Tip by Tom Winnifrith on investment website T1PS.com on 07.10.04 :
"In the mining world, Caledon Resources raced ahead by 0.75p to 5.125p after website t1ps.com upgraded its stance from "hold" to "strong speculative buy." Last time this website tipped Caledon the shares more than trebled in three months before members were advised to sell half their holdings so guaranteeing a three figure return. The website argues that the risk/reward trade-off now looks more attractive than ever and suggests that corporate activity within the subsector (Chinese gold explorers) is about to explode"
http://www.caledonresources.com//
Trades over 300,000 Shares are delayed in reporting by 1 Hour.


On fundamentals ALL exploration companies without resources can be said to be overpriced. The only assets they have which can have a hard-and-fast value assigned to them are their bank balances.
People invest in explorers because they believe that the projects/management/geo team have the potential to develop valuable mineral deposits. The share price usually reflects the market's opinion about this potential.
In the fulness of time, if Caledon discover deposits which can be proved up to contain a couple of million ounces, those that bought at 5p or even 15p will be seen to have been correct (or fortunate!) in their assessment of risk/reward.
Some details below from the recent WHI broker note on Palladex, I am not suggesting for a moment that anyone go buy Palladex this is just for comparative data where you will see the value of a company compared to it's in-situ gold.
Point is where will CDN be once they show one project is as big as they and we hope by giving an estimate by end of 2004 ?

Caledon Overview:
Caledon Resources PLC is a public company listed on the Alternative Investment Market of The London Stock Exchange (trading symbol: "CDN"). Its mission is to become the leading gold exploration company in “The Golden Triangle” of Southern China

Caledon has assembled a multi-talented, technically oriented management team - one of few with in-depth knowledge and experience in China. All members have over 15 years experience in evaluating hundreds of East Asian sediment hosted disseminated gold deposits
Advanced stage gold exploration focussed on under-explored producing gold mines in China - Exploration active on four advanced stage gold projects: Hengxian, Gaolong, Badu and Mojiang
Caledon’s primary focus: Sediment Hosted, Disseminated Gold Deposits (“Carlin-type”). Quoted from the United States Geological Survey (USGS Open-File Report 02–131): “It is likely that many of the Carlin-type Au ore districts in China, when fully developed, could have resource potential comparable to the multi-1,000-tonne Au resource in northernNevada.”

Corporate Summary
Caledon Resources PLC is a public company listed on the Alternative Investment Market of The London Stock Exchange (trading symbol: "CDN") and has been domiciled in the UK since February 2003. The Company’s primary focus is to enhance shareholder value through the opportunistic evaluation of fertile under-explored gold districts, resulting in the exploration, discovery and development of world-class gold ore bodies. The Company is currently focused on project evaluations and exploration for sediment hosted disseminated (“Carlin-type”) gold deposits situated in Southern China, although other styles of mineralisation are being assessed if they have multi-million ounce potential.

Caledon’s principal area of focus is Guangxi Province where it has negotiated joint ventures with The Geological Survey of Guangxi and is in the process of forming additional joint ventures with the Chinese National Gold Corporation.

Caledon has signed a joint venture agreement covering the Longtoushan Gold mine and 350 sq km’s of surrounding tenements in Guangxi Province as well as joint venture agreement covering various exploration areas under the control of The Geological Survey of Guangxi.

In addition, advanced exploration property acquisitions and joint ventures are being evaluated in Guangxi with The Chinese National Guangxi Gold Corporation and other joint ventures are under negotiation in Yunnan and Guizhou Provinces.

In order to exploit this opportunity, Caledon has assembled a team of geologists whose main focus over the past 15 years has been to identify and evaluate gold occurrences and deposits throughout South East Asia on behalf of several major mining companies.

Of the 300 plus gold occurrences and districts identified and screened over the years by Caledon’s team, five distinct gold districts have emerged as top-priority ranked targets, based on their geological similarities with the multi-million ounce gold districts found in the State of Nevada, U.S.A (“Carlin-districts”). The USGS has identified the so called “Golden Triangle”, consisting of the provinces in which the Company is focused (Guangxi, Guizhou and Yunna), as having similar style mineralisation to the Carlin deposits in Nevada.

To date, five highly ranked areas in Guangxi Province have been identified by Caledon’s team. Applications for mineral titles have been submitted on all five districts and joint ventures are being negotiated where applicable.

Recognising the need for foreign mining investment, in parallel with China’s entry into the World Trade Organisation, the country has adopted a number of sweeping changes that have recently been enacted in their mining legislation. In the country’s bid to attract foreign investment and mend the fractured structure of their mining industry, the Chinese government, through powers delegated to the provinces, allows foreign ownership of up to 90% in mineral titles and producing gold assets. In addition, various tax incentives exist to help foreign gold explorers and producers.

Perhaps the most relevant change recently enacted in China, involves the evolution towards complete transparency within the Chinese gold markets. Companies can now buy and sell gold on the Shanghai Gold Exchange, which quotes gold prices in line with the London Gold Fix rates. Additional mechanisms are currently in place to allow for repatriation of profits from Chinese-based, foreign-operated gold mining operations. Further enhancements are expected within the year.

