Gold shines amid market volatility

Resources Corner

It wouldn’t be a Resources report without a look at the iron ore sector and this week we’ve seen Rio Tinto report record iron ore production as part of its solid third quarter performance report. Copper also produced strong results with Rio increasing its copper guidance for the year to 615,000 tonnes, up from 585,000 tonnes.
 
To coal, and China's Ministry of Finance says import tariffs for anthracite coal and coking coal are set to return to 3 per cent; while non-coking coal is poised to have an import tax of 6 per cent. Shares in Whitehaven Coal sank to the benchmark’s worst performer of last week as traders responded to the news.
 
In gold news, OZ Minerals has confirmed it is firmly on track to achieve its annual production forecast. While, Orbis Gold has been kept busy as takeover speculation grows. The gold miner says it has rejected a cash takeover bid by Canada's Semafo Inc.
 
Commentary
 
A bearish equities market has seen the gold price spark into action once again, and last week Finance News Network Interview spoke with James Turk, Founder and Director of GoldMoney, who was presenting at the Gold Investment Symposium.
 
Why do you perceive gold as a necessary holding?
 
Gold has been around for 5,000 years. It’s money that doesn’t have any counterparty risk, in other words, there is no one promising the value of gold except the market itself. The market accepts gold for what it is. And, it is an important diversifier in everyone’s portfolio. So, I think everyone should own some physical metal.
 
Where do you believe the price of gold should be trading?
 
I think gold is cheap. Even though $US1,200 per ounce sounds as though it’s expensive on a historical basis based on all of my measures, it’s still cheap. It’s still early in this bull market and I think gold is going to be going much higher. My near term target is $US2,000 per ounce and I think we will see that in the not too distant future.
 
What are your thoughts on mining shares?
 
I’m really a gold bullion guy. I don’t really get involved in mining share per se, but I do believe that the mining share are undervalued and as gold goes higher from here, which is what my expectation is, I think the mining shares will go higher as well. But remember, mining shares are an investment and you have risks and things that you don’t have with gold bullion, they are different things when you are looking at one or the other.
 
Coal’s ups and downs
 
Shares in Whitehaven Coal (ASX:WHC) sank to the benchmark’s worst performer last week as traders responded to news China will re-introduce import tariffs on coal imports. China's Ministry of Finance says import tariffs for anthracite coal and coking coal are set to return to 3 per cent. Non-coking coal is poised to have an import tax of 6 per cent.
 
Atrum Coal’s NL (ASX:ATU) wholly owned subsidiary Kuro Coal has received four coal licences in the Peace River coalfield in British Columbia. Kuro Coal says the licences total more than 5,000 hectares and are located in the rich coking coal region of Peace River.
 
Production growth
 
Rio Tinto Limited (ASX:RIO) has had a solid third quarter performance with record iron ore production. Global iron ore production is up 12 per cent on the same period last year with shipments up 15 per cent. Copper also produced strong results with Rio increasing its copper guidance for the year to 615,000 tonnes, up from 585,000 tonnes. 
 
Mount Gibson Iron Limited (ASX:MGX) says it has delivered a strong operational performance in the September quarter in volatile market conditions. The iron ore miner has reported iron ore sales revenue of 1.9 million wet metric tonnes (mwmt) over the quarter.
 
Setbacks
 
BlueScope Steel Limited (ASX:BSL) has restarted its Waste Gas Cleaning Plant after it was shut down by fire earlier in the week. The company says the Sinter Plant at Port Kembla has received approvals from the NSW EPA to enable iron and steel production to continue without interruption.
 
Gold talk
 
Copper and gold producer OZ Minerals Limited (ASX:OZL) has confirmed it is firmly on track to achieve its annual production forecast. The miner expects to deliver between 130,000 to 140,000 ounces of gold and between 85,000 to 90,000 tonnes of copper over the 2014 financial year. 
 
Orbis Gold Limited (ASX:OBS) has appointed Merrill Lynch as its defence advisor after it received a number of confidential approaches. The gold explorer says the approaches came at the corporate and asset level and that there are no assurances the approaches will lead to an offer being made. Just days later, Orbis Gold Limited (ASX:OBS) has rejected a cash takeover bid by Canada's Semafo Inc (TSE:SMF). The gold miner has received a conditional, non-binding and indicative proposal valued at between $0.62 and $0.65 cents per share. 
 
Fiji based Dome Gold Mines Limited (ASX:DME) has appointed John McCarthy as Chief Executive Officer. The gold explorer and developer says Mr McCarthy will take the role immediately and that the appointment follows the company’s merger with Magma Mines.
 
M&A action
 
Rio Tinto Limited (ASX:RIO, LON:RIO) has tied up the sale of its Mozambique coal assets which it acquired as part of its $4 billion acquisition of Riversdale Mining in 2011. The global diversified miner announced in July it would divest the assets for just $US50 million to International Coal Ventures Private Limited (ICVL).  
 
BC Iron Limited (ASX:BCI) has increased its relevant interest in Iron Ore Holdings to 90.37 per cent as of yesterday afternoon. The iron ore miner says it’s pleased to reach the 90 per cent acceptance milestone and urges shareholders who have not accepted the offer to so without delay. The offer will not be extended beyond the October 14 deadline.