Money flows are being watched. Gold hit $955 an ounce on Tuesday in Tokyo, as Chinese stock markets showed signs of stability and oil prices gained ground. The precious metal dropped 0.5 per cent the previous day on selling by short-term investors due to caution in the face of tumbling Chinese equities and a fall in oil.
Spot gold was at $954.50 an ounce, up 0.5 per cent from New York’s notional close of $949.65, but off a three-week high of $961.00 marked on August 28. In August, gold was mostly caught in a narrow range, falling 0.4 per cent. It has been wedged within around $20 of the $950 mark since mid-July.
US gold futures for December delivery were up 0.3 at $955.90 an ounce after falling $5.30 on the COMEX division of the New York Mercantile Exchange on Monday. A bullion trader in Hong Kong said that gold was rebounding from the lows it hit yesterday and that markets were quiet.
As the end of a summer holiday period nears, the financial markets are looking for the next theme to trade with, and the most recent focus was on Monday’s sell-off in Chinese equities amid caution over optimism about the pace of economic recovery. Gold at that time took a hit together with other commodities, given that the precious metal’s ceiling around $960 proved solid last week.
Another excuse to sell bullion on Monday was a weekend report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades with six foreign banks, traders said. But there is a lack of understanding in the markets about what is at risk. Whether China’s economy as a whole is at risk due to heavy losses at state-owned companies is yet to be seen.
Also, Monday’s mild gains in silver and palladium suggested that investors were not so risk averse as at times when they flee from any financial assets but cash, traders said. Silver and palladium are, in general, less resilient than gold, which is seen as a safe-haven asset, when investors’ risk tolerance falls sharply.
“People are being extra careful and watching if there is a new trend in money flows as the month of September starts,” said Naomi Suzuki, a senior analyst at SC Asset Management Co. “I think such nervousness is helping make people take notice of that report,” she said, referring to the weekend report on commodity derivatives trades in China.
Analysts also said gold prices are likely to drift lower short-term, with physical buying still relatively weak.
Vancouver’s West Timmins Mining Inc (TSX:WTM) has agreed to be acquired by Toronto-based Lake Shore Gold Corp (TSX:LSG) in an all-share deal worth approximately $319 million. The merger will combine the company’s stake in the Timmins gold mining district in northern Ontario and Quebec and will create a large new gold mine complex in an area that has produced approximately 70 million ounces of gold in the past 100 years.
Under the terms of the agreement, West Timmins shareholders will receive 0.73 of a Lake Shore Gold share for each West Timmins share. Following the close of the deal, Lake Shore shareholders will own 67 per cent of the new company; West Timmins shareholders will own the remaining 33 per cent.
Three of the 13 board seats will go to West Timmins. The combined company will have exploration rights over 130 square kilometres of land and a strong balance sheet with no debt and approximately $115 million in cash.The deal, which is subject to shareholder and regulatory approval, is expected to close in November.
The company plans to start what it calls an aggressive and advanced underground exploration program at its Thunder Creek project. West Timmins share price range during the past week: between $2.20 and $2.70; 52-week high: $2.74; 52-week low: $0.13.
Canadian gold producer Yamana Gold Inc said Monday chief operating officer Ludovico Costa has taken on the additional role of president. Yamana also announced the promotion of Charles B Main to the new role of executive vice president, finance, in addition to his current role as chief financial officer. Main has been CFO since 2003.
The company also named former Barrick Gold Corp executive Alex J Davidson to its board. Davidson had been at Barrick for 16 years, where he was most recently the executive vice president of exploration and corporate development. Yamana shares finished Monday down 13 cents at $9.20.
Temex Resources Corp (TSX V:TME) has announced that a field exploration program has commenced on the Latchford Gold Project located in northeastern Ontario in the area south and west of the town of Cobalt. The program will focus on determining the extent of the new gold in bedrock trend discovered late last year, located approximately 6 km north of the original discovery in 2004 of a block of rock containing a carbonate vein with bonanza gold mineralization from which grab samples assayed in excess of 6,000 g/t gold.
Last fall, the company conducted a prospecting program from which several select grab samples returned gold values ranging from 0.10 g/t to 5.52 g/t gold and 11.97 g/t gold in an area that had anomalous mineralization with values up to 0.65 per cent copper, 0.069 per cent cobalt and 0.052 per cent nickel.
Blue Note Mining Inc has reported that it has engaged Logan Drilling of Stewiacke, Nova Scotia, to begin a 10-hole drilling program on Blue Note’s Williams Brook Gold property located near Bathurst, New Brunswick.
The aim of this drill campaign is to further define the grade, frequency and geometry of gold-bearing quartz veins at the Williams Brook Gold property. Blue Note believes the best opportunity to add to shareholder value is to focus its fall exploration program on its 100-percent owned Williams Brook gold property in Bathurst, New Brunswick, Canada.
Blue Note also holds a 100 per cent interest in over 400 square kilometers of mineral claim properties in the region surrounding the Williams Brook property that is considered prospective for new gold discoveries. These claims will be the focus of exploration over the next 12 months.