I had the great opportunity yesterday to connect with legendary resource developer & financier, Ross Beaty, founder and chairman of the $2.7B Pan American Silver Corp., and executive chairman of Alterra Power Corp. Throughout his 37 year career, Ross has generated an astounding sum of over $4B worth of shareholder wealth.

His comments during this amazing interview, describe a screaming ‘pressure-cooker’ global environment for commodities, with sustainability, declining discovery rates, depletion, and resource nationalism all but choking off supply-side growth.

“We are hitting walls of sustainability,” said Ross. “Discovery rates are declining in metals and in oil & gas, much less is being found than is being consumed, and all of these patterns whether it be use of water, use of land, depletion of soil, inability to replace energy consumption as is being consumed…When you look at all those things [you see] there’s a lot of constraints to our economic system today…The world will hit those constraints, and that’s going to be a brake on things like economic growth, and things like commodity consumption growth.” 

Speaking on the supply-side Ross added that, “Nothing that affected the supply-side challenges we’ve seen in the last few years is different this year. If anything, supply challenges are greater. Social issues, environmental issues, political issues, resource nationalism by many countries, all of these things will constrain supply responses to high metal prices…There will be lots of shocks to cause prices to go up and go down this coming year I think.”

When asked about record sales seen recently in silver bullion products, Ross commented that, “Because of the world’s indebtedness…particularly the U.S., there will be continuing weakening of global currencies and increasing monetary flooding of paper currency supporting hard currencies like gold and silver. I think metal prices for those precious metals commodities will continue to trend higher…Look at the ETF & coin demand, and you’re seeing continuing demand for silver as a monetary product, just like gold…it’s a tendency of people to want to buy physical metal as an alternative to paper money…it’s been a great bet, and I see that continuing.” 

When asked about the tough resource share market for investors, Ross said, “This is a really good buyer’s market today, there’s great value in exploration companies…it’s a far better time to invest than say the beginning of 2011 when prices were at the top, and so I think people should look at an out of favor market. That’s when money is made. It’s when nobody else wants to invest. It’s when the best investments are made…I think it’s a very good time to invest right now for anybody looking at this particular sector…The tide is out…[but] any improvement in the macro market which brings investors back into the space will cause improvement in the share prices pretty much across the board…We are in a super-cycle [for commodities], metal prices are proving that…[so] you’ll see lot’s of capital gains being made in 2013.”

In a concluding word to investors looking to profit in resources, Ross said, “Over the long-term cream floats to the top, and a well-run company that is financially & operationally strong, with it’s greatest asset[being] it’s people…will do better than other companies, and generally speaking will outperform the market.” 

NEWS RELEASE.

January 28, 2013: Montreal, Quebec – Stornoway Diamond Corporation (Stock Profile – TSX:SWY) reports the completion of a mine design and cost optimization exercise (the “Optimization Study”) for the Renard Diamond Project, Stornoway’s 100% owned mining development project located in north-central Québec. The Optimization Study incorporates certain design refinements undertaken since the release of the project’s Feasibility Study in November 2011 (the “Feasibility Study”), including the deferral of shaft access for the underground mine and a modified underground mining sequence and draw point design.

As a result of these design changes, project operating and capital cost estimates have been restated, and a revised production schedule established. The Optimization Study also contains an updated project development schedule and financial model incorporating, amongst other things, the terms of the March 2012 Mecheshoo Agreement with the Cree Nation of Mistissini, the Grand Council of the Crees (Eeyou Istchee), and the Cree Regional Authority, and the November 2012 Renard Mine Road financing agreement with the Government of Québec. Highlights of the Optimization Study are as follows:

• A revised initial capital cost of C$752 million, including contingencies, in October 2012 terms, a reduction of C$50 million from the previous estimate which was expressed in June 2011 terms.
• A revised operating cost averaging C$57.63/tonne (C$76.63/carat) life of mine in October 2012 terms, an increase of C$2.92/tonne from the previous estimate.
• Base case estimates of Net Present Value (“NPV”) of C$683 million at a 7% discount rate and Internal Rate of Return (“IRR”) of 20.3% before taxes and mining duties, and C$391 million and 16.3% after taxes and mining duties, all improvements from the previous estimates.
• 11 years reserve-based mine life with diamond production averaging 1.6 million carats/annum life of mine, real terms net revenue of C$4,046 million, and a cash operating margin of C$2,693 million (67% compared to 68% in the previous estimate).

Matt Manson, President and CEO, commented: ”The Optimization Study reported today confirms a robust project with strong cash flows. Since the release of the project’s Feasibility Study, we have been able to bring down our initial capital cost estimate with only a modest impact on the project’s operating costs. We are particularly pleased that the project has so successfully absorbed the kind of post-feasibility design adjustments and operating agreements that can negatively impact a project’s value. The deferral of the shaft has been achieved without compromising the future development of the project’s substantial resource upside, and the refinements made to the underground mining sequence provide greater confidence in the operating parameters for this critical part of the overall mine plan. With our Mining Lease and Québec Certificate of Authorization in hand, and the Renard Mine Road under development, we can now move towards finalizing our project financing arrangements, and initiating project construction in the third quarter of this year.”

To read how this impacts the feasibility study – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

January 28, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported additional high-grade gold results from drill testing of multiple shallow zones situated along the Bug Lake Fault System on its wholly owned Martiniere Property in Quebec. Drilling continued to expand and delineate the Hanging Wall, Footwall and Bug Lake Zones, with most holes successfully intersecting multiple zones of gold mineralization.

