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The International Forecaster - excerpt
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GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS
We repeat for new subscribers: sell the hedgers.
That means Barrick, Placer Dome, Newmont, Anglo-Gold and the
Australians, particularly Sons of Gwalia, which has run into
a host of problems, such as lower grade, as Barrick has had.
We said seven years ago that these mines, which were high
grading, would run into trouble eventually and we were right.
It could be with lower grade and higher gold prices that most
all of these hedgers could not deliver against their derivative
contracts. If that happens bullion banks will go bust and
that could bring down the entire derivative structure. Gold
is a linchpin and once pulled the financial carnage will be
unstoppable.
Why hasn't Comex gone back to regular hours
over a year after 9/11? Is it because it makes it easier for
the bullion banks to rig the market? What happens when one
or two big players demand delivery of physical gold or silver?
If the exchange settles for cash it destroys the whole market
on Comex and everyone will then move to other legitimate exchanges.
As we know JPM has a vested interest in lower
or stable gold prices due to its preeminent position as leader
of the gold manipulation cartel and that they have large short
positions in gold derivatives in collusion with central banks.
Elaborate schemes have been considered and used since the
late 1980s to free up the value of gold in order to continue
a fiat money system. Now that gold sales and leasing by central
banks is less of an option they have resorted to false bookkeeping,
such as, you lease your gold, which in actuality has been
sold by another party, and you still carry it on your books
as an asset. Not only do Morgan's derivative positions in
gold and other areas look dangerous, so does the market's
opinion of Morgan. When we looked at their fundamentals and
the chart patterns at $56.00 a share we knew then that other
large investors saw the same thing we did. They sold and we
went short. We now also may be looking at the bursting of
the bond bubble if the 10-year notes activities last week
are any indication, having jumped from 3.59% to 4.26%. If
that happens Morgan would be in additional serious trouble
having written a huge number of interest rate swaps. Incidentally,
we are sure the fall in 10-year notes and the rise in yield
was in part caused by Fannie Mae getting its books straight.
We figure they had to buy $200 billion in 10-year Treasuries.
We knew they bought $60 billion worth and they may well have
been a buyer as foreigners and other hedgers were sellers.
We'll find out in time. All we know is it looks like yields
want to go higher. As a sidestep 30-year mortgage rates have
jumped by 1/2%, which kills a lot of refinancing, which in
turn cuts into additional consumer liquidity. There are going
to be massive debts out there that are never going to be repaid,
which puts enormous volatility pressure on derivatives causing
huge losses similar to what happened with LTCM in 1998. Morgan
has $20 trillion in derivatives on the books. The amount is
beyond comprehension. It can only be that Morgan is acting
for the US Treasury and the Federal Reserve. How could any
sane banker put itself at $200 billion in real risk? Morgan
couldn't without the collusion of those elitists who run our
country. Morgan's exposure to litigation could run easily
over $20 billion. How would they pay such judgments? They'd
go bankrupt of course and then be resuscitated in reorganization
by the US Congress, but their failure would allow gold to
trade freely again. Thus, the demise of Morgan is very important
to the future of gold.
More bullish news. The short position on Crystallex
has increased from 734,360 in November 2001 to 2,385,660 shares
as of October 2002. This is similar to shorts in other gold
and silver stocks. We are also seeing shorting on all the
20 to 60 cent recommendations. Once this market turns and
these shorts have to cover, it will be explosive.
Marxists and other former prisoners such as,
Tokyo Sexwale are straining at the bit to take advantage of
South Africa's new improvement charter, which calls for 26%
of all mines to be owned by blacks within 10 years. The new
mining charter calls for at least 15% of mines to be black-owned
within five years. The black recipients, of course, are all
ex-freedom fighters as in Zimbabwe. The law, as we warned
two years ago, is a slow nationalization of the mining sector,
which will deprive investors of the full fruits of their investments.
