especially given the uncertainty around the fiscal cliff.

“[That] makes calling the peak in gold prices a difficult exercise. [But] the gold cycle is likely to turn in 2013,” says Goldman analyst Damien Courvalin, lowering his 12-month forecast to $1800 per ounce.

Looking at the commodities sector more broadly, “Supply-side fundamentals, demand elasticity and idiosyncratic risks will prove increasingly important in driving price action,” counters Hussein Allidina in his 2013 Commodities Outlook for Morgan Stanley. “Under this lens, we favor exposure to gold/silver,” he says, forecasting an average gold price in 2013 of $1853 per ounce.

“Positive US data [on Wednesday] pointed to some improvement in economic growth,” says  Commerzbank, “which did not bode too well for the gold price.”

“Now that the key support level of $1700 an ounce has been breached,” says David Levenstein in his daily note for South Africa’s Rand Refinery, “there is a possibility that technical traders may attempt to push prices lower in the short-term.”

“We’re actually seeing a fairly mysterious seller in the Asian time zone over the last week,” says Jeffrey Rhodes, CEO of INTL Commodities in Dubai, quoted by Emirates 24/7. “We’ve seen some fairly large sell orders hit the market in the thinly-traded twilight zone.”

“Maybe that [push to lower prices] is a prelude to buying gold…Either way, many players are closing their books for the year – they’ve either made what they’ve made for the year, or they’ve lost and don’t want to lose anymore,” according to Rhodes.

NEWS RELEASE.

December 6, 2012: Montreal, Quebec – Stornoway Diamond Corporation (Stock Profile – TSX:SWY) announced that it received the global Certificate of Authorization for the Renard Diamond Project from the Québec Ministère du Développement Durable, de l’Environnement,de la Faune et des Parcs (“MDDEFP”).

The Certificate of Authorization represents the principal regulatory approval required to commence mine construction, and has been issued by the Québec regulators following more than 2 years of formal environmental study, community engagement and public consultation under the terms of the James Bay and Northern Québec Agreement (the “JBNQA”).

Matt Manson, Stornoway’s President and CEO commented: “Today’s news represents the most significant milestone in the development of the Renard Diamond Project achieved to date. It comes just 11 months since the filing of the project’s Environmental and Social Impact Assessment, an accomplishment that reflects the high quality of the work undertaken by Stornoway’s project team and partners, and the broad support that the project enjoys within the nearby communities of Mistissini, Chibougamau and Chapais. The MDDEFP global Certificate of Authorization is the most important element of the permitting process for mining projects in Québec. As of today we are able to say that the principal regulatory hurdle for the Renard Diamond Project is behind us.”

The Renard project falls under the social and environmental protection regimes of both the JBNQA and the Canadian Environmental Assessment Act (“CEAA”). Successful public hearings on the project were held by the federal Canadian government and Québec in June and August of this year respectively. Stornoway expects to receive regulatory authorizations from the Fisheries and Oceans Canada and Environment Canada shortly, following the conclusion of the federal government’s evaluation of the project under the CEAA.

To learn more about this major milestone – CLICK HERE.

CompanyFeed™

Stornoway’s flagship asset is the Renard Diamond Project which the company has been working on for 10 years. Current NI 43-101 compliant Indicated and Inferred Mineral Resources stand at 23.8 and 17.5 million carats respectively, with a further 23.5 to 48.5 million carats classified in the non-resource category.

A few weeks ago, the company completed the field portion of a bulk sample program on the Renard 65 Kimberlite pipe. The objective of the bulk sample program is to collect a large enough parcel of diamonds to allow the conversion of material that is currently classified as an Inferred Mineral Resource at Renard 65 to an Indicated Mineral Resource and then, if warranted, to a Mineral Reserve. Another step in the process of building Quebec’s first diamond mine.

Although Renard is clearly the big value driver for Stornoway (Stock Profile – TSE:SWY), the company also maintains a fairly robust exploration program. The company has three advance stage exploration projects and three grassroots projects located across Canada.

2012 was an interesting year for diamonds. Two major players in the industry, BHP and Rio Tinto, announced plans to get out of the diamond mining business. This shift has some wondering about the state of the industry. But KPMG writes in a recent quarterly diamond report, “…reserves are continuously depleting with mature open-pit mines reaching their target economic depth. Also, there have been limited new diamond discoveries in the recent past.”