Results from the final 11 holes of the fall 2012 drill program indicate the presence of a fault repeat of the Footwall Zone, potential for expanding the Footwall Zone to depth and provide further evidence for the local development of a fourth, near surface high-grade zone located between the Bug Lake and Hanging Wall Zones. Drilling continues on the Martiniere Property with 2 rigs currently on site.

“Today’s results continue to demonstrate the continuity and growth potential of the multiple zones in the Bug Lake area of the Martiniere Property and they set the stage for an exciting 2013 drill campaign,” said Darin Wagner, President and CEO of Balmoral Resources.

To view the results – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

January 28, 2013: Vancouver, BC – Goldgroup Mining Inc. (Stock Profile – TSX:GGA & OTC:GGAZF) announced that it has entered into a binding agreement with Oroco Resource Corp. (Stock Profile – TSX-V:OCO) whereby Goldgroup will acquire 100% interest in Oroco’s Cerro Prieto Project (the “Properties”) in Sonora State, Mexico for an initial cash payment of US$4.5 million, US$1 million private placement of units in Oroco and up to an additional US$13.5 million in payments made from future gold produced at the Properties, subject to receipt of regulatory and Oroco shareholder approvals.

Cerro Prieto is a principally permitted, gold and silver project located in northern Sonora State, Mexico, with mineral concessions totaling an area of approximately 7,000 hectares, containing approximately 17.5 kilometers of strike length of the mineralized structure hosting the current resource. In early 2012 Oroco announced the receipt of the Environment Impact Statement (Manifestacion de Impacto Ambiental) and the Authorization of Change of Land Use (Estudio Tecnico Justificativo para Cambio de Uso de Suelo) for the Cerro Prieto project.

For the Transaction Highlights – CLICK HERE.

CompanyFeed™

If you are a gold bug the past three and a half months have not been good. Since peaking at $1,798.05 on October 4th, 2012, the price of gold has been losing ground and closed on Friday at $1,657.85. This marks a 7.8% loss in less than four months.

Meanwhile, the major equity markets have caught fire – over the same period the DJIA has climbed from 13,575.36 to 13,895.98, a gain of 2.26%. The US dollar has also performed well recently further adding to gold’s woes.

Gold stocks, one might think, would be performing better than gold given that confidence in the equity markets is back in full force. Not so. Since October 4th last year, the S&P/TSX Global Gold Index has seen its value drop from 352.50 to 280.59 – a whopping loss of 21.4%.

To paraphrase legendary soul singer Marvin Gaye, what’s going on… with gold and gold stocks?

The current factors facing gold stocks.

Historically, investors have been able to leverage the price of gold by investing in gold stocks. Unfortunately, the same math applies on the downside.

In addition, some believe that gold mining companies are simply not able to replace production at the same cost as mines are depleted. If these deposits are replaced by lower grade ore, then profits and cash flows will be lower due to higher production costs – particularly if the price of gold does not continue to rise. Under this scenario, the “leverage effect” of a particular gold producer would decline proportionally over time.

The MiningFeeds Gold Stock Index is currently at 1,624.48. The index was launched on April 1, 2012 at 1,000 and features a weighted average market cap index of publicly traded gold companies – CLICK HERE – for that list. After reaching a high of 2,020.42 in early October, 2012 the index hit a low in November of 1,604.68. Keep a close eye on this key support level in the coming days and weeks.

The current factors affecting the price of gold.

Let’s first look at the CNN Money Fear & Greed Index. The index is calculated using 7 key indicators (Stock Price Movement, Stock Price Strength, Stock Price Breadth, Put and Call Options, Junk Bond Demand, Market Volatility – VIX, and Safe Haven Demand). For each indicator, the index looks at how far they’ve veered from their average relative to how far they normally veer. The index scale is from 0 to 100 and the higher the reading the greedier investors are being (50 is neutral). Currently, the index is at 94 representing “extreme greed” and the highest ranking reached in the past 3 years.

Extreme investor greed reflects the “risk on” appetite in the markets today. “It’s a pretty simple situation at the moment. Sentiment towards the global economy, with the UK being the lone exception today, has turned manifestly bullish. In this environment, gold and silver become less attractive as investors would rather jump on board the rally in equities – that’s where the action is,” according to one US-based fund manager.

On Wednesday, the House of Representatives agreed to kick the debt ceiling can down the road for a few months. In order to do so, the House voted on legislation that will raise the debt ceiling for three months and delay a US default. According to Republican House member John Fleming, “We feel by moving the issue of raising the debt ceiling behind the sequestration … that we reorder things in a way that Democrats will have to work with.” The news further sparked the equity markets and ignited a sell-off in gold.

The legislation contains a “no budget, no pay” segment meaning the House and Senate members will no longer receive their paychecks if a budget is not in place by April 15. The debt ceiling is now on the back burner until perhaps mid-May. Some anticipate the US Congress will ultimately raise the debt ceiling from $16.4 trillion to $18.8 trillion; however, this move is now clearly dependent on the upcoming budget.

The price movement in gold has exhibited an interesting correlation with the debt ceiling in the US. In March 2008, gold broke through the $1,000 level. A few months later, the debt ceiling was raised to above $10 trillion. In November 2010, gold reached $1,400 an ounce only a few months after the debt ceiling was raised to more than $14 trillion. Perhaps it’s no coincidence that gold is currently trading at $1,657.85?

