robin bromby article

India, China pushing gold price.

THE DIRT: Robin Bromby | July 02, 2009
Article from: The Australian.

WE pay far too much attention to the daily movements of gold.

Will it go through $US1000 per ounce or will the US economy and dollar stage a miracle recovery, sending the yellow metal back below $US600?

You have to see the context. Or, if you prefer, the big picture.

The market has already discounted the forthcoming sale of about 400 tonnes by the International Monetary Fund. We now indications that, in fiscal 2010, India will import about 600 tonnes of the metal, near enough to about a quarter of global mine production.

And there are rumours sweeping around the world that China, just a few months after revealing it had been increasing its gold reserves over the past three years, will spend about $US80 billion ($98.9 billion) to buy more - and, at present prices, that would amount to the equivalent of almost 90 per cent of global mine output for a year.

Now these aforementioned events may intertwine - you might get India and, particularly China, taking up all or some of the IMF sale, which is why the market was largely unfazed about 400 tonnes coming on the market.

The bottom line: one way or the other, there’s going to be plenty of demand for gold.

One miner/explorer that continues to attract our interest is North Queensland Metals which not only has no debt, but paid a maiden interim dividend this year from production of gold at its 60 per cent-owned Pajingo mine near Charters Towers.

The junior has had a busy week. First, it said it would get a scoping study this month which would allow it to decide whether to exercise an option on the Dotswood prospect, 80 kilometres from Charters Towers. It has been drilling and this has confirmed the presence of high grade narrow veins. Some ore has been trucked to the Pajingo mill to test how blending works.

Then it and co-owner Heemskirk Consolidated reported that drilling at two prospects near the Pajingo mine had returned grades up to 22.8 grams per tonne. In all, the two companies hold 820 square kilometres of exploration ground surrounding the mine, and this is the start of the new exploration work.

Finally, NQM and HSK will pay $1.75 million for the Twin Hills mine, the operation that bought former owner BMA Gold to its knees. BMA is now part of Gold One International which has turned its attention to South Africa. There is still gold grading up to 7.5g/t at Twin Hills and the plan is to truck the ore to Pajingo.

If Queensland sounds a bit tame, there’s always Kyrgyzstan.

Kentor Gold is close to gold production at its Savoyardy project in the Central Asian republic, and has now taken an option over the Andash gold-copper project. Again, this is getting a standing start as Anash has both a completed bankable feasibility study and an estimated resource of 680,000 contained ounces of gold and 77,000 tonnes of copper - on paper at today’s prices, that’s worth about $US1 billion.

Manas Resources, which is raising $6 million in new capital, has begun drilling at its Tolubai gold project in southwestern Kyrgyzstan. They are not mucking about: there are five rigs operating around the clock.

The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.

http://www.theaustralian.news.com.au/business/story/0,28124,25722962-15023,00.html