After a torrid first half of the year that saw gold mining stocks outpace virtually every other sector or industry, the third quarter has been rather quiet for miners both large and small. The sluggish gold price is partly to blame for the lack of news coming from gold miners.
With a momentary break in the lull as we near the beginning of the fourth quarter, now is a good opportunity to give a brief rundown of some recent headlines across the gold mining industry.
Barrick Back On Track?
Good news has been difficult to come by for the world's largest gold miner, Barrick Gold (ABX). It has endured painful losses due to lower gold prices in addition to a less-than-stellar reputation in many of the foreign countries where the Toronto-based mining firm operates.
Now, the company is dealing with the second cyanide spill in about a year at its Veladero gold mine in Argentina. The first incident was the worst environmental disaster in the country's history. As a result of that spill, Barrick was levied a $10 million fine by the Argentine government. Although there are no details forthcoming about the actual volume of this recent spill, the company was forced to suspend operations at Veladero.
There may be encouraging news for once, however: Barrick's president, Kelvin Dushnisky, said this week that the Veladero mine could resume normal operation within two weeks. He also noted that the company's output targets for the project have not changed.
Acquisitions and Sales
While Newmont continues to seek approval for the sale of its 48.5% stake in Indonesia's Batu Hijau mine, Harmony actually acquired a 100% ownership stake in Papua New Guinea's Hidden Valley mine. Interestingly, Newmont Mining is expected to be the top bidder for Barrick's sale of its half of Australia's Kalgoorlie gold mine. (Newmont already owns the other 50% of Kalgoorlie.)
During a period where many miners are in transition, it's understandable that many major miners are selling off assets in order to deal with their high leverage and debt burdens. Meanwhile, this presents an excellent opportunity for well-positioned miners to scoop up valuable mines and improve their own portfolios.
One of the more exciting developments in the mining space comes from Nevada Exploration (NGE), which is proposing a revolutionary new method for detecting gold deposits that are buried beneath "overburden," or layers of surface rock. The technique tests underground water supplies for minute gold particles and traces their path origin in order to identify the source of gold deposits.
Particularly in an age when new gold discoveries are dwindling, this method helps locate significant deposits of the precious metal without as high of an overhead cost to dig and identify where these deposits are located.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.