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Real-Time news about Tianshan Gold. (London Stock Exchange): 0 recent articles
|mr.oz: Get Ready - Here Come the Gold Stocks!
By David Galland
You'd have to be a monk living in isolated penury to miss the fact that gold is on a tear. Specifically, it has risen from $277.75 on January 4, 2002 to $950 last week, a gain of 242% in just over 6 years. Over the same period, the trembling S&P 500 is up an anemic 22%.
In a gold bull market, an investor would expect the profits on gold stocks to be a multiple of those to be had from bullion. That leverage comes from simple arithmetic: once a gold producer covers its production costs, then each 1% rise in the price of gold can translate into a 5%, 10% or even richer improvement in the bottom line. For a company such as Barrick, with 125 million ounces in proven and probable reserves, even a $1 per ounce increase in the price of gold can mean big money.
And so we see that between January 2002 and last week, the gold stocks were in fact up 612%. So far, so good.
Yet, the gold stocks have stalled in recent months; between August 1, 2007 and February 21, 2008 gold bullion rose 42%, but gold stocks were up just 37%.
What's going on? Is it that, in their concern over the broader equity markets, people have forgotten that gold stocks are associated with gold? Or is something else at work here?
The answer is "something else."
The Mothball Years
While there are a number of plausible reasons for gold stocks lagging of late, we have come to the conclusion that the true explanation reaches much farther into the past. It's that the managements of the gold producers have only recently escaped the state of fear they operated under during gold's 20-year bear market.
Consider: as recently as the year 2002, gold was still trading near $280. Against that number was a cash cost of around $250 per ounce for a typical company. That cost figure is about as low as the number could go, and it was the response of an industry beaten down and huddling in a trench.
Caution lingers after the reason for it has gone. As gold began its upward move in 2002, it did so against the backdrop of an industry still in mothballs and still run by managers whose primary skills were cost cutting and frugality. This is important on a number of fronts.
1)Having been trained in the acid bath of razor-thin margins, management was intensely skeptical about gold's rally. They suspected it might be just another bear market trap, ready to punish unwary optimists who parted with cash to ramp up production.
2)In the hunkered-down years, miners focused on the higher-grade, easy-to-mine material that gave them the best shot at turning a profit, however small that might be. And being in survival mode, they were extremely cautious about buying new equipment or maintaining a large workforce. Employee rosters were reduced to the bare minimum.
3)Because staying in business was such an urgent goal, they were willing, even eager, to sell future production at a set price -- a perfectly rational strategy in a bear market, because it at least assured they would receive a price that covered the known costs.
With all these factors taken together, it's easy to understand why the industry was slow to respond when gold started rising. In fact, it was only in February 2003, with gold trending over $350, that Barrick Gold Corp., the world's largest gold miner, began the expensive process of unwinding its hedges. And it wasn't until November of that year that the company announced it would stop forward selling altogether and would eliminate its entire hedge book.
Once the turning point came - when management finally realized the bull market was for real -- the industry began to scramble to catch up. Which, in a choo-choo industry like mining, means hiring and training lots of people, buying or refurbishing the equipment needed to reestablish production on second-tier deposits, upgrading facilities, building expensive new mills, etc., etc. And, of course, dealing with the challenge and expense of unwinding hundreds of millions of dollars worth of forward hedge contracts.
The rebuilding of the gold mining industry, in short, really only began in earnest over the past few years.
The Ugly Duckling Years
As would be expected, the costs associated with rebuilding the industry sent big hits to the bottom line, resulting in the kind of ugly financial metrics that repel institutional investors.
The metrics were not at all helped by the shift away from high-grade ore, because the lower the grade, the more the material you have to dig, hoist, haul and process, meaning increased production costs. In addition, the industry rebuild occurred against a backdrop of generally rising inflation and a falling dollar, which helped push the cash cost of production up by more than double from the mothball years, keeping the miners unattractive as investments.
By contrast, the base metals companies, which had hit bottom earlier, near the end of 1998, had already emerged from the mothball stage, thanks to increasing demand from China and elsewhere. They were, as a result, well on the road to recovery when the big price increases for base metals kicked off in 2004. So, while the gold miners have been widely shunned as ugly ducklings in recent times, the base metals sector has been enjoying salad days, reflected in multi-billion mergers and acquisitions and, of course, sharply higher share prices.
