Forgotten Gold Stocks From South Africa

Ivan Martchev, On Wednesday May 19, 2010, 12:09 pm EDT

Since gold bullion has essentially doubled in the past five years, you would think that most major gold mining companies would have seen an appreciable rally in their shares, right?

Wrong.

The economics of gold mines can vary dramatically depending on mining costs as well as the quality of the deposit. A third factor is currency; South African miners pay costs in an appreciating currency, but sell gold in a depreciating currency.

Some background on South Africa
Everyone knows about apartheid and the economic embargo that held back the South African economy. Progress has been made since apartheid officially ended in 1994, but many issues remain.

South Africa is the most developed economy on the African continent, with annual GDP of $495 billion (on a purchasing power parity basis). Yet South Africa's unemployment rate has remained stubbornly high at 24%. Despite the nation's role as a global commodity player, South Africa's economy is surprisingly diversified, with agriculture only 3.5% of the economy, industry 32.1%, and services standing at 64.4%.

Impetus for underperformance
At first, South Africa's currency, the rand, was a big help to the country's mining equities, depreciating dramatically in 2001. Along with the broader commodity rally, the currency began to reverse course as economic conditions in South Africa improved. This meant that as the gold price was climbing for mining companies that pay their costs in U.S. dollars, the rand price of gold was actually declining for South African mining companies that pay their costs in rand but sell their gold in U.S. dollars.

When the rand finally stabilized, other mining costs climbed precipitously as we reached almost $150 a barrel for oil. Combine that with aging infrastructure and an electricity shortage in 2008 and you begin to understand there was little South African mining companies could do against major headwinds.

The other critical reason for the underperformance is extremely high operating costs. And I'm not just referring to electricity rate increases. South Africa has the world's deepest and most dangerous mines, where you have to go miles underground. This is why producers are seeing rising costs as they dig deeper, while output is falling. Gold production in South Africa was at more than 1 million kilograms in 1970, while in 2009 the country produced only a fifth of that, the lowest in more than a century of data.

However, theses high costs could create a "beach ball under water" effect for South African gold miners if gold prices rally sharply from here, as the group could see the biggest improvement in operational performance.

Enter John Paulson
I have written about hedge fund manager John Paulson's big bet on gold before. I am happy to report that the big holdings in South African gold mining giants AngloGold Ashanti (NYSE: AU - News) and Gold Fields(NYSE: GFI - News) have not changed, according to his latest SEC filings. Both have appreciated less than 50% since 2005 when gold was near $400! This is why Paulson is interested.

A South African option on gold
The most extreme case in high operating costs is Witswatersrand Consolidated Gold Resources Limited, also known as Wits Gold, a self-proclaimed "long-term option on gold." The company mines no gold. It has instead acquired mining rights from other South African majors including Harmony (NYSE: HMY - News), which become valuable if the gold price rises substantially.

The properties have uneconomic projected mining costs at present, as many of them are deep underground. There is also uranium on some of the properties. A small part of the rights cover gold that is economically feasible to mine now, although there are no plans at present for that.

If you are looking to play an explosive move in gold bullion in the next five years, South African gold mining stocks appear deserving of your attention.

Fool contributor Ivan Martchev owns no shares in any of the companies in this story. Try any of our Foolish newsletter services free for 30 days. The Fool has a disclosure policy.

Source :finance.yahoo.com/news/Forgotten-Gold-Stocks-From-fool-2121626629.html?x=0&.v=1

Gold Fields Drills Out 1 Moz Mineral Resource at Hamlet, St Ives

Press Release Source: Gold Fields Limited On Thursday May 20, 2010, 5:51 am EDT

JOHANNESBURG, May 20, 2010 /PRNewswire-FirstCall/ -- Gold Fields Limited (Gold Fields) (JSE, NYSE, NASDAQ Dubai: GFI) is pleased to announce a substantial increase in the Mineral Resource at Hamlet, an emerging gold deposit in the Argo-Athena camp at its St Ives Gold Mine in Western Australia.

Exploration drilling over the past year has led to an increase in Indicated and Inferred Mineral Resources at the Hamlet deposit, which is now reported as 6.62 Mt at 4.86 g/t for a total of 1.03 million ounces. The Mineral Resource estimate has been independently audited by Optiro, a Perth-Based minerals industry consulting and advisory organisation.

After Athena, Hamlet is the second major discovery in the developing Argo-Athena camp in the last two years and is the result of an extensive investment in the St Ives' near-mine exploration programme.

Table 1: Hamlet Project, Mineral Resources (18 May 2010)*

    Resource   Tonnes     Grade      Gold
    Category   (Mt)       (g/t)      (Koz)

    Indicated  2.43       4.22       330
    Inferred   4.19       5.20       700
    TOTAL      6.62       4.86       1,030

* The Mineral Resource is reported at a nominal 0.60 g/t gold cut-off grade, for shallow resources, constrained within an optimised pit shell and 2.4 g/t cut-off for the underground resources within conceptual stope shapes. It is expected that the majority of the resource will be mined by underground methods. The pit shell is based on price assumptions of US$1,150/oz (A$1,375/oz) gold. The Mineral Resource estimate is reported in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2007 Edition (SAMREC Code) and is reported without unplanned dilution or ore loss.