The KPMG report predicts an average world diamond price decline of 2% in 2013 followed by a 7% rise in 2014 and a 9% rise in 2015. Good news for Stornoway Diamonds President & CEO, Matt Manson, who we managed to track down for an exclusive interview during what has been a busy time for the company.

Stornoway has been in the diamond mine development business for many years now. Please provide our readers with an overview of the company and some of your major achievements along the way.

Since 2006 Stornoway’s focus has been the development of the Renard Diamond Project in Quebec. In the last 6 years we have worked our way through the lengthy and expensive process of establishing what is now one of the world’s largest undeveloped diamond resources. This has been an immense amount of work, in drilling, sampling, bulk sampling, geological modeling and diamond valuation.

At the same time, we have transformed Stornoway from a grass roots explorer focussed primarily on Canada’s north, to a mining company headquartered in Montreal at the heart of the Quebec mining community and preparing to develop the world’s next diamond mine.

Along the way, we have unitized the project by acquiring the interest of our partner SOQUEM Inc., making Investissement Quebec our largest shareholder, entered into a financing agreement with the Quebec Government that facilitated the start of construction on the Route 167 Extension which will make Renard the first diamond mine in Canada with an all season road, completed the project’s Feasibility Study, filed the project’s ESIA, signed an Impacts and Benefits Agreement with the Crees of James Bay last March, and signed partnership agreements with the communities of Chibougamau and Chapais this past July.

Most recently, in September we announced a Mandate Letter and draft term sheet in connection with a potential $475 million debt financing for Renard with seven commercial lenders, a deal that once completed will rank as the largest project financing for a diamond project yet completed. We received the project’s mining lease in October and we expect to receive our principal regulatory approval for mine construction, the project’s “Certificate of Authorization” soon. These are all significant achievements for a company making the long and difficult transition from exploration to production.

This year there have been some big changes in the diamond industry. Most recently, Harry Winston announced it was buying the Etaki diamond mine from BHP Billiton for $500 million. What is the significance of these changes and what does these mean for Stornoway?

These changes are a natural part of the evolution of the diamond industry in Canada, of which Stornoway is obviously at the heart.  The exit of BHPB from the diamond business, and also we understand Rio Tinto, has been expected for some time. Both the Diavik and Ekati mines are nearing the end of their currently defined reserve life, and diamonds are a very small part of the business of these two very large mining companies.

These transactions have created an unmerited negative sentiment about the diamond sector in Canada, especially in the media. In actual fact, they reflect the very limited outlook for future diamond supply. Renard, at 2 million carats per year peak production, is one of the largest new projects under development in the world, but will only represent 2% of world supply. This is not an industry that suits large diversified miners seeking to expand their mining divisions and improve margins. This is not possible in the tight diamond sector, and hence BHPB and Rio Tinto are exiting.

In the short term, Stornoway is focussed on the timely development of Renard, which we believe is a highly valuable project with a long potential mine life. In the medium to long term, the reorganization of ownership of BHPB and Rio Tinto’s assets into other companies will help create more liquidity in the public equity markets for diamond companies, improve the industry’s visibility in general, and provide greater opportunities for growth in the sector.

Stornoway has, from what I can tell, an excellent relationship with Quebec’s First Nations people. Was this a key component associated with receiving your mining lease for Renard from the Quebec Ministry of Natural Resources in October?

Stornoway has maintained a positive relationship with the Crees of James Bay (Eeyou Istchee) and in particular the Cree Nation of Mistissini, since the discovery of Renard in 2001. In 2010 we signed a Pre-development Agreement with the Crees and an IBA, the Mecheshoo Agreement, in March 2012. This last agreement was the most recent example of an IBA between a mining company and an aboriginal community in Canada. Our relationship with the Crees is based on trust and respect.

During the mine design process we organised regular community meetings to take input from local people on specific aspects of the project’s configuration. In negotiating the Mechesho Agreement, we brought the Cree parties under a CA and negotiated on the basis of complete transparency on the project’s employment and business opportunities, and financial model. We respect that we are operating within the  traditional territories of the Crees.