On Thursday Morgan Stanley cut its estimates for gold in 2013 by 4% to $1,773 an ounce. The bank said, “We remain bullish on the gold price outlook in 2013 despite recent selling pressure triggered by market concerns of an earlier than previously anticipated tightening in U.S. monetary policy.”

Gold stock news and notes this week.

This week was not all negative for the gold sector – a few gold miners announced key milestones and the analysts were weighing in as well.

Abzu Gold (Stock Profile – TSX-V:ABS) announced the commencement of a 5,000 meter drill program at its flagship Nangodi gold project in Ghana. The announcement comes on the heels of closing a $2.5 million unit financing at $0.11 with strategic partner Stonehouse Construction. Shares of Abzu Gold are currently trading at $0.08.

Atico Mining (Stock Profile – TSX-V:ATY) reported results from seven drill holes for their El Roble mine project in Columbia including 119 meters of 6.9% copper and 6.3 grams per tonne gold. The company’s stock rallied this week up 42% to close at $0.98 on volume of 3.78 million shares.

AuRico Gold (Stock Profile – TSX:AUQ & NYSE:AUQ) announced the completion of their $300 million share buyback program. Raymond James analyst Gary Baschuk updated his target price to $8.75 per share (down from $9.00 per share) but maintained an Outperform rating on the stock. AuRico shares closed on Friday at $7.12 down $0.34.

Osisko Mining (Stock Profile – TSX:OSK & OTC:OSKFF) reported Q4, 2012 production results and announced 2013 operational guidance. Results were 101,544 ounces at $903 per ounce cash costs which were “in line” with TD Securities analyst Daniel Earle’s forecast of 109,000 ounces at $915 per ounce. On the negative side, the company forecasts slightly lower production rates for 2013 with slightly higher production costs. Shares of Osisko Mining lost almost $1.00 this week closing at $6.97.

Sunridge Gold (Stock Profile – TSX-V:SGC & OTC:SGCNF) commenced a drill program at the Kodadu target – part of the company’s Asmara gold project in Eritrea. The goal of the program is to identify a resource that could be mined as feed to a central gold plant. Shares of Sunridge Gold traded around the $0.25 mark last week.

Rough diamonds achieved record prices in the summer of 2011 but prices have since slipped back to 2010 levels on global macroeconomic worries.  However, current prices are still higher than historic levels reached in the summer of 2008, and new supply is estimated to fall short of new demand over the next two decades, which could take prices back to new highs.

According to a December Bain and Co. report, The Global Diamond Industry: Portrait of Growth, global diamond demand is expected to grow at 5.9% annually through 2020, while supply is only expected to grow at 2.7% over the same period of time.

Please note, when discussing diamond supply/demand, the demand is typically end user or purchaser demand of polished diamonds, while supply is typically rough diamond supply from mines.  There are sometimes divergences between rough and polished diamond prices, but generally speaking they are symbiotic.

Modest-at-best new supply growth over the next 17 years can be attributed to mature mines approaching non-economic depths, and a lack of new projects to offset the diminishing production of the aging mines. Even with annual supply growth of 2.7% through 2020, the supply in 2020, estimated to be 157 million carats, will still not equal pre-financial crisis supply of 177 million carats produced in 2005.

Two of the largest diamond mines in the world, Canada’s Ekati and Diavik mines (Harry Winston Diamond Corp. – TSX:HW & NYSE:HWD), have exhausted open pit resources are now are both underground mines. The need to convert a mine from an open pit operation to an underground operation typically results in curtailed production given the geology of kimberlite pipes (the geologic formation of the resource is shaped like a carrot, and gets narrower at depth). Ekati’s production declined 28% yoy in 2012, and Davik’s production is estimated to decline 17% yoy in 2013.  Three more of the worlds largest mines are set to go underground over the next few years, as Russia’s Udachny mine is expected to be converted to an underground operation in the next 2 to 4 years, and Botswana’s Jwaneng and Orapa mines are expected to go underground shortly thereafter.  

Given that it can take over a decade and $1billion to take a diamond project from discovery to production, there have been a very limited number of significant new projects in development since the mid 1990’s.  Projects expected to come online in the next 5 years, with estimated annual production of 1 million carats or more are Canada’s Renard (Stornoway Diamond Corp. – TSX:SWY) and Gahcho Kue (De Beers Canada/Mountain Province Diamonds Inc. – TSX:MPV) projects, Botwana’s Ghagoo project, and Russia’s Grib, Lomonosov, Botuobinskaya, and Lomonosovsky projects.  Two other projects worth noting are Canada’s Chidliak (Peregrine Diamonds Ltd. – TSX:PGD) and Star-Orion (Shore Gold Inc. – TSX:SGF)  projects, which have the potential to be large mines, but are not likely to commence production any time soon.

The intention of this study is to focus solely on the new supply of gem-quality rough diamonds through mine production.  The mining of industrial grade (non-gem-quality) diamonds exclusively is not economic, thus, an estimated 98% of industrial grade diamond demand is supplied with synthetic (lab grown) diamonds.  However, mines do produce industrial grade diamonds, but only as a by-product.  On average, gem-quality diamonds only represent approximately 25% of a mines production, but account for 95% of the value of diamonds produced. It is important to understand that diamond mining is not just about the quantity of carats produced, but also the quality of diamonds produced. That said, for purposes of simplicity, this study is based on the assumption that the supply of rough diamonds is based on the quantity of carats produced, not the value of carats produced.

