Juniors The Belles Of The Gold Ball

With gold prices hitting new record nominal highs almost daily, the first half of November was a great time to be a gold junior.

• Much like Barrick Gold in the old days, Goldcorp is once again getting a jump on the competition by snapping up a junior with a promising but relatively early stage grassroots gold project.

This time, the target is Canplats Resources and its two-year-old Camino Rojo gold-silver-lead-zinc project in Mexico’s Zacatecas state, and the offer is $238 million in shares. It’s all part of Goldcorp’s far-seeing effort to lock up satellite projects around its huge, new Penasquito polymetallic mine-and-mill complex, located 50 km from Camino Rojo.

• Another junior riding the gold wave is Brian Kiernan’s Moydow Mines International, which struck a deal to sell itself to royalty company Franco-Nevada for US$58 million in cash and shares. Franco is after Moydow’s 2% net smelter return royalty on the Ntotoroso portion of Newmont Mining’s Ahafo open-pit gold-mine complex in Ghana.

Moydow cleverly discovered Ntotoroso’s gold slightly off the main, 2-km-long Yamfo-Sefwi gold trend during the darkest days of the last gold bust. It subsequently sold its half interest in Ntotoroso in 2004 to Newmont for US$40 million, but retained the 2% royalty on any production in excess of 1.2 million oz. gold.

As of Sept. 30, 2009, 850,000 oz. gold had been recovered from the royalty property since production began in 2006, and Franco expects Moydow’s royalty to become payable in 2012.

Newmont had bought its first half-interest in Ntotoroso and its other, more-substantial Ahafo assets through its acquisition of Australia’s Normandy Mining in 2002. The Ahafo assets, situated in what at the time was an undeveloped belt, were almost an afterthought for Newmont, but they evolved over this decade into one of the pillars of the major’s gold-production empire.

• With new money for gold projects sloshing around Howe Street, Gleichen Resources in Vancouver was able to come out of nowhere to quickly close a $241.5-million special warrant financing and buy a 78.8% interest in the budding Morelos gold project in Mexico from Teck Resources.

• In fact, gold’s so hot that people are even throwing money at Gabriel Resources again. The erstwhile mine developer has been bogged down for more than a decade at its Rosia Montana gold project in Romania, but has been able to snag $67.5 million from a subsidiary of the Beny Steinmetz Group. This new investor is already active in other businesses in Eastern Europe and Africa, including diamonds, copper-cobalt, iron ore and bauxite, but this is its first big move into gold.

• There was more good news out of the troublesome Ecuadorian mining scene, with high-profile projects such Kinross Gold’s Fruta del Norte getting governmental approval to resume major exploration and development efforts. But caution is advised as there are still plenty of unknowns left regarding the country’s untested, new mining royalty structure.

• One of the trends in gold these days is that the central banks of more and more non-G7 countries are bulking up the gold content of their foreign-exchange reserves. On Nov. 11, it was Mauritius’ turn, with the central bank of the tiny island nation buying 2 tonnes of gold from the International Monetary Fund for US$71.7 million, and thereby boosting its gold holdings to 5.7% of its total foreign exchange reserves from 2.3% at end of October. The sale is part of the IMF’s third-quarter decision to unload 403.3 tonnes of gold — 200 tonnes of which was recently sold to India’s central bank.

Meanwhile, the IMF’s managing director, Dominique Strauss- Kahn, has reiterated his views that the world can no longer count on the U. S. dollar and that a new global currency might evolve out of the special drawing right — the IMF’s in-house accounting unit.

Consistent with IMF policy, he again urged the Chinese government to revalue the renminbi upwards. The RMB’s been pegged around 6.83 per dollar since July 2008, after having been raised 21% over the previous three years.

• Xstrata’s head honcho Mick Davis keeps on living large. Newly freed from insider-trading restrictions imposed during Xstrata’s recently dropped bid for Anglo American, Davis has cashed in three tranches of stock options first granted in 2001, when he became chief executive. His immediate profit? About US$23.4 million.

Davis reaps the benefit of Xstrata’s share price more than tripling since March, though shares are still off about 75% from pre-crash levels in mid-2008.