Gold miners resilient despite price declines

Resources Corner

Australia’s gold miners are proving resilient despite ongoing weakness in the gold price.
 
The nation’s largest listed gold miner Newcrest Mining Limited (ASX:NCM) has confirmed its annual output guidance. 
 
Consolidation in the sector has also arisen with Norton Gold Fields Limited (ASX:NGF) taking advantage of the current climate. 
 
The China-backed company launched a $24 million bid for Perth-based Bullabulling Gold Limited (ASX:BAB) over the week.       
 
Economist and investor James G. Rickards also remains bullish on the gold price despite the precious metal’s falls.  
 
The price of gold currently hovers around $US1,282 from a low around $US1,190 at the end of December last year, having hit a peak of almost $US1,900 in August 2011. 
 
Commentary
 
Finance News Network spoke with James G. Rickards – author, economist, lawyer, investment banker and portfolio manager at West Shore Funds. Mr. Rickards offered FNN his views on the shape of a diversified portfolio, with a look at the potential for spikes in the price of tangible assets such as gold. 
 
While the price of gold has faced a recent slide, Mr Rickards is betting this is only a short-run adjustment.
 
“I think it will sort of grind its way higher over the course of the year. So, it’s around $US1,300 now, you know, you could see it moving towards the $US1,700 level, maybe a little but higher. $US2,000 might be a stretch.”
 
“You know ultimately, my intermediate three to five year target is more in the $US7,000 range but it’s going to take a catastrophe and some realisation that there has been a loss of confidence in paper money to get there.”
 
“But in the short run, sure, $US1,700 is a realistic target for the end of the year.”
 
Mr Rickards says strong demand for gold suggest the potential for major catastrophe, with gold historically acting as a hedge against shocks in equities markets.   
 
Gold miners making news
 
Newcrest Mining Limited (ASX:NCM) says it is on track to deliver annual gold output around the top end of its guidance range as it gears up for a changing of the guard. The gold miner reported gold production of 551,590 ounces and copper production of 21,012 tonnes in the first three months of this year.  
 
Australian gold producer Norton Gold Fields Limited (ASX:NGF) has launched an off-market $24 million bid for Perth-based Bullabulling Gold Limited (ASX:BAB, LON:BGL). The offer represents a 30 per cent premium to Bullabulling Gold’s last closing price of 0.054 ahead of the announcement.  
 
OceanaGold Corporation (ASX:OGC) has reporting an incident at its Macraes Open Pit mine on Easter Sunday. The gold producer says heavy rainfall caused a section of the west wall to fail but no personnel were working in the open pit at the time. The slide did cut off access to the underground section of the mine however all underground personnel were brought safely to the surface with no injuries.
 
Mining output reports
 
Mount Gibson Iron Limited (ASX:MGX) has affirmed its annual output guidance after posting third quarter sales of 2 million wet metric tonnes of iron ore, in line with the same period last year. The iron ore miner says that despite short term weather related interruptions its sales for the first nine months hit a record 7.1 wet metric tonnes. 
 
Atlas Iron Limited (ASX:AGO) is set to meet full-year production guidance for the 2014 financial year. The iron ore miner delivered record shipments of 2.73 million tonnes in the March quarter.
 
Whitehaven Coal Limited (ASX:WHC) has cut its full year production guidance. The coal miner now expects output to drop to between 9.8 million and 10 million tonnes, down from an earlier forecast of 10.7 million tonnes. The downgrade has been blamed on an operational issue at its Narrabri mine. 
 
Developments by the majors
 
Global miner Rio Tinto Limited (ASX:RIO) has awarded civil and mining contractor Brierty Limited (ASX:BYL) and its joint venture partner a $9.9 million contract. Under the contract the Brierty and Karlayura joint venture will construct about 11 kilometres of access roads at the Rio Tinto West Angelas Mine in the Pilbara region of Western Australia.   
 
BHP Billiton Limited (ASX:BHP) has officially opened its Jimblebar iron ore mine in the Pilbarra. The major miner has a $US3.2 billion interest in the mine which first began producing in the September quarter last year. It is expected to produce 35 million tonnes per annum by the end of the 2015 financial year.