Global 2012 rough diamond production is estimated to have been 127 million carats, 2013 production is estimated to be 130 million carats.  The below chart details the production of the most significant diamond mines in the world, estimated to produce a combined 113 million carats in 2013 (or 87% of estimated 2013 supply). The balance of 2013 global rough diamond production (or 13% of estimated 2013 supply) not included below is composed of small-scale or informal mining operations, where production data is opaque or not available.  For example, the Democratic Republic of the Congo (DRC) is the third largest diamond producer in the world by volume, but there is only one commercial producer in the country, so the majority of DRC production data on a project basis is unreliable or not available at all.  Projects below are sorted by annual production in carats; projects not in yet production (italicized) are sorted by the year that they are expected to commence production.

Annual Production	Remaining Mine	Project	Project
in Million Carats	Life in Years	Name	Location
11.1	13	Orapa	Botswana
10.6	12	Jwaneng	Botswana
10.0	30	Marange	Zimbabwe
7.6	7	Argyle	Australia
7.4	10	Diavik	Canada
7.4	7	Ekati	Canada
6.8	30	Catoca	Angola
>4.0	25-30	International	Russia
>4.0	25-30	Jubilee	Russia
>4.0	25-30	Nyurbinskaya	Russia
>4.0	25-30	Udachny	Russia
>4.0	25-30	Arkhangelskaya	Russia
>4.0	25-30	Komsomolskaya	Russia
>4.0	25-30	Zarnitsa	Russia
3.1	23	Venetia	South Africa
>2.0	25-30	Aikhal	Russia
>2.0	25-30	Mir	Russia
1.1	>25	Finsch	South Africa
1.0	<5	Letlhakane	Botswana
1.0	>75	Debmarine Namibia	Namibia (offshore)
<1.0	>20	Snap Lake	Canada
<1.0	>10	Victor	Canada
<1.0	>50	MIBA	DRC
<1.0	>50	Cullinan	South Africa
<1.0	10	Kimberley (tailings)	South Africa
<1.0	10	Voorspoed	South Africa
<1.0	15	Koidu	Sierra Leone
<0.5	20	Murowa	Zimbabwe
<0.5	35	Orange River	Namibia
<0.5	<10	Damtshaa	Botswana
<0.5	C & M	Lerala	Botswana
<0.5	15	Karowe (AK06)	Botswana
<0.5	20	Kao	Lesotho
<0.5	20	Koffiefontein	South Africa
<0.5	>10	Letseng	Lesotho
<0.5	>50	Williamson	Tanzania
<0.5	<5	Ellendale	Australia
<0.5	30	Liqhobong	Lesotho
<0.5	C & M	BK11	Botswana
<1.0 (2013)	15	Ghagoo (Gope)	Botswana
<0.5 (2013)	25	Lace	South Africa
<0.5 (2013)	15	Merlin	Australia
4.0 (2014)	>20	Grib	Russia
2.0 (2014)	>50	Lomonosovsky	Russia
4.5 (2015)	11	Gahcho Kue (Kennedy Lake)	Canada
2.0 (2015)	>50	Lomonosov (Severalmaz)	Russia
1.0 (2015)	31	Liqhobong	Lesotho
1.7 (2016)	>11	Renard	Canada
1.5 (2016)	>40	Botuobinskaya	Russia
1.7 (2018+)	20	Star-Orion	Canada
<1.0 (2018+)	>35	Bunder	India

Source: Company websites, Kimberly Process, and authors analysis.

“C & M” denotes the mine is currently under care and maintenance, and production is halted.

Paul Zimnisky, Guest Contributor to MiningFeeds.com

About the author: Paul Zimnisky, has worked in the financial industry for almost 10 years, primarily as a buy-side equity analyst focused on the metals and mining space, and as an ETF arbitrage trader.  Paul currently creates and develops new exchange-traded products.  Paul has a finance degree from the University of Maryland.

Disclosure: at publication date Stornoway Diamond Corp. is a client of MiningFeeds and the author is affiliated with an investment fund that currently holds the public companies listed above.

NEWS RELEASE.

January 18, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported today that the 2013 drill program has commenced on the Company’s wholly owned Detour Gold Trend Project in Central Quebec. The principal focus of the 2013 winter drill program will be the further delineation and expansion of the known zones on the Martiniere Property.

During 2012 the Company successfully continued the expansion of the high grade Martiniere West Zone on the Martiniere Property. In addition, exploration drilling led to the discovery of several new high-grade gold zones along and proximal to the Bug Lake fault, approximately 600 metres to the northeast of the West Zone. The Bug Lake discoveries are associated with a second major gold bearing structure on the Property – significantly enhancing the overall potential of the gold system in the Martiniere area. All known zones remain open for expansion at shallow depths.

Initial drilling will target a number of high-priority exploration targets outside the known gold zones within the broader Martiniere Property, prior to commencement of expansion work on the known zones. This sequencing will allow for additional testing of any new discoveries, following receipt of assays, during the current winter program. Balmoral anticipates completing at least 14,000 metres of drilling during this phase of testing, with additional drilling already planned for the spring-summer season. The Company is fully-funded to complete its 2013 objectives.

“With the exceptional success of our summer/fall 2012 drill programs in expanding the known zones of mineralization and making new discoveries in the Martiniere area, we have high expectations for our work on the Detour Gold Trend Project in 2013,” said Darin Wagner, President and CEO of Balmoral Resources Ltd.