The Golden Years
Here at Casey Research, we are of the firm opinion that, now that the biggest costs related to restarting their industry are behind them, the big gold companies are poised to take off. The proof should come in rapidly improving margins which, lo and behold, we have begun to see in the quarterly reports now being released.
Just last week, Goldcorp announced that fourth-quarter profit had nearly quadrupled over the same quarter the year before. And then Kinross announced that it, too, had posted a record quarter, with profits up almost three-fold over Q406. Meanwhile, Barrick reported that net profit for 2007 was 28% ahead of 2006. In addition, Barrick is feeling sufficiently flush (and optimistic) that it's buying out Rio Tinto's 40% interest in the Cortez Hills joint venture for $1.695 billion... cash.
And the exception to this picture of profit eggs finally hatching is only superficially an exception. Newmont announced a loss of $1.8 billion in 2007. But most of it came from a one-time house cleaning -- $531 million to unwind 18.5 million ounces of forward gold sales and a $1.6 billion non-cash charge to terminate operations related to merchant banking. Look past those elements, which are an overdue recognition of money that went down the drain years ago, and you find that Newmont's mining business is actually in a healthy position. Looked at from another angle, Newmont took these charges now because they could afford to do so and because they felt that the damage to their share price would be softened by the strong performance of their current operations. Now that they've cleaned up the books, they too are dressed up to join the profit party.
How to Profit
It won't be long before others also note the pending improvements to the bottom lines of the big gold companies. The investment herd, we are convinced, is coming and, we expect, coming soon.
How to profit?
First and foremost, you want to be moving into the established producing companies post haste. The gangway on this ship is getting ready to be pulled up.
Secondly, you should seriously consider moving some funds into the higher-quality junior exploration stocks. History has proven that, absent an exciting discovery story, the big gold stocks must get in gear before investor sentiment can reach the critical mass needed to ignite the juniors.
History also shows that as profitable as the big gold companies are in a bull market, returns on the juniors can blow those away. Exponentially. This upside, of course, comes with a greater degree of risk.
But paradoxically, this risk has been largely mitigated by the majors' slow take-off. That's because, anticipating that the gold stocks would follow the metal higher - and history shows no example of them not doing so - investors have already poured record amounts of money into exploration programs. As a result, we now know which companies have the goods -- significant discoveries that juniors have spent tens of millions to define and prove up with the clear intent of selling to the majors.
The missing element, of course, has been that, until recently, the majors didn't have enough free cash to make those acquisitions. That is about to change.
While you don't know me and so will have to take my word for it, I am not the type of person to fall in love with any investment. And any time I feel such an urge coming on, I check all my assumptions twice and then check them again. That said, I will also say that I have never been more bullish than I am now on the gold mining sector as a whole, with an added nod to the well-run exploration companies.
David Galland is the managing director of Casey Research, publishers of Doug Casey's monthly International Speculator advisory. For over 27 years Doug Casey and the Casey Research team have provided self-directed investors with unbiased research on investments with the potential to provide double- and triple-digit returns by tapping into evolving economic and investment trends ahead of the crowd.|
|mr.oz: GOT SOME PRESS TODAY (UK time) .... from MINESITE
(read this Sw.Vulture and do some research from the Notes above. Resource will be re-defined, upgraded if things continue in this "vein", by the end of the year)
October 30, 2007
Tianshan Goldfields Has a Simple Story
By Rob Davies
The junior resource sector is a pretty crowded place these days and it is tough for individual companies to attract attention. One thing that helps though is a simple story and it doesn't get much simpler than having one project in one country exploiting one commodity. Such is the case with ASX and AIM listed Tianshan Goldfields. It is developing its 90 per cent owned Gold Mountain project in the Tian Shan gold province of north east China and the steady growth in its share price since listing demonstrates how the market appreciates the progress it is making. Even so, a valuation of £34million for 2.8 million ounce resource that can be mined by open cut and then heap leached suggests that the story is not that well known yet.
Chairman Keith Liddell was able to give Minews some background to the most recent news on the phone from Australia, though he is about to relocate from there to London in the next few weeks - something he admits is not really the best of timing for the weather. In the last few weeks there has been some significant news flow and all of it is positive. To put the news into context it is worth pointing out that the resource lies in three deposits: Yelmand, Mayituobi and Jinxi all within a few kilometres of each other. The contained gold in these three deposits currently stands at 800,000, 162,000 and 1,721,000 ounces respectively at the indicated and inferred categories.