The Crees have, in my opinion, a very well developed view on mining, which they regard as welcome as long as it conforms with the best interests of the Crees, is respectful of the environmental, and contributes to the well-being of their communities. These are also Stornoway’s objectives. The good relationship between Stornoway and the Crees, our “social licence”, is well understood by the permitting authorities, and is a contributing factor in our successful permitting process.

Now that the permit has been received, what are the remaining hurdles in front of Stornoway before you are able to put the project into production?

Until now, the three principal challenges for Stornoway in the development of Renard have been project permitting, maintaining road development on schedule for first road access in 2013, and project financing. The receipt of our Certificate of Authorization is the principal hurdle in our permitting process – so it will be good to have that box checked.

On October 29th we press released that delays in the development of the Route 167 Extension would likely arise owing to the decision of the Quebec government to review costs associated with the project and defer the awarding of the road’s two last construction contracts. On November 15th, just two weeks later, we were able to announce a new agreement with Quebec where Stornoway would assume completion of the road as a single lane, mining-grade road, and be financed by Quebec with a line of credit up to $85 million to do so.

This agreement gives us control over the road project, and for the first time control over the project schedule, and we were able to re-confirm all-season road access for 2013. The remaining challenge for us now is to meet project financing. Our $475 million commercial debt deal will be part of the answer. We are also pursing financing opportunities tied to diamond supply, and at some stage we will come back to the equity markets.

The task of financing the first development project for a junior miner seeking to transform itself into a producer is always the supreme challenge in the growth of a mining company. However, we are meeting this challenge with the same optimism for ultimate success with which we have met all other challenges to date.

By nature of the industry there aren’t many diamond mines in the world. Are there additional operational challenges associated with mining diamonds due to the limited number of operation mines? (i.e. know-how, equipment, etc.)

No. Most diamond mines use established technology easily available in the mining support trade. Most employment roles in a diamond mine are not specific to diamond mining. Specialized people are required in the areas of diamond processing, security, marketing and mine geology. We already possess much of this expertise in house.

The expected contraction in world diamond supply also makes it easier than previously to recruit specialized people from the open job market. We see the general shortage of master mechanics and electricians in the Canadian mining industry as a greater risk to us that any shortage of people with diamond experience.

People tend to focus on your Renard project for obvious reasons but the company also has a number of exploration projects. What is the status of your exploration activities?

As is natural for a development-stage company, we have reined in our spending on our portfolio of exploration projects over the last two years as we focus on developing Renard. This portfolio includes the advanced stage projects Aviat, Qilalugaq (both in Nunavut) and Timiskaming (Ontario) and grassroots projects (including Pikoo in Saskatchewan and Aeon in Quebec).

In June we were able to release the first NI 43-101 compliant resource at Qilalugaq  (a total Inferred Mineral Resource 26.1 million carats from 48.8 million tonnes, with an average +1 DTC total diamond content of 53.6 carats per hundred tonnes to a depth of 205m, and additional resource upside in the form of a target for further exploration of between 7.9 to 9.3 million carats from 14.1 to 16.6 million tonnes total content of kimberlite with an average +1 DTC total diamond content of 56.1 cpht, extending to 305m depth.).

We have also been operating very targeted sampling and prospecting programs in our grassroots projects over the last 12 months. Stornoway has always valued an active portfolio of projects, and our strategy is to return to exploration more aggressively once Renard is fully financed and underway.

Disclosure: at publication date Stornoway Diamonds is a client of MiningFeeds.

Tungsten is the hardest and strongest metal on the planet. It is over three times harder than chromium, cobalt and titanium and over five times harder than nickel, iron and platinum. Tungsten alloys well with other metals and displays high resistance to corrosion.

Strategically speaking, tungsten was ranked in a first place tie with rare earth elements on the British Geological Survey (BGS) annual mineral “risk list” in 2012.

The updated risk list gives an indication of the relative risk to the supply of a chemical element or element groups which are required to maintain our economy and lifestyle.

The position of an element on this list is determined by a number of factors which might affect availability. These include the abundance of elements in the Earth’s crust, the location of current production and reserves, and the political stability of those locations. Recycling rates are also included in the analysis.

North American Tungsten (Stock Profile – CVE:NTC) is a leading junior tungsten producer. The company currently produces 4% of the world’s supply and has been producing tungsten from its Cantung mine in Canada’s Northwest Territories since 2001.