To read more about the program – CLICK HERE.

CompanyFeed™

While grassroots mineral exploration activity appears to be down in 2012 compared with 2011, there were many advanced exploration projects including New Gold’s Blackwater (Stock Profile – TSX:NGD), Pretium’s Brucejack (Stock Profile – NYSE:PVG & TSX:PVG), Seabridge’s KSM (Stock Profile – TSX:SEA) and several coal projects in British Columbia that may strongly boost the exploration expenditures for 2012 into record-breaking territory.

Commensurately, we should see B.C.’s share of the total investment in mineral exploration in Canada increase as well. These notable highlights, though, are in sharp contrast with the tough venture market conditions, due largely to the volatile global economy, that so many B.C.-based junior exploration & mining companies have faced this past year.

As we note at the Association for Mineral Exploration British Columbia (AME BC), explorers and developers are competing internationally for investment and the best indicator of successful mineral exploration and development is seeing a new mine open. The widely held dream of so many explorers (and investors) of moving a prospective discovery through exploration, permitting and into construction and production is becoming a reality in B.C. Take for example New Gold’s (Stock Profile – TSX:NGD) re-opening of the New Afton mine in mid-2012, and the number of new mines that are under construction across the province, such as Thomson Creek Metals’ Mount Milligan project (Stock Profile – TSX:TCM) and Imperial Metals’ Red Chris project (Stock Profile – TSX:III).

These new mining projects are a major boost to the industry and to the B.C. economy. Still, the industry, investors and government should not lose sight of the need to find the next new mineable deposit, which can only happen through exploration. If we’ve learned anything from mineral exploration cycles, it’s that we can’t stop investing in, and planning for, the timely development of B.C.’s mineral resources to coincide with worldwide commodities demand.

According to the B.C. government, over 335 Notice of Work permits received approval for exploration in 2012. Importantly, the government is also reviewing regulations to exempt low-risk exploration and mining activities from requiring Mines Act permits.

Furthermore, the federal government and B.C. are working to develop a single, effective environmental assessment process, which industry fully supports assuming environmental standards are stringent, fair and science-based. AME BC members were also pleased to see that the B.C. government had moved their regional geologists back into the Ministry of Energy and Mines, which is an acknowledgement of geologists and their important role in government.

While we know that permitting issues still remain for some AME BC members, B.C. has been able to demonstrate that its modern-day “gold” rush for base and precious metals and coal is indeed real. The fact is that great mineral and coal resources occur in British Columbia and responsible explorers and developers from around the globe know this to be true. B.C. is under-explored and vast, covering over 944,700 square kilometres, an area larger than the State of Texas; or, France and Germany combined. It’s important to remember that while explorers require access to large areas to search for elusive new deposits, actual exploration and mining in B.C. has used much less than one percent of the provincial land base, or an area smaller than Greater Victoria (540 square kilometres).

And the opportunity of sharing benefits from responsible mineral and coal exploration and development of the land with local and aboriginal communities throughout B.C. is real and significant. In fact, B.C. is leading the way internationally with examples of resource revenue sharing agreements with First Nations and we expect to hear of more such positive agreements announced in 2013. 

AME BC’s annual conference, Mineral Exploration Roundup 2013, returns to the Westin Bayshore, January 28 to 31, during B.C’s annual Mineral Exploration Week. This year’s theme is “Resources for Life: Digging Deeper.” Roundup is held annually in Vancouver, which is home to 1,000 mineral exploration and mining companies, as well as 2,400 international service consultants and supplier companies supporting the sector in technical, legal and financial affairs.

Confirmed keynote speakers at Roundup 2013 include top executives from companies such as New Gold, Hunter Dickinson, Teck Resources, Agnico-Eagle Mines and Franco-Nevada Corporation. To learn more about Roundup 2013 – CLICK HERE.

The Atascosa Ranch is walking distance from the US/Mexico border, just outside of Nogales, Arizona. It’s owned by Dave Lowell, an affable 84-year-old man who’s spent the past 75+ years hunting for buried treasure. Today, he’s known as the most successful mining explorationist of the past century, having discovered an unprecedented seventeen ore bodies, including the world’s largest copper mine.

J. David Lowell was born February 28, 1928, to a modest family, not too far from Atascosa (the ranch belonged to his uncle at the time). Lowell was first exposed to mining at age 7, when his father, a mining engineer, put him to work. When Lowell pursued his college education at Arizona and then Stanford, he concurrently worked at mines and on exploration programs. Not too long after he had completed his degrees, Lowell had become one of the foremost experts on copper deposits.

Lowell is probably best known today for co-authoring the Lowell-Guilbert Model, a guide to large, low-grade porphyry copper deposits published in 1970. Throughout most of his career, Lowell used the model to locate some of the most profitable mineral finds in the history of mining, such as the 1981 discovery of the Escondida deposit in Chile. Containing hundreds of billions of dollars worth of ore, Lowell and his colleagues found it at the cost of a mere $2.5 million.

Lowell is modest about his success. But he offered a theory as to why major mining companies don’t make discoveries as efficiently as prospectors like Lowell. Major mining companies have a “don’t make mistakes” approach, which “doesn’t fit at all with the profile of the mad scientist who discovers mines,” he said. “When something like one in five hundred good-looking targets will become a mine, a successful explorationist needs permission to be wrong four hundred and ninety-nine times.” Here he paused. “If there’s anything my career says about me, it’s that I’m very good at being wrong.”