The group now has all of the key primary ingredients in place in order to position the group for maximum returns.

Those key ingredients are:

highly experienced, South East Asia based technical management with proven exploration abilities,
acquisition / title lock on a number of properties hosting potential multi-million ounce disseminated gold deposits, and
an appropriate amount of financing in place allowing the group to conduct a meaningful first-pass exploration program within these districts.
Given the sweeping changes that China’s mining law has recently undergone, Caledon is well positioned to maximise gold exploration opportunities that exist in the country.

It is likely that many of the Carlin-type Au ore districts in China, when fully developed, could have resource potential comparable to the multi-1,000-tonne Au resource in northern Nevada.”

These are not my words, but the words of the US Geographical Survey or the (USGS). To read there full report on Carlin Deposits you need to go to the link -
http://geopubs.wr.usgs.gov/open-file/of02-131/OF02-131.pdf

The Projects
Hengxian Gold Mine - The Hengxian project is a classic example of a sediment
hosted disseminated gold system ("Carlin-type"), with considerable exploration
potential. At Hengxian, gold is being mined in a north-east trending zone
measuring up to 3 kilometres long and up to 800 metres wide. Gold occurs in
steeply dipping, high grade feeder structures (> 4.5 g/t gold avg.), feeding
flat-lying moderate grade (1-4 g/t avg.) stratiform zones. To date, at least
four sub parallel feeder structures have been defined. The gold mineralisation
occurs on a major regional structure that can be traced for more than ten
kilometres away from the existing workings. Access and infrastructure in the
area is excellent - Hengxian is a two hours drive from Caledon's office base
situated in the Guangxi Provincial capital, Nanning.

Previous exploration has been almost entirely focused on shallow oxide zones.
Gold resources at Hengxian are reported to be 310,000 ounces (Inferred category)
grading approximately 4.6 g/t gold - with those resources having been defined by
only a limited amount of shallow focused drilling, concentrated on the surface
oxide zones (0-60 m depth). Exploration to date has only been focused on a small
- 2.5 kilometre long - portion of the entire 10 kilometre long structure,
initiated on obvious outcropping oxidised sulphides.

Summary results from drilling conducted on Hengxian Hill by Caledon's minority
partners, Taifu Mining, defining the near surface limits of the deposit, include
the following:

Section Hole Number Depth (m) Intercept (m) Grade g/t Au
44 ZK 14 13 50.6 2.02
435 ZK 4351 25 10.1 8.0
ZK 4351 49 14.5 5.03
43 ZK 432 45 41.4 6.44
ZK 5 49 31.0 8.8
ZK 19 102 27.0 4.0
425 ZK 251 50 42.5 3.91
ZK 4255 103 29.1 6.93
ZK 4252 72 12.8 6.16
ZK 4252 90 18.6 4.02
415 ZK 152 42 20.7 3.0
ZK153 65 13.9 4.68
41 ZK 16 10 11.1 3.79
ZK 411 33 24.6 4.0

Intervals between known areas of higher grade mineralisation carry significant
disseminated gold mineralisation, typical of such gold deposits. For example,
drill hole ZK19 reported a 27 metre wide interval grading 4.0 g/t gold,
occurring within a much wider down-hole interval reporting a width of 133 metres
grading 3.24 g/t Au.

Gaolong Gold Mine - Gold has been actively mined at Gaolong by Caledon's
minority partners, Guangxi Tianlin Gaolong Gold Mine Ltd Co for over 10 years.
At Gaolong, surface and limited underground mining can be traced in a
semi-continuous manner over a strike length in excess of three kilometres, with
mining widths averaging 10 to 30 m, to a maximum of 60 m wide.

The Gaolong mine itself is ranked in the top two gold producers in the province
and has been cited by the United States Geological Survey (USGS) as having
distinct similarities to the 15+ million ounce Betze ore body situated in
Northern Nevada, USA (USGS OP 02-131).
Results from past drilling performed at shallow depths immediately adjacent to
zones being mined by the Chinese at Gaolong, are a testament to the bulk minable
nature of the Gaolong ore bodies themselves (i.e. Section #30 - 4.1 g/t over
10.8 m, 3.2 g/t over 33.4 m, 4.7 g/t / 31.3 m). The immediate extensions of
these open-ended zones will form the focus of gold exploration to be undertaken
in 2004.
In the 4th Quarter, 2003, Caledon reported results from a preliminary channel
sampling program at Gaolong, as part of the effort to identify drill targets on
the project. The following is a summary of results from this initiative:

Channel # Sampled Width Gold Grade
Channel 1 44 meters 2.5 g/t
Channel 2 10 meters 3.9 g/t
Channel 3 14 meters 2.4 g/t
Channel 4 28 meters 2.7 g/t
Channel 5 22 meters 2.3 g/t
Channel 6 12 meters 3.3 g/t

Badu Gold Mine - Small scale mining is in progress at the Badu Mine, situated 12
kilometres North East of the Gaolong mine. The Badu mining and exploration
tenements are included within the Gaolong master agreement. The GTGGML's
open-pit mining operations at Badu can be traced in a semi-continuous manner for
over four kilometres along strike, with mining widths averaging 20 to 40 m. Gold
is recovered in the heap leaching of oxide ores, with average head grades of 1
to 2 g/t gold. Caledon is aware of only 1-2 shallow drill holes having being
completed over the entire four kilometre strike length.