The company has navigated two mine shutdowns and restarts and, during the most recently shutdown in 2010, upgraded the mine with a $25 million capital program. In addition to the Cantung mine, North American Tungsten owns the MacTung property which boasts one of the largest high-grade tungsten deposits in the world.

We recently joined company President & CEO, Stephen Leahy, for a one-on-one interview where we took a look back in time, and found out what’s in store for 2013.

For many mining investors tungsten is a relatively unknown metal. Please tell our readers about tungsten mining and what tungsten is primarily used for.

Tungsten is a Strategic metal with significant attributes. It is the hardest material on earth besides diamonds, it has the highest melting point of any metal, it is close to gold in density, and it is non-toxic.

The majority of tungsten use is in cutting tools, inserts and drills. These equate to approx. 65% of consumption. The balance is widespread including military, electronics, lighting and even jewelry. New composite technology is opening up significant new markets for Tungsten that will use its density and non-toxicity as key drivers.

North American Tungsten produces 4% of the world’s tungsten – who do you sell to and what does a typical sale look like?

While all of our off-take agreements are confidential, I can tell you that we currently ship about 70% of our production to Asia and 30% to Europe. We typically contract for a minimum of one year and our pricing is usually 80% or higher of the LMB Ammonium Paratungstate (APT) quotation which is adjusted monthly.

Currently, production is out of your CanTung mine in the Northwest Territories. How long has the mine been in operation and what are the current operational highlights?

The CanTung Mine started operations in the early 60’s as an open pit mine and moved underground in the early 70’s. While we currently only have some 2 years of forward resources, we’ve had that approx. number for the last eight years of mining. Needless to say, we do believe that there is much more development to be done at CanTung.

We do boast the highest head grade of any mine we know of and our gravity concentrate is world renowned for its exceptional quality. We have made significant improvements, investing some $50 million at the mine in the last 2 years, boosting productivity and efficiencies.

On October 16^th the company announced a major permitting milestone for its MacTung project in the Yukon. What is the significance of the Draft Screening Report?

The draft screening report (DSR) from the Yukon Environmental and Socio-economic Assessment Board (“YESA”) recommending that our MacTung project proceed, is a major milestone in the Yukon mining permitting process. The DSR essentially gives the green light for the project to the government regulators for their approval.

Once permitting has been fully received, what are your plans for MacTung?

Financing is the key to MacTung and we have already started the process to connect with potential partners and long term off-take entities. The construction plans for MacTung call for a 2 year time frame.

Globally, how does MacTung stack up against other tungsten projects in operation or in development?

MacTung is the world’s largest known undeveloped high grade tungsten-skarn deposit with over 33 million tonnes at 0.88 WO3. That means a 30+ year mine life, which in the tungsten world is very very significant.

Disclosure: at publication date North American Tungsten is a client of MiningFeeds.

2011 was a banner year for Goldgroup. The company completed its earn-in interest for 100% ownership of its flagship project, Caballo Blanco, situated near Veracruz, Mexico and completed a $40.25 million financing at $1.40 per share to fund development expenses (Stock Profile – TSE:GGA).

Early in February 2012, it was reported in a Mexican newspaper that the Governor of the State of Veracruz stated Goldgroup’s Caballo Blanco project should be designed with the welfare of all stakeholders in mind. At the time of the article Goldgroup’s shares were trading at $1.30.

Notwithstanding the Governor’s public statement, mining operating permits, including Goldgroup’s outstanding Environmental Impact Assessment, are a matter under the jurisdiction of the Federal government of Mexico.

But as 2012 wore on, the company began to lose momentum despite reaching another major milestone when it released its Preliminary Economic Assessment (PEA) for Caballo Blanco in April.

Fast forward to September, 2012. Goldgroup announced the decision to defer the evaluation of the Environmental Impact Assessment for Caballo Blanco. A reasonable decision considering Mexico was going through a post-election change in Federal government.

Recently, there have also been management changes at the executive level which created additional uncertainty. And, as many mining investors know, 2012 was not the kind of year when uncertainty went unnoticed. Today, Goldgroup’s shares can be had for $0.35.

We connected with Goldgroup’s newly appointed President & CEO, Dr. Hans von Michaelis, to get the details on what’s in store for 2013.

Goldgroup is focused in Mexico and the country is a major destination for international mining investment, in short, why Mexico?

