By Kishori Krishnan Exclusive To Gold Investing News
It is a small Quebec town and it has great potential. In a $1 billion project, the streets of Malartic will soon be ripped asunder and residents relocated to get at one of the largest gold deposits in North America discovered under the town.
The streets of Malartic in northwestern Quebec may not be paved with gold, but the ground underneath them is. Some time next year, Osisko Mining Corp. plans to start ripping up those streets and digging what will become Canada’s biggest open-pit gold mine.
Some of the town’s residents oppose the mine on environmental grounds, but many are happy about the economic benefits it will bring to their economically depressed region, including 465 permanent jobs and close to 800 construction jobs.
“This has given us a second lease on life,” said Mayor AndrÃ© VÃ©zeau. “We’ve been in decline since 1997.” Until a few years ago, residents in the southern end of Malartic had no idea their homes were built on one of the largest gold deposits in Canada. Osisko began drilling hundreds of holes in the streets in 2005 on a hunch there was gold fairly close to the surface. It discovered one of the largest gold deposits in North America - an estimated 6.28-million ounces and another 3.65-million ounces on adjacent properties.
With gold prices rising after years of stagnation to more than US$ 900 an ounce, investors are anxious to cash in on the potential profits as quickly as possible. However, the only feasible way to undertake the project is as an open-pit mine, the company says, and that will require displacing several hundred residents.
“Open-pit mines have an economy of scale,” Osisko president Sean Roosen had said in an interview. “An easy comparison is that underground mining costs between $65 and $150 a ton. … In open-pit mining it would be about $1.80 a ton. This deposit would not be economical as an underground mine.”
The mine will eventually be two kilometres long, 800 meters wide and 380 metres deep - deep enough to bury the Eiffel Tower. The only thing separating the pit from the community will be a `green wall’ 80 metres wide and 15 metres high.
At least four new open-pit mining projects are in the process of being evaluated, including an ore deposit near Amos, some 50 kilometres north of Malartic, that could be as much as three times the size of the Osisko mine.
The price of gold has been on a volatile ride over the past few months. Gold stocks, as a leveraged bet on gold prices, have been even more volatile. A few months ago it looked like gold was on the verge of a big move higher and was knocking on the $1,000 an ounce door. Once again, it was turned away.
That doesn’t mean gold is done forever. In fact, the opportunity in gold has only become more compelling. The realistic consideration of a second stimulus, the long awaited launch of the Treasury’s PPIP, and the growing government deficits, will go a long way to proving this correction in gold will be temporary, insist analysts.
That’s why right now gold stocks are looking good once again. A prominent official at Standard Chartered Bank Malaysia claimed on Saturday (July 11, 2009) that gold prices should reach $1,050 per ounce by the end of 2009, the Star reports. The yellow metal reached its record high of $1,030 per ounce last March, but has struggled to overcome resistance on the few occasions it has subsequently tested the level.
Barrick Gold (NYSE: ABX) which closed Monday at $31.99 is shining on. So far the stock has hit a 52-week low of $17.27 and 52-week high of $52.48. Barrick Gold stock has been showing support around $30.23 and resistance in the $32.87 range. Technical indicators for the stock are bearish.
Kinross Gold (NYSE: KGC) closed Monday at $18.21. So far the stock has hit a 52-week low of $6.85 and 52-week high of $25.36. Kinross Gold stock has been showing support around $16.88 and resistance in the $18.88 range. Technical indicators for the stock are bullish.
Evolving Gold Corp
Evolving Gold Corp. (TSXV:EVG), a Vancouver-based junior miner, saw its shares soar 47 per cent after the company reported promising drilling results at its Rattlesnake Hills gold deposit in Wyoming. After an early trading halt, the company’s stock jumped 21 cents to 66 cents, a gain of 46.7 per cent in heavy trading of more than 2.2 million shares on the TSX Venture Exchange.
Evolving Gold said Rattlesnake is an gold system with similar geology to the Cripple Creek gold deposit in Colorado. Three core drills are currently operating at Rattlesnake to test the extensions of high grade gold deposits identified in 2008. “Rattlesnake has many geological similarities to the Cripple Creek deposit in Colorado, where over 20 million ounces were mined from high grade underground operations, and where Anglo Ashanti is currently mining the halo gold mineralization,” said president and chief geologist Quinton Hennigh. “The results of our drilling are indicating a major new body of gold mineralization.”
In another development, Evolving Gold said it had entered into a private placement with Golden Predator Royalty and Development Corp. (TSXV:GPD) for a private placement of $500,000. The company also has gold properties in New Mexico and Nevada.
Centamin Egypt Ltd (CEY.L) on Tuesday announced an increase in gold resource estimates at its flagship Sukari project in Egypt. The company (CNT.AX) (CEE.TO) said the resource estimate was upgraded by about 520,000 ounces, or 6 per cent, from its February statement to 9.91 million on a measured and indicated basis, and contains about 3.3 million ounces of inferred resources.
The AIM-listed company said drilling indicates that mineralization continues further north of the existing reserve, with continuous high grades in the deeper zones. Centamin moved into production at the end of June. It is seen as a possible takeover target by one of the large gold producers once it ramps up output and successfully exports its gold.
“While the stock may continue to be driven by a takeover premium, we reiterate that Centamin is still attractive given the blend of more than 10 years of reserves, low technical risk, low political risk and no debt,” said Julian Emery, an analyst at Ambrian Capital.
ATW Gold Corp.
ATW Gold Corp. (TSX.V:ATW) is producing gold in Australia and it’s got one mine in production. Traders insist they’re not a large producer right now, but it looks like they should be very cash flow positive, producing profits from two different mines very soon, with huge exploration potential.
Apollo Gold Corp.
Apollo Gold Corp. (TSX:APG) is turning out to be favorite for traders. The company is set to produce gold at the rate of about 150,000 ounces per year at a cash cost of under $350 from its Black Fox property in Ontario. But where the story gets really exciting is in the blue sky potential it holds.
The company just reported some drill results from the Grey Fox property, which is located 3.5 kilometers away and along strike with the Black Fox. The assays suggest an even higher grade for open pit mining than at the Black Fox mine where current production is taking place.
Gold prices jumped to a one-week high of $926 Tuesday lunchtime in London, ticking back with world stock markets and non-US currencies after US retail sales and producer-price inflation both showed a sharper than expected recovery.
Asian stock markets reversed Monday’s 2 per cent losses, while European shares unwound July’s losses to date. Gold prices had already leapt 1.6 per cent as London trade drew to a close on Monday, rising as US equities jumped 2.5 per cent for the session after banking analyst Meredith Whitney upgraded her view of Goldman Sachs ahead of the investment bank’s second-quarter earnings report.
“We are going to see very good numbers not just from Goldman,” said one Swiss find manager to Bloomberg this morning. “Stronger equity markets have been the main driver behind the base metals on Tuesday morning,” said a note from Standard Bank’s commodity team. “Also supporting commodity prices has been a sharp fall in the VIX (volatility) index, suggesting that risk appetite is on the increase again.”