Work is underway now on a pre-feasibility study will enable the quality of that resource category to be upgraded. Keith expects a new resource statement by the end of the year and the completed pre-feasibility by the beginning of the second quarter of 2008. Work will roll on to a bankable feasibility study with the target of applying for a mining licence in 2008 with a view to production starting in 2009. The most recent data from Bulk Leach Extractable Gold tests indicated that recoveries of 91.3 per cent were achievable after five days on drill core from Mayituobi crushed to minus 2 mm. More comprehensive data on bulk samples from Mayituobi and Yelmand suggest that recoveries in practice would be more like 60 to 70 per cent.
Mine planning at this stage contemplates starting up Mayituobi and Yelmand as two separate heap leach operations as they both outcrop and could be developed quickly. Both would be mined at the rate of 2.5 million tonnes a year which would exhaust the relatively small Mayituobi deposit in two years. After that the mining rate at Yelmand would double keeping output at 80 100,000 ounces a year. Keith expects that this Phase 1 stage would last until 2010 by which time Jinxi will have been more thoroughly drilled out. Once production migrates there he is hopeful that this larger body will allow output to rise to 350 -300,000 ounces a year and he expects cash costs to be of the order of US$200 - US$250 an ounce.
Full details of capital cost won't be known until the BFS is complete but this style of mining will keep it to a minimum. Keith says he would be prepared to contemplate some limited hedging of future production as part of a financing package but probably no more than 20 per cent. In the meantime another 35,000 metres of drilling is underway to improve the quality of the resource and Keith says there is plenty of exploration potential in surrounding ground. Tianshan might be a simple story, but it looks like it will be a nice, long one.|
|mr.oz: Latest Fox Davies Capital Sector analysis comments favourably on TGF. The summary is clear but concise for any newcomers (p44)
Tianshan Goldfields Ltd Market: AIM (ASX) Analyst: Peter Rose / Brock Salier
TGF LN (TGF AU) Share price: 19.7p September 4, 2007
Tianshan is an Australian based company with a 90% interest in the Gold Mountain project, which hosts a high-sulphidation epithermal gold deposit, close to the high grade Arxi gold mine, located in the Tulusi Basin, part of the Tian Shan Gold Belt. In 2003, a controlling interest in the Gold Mountain
project was vended into Tianshan Goldfields by the Australian Investment Group, Mineral Securities (MinSec). MinSec is now a 19.99% shareholder in Tianshan and will move to 30% once a performing preference share is converted.
The Company began exploration in 2003 with the aim to identify large tonnage, strata-bound, disseminated style gold deposits in near surface blankets associated with high grade feeder breccias and veins, suitable for open pit mining and heap leaching.
The Gold Mountain project has been consistently generating new drill targets and, to date developed a 2.84Moz resource with pre-feasibility studies underway. The exploration licence is renewable on a 2-year basis, currently valid until September 2008. In June 2007, it was announced that five new exploration licences had been granted for an aggregate area of 111km2 bringing the total licence area to 632km2. Negotiations are advanced to secure further tenements over areas of known mineralisation in the Tulasi Basin.
The project is located in a mountainous zone in the Xinjiang Province at a maximum elevation of around 1,600m. The area is normally subject to snow cover from November to March. Access is only 50km from the city of Yining, but the last 25km is via a high gradient unsealed road. However,infrastructure in the form of low cost power and water should be readily accessible when required.
The deposits comprise blankets of silicified breccia over a limestone base.
The 2006 drill field season completed 225 holes for 36,717m and produced a total indicated and inferred resource of 95Mt @ 0.9g/t at a 0.5g/t cut-off grade. These resources are contained within a 4.0km2 area in the north-west portion of the 88.5km2 exploration licence. The resource is contained in
four discrete deposits, with around 60% of the total resource Jinxi/Balake.
The 2007 exploration budget is US$5.4mn and is primarily an infill drill programme to raise the inferred resource to indicated category. The second report from 4,953m of the 2007 drill programme showed assay results from 40 drill holes. There were some significant intersections from the Jinxi,
infill and extension holes including 57m @ 3.64g/t, 23m @ 1.58g/t and 25m @ 1.1g/t. Drilling has intersected hydrothermally altered breccias at shallow depth in the south west and extensions to the mineralisation to the north and southeast have also been confirmed.