It leaves open to negotiation black participation in any new
mining ventures. Existing mining groups are setting up a 100-billion
rand fund to bankroll the improvement initiative. Shareholders
of South African gold and platinum shares, that is your money
that is being given away to a group of people who spent their
nights murdering white South Africans not so many years ago.
That group included Mr. Tokyo Sexwale and Nelson Mandela,
South Africa's new saint. The first indications were that
the ruling black Africans wouldn't take 51% of all mining
companies within 10 years and that state organizations should
provide funding and warehouse the companies' shares. Are you
not relieved shareholders that they are only going to take
26% of your investment? How gracious of the government. If
you haven't sold your South African shares already, do so.
We lived in South Africa for several years and we can promise
you your investments will be destroyed. We strongly urge you
to switch to unhedged North American producers such as *Agnico-Eagle
(AEM-NYSE) and *Goldcorp (GG-NYSE.)
HONG KONG, Oct 18 (Reuters) - Physical gold
dealers in Asia gave a mixed picture of demand on Friday,
with Hong Kong firms unable to fill the flood of orders while
Singapore and Malaysia reported only a mild pick-up in demand
ahead of the holidays.
With the steady fall in the price of bullion
this week, refineries and gold bar dealers in Hong Kong have
run out of stock of good delivery kilobars bars.
"There is no stock. We have checked with Johnson
Matthey and Lee Cheong and they don't have stock. They can't
supply the market," said William Leung, a dealer at Standard
Bank London in Hong Kong.
Dealers in Hong Kong were quoting premiums
of US$0.15-0.20 an ounce over loco London prices, a turnaround
from discounts of US$0.05-0.10 last week.
"BOMBAY, Oct 21 (Reuters) - Gold imports from
India, the world's largest consumer of the precious metal,
are likely to rise this week as global prices have fallen
and festive buying has increased, traders said on Monday …"More
and more people, including those who had earlier suspended
buying due to firm prices, are now purchasing gold jewellery
ahead of the peak festival season," said Nayan Pansare, a
senior official of gold trading firm Inter Gold Ltd".
DENVER, Oct 23 (Reuters) - Newmont Mining Corp.
(NEM) (CA:NMC) , the world's largest gold miner, on Wednesday
said it would restate 12 quarters of earnings to correct the
accounting of forward gold sales and purchase contracts dating
back to 1999. The company, based in Denver, said the correction
comes after a review by PricewaterhouseCoopers LLP of its
accounting policies and would result in the restatement of
its earnings from the third quarter of 1999 to the second
quarter of 2002. PricewaterhouseCoopers replaced Arthur Andersen
LLP., the firm that has been embattled since last year's collapse
of Enron Corp., as the company's accountant in May 2002. The
restatement will widen its loss for 1999, 2000 and 2001 by
a total of about $6 million, the company said. For the first
half of 2002, net income will be cut by about $500,000. Following
the review, Newmont said that it has concluded that the prepaid
forward sales contract did not meet the technical criteria
to be accounted for in the manner reflected in its financial
statements.
KUALA LUMPUR (AFX-ASIA) - Prime Minister Mahathir
Mohamed is stepping up plans to use the gold dinar to trade
with participating Islamic countries by proposing establishing
a team to study the scheme. Malaysia plans to use the gold
dinar mechanism to facilitate financial settlements between
participating Islamic nations in gold, while at the same time
increasing trade among Islamic nations. "I will propose to
the Cabinet and if they agree, I will ask Bank Negara to establish
a secretariat for the gold dinar (facility). Iran seems to
be interested so we will contact them," Mahathir said at a
press conference. He added that Malaysia is still in the process
of explaining the concept of using the gold dinar to other
Islamic countries. He said participating countries may have
to revise their laws to comply with international financial
regulations. Mahathir said Malaysia is looking for Islamic
countries with a strong financial and economic background
as participants. He added that the gold dinar will be valued
according to the market price.