Despite being a pro about being wrong, Lowell does admit to limitations. Having “no taste for shareholder relations,” he recalled giving a presentation to investors in 1995 that resulted in the share price of one of his companies falling from $35 to $15 during the time it took him to finish his talk. The shares recovered shortly thereafter.

On the changing impact of technology on mineral exploration over the span of his lifetime, Lowell holds that it’s been “very little.” He believes that “geophysics has been very oversold,” instead favoring “drill holes and geochemistry… The best guide to ore is ore.” Lowell also voiced doubts that technology would be able to revolutionize mineral exploration the way 2D and 3D Seismic has for the oil and gas business, at least in the near future.

The commodities super-cycle is in tact, Lowell believes. There’s elasticity in mining companies’ profit margins, he told us, but not in the demand for the underlying commodities they produce. For that reason, large, undeveloped, low grade copper deposits will need to be put into production, sooner than later.

When asked about his favourite jurisdictions for exploration currently, he told us he favors Chile, Peru, New Guinea, Mongolia, Nevada, and some parts of Africa. But he qualified his dispositions by recalling that attractive jurisdictions are constantly changing. “Places like Arizona were very attractive as a place to explore for copper deposits, and now Arizona is about as bad as Venezuela,” he chuckled.

When we moved on to the role luck has played in his career, Lowell avoided answering directly. Instead he responded that “minefinders who make one discovery are much more likely to find another.” His basic philosophy is that of persistence, and it shows — his career is equally productive after retirement age as it was before.

Lowell is developing several projects, including a titanium-iron deposit in Paraguay, which he believes is the largest of its kind in the world. Other active projects are under wraps for now, as to avoid competition. Investors who rode his Arequipa Resources shares from .20 to $30.00 in 1995 will surely be watching Lowell’s upcoming public ventures. An autobiography is also in the works.

It was an honor to spend time with Dave at his ranch, and we’re pleased to share some video, pictures, and sounds of the day. We hope you enjoy the following short film about the greatest outlier and maverick the mining industry has known in recent memory, J. David Lowell.

NEWS RELEASE.

January 15, 2013: Vancouver, B.C. – Cardero Resource Corp. (Stock Profile – TSX:CDU & NYSE-MKT:CDY) reports  it has entered into an agreement to extend the option period for the acquisition of four coal licenses which form part of the Carbon Creek Metallurgical Coal Project. The extension will last for a period of up to three calendar months.

Extension of Coal License Acquisition Option

On January 14, 2013, the Company entered into an agreement with the optionor of four coal licenses forming part of the Carbon Creek Metallurgical Coal Project to extend the exercise deadline of the option for a period of up to three months. Previously, the Company was required to exercise the option on or before January 14, 2013 by paying the option holder $5M and issuing 400,000 common shares. Under the new terms, Cardero has agreed to pay a non-refundable deposit of $1M on January 14, 2013, with the $4M balance and 400,000 shares due upon exercise of the option. The Company may extend the deadline for the exercise of the option for up to three months (to April 14, 2013) upon payment of an extension fee of $20,000 for each month of the extension. To date, the Company has made the initial $1M interim payment and the first $20,000 payment to extend the option.

“Renegotiation of the option terms allows the Company to postpone full payment for the coal licenses while we finalize terms and subsequently close the Sprott loan facility, originally announced in October 2012.” stated Michael Hunter, Cardero’s President and CEO. “The loan facility is tied to the equity financings, which Cardero closed on December 31, and closing of the debt facility is expected in the coming weeks. When we complete the acquisition of the coal licenses, Cardero will have a 100% working interest in this excellent asset.”

To learn more about the Carbon Creek project – CLICK HERE.

CompanyFeed™

The US economy “is not out of the woods” according to Federal Reserve chairman Ben Bernanke, speaking at a question and answer session at the University of Michigan Monday. 

“I want to be clear that while we’ve made progress, there’s still quite a ways to go before we’ll be satisfied…we are approaching a number of other critical watersheds.”

Bernanke noted that politicians are yet to agree a deal that would remove automatic spending cuts that were postponed to the start of March as part of the fiscal cliff deal, nor is there agreement on raising the $16.4 trillion debt ceiling.”

“It’s very, very important that Congress takes the necessary action to raise the debt ceiling to avoid a situation where our government doesn’t pay its bills,” Bernanke said. 

“Congress should act as soon as possible,” says a letter dated yesterday from Treasury secretary Timothy Geithner to Republican House of Representatives speaker John Boehner, “to extend normal borrowing authority in order to avoid the risk of default and any interruption in payments.”

The letter adds that the Treasury expects its extraordinary measures designed to keep the US from hitting the debt limit will be exhausted “between mid-February and early March”.

“The full faith and credit of the United States is not a bargaining chip,” President Obama told a press conference yesterday. “[The Republicans] will not collect a ransom in exchange for not crashing the American economy.”

“The American people,” responded Boehner after the press conference, “do not support raising the debt ceiling without reducing government spending at the same time.”

“We likely will see more protracted bickering in the weeks ahead,” says Ed Meir, metals analyst at INTL FCStone. “This means that the gold market may go through a repeat of what we saw in December, namely, varying ‘mood swings’ that will result in directionless trading.”

NEWS RELEASE.

