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New Prospects of Ukrainian Gold New Prospects of Ukrainian Gold

Interview with Nikolay Gozhik, Head of Business development, Ukrainian office representative of Avellana Gold. - What do you think about gold mining in Ukraine – what are the problems and prospects? Muzhievo gold deposit is in fact the first project on polymetal mining in the history of independent Ukraine. Is the country actually ready for such a large-scale project? - Mining is currently ...

Interview with Nikolay Gozhik, Head of Business development, Ukrainian office representative of Avellana Gold.

- What do you think about gold mining in Ukraine – what are the problems and prospects? Muzhievo gold deposit is in fact the first project on polymetal mining in the history of independent Ukraine. Is the country actually ready for such a large-scale project?

- Mining is currently experiencing lack of investment as it is connected with many risks. We can name up to ten risks in total.
Firstly, there is a risk of confirming deposit during mining. It depends on how professional the exploration works were. Secondly, there is an environmental risk, i.e. how acceptable specific technologies for maximum gold extraction are. Thirdly, there are risks connected with stability of world prices for main metals of the deposit. The risks of a country are also of importance, namely stability of subsurface resource use, significant volatility of currency exchange rate. It is made even more complicated by the fact that the state acts as a compulsory buyer-counteragent of a part of resources.
There are many promising objects in Ukraine which may be interesting for investors. We have gold deposits and gold sites in central Ukraine. We have deposits of rare metals which are in high demand in the world. We also have deposits of lithium, beryllium and others. But Ukrainian judicial system and tax laws scare potential investors. There are no guarantees of license terms and regulatory rules stability in the sphere of subsurface resource use during project implementation.

- As far as we know it is the first Avellana Gold project in Ukraine.

- From the outset we stressed that Avellana Gold is an ideal company for gold mining in Ukraine. Namely, for Zakarpattia deposits, the industrial value of which has been confirmed. In fact, financing is given for implementation of this very project. And if the first project is a success, Avellana Gold will become the first junior mining company to have achieved positive results in Ukraine. I mean a company which is financed by private and public capital and is created by geologists with an extensive experience in the field. Most foreign companies employ the same principle as Avellana Gold does, particularly those which develop world-class projects.

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Decade of Gold Mine Declines Poised to Spur Deals Decade of Gold Mine Declines Poised to Spur Deals

Mine supply may fall about a third in the 10 years to 2025, according to Bloomberg calculations based on forecasts from BMO Capital Markets and Randgold Resources Ltd. The number of newly discovered primary gold deposits fell to three in 2014, from a peak of 37 in 1987, according to Melbourne-based industry adviser MinEx Consulting Pty. «What we’ll possibly see is consolidation in the industry ...

Mine supply may fall about a third in the 10 years to 2025, according to Bloomberg calculations based on forecasts from BMO Capital Markets and Randgold Resources Ltd. The number of newly discovered primary gold deposits fell to three in 2014, from a peak of 37 in 1987, according to Melbourne-based industry adviser MinEx Consulting Pty.

«What we’ll possibly see is consolidation in the industry as a result, whether that’s a large company taking over smaller ones, a number of smaller ones getting together, or even two or three large companies being merged», Ian Telfer, chairman of Vancouver-based Goldcorp, said in an interview. – «No CEO wants to run a shrinking company».

The number of deals in the gold sector this year is the highest since 2011, as the metal’s price surge has spurred producers to trade assets to add production or to improve the quality of their mine portfolios. Goldcorp is reviewing opportunities for acquisitions or partnerships including in new discoveries and existing assets, both in the Americas and further afield, Telfer said.

Risky Business

A decline in gold mine output may arrive sooner than forecast, though a slowdown in supply will be gradual, Sydney-based Jordan Eliseo, chief economist at gold trader and refiner Australian Bullion Co., said by phone. «It’s not going to plummet overnight», he said. The availability of recycled gold means the impact on prices may also be limited, Eliseo said.

In the medium term, output from existing mines will drop about 10 percent in the five years to 2020, according to London-based Metals Focus Ltd. While gold finds are brought into production more quickly than copper or nickel discoveries, it still takes an average of 10 years to commercialize new projects, according to MinEx Consulting.

Newcrest expects to strike more deals as it looks to stock its growth pipeline, CEO Biswas told reporters in Melbourne last week. «There will be more», - he said. «Exploration is a very risky business, you have got to have a lot of irons in the fire».