Singapore, Oct. 23 (Bloomberg) -- Global gold
supply may fall next year by about 200 tons as producers reduce
the volume of the metal they sell in forward markets, even
if bullion prices fall, the Financial Times said, citing Goldman
Sachs Group Inc. Gold miners this year have become net buyers,
securing physical supply by buying back gold which was previously
sold in the forward market, the paper said, citing Daniel
McConvey, vice- president of global investment research at
the investment bank. ``We do not expect a return to hedging
if the gold price dips over the next year,'' McConvey said
in the report. ``Rather, we expect that downward moves in
the gold price will be met with stronger hedge buybacks.''
-END- Gold demand is expected to increase 300 tonnes in China
alone next year. Add another 200 tonnes of gold supply decrease
here and you get the picture for next year. The Gold Cartel
is in BIG trouble!!
VANCOUVER, October 24 (Dow Jones) -- Barrick
Gold Corp. expects its 15 to 20 percent share of the world's
estimated 100-million-ounce gold hedging market will drop
as the company reduces ounces committed under its hedges,
Barrick chief financial officer Jamie Sokalsky said Thursday.
On a conference call, Sokalsky said liquidity in the hedging
marketplace is down from several years ago, but that reduction
isn't affecting Barrick's ability to do business with counterparties.
"We still see a reasonably robust market," Sokalsky
said, adding that there is less business going through the
market in general and the company considers this factor when
it does transactions. Barrick is in the hedging market every
second day, on average, as it rolls over contracts, he said.
The company's forward sales position was 16.9 million ounces
at the end of the third quarter, and it plans to cut that
position to 12 million ounces by the end of 2003. The company's
variable price sales and call option contracts totaled 2.2
million ounces at quarter-end, with a target of 1.5 million
ounces. The mark-to-market value of Barrick's gold contracts
was negative $301 million at the end of the quarter, at a
spot gold price of $324 an ounce, but the mark-to-market value
would approach zero, or breakeven, at a gold price of $307
an ounce, the company said. Barrick surprised observers last
month by warning of reduced third-quarter earnings due to
operational problems at several mines. As reported, actual
earnings in the period were $34 million or 6 cents a share,
down from $59 million or 11 cents a share in third quarter
of 2001. But the fourth quarter is looking "exactly as we
had planned it," with production and costs on track with the
company's estimates, said John Carrington, vice chairman and
chief operating officer. Barrick's exploration spending in
2002 is expected to total $100 million, officials said on
the call. Exploration budgets for 2003 haven't been finalized.
*Agnico-Eagle Mines Limited (ticker:
AEM, exchange: New York Stock Exchange) News Release - 10/23/2002
Agnico-Eagle reports third quarter results and announces
successful commissioning of LaRonde at 7,000 TPD rate (All
amounts expressed in U.S. dollars unless otherwise noted)
Stock Symbols: AEM (NYSE) AGE (TSX) Agnico-Eagle Mines
Limited today reported a third quarter net loss of $0.6 million,
or $0.01 per share compared to a net loss of $5.6 million,
or $0.08 per share in the same period in 2001. Operating cash
flow improved to $2.3 million, or $0.03 per share from $0.9
million, or $0.01 per share in the third quarter of 2001.
For the year to date, net earnings were $3.2 million, or $0.05
per share compared to a net loss of $4.7 million, or $0.07
per share in 2001 while operating cash flow increased to $14.9
million, or $0.22 per share from $10.9 million, or $0.16 per
share in 2001.
Highlights for the third quarter include:
- LaRonde underground mine and mill now operating
at 7,000 tons per day with successful commissioning of mill
in early October, already reaching peak daily rates of 7,900
tons.
- Although lower than anticipated, both earnings and cash
flow improved over prior year levels.
- Deep drilling encountered economic mineralization on western
limits of Zone 20 North suggesting greater than anticipated
strike length and potential new parallel gold zone.