Mexico likes and wants mining development and welcomes foreign investment.  Mexico is one of the most favorable mining jurisdictions in the world and that is why Goldgroup is focused there.  The country has a deep-rooted history in mining, especially precious metals.  Geologically, Mexico is well-endowed with numerous world-class deposits.  The country has transparent and fair, Federal mining laws which are supportive of investment by foreign and domestic mining companies.  For Goldgroup, Mexico has been an excellent opportunity for the development of gold mines.

There’s been quite a bit of turnover at the executive level of Goldgroup Mining over the past few months – what precipitated the changes at the company?

Goldgroup has experienced some challenges over the past year, as is typical with companies’ fast tracking larger-scale mines to production. As a result, the Board tweaked its management team to better meet these challenges.

On October 12, 2012, the Board elected the company’s then Executive Chairman, Gregg Sedun as interim, temporary President and CEO, to fill the place of Keith Piggott.  I have been an active member of the Goldgroup team since the company’s inception and was serving as Lead Director.  Chester Millar has started and developed several gold mines in Mexico, and elsewhere.  I previously worked with Chester on several of these developments and he wanted my help again to advance Goldgroup’s excellent projects and to regain focus on the company’s main goals.

You were recently appointed as Goldgroup’s new President & CEO, in a nutshell, why did you take on the role and what is your plan for Goldgroup?

I gladly accepted the role as CEO and President as it represents a worthwhile and realistic challenge to build a successful gold mining company.  Along with most mine development resource companies, the need arose to strategize to improve staying power through tough macroeconomic times, including downsizing overhead expenses.

On September 14^th the Company announced it decided to defer the evaluation of the Environmental Impact Assessment at Caballo Blanco – your flagship project.  Tell us about the project and the status of the filing?

Goldgroup’s 100% owned flagship Caballo Blanco project consists of a series of  oxidized gold mineralized zones located in the State of Veracruz in eastern Mexico.  Within the 54,732 hectares of mineral concessions, the La Paila gold deposit has been delineated within an area with prolific epithermal alternation known as the Northern Zone.  This zone is within a large volcanic system that hosts several ­­­­­­­additional prospective silicious targets that warrant further exploration in the future.  The gold is fine-grained and occurs within vuggy, massive and brecciated silica in an altered andesite host-rock in a very large epithermal volcanic system.

Goldgroup completed a Preliminary Economic Assessment (PEA) on Caballo Blanco in April 2012.  The PEA outlined robust project economics with a 1.5 year payback period, pre-tax internal rate of return (IRR) of 66.4% and a pre-tax net present value (NPV) using a 5% discount rate of $283.8 million.  At a projected mining rate of 20,000 tonnes per day, the project is estimated to produce an average of 95,000 ounces of gold annually over a 7.5 year mine-life (with first year production estimated at 61,000 ounces of gold).

With regards to the status of the Environmental Impact Assessment (EIA), on September 14, 2012, Goldgroup announced that the company would defer submittal of the EIA as Mexico was undergoing Federal changes at that time.  Goldgroup recognizes the importance of working with President Nieto’s new team to integrate their specific requirements.

It is important to note that the environmental permitting process is governed by Mexican Federal law and regulations.  We are currently working with Federal, State and local authorities to ensure the company addresses all of their advanced comments and suggestions and we expect to reactivate the EIA submittal in a timely manner.  After receiving the permits, the Caballo Blanco project is estimated to require approximately twelve months for detailed engineering and construction of an operating mine.

Your Cerro Colorado mine in Sonora, Mexico is currently in production.  Please tell our readers about the mine and its strategic importance?

Cerro Colorado is where the Goldgroup team started mining and heap leaching in Mexico.  It is a low-grade resource in a prospective district.  The mine is nearing the end of its mine-life unless more ore can be proven up.  The Cerro Colorado gold mine demonstrates Goldgroup’s mine development and operating capabilities.  Once Caballo Blanco is permitted Goldgroup’s current plan is to draw on its seasoned and proven mine operating and heap leaching team at the Cerro Colorado mine.

Mining is a key part of Mexico’s economy, what changes have you seen over the past 10 years that lead you to believe Mexico will remain a stable mining jurisdiction?