Avellana Gold has started implementation of social programs Avellana Gold has started implementation of social programs

We are glad to announce that Avellana Gold has launched the first social activities in Muzhievo. These are only the first steps that should be turned into extended social program dedicated to improve living standards. Avellana Gold is actively encouraging both Muzhievo and regional community to participate and mutually work out comprehensive document that can really contribute to improvement of...

We are glad to announce that Avellana Gold has launched the first social activities in Muzhievo. These are only the first steps that should be turned into extended social program dedicated to improve living standards. Avellana Gold is actively encouraging both Muzhievo and regional community to participate and mutually work out comprehensive document that can really contribute to improvement of existing social environment.

The company is also focused on a wide range of environmental issues that had been left unsolved for years. Regarding that we have started the dialog with local authorities and new decisions might be coming soon.

«It is common practice that to develop a large-scale project, foreign investors come up with a range of social programs for local people. Avellana Gold Company is not an exception in this regard», - stated Nikolay Gozhik, Head of Business development, Ukrainian office representative of Avellana Gold.

Chief Executive Officer Avellana Gold Company Brian C Savage appealed to the Prime Minister of Ukraine Volodymyr Groysman Chief Executive Officer  Avellana Gold Company Brian C Savage appealed to the Prime Minister of Ukraine Volodymyr Groysman

Avellana Gold CEO Brian C Savage has recently sent an open letter to the Prime Minister of Ukraine Volodymyr Groysman in which he asked for support in organizing the meeting with representatives of the Government of Ukraine and the National Investment Council. In particular, the letter contained a vision of further development of the company – to make Avellana Gold a flagship project that would...

Avellana Gold CEO Brian C Savage has recently sent an open letter to the Prime Minister of Ukraine Volodymyr Groysman in which he asked for support in organizing the meeting with representatives of the Government of Ukraine and the National Investment Council.

In particular, the letter contained a vision of further development of the company – to make Avellana Gold a flagship project that would be able to compete on international market. The sources of financing for the project are also described in the letter.

ANALYSTS STILL BULLISH ON GOLD  ANALYSTS STILL BULLISH ON GOLD

DESPITE weakness over the past fortnight, analysts believe it’s onwards and upwards for gold. Gold has struggled over the past two weeks as the US dollar strengthens and the chances of a US interest rate rise in December increases. The decline of Donald Trump in the US presidential election polls has also removed a perceived catalyst for gold, though Sprott noted overnight that Hillary Clint...

DESPITE weakness over the past fortnight, analysts believe it’s onwards and upwards for gold.

Gold has struggled over the past two weeks as the US dollar strengthens and the chances of a US interest rate rise in December increases.

The decline of Donald Trump in the US presidential election polls has also removed a perceived catalyst for gold, though Sprott noted overnight that Hillary Clinton’s spending plans were supportive for gold.

The price fell as low as $US1248 an ounce last Friday and is currently at around $1257/oz.

ANZ Research said that with rising inflation expectations, geopolitical issues and signs of improving physical demand, the environment for gold remained positive.

“Higher industrial commodity prices and a reduction in capacity in several industries in China are starting to push producer prices higher,” ANZ said yesterday.

“Break-even rates (a measure of inflation) are also starting to rise in the UK and US, which will increasingly support gold.”

ANZ is tipping the weakness in gold to be short-lived.

“In the short term, the impending rate hike in the US will remain a headwind,” it said.

“However, once passed, we expect prices to continue their drive towards $1375/t in Q1 2017.”

RBC Capital Markets noted that there was no material outflows in total global gold exchange-traded fund holdings last week.

“Global gold ETF holdings actually increased week over week by 450,000oz and now sit at 65.8Moz as of Monday, October 10, with inflows now totalling 18.8Moz year-to-date,” it said.

“However, the COMEX net speculative position declined by 4.3Moz to 27.1Moz last week, which was the second-biggest decline in positioning this year, as investors pared back positions following the drop in gold price.”

RBC said the strength in ETF holdings was supportive for the gold price in the long-term, despite near-term volatility.

Analysts suggested the recent pullback could provide and attractive entry point for investors.

UBS agreed as it maintained its 2017 average gold price forecast of $1400/oz when it updated it metal price outlook this week.

“As long as uncertainty continues to dominate the gold trade, we expect the more liquid gold names to trade in lock step as investors look past fundamentals,” UBS said.

“In our view, gold equities are swinging with the macro outlook for US rate expectations but over the medium to long term, we remain positive on gold equities supported by negative real rates and macro risks.”

Evolution Mining and Alacer Gold are UBS’s preferred gold picks.

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