- High grade gold results from Lapa Property drilling, east
of LaRonde, has led to follow up drill program in the fourth
quarter.
"Although third quarter gold production was
lower than anticipated the LaRonde Mine is now operating at
the planned expanded rate of 7,000 tons per day. As a result,
gold production in the fourth quarter is expected to achieve
record levels", said Sean Boyd, President and Chief Executive
Officer.
The Company is hosting a conference call to
discuss third quarter results and to provide an update on
exploration and development activities at LaRonde on Thursday
October 24th, 2002 at 11:00 a.m. (EST). To participate in
the conference call, please dial (416) 640-4127. To access
the rebroadcast, please dial 1-877-289-8525 and enter the
reservation number 177339. The conference call can also be
accessed over the Internet through the Company's website www.agnico-eagle.com.
QUARTERLY MANAGEMENT DISCUSSION AND ANALYSIS
Change in Reporting Basis As a result of its
substantial US shareholder base and to maintain comparability
with other companies in the gold sector, the Company changed
its primary basis of reporting to US GAAP effective January
1, 2002. A full set of consolidated financial statements and
the related management discussion and analysis prepared under
Canadian GAAP will also continue to be prepared for statutory
reporting purposes in Canada and sent to shareholders.
Results of Operations The following table provides
a summary analysis of the key variances in net earnings for
the third quarter and year to date from those reported in
2001:
Excluding the El Coco royalty, cash costs to
produce an ounce of gold in the third quarter increased to
$197 per ounce from $165 per ounce in 2001. Total cash operating
costs to produce an ounce of gold were $208 compared to $181
in the same quarter of 2001. Gold production increased by
9% to 50,073 ounces in the third quarter when compared to
2001. However, cash costs per ounce were adversely affected
by lower zinc production and slightly low grades on increased
ore throughput. On a per ton basis, minesite operating costs
continue to decline as ore throughput increases. Onsite operating
costs at LaRonde in the quarter were C$51 per ton, down from
C$53 per ton in the same period of 2001. These costs are expected
to gradually decrease to C$45 per ton over the next year once
the mine and mill are optimized at the 7,000 ton per day rate.
The following table provides a reconciliation
of the costs per ounce of gold produced to the financial statements:
Gold production in the fourth quarter 2002 is
forecast to reach 100,000 ounces. Cash costs in the same period,
excluding the El Coco royalty, are expected to be approximately
$110 per ounce. The El Coco royalty is estimated to add $50
per ounce to cash costs in the fourth quarter. Gold production
for the full year 2002 is now forecast to be 285,000 ounces
at a cash cost of approximately $130 per ounce and total cash
costs, including royalties, of approximately $165 per ounce.
As previously disclosed, gold production is
expected to be below target for the year due to delays in
accessing higher grade gold mining blocks in Zone 20 North
at depth caused by delays in ventilation development which
slowed level development at depth. As a result, mining activity
was concentrated on the upper zinc/silver parts of Zone 20
North. The activity of work crews to develop Zone 20 North
was curtailed by ventilation capacity at depth as well as
record high temperatures experienced during the summer. Improvements
in the ventilation system and normally cooler fall temperatures
have resulted in a significant improvement in the pace of
development. In addition, as previously disclosed, an electrical
failure of the SAG mill drive resulted in 11 days of lost
production in July.
After a scheduled 6-day shutdown in early October,
the mill was commissioned and attained the new capacity of
7,000 tons per day within 48 hours. Since startup, ore throughput
has averaged 7,500 tons per day, with peak daily rates of
7,900 tons, and daily payable gold production has averaged
1,100 ounces. Currently the mine and the mill are operating
at the newly expanded production rate with gold ore from the
lower levels of the mine providing approximately 35% of the
mill feed. Approximately 85% of the ore processed in 2003
is expected to be sourced from the lower gold-rich levels
of the mine, resulting in increased gold production in 2003.
