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gunDriller
22nd June 2013, 06:14 AM
http://finance.yahoo.com/news/golden-minerals-announces-suspension-production-200600987.html

"GOLDEN, Colo., June 21, 2013 /PRNewswire/ -- Golden Minerals Company (NYSE MKT: AUMN); (AUM.TO) ("Golden Minerals" or "the Company") announced that it has suspended operations at its Velardena mine as of June 21, 2013, in order to conserve the asset until operating plans and prices for silver and gold indicate a sustainable cash margin for operations. The employees at the Velardena mine were informed of the Company's decision in the afternoon of June 21, 2013. In February 2013 the Company anticipated the Velardena operations would achieve operating cash neutrality during the third quarter 2013, assuming gold and silver prices of $1,600 per ounce and $30 per ounce, respectively. In May 2013 the Company projected a $5 million negative margin from the operations for the remaining three quarters of 2013 at prices of $1,500 gold and $25 silver. Metals prices have continued to decline and remain below these levels.

(Logo: http://photos.prnewswire.com/prnh/20120803/LA52082LOGO)

The Company is placing the mine and processing plants on a care and maintenance program to enable a re-start when operating plans and metals prices support a cash positive outlook for the property. Approximately 470 positions at the Velardena operations are being eliminated as a result of the suspension. The Company is presently negotiating the specific terms of a severance package with its labor unions. The Company plans to retain a core group of approximately 50 to 60 employees to facilitate a re-start of operations and to maintain and safeguard the longer term value of the asset."


i guess small scale miners are not the only ones protesting the burdensome regulations & artificially low prices.

http://www.goldenminerals.com/

ximmy
25th June 2013, 07:07 PM
I read a good article at Coinflation:

However, there are a number of things from financial markets that indicate that the prices of gold and silver are continuously suppressed for the benefit of the U.S. government rather than prices fell as the result of free market trading.....

For gold in particular, the price has fallen low enough that many existing mines can no longer operate at a profit. With the just announced $5.5 billion asset write-off by Newcrest Mining, mining companies have recently booked $17 billion of losses from write-downs of paper assets. Barrick Gold Corporation, the world’s largest gold mining company, and Newmont Mining Corporation, one of the other largest gold mining companies, have not yet booked paper losses. They are expected to do so in the coming weeks.

Last week, Barrick Gold Corporation announced layoffs of more than 10 percent of its Utah mine workers, other layoffs at its Nevada operations and as much as a 30 percent reduction of its corporate staff. This followed previous announcements that the company may not be able to continue development of some of its largest mining projects in South America (such as Pascua Lama). Barrick’s news followed a recent announcement by Newmont Mining Corporation that, because of falling commodity prices, it was laying off staff at its mines in Colorado.....

While the supply for physical gold and silver may be at risk of falling, demand has been soaring. In the months of April and May, China and India together consumed more gold that was produced worldwide by mines or as salvage from recycled scrap during those two months. Beyond that, other central banks were buying gold reserves such as Russia and South Korea.....

http://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=26979

Mouse
28th June 2013, 09:45 AM
I don't understand how the mines should even care. Either they are long the commodity as they produce it and they are hedged with short paper in accordance with their production/delivery schedule - in which case the lower price of the commodity would be hedged by the short paper, or they have sold production into the futures market and have hedged with long paper. Either way, they should be locked in. The only thing I can think of is the tenor of the hedges going against them, e.g. they are looking a year or more out and have not locked in price, and think the low prices will remain. Would appreciate any thoughts from derivative whizzes on here. Why would they not be locked into a price already? They shouldn't give a shit.

Sparky
28th June 2013, 10:03 AM
I don't understand how the mines should even care. Either they are long the commodity as they produce it and they are hedged with short paper in accordance with their production/delivery schedule - in which case the lower price of the commodity would be hedged by the short paper, or they have sold production into the futures market and have hedged with long paper. Either way, they should be locked in. The only thing I can think of is the tenor of the hedges going against them, e.g. they are looking a year or more out and have not locked in price, and think the low prices will remain. Would appreciate any thoughts from derivative whizzes on here. Why would they not be locked into a price already? They shouldn't give a shit.

Hedging varies from miner to miner, and the amount of hedging has decreased dramatically since this gold bull began. Here's a brief story (http://goldnews.bullionvault.com/gold-hedge-051020131) from last Month:

Friday, 5/10/2013 12:18

LATEST analysis of the gold mining industry's position in the derivatives market shows a sharp reduction in their hedgebook, according to Thomson Reuters GFMS.

Undertaken on behalf of French investment bank and London bullion dealer Societe Generale, the latest Global Hedge Book Analysis finds that the last 3 months of 2012 "saw a return to strong de-hedging", with what little was left of the industry's forward sales being cut by more than one fifth to equal just 32 tonnes.

Overall, the gold mining industry's hedgebook – built up by borrowing gold bullion and selling it at current prices during the long 1990s' bear market for fear of further falls ahead – peaked in 2001 at more than 2,900 tonnes.

As prices have since risen 5-fold and more, the mining industry has bought back and closed 99% of that short position.
Despite the 10% crash in world gold prices in April this year, "We expect that producer hedging/de-hedging activity will remain on the periphery of the gold market," says Thomas Reuters GFMS "due to the persistence of shareholder pressure to remain unhedged."