Stockwatch Business Reporter - Some more of the Renaud Story
Gold Summary for Oct. 17, 2014 2014-10-17 21:04 ET - Market Summary by Stockwatch Business Reporter New York spot gold closed down 70 cents to $1,238.20 Friday, ending the week up $15. Here in Canada, the TSX Venture Exchange rose 18.2 points to 810.23, while the TSX Gold Index lost 5.59 points to 162.53. Canadian gold miners ended another day down. Agnico Eagle Mines Ltd. (AEM) slid $1.84 to $32.34, Barrick Gold Corp. (ABX) dropped 38 cents to $15.12, Goldcorp Inc. (G) dropped $1.03 to $25.85 and Primero Mining Corp. (P) lost 35 cents to $5.01. Primero's chief operating officer, Renaud Adams, has left to join Richmont Mines Inc. (RIC), up five cents to $2.73 on 164,000 shares, as president, effective Nov. 15. Richmont's shares tumbled from $14 in late 2011 to $1.05 by the end of 2013, but things are finally starting to pick up thanks to nine months of better-than-projected production. The company has produced 72,000 ounces of gold so far this year, prompting a 15,000-ounce increase in guidance to 90,000 ounces. Richmont has three gold mines, Island in Ontario, Beaufor in Quebec, and Monique also in Quebec. Mr. Adams's job will be expanding production at Island. Beaufor has already been in production for 18 years and Monique is a small-scale operation, designed by the company's previous president, Paul Carmel, to boost revenues for the short term. Richmont fired Mr. Carmel in July after two difficult years, made worse by gold's drop in 2013. When Mr. Carmel first joined the company, in May, 2012, Richmont's stock had already fallen to $5. It had spent the previous six months on its way down from $14. (Investors were not happy when they learned president Martin Rivard, son of the company's founder Jean-Guy, was leaving for personal reasons.) Mr. Carmel tried to stop the slide but it was no use, for he had only bad news to share with investors. First, he said there was simply no way to make the company's main mine, Francoeur, in Quebec profitable, so he was shutting it. Then, he said he was stopping work at the company's other big project, Wasamac. It was a good thing he did. A mine at Wasamac would have cost Richmont a half-billion dollars to build, and it would have been a financial disaster. Wasamac is uneconomic with gold below $1,500. Richmont paid Mr. Carmel $1.05-million to leave. Its new president, Mr. Adams, is not likely to be cheap. Primero paid him $926,650 in salary and cash bonus last year. Bill Boden's Peruvian explorer, Panoro Minerals Ltd. (PML), had a busier-than-usual day, dropping seven cents to 28 cents on 1.51 million shares. Investors await two preliminary economic assessments, also known as dream sheets, for Cotabambas, a Peruvian gold project, and Antilla, a Peruvian copper project. The company also owns the Kusiorcco gold property in Peru, which is in promotable territory. It sits next to Hudbay Minerals Inc.'s (HBM: $8.29) Constancia silver-gold mine, which is scheduled to start production any day. Over the next few years, Hudbay plans to expand its mine, and it could try to acquire Kusiorcco. This would be good for Panoro, as it has been having a bad time there. Locals have refused to grant the company access, even though the government granted Panoro drill permits in 2009. The government cares little whether Panoro drills; it receives an annual claim-maintenance fee, called a vigencia, either way. Panoro spent a total of $675,000 on vigencias last year. It spent triple that on "community service" payments, which are fees charged by locals for access. "Exploring in Peru is easy," according to Panoro's president, Luquman Shaheen, but that is because the company has what he calls the three Ps: proyectos, plata and permisos (projects, money and permits). It can partially thank Hudbay for the second, plata. Since 2011, Hudbay has participated in most Panoro financings. The major now owns 24.9 million Panoro shares, or 11 per cent of the company. Hub Mockler's Canuc Resources Corp. (CDA), unchanged at two cents, has had it with Ecuador. It is transferring its Nambija gold property, which has been plagued by illegal miners for over a decade, to Jorge Guzman, its local general manager. Sr. Guzman might have better luck bringing Nambija to production on his own. If he does, he must pay Canuc $10,000 a month as a royalty. Production is possible. Neighbour Freddy Naverez has a toll mill and they have been discussing an arrangement for the past year. Canuc, however, has had enough. Illegal miners have prevented the company from both mining and exploring, and now they are lobbying the government to cancel Canuc's mining rights, citing inactivity. Today chairman Mockler said, "it became apparent to Canuc that . . . the government was taking them [the illegal miners] seriously. Consequently, Canuc came to the conclusion that Ecuador was not a friendly environment in which to conduct exploration." He gave the country plenty of time to change its ways -- 16 years. Canuc started out strong. In 1998, it moved two second-hand mills to Nambija and began small-scale production. It aimed for about 250 ounces of gold a month, but ended up with only a handful, blaming disruptions on illegal miners and "local residents who own houses scattered over the surface of the ore body." In September, 1999, Canuc paid $100,000 so 100 families could buy homes, in exchange for four months of unhindered access to the project. It had a good four-month run before the hindrances resumed. Canuc managed to produce handfuls of gold on and off through 2010, when high costs forced the company to shut down its mine and sell its mills. It had been hoping to restart production ever since, but now that task belongs to Sr. Guzman. Canuc does generate some revenue, about $55,000 a month from working interests in some Texas oil wells. It plans to use that money finding a new project. © 2014 Canjex Publishing Ltd. All rights reserved.