Mexico is one the fastest growing economies in Latin America.  Mexico’s young population is also growing and the country needs jobs, especially in the more rural areas.  Mexico’s cities have been growing very rapidly due to an influx from rural areas as well as population growth.  The mining industry in an important source of rural jobs, especially in areas where the Government has clamped down on subsistence farming of illegal crops.

Since Mexico legalized foreign investment and foreign ownership of mines about twenty-five years ago, the industry has grown dramatically.  Mexico recognizes that it needs and wants its mining industry to grow.  Mexico is now becoming much more concerned about sustainability issues at its mining camps. There is no question that mining is recognized as an important income earner and wealth creator in Mexico.

Disclosure: at publication date Goldgroup is a client of MiningFeeds.

The price of gold fell back below $1715 an ounce Monday morning in London, more-or-less in line with where they were two weeks ago after failing to hold gains made during Asian trading.

“Gold is still following its long term uptrend from 2008 lows,” say technical analysts at Scotiabank, “with support from the uptrend at $1632.”

Silver fell back to around $33.50 an ounce while stocks edged higher and commodities were broadly flat.

Euro gold prices meantime came close to one-month lows as the Euro rose to a one-month high against the Dollar after comments from German chancellor Angela Merkel that suggested more Greek debt might eventually be written down.

Greece revealed details Monday of the bond buyback program announced last week, through which the government will buy back its bonds currently trading at a discount to par value.

The government has said it will spend up to €10 billion buying back its own bonds, though it is only prepared to pay up to a maximum percentage of the face value of the debt. Bondholders will compete to get the best price for a given maturity, with Athens setting the minimum price range (depending on bond maturity) at 30.2% to 38.1%, with the maximum range at 32.2% to 40.1%.

“[The prices are] higher than previously published or announced,” says Spyros Politis, chief executive of an Athens-based fund management firm that holds Greek government debt. “At the moment it looks as if it will be successful, or if they miss the target, they will miss it by a small margin. Anything that reduces the overall debt burden is good.”

Chancellor Merkel meantime said over the weekend that a further write down of Greek debt might be possible if Greece’s budget moves into primary surplus – meaning the government takes in more in revenues than it spends before debt payments are taken into account.

“If Greece one day can rely once again on its own revenue,” Merkel told German newspaper Bild am Sonntag, “without having to borrow, then we’ll have to look at this situation and make an evaluation.”

“[This is] the end of denial,” says ING Groep economist Carsten Brzeski. “It’s definitely a shift, but on the other hand, it’s obvious [that a write down will be needed].”

Germany’s manufacturing sector saw improved conditions last month compared to a month earlier, although output still appears to have declined, according to purchasing managers index data published by Markit Monday.

Germany’s manufacturing PMI rose from 46.0 in October to 46.2 last month, with a figure below 50 indicating sector contraction.

Manufacturing in the Eurozone as a whole also continued to contract but at a slower rate, last month according to PMI data, while it was a similar story for the UK.

China’s official November PMI meantime rose from 50.2 to 50.6. Similar data for the US are due to be published later today.

Negotiations between Republicans and Democrats over how to avoid the so-called fiscal cliff are set to continue this week, with both sides still in disagreement.

“There’s no path to an agreement that does not involve Republicans acknowledging that rates have to go up for the wealthiest Americans,” US Treasury secretary Timothy Geithner told CBS viewers Sunday.

“The president is asking for $1.6 trillion worth of new revenue over 10 years,” said Republican John Boehner, the House of Representatives speaker. “[This is] twice as much as he has been asking for in public.”

In New York, the so-called speculative net long position of gold futures and options traders – measured as the difference between bullish and bearish contracts held by noncommercial traders – rose for the third week running in the week ended last Tuesday, Commodity Futures Trading Commission data show.

Overall open interest however fell from a week earlier, while the period does not cover last Wednesday, which saw gold drop 1.5% in a few minutes.

“The market remains sustained by the promise of continued monetary accommodation,” says Standard bank commodities strategist Marc Ground. “The Fed is not going to respond to stronger-than-expected data with tighter policy immediately and, more importantly, the interest rate markets are not going to expect the Fed to change course. If rates can’t rise materially on strong data the Dollar is unlikely to rise materially.”

The world’s biggest gold exchange traded fund SPDR Gold Shares (GLD) saw its bullion holdings rise to a new record on Friday at 1348.8 tonnes, while November saw the largest monthly sales of gold investment coins by the US Mint since July 2010.