The Hamlet deposit is located approximately 1km to the east of the new Athena underground mine and 12km south of the Lefroy Mill. Athena and Hamlet are part of a larger mineralised system in the Argo-Athena camp, which is being actively explored by the near mine exploration team.

"This milestone highlights the potential of the developing Argo-Athena camp, which now has an estimated endowment[1] of about 4 Moz, and is a credit to the excellent work done by the near mine exploration team," commented Nick Holland, Chief Executive Officer of Gold Fields.

An initial Indicated and Inferred Mineral Resource for the Hamlet Deposit of 2.1 Mt at 3.65 g/t for 251 Koz was reported in Gold Fields' Mineral Resource and Mineral Reserve declaration for the 2009 financial year. Drilling since July 2009 has focussed on shallow mine-definition and extensional drilling aimed at defining the size and content of the deposit. A total of 41,900m of RC (reverse circulation) drilling and 45,700m of diamond core drilling was completed in 10 months. The deposit consists of an upper and lower lode; the lodes have been defined over 600m of strike and to a vertical depth of 800m. The deposit remains open at depth. Drilling to further expand the resource and support a feasibility study is underway and a construction decision is planned for the first half of calendar 2011.

Gold Fields recently intersected the first ore on the margins of the main ore body in underground development at the new Athena mine. The decline and mine development are progressing on time and within budget and full production remains on schedule for mid-calendar 2011. The Athena infrastructure, currently under development, was positioned to provide a potential underground access to the Hamlet deposit, which would enable the rapid development of the project on completion of a successful feasibility study.

[1] Endowment is defined here as all Inferred, Indicated and
        Measured Mineral Resources and past production

The information in this media release that relates to the Mineral Resources is based on information compiled by Malcolm Jolly Pr. Sci. Nat, Manager Mineral Resources who has overall responsibility and accountability for the St Ives area, St Ives, Mathew Briggs, MAusIMM, Exploration Manager for St Ives, who has overall responsibility and accountability for the Hamlet exploration project, in terms of the SAMREC Code 2007. John Donaldson, MAusIMM, Principal Resource Geologist, is accountable for the Mineral Resource estimation. All are full time employees of Gold Fields and qualify as Competent Persons as defined in the SAMREC Code. Messrs Jolly, Briggs & Donaldson consent to the inclusion in the press release of the matters based on their information in the form and context in which it appears.

The United States Securities and Exchange Commission (SEC) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce from. Certain terms are used in this release, such as "Mineral Resource", that the SEC guidelines strictly prohibit companies from including in filings. US investors are urged to consider closely the disclosure in our Form 20-F.

Notes to editors

About Gold Fields

Gold Fields is one of the world's largest unhedged producers of gold with attributable production of 3.6 million ounces* per annum from nine operating mines in South Africa, Ghana, Australia and Peru. Gold Fields also has an extensive growth pipeline with both greenfields and near mine exploration projects at various stages of development. Gold Fields has total attributable Mineral Reserves of 81 million ounces and Mineral Resources of 271 million ounces. Gold Fields is listed on JSE Limited (primary listing), the New York Stock Exchange (NYSE), the Dubai International Financial Exchange (DIFX), the Euronext in Brussels (NYX) and the Swiss Exchange (SWX). For more information please visit the Gold Fields website at http://www.goldfields.co.za.

Source : finance.yahoo.com/news/Gold-Fields-Drills-Out-1-Moz-prnews-1526148637.html?x=0&.v=1

Kubér to distribute Orchira pearl brand in U.S.

Kubér Mfg. will be the U.S. distributor for Orchira, a fast-growing pearl jewelry brand based in the United Kingdom.


New York--British pearl jewelry brand Orchira has entered into an exclusive distribution agreement with New York-based Kubér Mfg. that will open the brand's designs to the U.S. market and the Caribbean.

With more than 700 designs that span seven collections, Orchira's products include entry-level-priced product, designer collections and a high-end collection. All styles are designed in the United Kingdom and are handmade using authentic cultured pearls and gemstones set into solid silver, gold and gold plate.

Kubér, a manufacturer and supplier of precious-set gold and diamond jewelry, has operated within the U.S. market for over 30 years, and has built relationships with top retailers across the United States and the Caribbean.

"Their powerful network will give Orchira a strong head start in this market," Shan You, Orchira founder and chief executive officer, said in a media release. "We are so delighted to have the opportunity to work with the Kubér family owners and directors; they are efficient, smart business people with a strategic vision and are very well respected in the U.S. jewelry industry."

Kubér Mfg. President Basant Johari added that Kubér is excited to be working with Orchira and is proud to be the exclusive distributor of its products.

"This is an outstanding brand with big success in the U.K. and E.U. market," he said in the release. "We believe the time is right and there is market demand for high-quality and innovative pearl jewelry. With the help of Kuber's sales and distribution network, Orchira is well-positioned to capitalize on these attractive market opportunities and expand its U.S. presence."


Source :www.nationaljewelernetwork.com/njn/content_display/fashion/jewelry-fashion-reports/e3i424ad23a01d5797d4783027ba0d6a39e