The mineable portion of current resources should be sufficient to support a 100,000oz pa open pit,heap leach operation. The deposits are low grade and will have different strip ratios but should be highly commercial due to low capital and operating costs attributable to equipment, power, water
and labour. Metallurgical tests from heap leaching have shown satisfactory results. A pre-feasibility study is underway on an open pit operation with heap leach treatment.
Tianshan appears to have two options, either upgrade and fast track the current resource to production, or to focus on aggressive drilling to target a world class resource. The latter choice may carry weight in view of the highly prospective exploration potential in the wider lease area. This may
be clarified further as a result of the 2007 regional drill programme. On an in-situ value basis Tianshan appears undervalued.|
|hattori_hanzo: Hi mr .oz,
I'm still here, just quietly monitoring progress.
The share price is predictably following the previous patterns I've discussed; up & down within the trend lines of the uptrend channel.|
|mr.oz: Interesting article below on valuation of company dependant upon listing location
I'm no mathmentician , but I still reckon TGF is valued at under $25/oz
Hatto , anyone , comments on what should be the norm for a company with these current standings ???(I simply took mkt cap less cash / 2.8 mill inferred&indicated ... too simplistic??)
Been playing with header again ... I must stop it !
BROWSING THE BOURSES
Mar 29th 2007
Companies scour global exchanges to find a better price for their shares
BASED in Toronto, Golden China Resources is a mining company with the
kind of scary but alluring profile you might expect for a firm that
goes prospecting for gold. Established only three years ago, it is
still losing money. But it boasts an intriguing technology using
bacteria in the refining process, promising rights in China and what
appears to be a growing inventory of established reserves.
With bullion prices rising and economic doubts gathering, times should
be good for gold producers. But on the Toronto Stock Exchange, Golden
China has lost its lustre. Its share price has fallen by half since
early 2006. In response, the company has embarked on a different kind
of prospecting. It is studying how different bourses around the world
value companies like itself. Its findings are a challenge to anyone who
believes financial markets are consistent or rational.
Take, for example, the market's view of "in situ" ounces, meaning gold
that is in the ground. According to an outside analysis, Canadian
exploration companies are valued at $75 an ounce on average. As refined
gold now sells for more than $650 an ounce, this leaves some margin for
processing and mining risk.
See this article with graphics and related items at
|salmac: Hattori - Share price was up 1.85% on ASX overnight, not 10%.|
|davidblack: The grades here are very thin if there is any set back in the gold price!
At $600 an oz they are only getting $17.50 for every tonne of dirt shifted, amazing!
Congratulation on the current share price performance.|
|hattori_hanzo: ....and now a very, very interesting RNS:
Prospective Change of Significant Shareholding
Further to the release by Mineral Securities Limited ("Minsec") to the
Australian Stock Exchange on 22 February 2007, Tianshan Goldfields Limited ("
Tianshan" or "the Company") has been informed that, on 22 February 2007, Minsec
entered into an agreement, subject to approval by both the Foreign Investment
Review Board and in part Minsec's shareholders, to acquire 24,107,000 ordinary
shares of no par value in the share capital of the Company ("Ordinary Shares")
and 2,233,001 options in Tianshan (which can be exercised at any time up to 30
June 2008 at an exercise price of $0.20 per share) by means of a private sale.
Subject to completion of this agreement, Minsec will hold 37,152,451 Ordinary
Shares (representing 19.995% of the issued ordinary share capital of the
Essentially, the bottom line appears to be that our chairman, Keith Liddell, thinks the TGF share price is gonna do what I think it's gonna do...go up, a lot!
Mr Liddell (a highly respected chap) is also executive chairman of Minsec.
Keith Liddell - Non-Executive Chairman:
Mr Liddell is an experienced metallurgical engineer and resource company
manager, having worked exclusively in the minerals industry since 1980. His
technical expertise includes engineering of plant and equipment, process
development, project management, and risk planning. He has particular
experience with the development of resource projects for platinum group metals,
base metals, gold, diamonds, and industrial minerals. He holds a number of
patents in his name. Mr Liddell has extensive experience in the management of
resource companies, including the formulation and implementation of corporate
strategy, managing stakeholder relationships and in arranging corporate and
project finance. He is the former managing director of Aquarius Platinum
Limited, a leading platinum mining company that successfully developed the
Kroondal Platinum Mine in South Africa under his direction. Mr Liddell is
Executive Chairman of Mineral Securities Limited.|
Tianshan Goldfields share price data is direct from the London Stock Exchange