Liquidity and Capital Resources
At September 30, 2002, Agnico-Eagle's consolidated
cash and cash equivalents were $17.7 million while working
capital was $36.6 million. Including the undrawn portion of
its bank credit facility, the Company has $112.7 million of
available cash resources.
Cash flow from operating activities in the third
quarter improved to $2.3 million from $0.9 million. The increase
in cash flow from continuing operations is attributable to
an increased gold price, higher gold production and lower
interest expense, offset somewhat by lower byproduct metal
prices.
For the three months ended September 30, 2002,
capital expenditures were $21.5 million compared to $9.4 million
in the corresponding 2001 period. The increase is attributable
to more intensive underground development and the mill expansion
associated with the expansion of the LaRonde operation to
7,000 tons per day. For the full year, capital expenditures
at the LaRonde Mine are expected to be $55 million, approximately
$10 million above budget due to overruns associated with the
delays in underground development, the replacement of the
electrical drive in the SAG mill, the addition of an underground
spot cooling system and the acceleration of tailings dam construction.
Consolidated capital expenditures for the Company are projected
to be $60 million, including $5 million of capitalized interest
expense and foreign exchange translation losses.
Exploration and Development
Almost 44,000 feet of core drilling was completed
during the quarter using eight drills located on the following
target areas:
- One drill on production delineation drilling
between Levels 98 - 152.
- Three drills on definition drilling on and below Level 194.
- Two drills on Level 215 testing Zone 20 North at depth and
to the west.
- Two drills on the 20th Level exploration drift and on the
El Coco Property.
During the quarter, the focus of delineation
drilling shifted from the upper levels of the mine to the
lower levels reflecting the continuing transition to the gold/copper-rich
areas of Zone 20 North. However, additional intriguing values
were returned from the quartz vein zone in the upper mine.
Two additional intercepts were returned from the quartz vein
zone first reported in the second quarter. The latest quartz
vein results are as follows:
To date a total of 12 drill holes have been
completed over a strike length of 300 feet and a vertical
distance of 150 feet. Five of these drill holes have encountered
high-grade gold mineralization. Drill holes testing the upper
limits of Zone 20 South are systematically being extended
south into the sediments to test for further extensions of
the quartz vein zone.
Reflecting the transition to the lower levels,
definition drilling activity increased significantly due to
improved access on both Levels 194 and 215. Drill holes were
completed from the haulage drifts and production draw points
between Levels 191 and 215, where approximately 85% of 2003
production is expected be sourced. Zone 20 North drilling,
highlighted below, continued to confirm both the thicknesses
at depth and the strong correlation between improving gold
grades and higher copper grades.
Two mining blocks were extracted during the
quarter while mining was in progress on two other blocks on
Levels 194 and 215, with dilution and grades meeting expectations.
Three definition drill holes completed from
Level 194 to further define Zone 20 North were extended into
Zone 20 South yielding higher than expected grades. Drill
holes will continue to be extended south into the zone as
the systematic definition of Zone 20 North continues. The
latest Zone 20 South results have been summarized below:
On the deep exploration program, one additional
deep drill hole was completed below the bottom of the Penna
Shaft and it encountered two separate gold-bearing zones.
The results have been summarized below:
Drill hole 3215-22F was completed at the end
of the quarter encountering two gold bearing zones. The drill
hole was significant for three main reasons:
- The drill hole encountered a broad zone of
alteration and gold mineralization up to 200 feet thick.
- The value over 16.7 feet (southern intercept) appears to
correlate with Zone 20 North. This intercept is the deepest
and western most value on Zone 20 North encountering the zone
at a depth of 9,900 feet below surface. The value lies on
the current western limit of the present mineral resource
estimate, suggesting that the strike length may be greater
than presently indicated.
