robin bromby article in the australian

Investors go for African gold stocks as price of yellow metal rises again.

Robin Bromby From: The Australian May 10, 2010.

SWISS financial behemoth UBS reported on Friday that its sales desks in Zurich and Geneva had seen "exceptionally strong demand" for small gold bars and coins, buying on Thursday being the highest since 2008.
"All size bars up to 1kg are wanted by retail investors," the bank added.

Sometimes Pure Speculation gets faint-hearted about the gold story, then you see what happens to the yellow metal when we have a week like the last one. Primeval instincts take over and investors seek the security of gold, now back over $US1200/oz.

However, we expect investors to prefer gold stories located outside Australia at present. Forget the rights and wrongs of the so-called super tax; the bottom line is that investors will desert companies subjected to that tax regardless of whether it is equitable. (This will, incidentally, drive down the share prices of our producers, making them cheaper for foreign predators. Did that occur to anyone in Canberra?)

Which is why the West African gold story will go from strength to strength, the combination of high grade deposits and mining-friendly governments proving irresistible.

More companies are joining the land rush, the latest being Bendigo Mining (BDG). It has taken a 20 per cent holding in London-listed Goldstone Resources, which is exploring for gold in Ghana and Senegal.

Howard Carr at Vital Metals (VML) will be relieved he has just completed a $1 million placement. If markets turmoil continues, the financing doors will start slamming shut in the faces of junior explorers. Vital saw a nice spike in its price last month after adding gold exploration in Burkina Faso to its portfolio.

One African story that has received little attention, although we mentioned it briefly last year, is Shield Mining (SHX) in Mauritania. There's not a great deal of interest in this stock. At the market's close on Friday, there were just two buyers and four sellers.

Yet on Tuesday there was an interesting 19.8 per cent jump in the share price, but no news to trigger it. Someone may have been on the ball and noticed that Canada's Kinross Gold spent $C600m ($650m) buying a 9.4 per cent stake in Toronto-listed Red Back Mining. Kinross's interest is Red Back's Tasiast mine in Mauritania, which is targeting 1 million ounces a year by 2013. Its resource stands at 7.7 million ounces.

Shield's Tijirit project is just 35km northwest of Tasiast. Shield maintains its deposit is a Tasiast look-alike. Drilling there has produced intersections up to 6m at 17.63 grams/tonne gold.

Juniors off the radar.

SOME African explorers, though, are not being rushed off their feet............(continued)

http://www.theaustralian.com.au/business/mining-energy/investors-go-for-african-gold-stocks-as-price-of-yellow-metal-rises-again/story-e6frg9ex-1225864244984