January 15, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported today the acquisition of a 100% interest in each of the Martiniere, Fenelon and N2 Properties in Quebec. The Martiniere and Fenelon Properties form part of the Company’s Detour Gold Trend Project. The N2 Property is located approximately 80 kilometres to the southeast, adjacent to the currently producing Vezza gold deposit.

The Company also reported that it has completed the previously announced (see NR12-33, Nov. 22, 2012) acquisition of the Detour East Property, which also forms part of the Detour Trend Gold Project. Balmoral now owns 100% of its entire 64,893 hectare Detour Gold Trend Project, with the exception of 18 claims (998 hectares) which are held under a participatory joint venture with Encana Ltd. in which the Company holds a majority interest and is the operator.

“The completion of these two acquisitions result in a wholly owned land package covering nearly 65,000 hectares of some of the most prospective gold exploration terrain in the Abitibi greenstone belt,” said Darin Wagner, President and CEO of Balmoral Resources. “With rapidly expanding high-grade gold discoveries at Martiniere, historic gold resources and/or open-ended, advanced gold prospects on each of the other properties acquired, today’s acquisitions set the stage for the next phase of Balmoral’s growth. With our neighbours set to commence production on one of the largest open pit gold mines in North America, the recent acquisition of Trelawney and Queenston Mining and yesterday’s bid for Aurizon Mines, whose lead asset is only 45 kilometres south of our Martiniere discoveries, there is a great deal of attention and interest focused on the Abitibi making it an ideal time to consolidate our position and work aggressively toward expanding our asset base.”

To read more about the acquisitions – CLICK HERE.

CompanyFeed™

NEWS RELEASE.

January 8, 2013: Vancouver, BC – Balmoral Resources Ltd. (Stock Profile – TSXV:BAR & OTCQX:BALMF) reported results from eight holes completed on the Company’s Northshore Property in Ontario. The intercepts reported today expand the Afric Gold Zone along strike to the northeast and to depth. Results continue to point to the presence of several high-grade gold bearing structures within a very broad corridor of anomalous gold mineralization. Exploration on the Northshore Property is being funded and operated by GTA Resources and Mining Inc. (“GTA”) under a previously announced option agreement between the companies.

Highlights from today’s release include:

• Hole WB-12-29 which returned two broad intercepts of anomalous gold
  mineralization including two new high-grade discoveries (9.15 g/t gold
  over 3.00 metres and 9.78 g/t gold over 5.00 metres), expanding the
  Afric Zone to the northeast into an area of limited historic drilling.
• Hole WB-12-33 which returned an average grade of 1.37 g/t gold over
  68.00 metres (including 12.16 g/t gold over 4.00 metres), representing
  one of the deepest intersections on the Property to date and indicating
  the Afric Zone remains open at depth.
• Several bonanza grade intersections including: 66.50 g/t gold over 0.50
  metres (WB-12-33), 50.90 g/t gold over 0.50 metres and a second deeper
  intercept of 50.90 g/t gold over 0.50 metres (WB-12-29), and 20.10 g/t
  gold over 1.00 metre (WB-12-29).
• The gold mineralization hosted within the Afric Intrusive Complex has
  been partially defined over an area exceeding 450 metres in strike
  length and to depths in excess of 390 vertical metres.

Click HERE to read the full release.

CompanyFeed™

The uranium industry might finally be on the road to recovery as some expect demand from major energy consumers China and Japan to rise in 2013.

“The biggest pressure on price at the moment is not necessarily the downgrade to demand since Fukushima, it’s this massive inventory overhang,” said Morgan Stanley’s vice president of research, Joel Crane. “Should the Japanese government give the green light to restarts, that overhang is instantly gone and that will be very positive for prices.”

Analysts’ uranium price forecasts for 2013 range from $45 to $62.60 a pound according to a survey conducted by Bloomberg news. Prices for yellowcake last year declined 14% to average $48.72 and hit a three-year low in November at just north of $40 per pound.

Speculation that uranium demand is on the rise has been gaining momentum since Japan’s Liberal Democrat Party regained power. The country’s previous government, the Democratic Party of Japan, had plans to phase out nuclear power by 2030. Some speculate that a policy change may be afoot.

“We can’t say for sure that Japan will be free of nuclear power by the 2030s,” Trade Minister Toshimitsu Motegi said at a news conference in Tokyo. “We will make our decisions based on technological findings and not with prejudgment.”

The Global X Uranium ETF (NYSE Arca:URA) is up over 12 percent in the past month bouncing off its 2012 low of $5.73 to reach just under $6.90. While Cameco (Stock Profile – TSX:CCO & NYSE:CCJ) has tacked on over $3 per share since reaching its 2012 low of $16.41 in November. Cameco, a global leader in uranium production, currently supplies 16% of the world’s uranium production from its mines in Canada and the United States.

Denison Mines (Stock Profile – TSX:DML & AMEX:DNN) a uranium company with operations in Saskatchewan, Zambia and Mongolia has also rallied nicely gaining 25% over the past two months.

For MiningFeeds’ comprehensive list of publicly traded uranium companies – CLICK HERE.

It may be only a matter of weeks before the Pound’s next great decline begins…

Right AT the top of the banking pyramid you have an institution called the Bank for International Settlements (BIS), writes Paul Tustain – founder and director of BullionVault. It acts like a central bank for central banks.

Germany can draw down currency from the Bank of England and deposit it into the BIS. Again, it just writes the cheque drawn on the importer’s central bank, and pays it into its BIS account. You could say Germany has placed its ‘Foreign Currency Reserve’ at the BIS.