- The two intercepts are separated by 100 feet of altered
felsic volcanics. Previously completed deep drilling has encountered
similar mineralization, which was originally interpreted to
be isolated gold values. The northern intercept grading 0.29
ounces of gold per ton over 9.2 feet may be the indication
of a new parallel zone.
Currently three drills are testing Zone 20 North
at depth. Two drills are testing Zone 20 North along both
the eastern and western resource limits at a depth of 7,800
feet below surface, while a third is testing the zone along
the western resource margin at a depth of 8,800 feet below
surface.
The infrastructure (rail installation, dump,
locomotive charging station) has been completed for the Level
215 exploration drift and level development has commenced
towards the west. It is expected that the first new drill
station will be completed by early November. The Level 215
exploration drift will provide additional drill data that
will be incorporated into a study evaluating the economic
potential of the Penna Shaft at depth. In addition, the new
exploration drift will act as the platform to test the unexplored
ground near the western limits of the LaRonde property.
The eastern exploration program continued on
the 20th Level exploration drift where an additional four
drill holes below the level were completed. The drilling continued
to trace the alteration zone, down the western plunge originally
indicated by surface drilling. The alteration zone is open
to the east and at depth. Currently, one drill is continuing
to test the horizon at depth and to the east. A total of 587
feet of development drifting was completed during the quarter,
with the drift now located 1,465 feet from the Sphinx property
boundary, which is anticipated to be reached by the middle
of 2003.
Grassroots Exploration
As previously disclosed, an option agreement
was signed earlier this year between Agnico-Eagle and Breakwater
Resources Ltd. for their Zulapa and Tonawanda properties,
known collectively as the Lapa Property. Agnico-Eagle has
the ability to earn a 60% interest over a five-year option
period by completing certain work commitments. The Lapa Property
is located in Cadillac Township, Quebec, and has the potential
to host a gold mine similar to other mines located along the
Cadillac-Larder Lake Break. Work by Breakwater between 1981-1989
resulted in a mineral inventory calculation of 1,854,659 tonnes
at 0.19 ounces of gold per ton from all of the zones.
In 1999, Breakwater completed a four hole drill
program designed to test "Zone A" and discovered a new gold
bearing horizon, called the "Contact Zone" located approximately
160 feet to the north of "Zone A". This new zone consisted
of a sericitized shear zone containing blue-grey quartz stringers
and veins along with disseminated mineralization consisting
of arsenopyrite, stibnite, pyrrhotite as well as visible gold
found locally. The shear dipped vertically and was hosted
by the Piche Group (ultramafic) and was located at the contact
with the Cadillac Group (sediments). Three of the four holes
returned the following results:
To date, Agnico-Eagle has completed 10,000 feet
of drilling consisting of four holes. Three of these holes
intersected the Contact Zone at a vertical depth of 2,100
feet below surface and along a strike length of 750 feet,
which is open to the east, west and at depth. The holes returned
the following results:
Hole 118-02-02B encountered auriferous mineralization
in a second zone approximately 20 feet further north of the
Contact Zone. This new zone returned 0.32 ounces per ton gold
over a true thickness of 10.4 feet. A second phase drill program
is planned for the fourth quarter and is designed to test
the ore zone 500 feet below Agnico-Eagle's first set of holes
as well as to test for the structures existence towards the
east. This program should allow for the calculation of a mineral
inventory and if necessary a possible third phase drill program
would concentrate on infill drilling in order to calculate
a mineral resource.
The Longitudinal illustrations that detail the
drill results presented in this press release can be viewed
and/or downloaded from the Company's website:
www.agnico-eagle.com (Press Release)
or http://files.newswire.ca/3/20N2.pdf
http://files.newswire.ca/3/20N3.pdf
http://files.newswire.ca/3/inf.pdf
http://files.newswire.ca/3/Qtz.pdf
http://files.newswire.ca/3/Results.pdf
http://files.newswire.ca/3/Zone22.pdf
*********
Bob Chapman
bif4653@comcast.net
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