The BIS does lots of things I don’t understand. But I am starting to understand the Special Drawing Right (SDR). It’s a sort of ‘compost’ currency worth – at the moment – about the same as a Pound. You can mix it up yourself in the garden – as a heap of slowly rotting currencies in the following proportions: US Dollars (0.66) Euros (0.42) Yen (12) and Pounds (0.11). The package gets acquired by exporters when they flip all sorts of other accumulated foreign currency.

The BIS’s Special Drawing Right allows countries acquiring – say – too many Rupees (that would be exporters to India, like Thailand, who don’t want to accumulate the ever inflating Indian Rupee) to flip out of Rupees into this super-solid mixture of ‘top’ currencies, packaged as an SDR.  But the Rupee not being in the SDR the BIS looks to dispose of it. So the Rupee stays low, which in principle makes it easier for India to export.

Our careful analysis shows that the SDR composition allows the UK and US to be lazy, and everyone else to turn a blind eye. Few British or American workers have any intention of doing anything cheaper than a Thai factory worker, so their negative balances have in the meantime been parked with the Thais – within SDRs – as a store of wealth. The Thais are assuming that this makes a good solid base for Thailand’s own ‘Foreign Currency Reserve’.

For as long as everyone else is buying Pounds as part of a package labelled SDRs (or indeed in their own right) this allows the British to run a big trade deficit for a very, very long time. Lots of the outstanding calls on the British to get off their collective ass are frozen into those SDRs and held by the rest of the world as a trusted store of value.

The Pound is by a long way the most overweight currency in the SDR, being 11% of its value but less than 3% of the world economy. It’s an enormous current privilege for us British.The world’s financial garden mulch could be legitimately advertised “Now with extra British Pounds!”

I doubt this will turn out well, either for us, or – frankly – for the Thais.

In a way, I suppose, it seems that all global trade is always balanced, by the definition of trade. But whereas we have an appetite for American grain, Japanese digital cameras, European fridges and cars, and absolutely anything from China, their manufacturers seem to have an appetite for the security of a store of value that they can in future draw down from us. They don’t want our products, they appear to want some savings denominated in our money, which is extra-ordinarily convenient for British shoppers.

Somehow the British got to this situation of being a key component of the SDR. But as a component – and from the point of view of the user of SDRs – you’d have to say the Pound is now spectacularly unfit for the purpose.

A bit of thinking about how the SDR is composed, and what it is for, shows that the SDR can be a stabilising force in world trade when it works to distribute the currency of strong exporters as a reserve for everyone else. If that is how it is composed it will force exporters’ currencies up, make their exports more expensive, and generally retain value for the people who hold it.

This is exactly how the SDR works with Japan, who are exporters, but who find the inclusion of the Yen into SDRs causes their currency to be held artificially high and suppresses their prodigious export power. In the case of Japan the SDR acts as a force for bringing world trade back toward balance.

The inclusion of the Pound, a long time ago, was at a time when the British economy may have merited its inclusion (I really don’t know) and, this inclusion being decided by committee, and in the absence of a crisis, it remains the status quo today. But it has helped hold our currency high making it still harder for us to export – even though we run a large trade deficit. It encourages us to enjoy cheap imports, and works to increase the imbalance in world trade in goods.

It has also caused SDR holders to hold a chunk of Pounds which they might reasonably see as overvalued, which ought to matter to people like the Thais, and the Chinese, because the whole point of the SDR for them is to store reserves of international purchasing power.

As it happens the recipe for the SDR is re-set periodically. The next re-setting is due in January 2015. Since the last re-set the Chinese have become the world’s biggest exporters, and exporting countries are looking for a secure store of value. They have been accommodated by ownership of SDRs – and lots of Sterling held directly too.

As a Brit I really don’t like looking at the way this could play out. Why would all the voters on the IMF and BIS committees continue to support the Pound being overweight in the composition of the SDR? Why would the Chinese seek an SDR that incorporates Sterling? What would happen if there were a move to make an overdue and substantial reduction in the British weighting or – even – to replace it with Chinese Renminbi.

When push comes to shove, if the Americans and the Chinese are arguing over Chinese suppression of their exchange rate, and the Chinese are offering the Renminbi as a replacement for Sterling within the SDR, would the British deserve or get any support from America, or anywhere? No, they would not. The Americans want a more expensive Renminbi, the Chinese want a bigger slice of the international monetary action for the Renminbi, and the Europeans (the other big voting bloc, and a major SDR component) could be absolutely relied upon to support the Pound’s marginalisation and a few British financial chickens coming home to roost. In the Eurozone they are starting to understand that this is what financial chickens generally do.

It looks possible that the case everyone will rightly make is that the SDR should be composed of the currencies of strong exporters – because this both secures the SDR as a meaningful Foreign Currency Reserve, and helps to bring world trade into balance. The Pound – I believe – could soon be isolated, marginalised, and eventually ejected from the SDR’s composition, leading to a big surplus of ex-SDR pounds being available on international currency markets. I don’t think there will be many takers.

So, with all the usual provisos about the danger of making predictions, I say that UK savers should be ready for an escalation in the cost of your favourite imports, starting soon, and expect it to accelerate as the market prepares for January 2015. It may be only a matter of weeks before Chinese positioning for a seat at the top financial table spells a turbulent near term future for the Pound.

This excerpt is taken from Paul Tustain’s new report, Money Printing for Beginners (and Experts).