Mojiang Gold Mine - A letter of intent has been signed regarding Mojiang Gold
mine. Active mining has been underway at Mojiang since the late 1970s by the
Mojiang Mining Limited Company. The mining at Mojiang was based on reserves of
32 tonnes of gold (>900,000 oz) at a grade of 4-6 g/t Au. At present, the
majority of the gold mining operation is focused on gold production from open
pits and underground mining, with plant head grades consistently reporting above
4 g/t gold. To date, approximately 70% of the initial reserves have been mined.
At Mojiang, individual veins, averaging up to 12 metres wide, have been shown to
host grades in excess of 15 g/t. Individual veins sometimes exhibit bonanza
grades (in-excess of 30 g/t gold), typical of such systems. The veins are hosted
in sediments and acid volcanics, near the contact between thrusted Cambrian
sediments and metamorphosed ultra-mafic volcanics belonging to a regional scale
ophiolite complex, within the Red River Suture Zone.
Examples of diamond drill intercepts at Mojiang highlighted from the earlier
Chinese work include:

Section # Drill Hole Mineralised Intercept
Section 50 DDHZ50-6 41.62m @ 3.34 g/t
Section 51 DDHZ51-16 28.22m @ 4.89g/t
Section 52 DDHZ52-10 53.98m @ 2.72g/t
Section 40 DDHZ93-1 7.93m @ 13.67g/t
Section 40 DDHZ93-1A 8.39m @ 9.00g/t
Section 40 DDHZ94-3 12.35m @ 15.05g/t

Contact Information
London Office
18 Upper Brook Street
London W1K 7PU
United Kingdom
Tel: + 44 20 7318 5780
Fax: + 44 20 7318 5781
Stephen Dattels - Chairman
sdattels@caledonresources.com

Donal Douglas - Deputy Chairman
ddouglas@caledonresources.com
George Salamis - Managing Director
gsalamis@caledonresources.com
Manish Kotecha - Company Secretary
mkotecha@caledonresources.com

Hi Fonty, I had a such a lovely time at my graduation today, it was wonderful, though there were some tears in my eyes as I was saying my goodbyes.

Hi Joe, the Golden China RNS should be coming next week

Hi Xmortal, thanks for that.

and up 7.45% with this news.... so i think we should see some kind of upward trend from now on.

Caledon Resources PLC
08 July 2004



July 7, 2004

Update on Exploration Activities

Promising Results from Badu Field Sampling

Field exploration active on several fronts - drilling is expected to
commence at Gaolong/Badu by the end of July, 2004 and Hengxian
thereafter

Advanced field project evaluations encouraging

Caledon Resources is pleased to provide an update on the various
active exploration programs in China. Exploration work is on-schedule and
on-budget at Gaolong, Badu, Hengxian and Mojiang in preparation for the next
phase of drilling to commence sometime within the next 4 weeks.

In the past several weeks, Caledon's field crews have collected over 400
samples in the field at the various projects in preparation for the next
phase of drilling.

A reverse circulation drill rig is scheduled for the Gaolong and Badu projects
in Northwest Guangxi province by the last week of July 2004. A minimum of 2000
metres of drilling, with the possibility of extension, is planned for both
projects. Preparations are also underway to initiate a second phase of drilling
at the Hengxian gold project.

Badu Sampling - Phase 1 Drilling Preparations

Recent field work, conducted in preparation for upcoming drilling, has
identified a number of important gold bearing structures at Badu. Disseminated
gold occurs in over twenty separate occurrences on the field, spread over a
total area of ten square kilometres.

The assay results are encouraging.

Samples have been taken across a major structural deformation zone extending for
over three kilometres in strike length, and consist of channel samples collected
across the structure.

Results spread along two kilometres of the zone include:

Channel # Width (m) Gold Grade (g/t)
Channel 1 10.0 7.01 (incl 13.72 g/t over 2 m)
Channel 2 12.0 3.25 (incl 5.1 g/t over 4 m)
Channel 3 5.0 3.72
Channel 4 8.0 1.36
Channel 5 8.0 2.04
Channel 6 10.5 1.15

Sampling has defined a shallow dipping zone (40o) of gold mineralisation with
an observable average thickness of 80 metres. Within this zone, structurally
deformed sedimentary units have been selectively replaced with disseminated gold
mineralisation (Au-As-Sb) showing all the hallmarks of classic Carlin-style
disseminated gold mineralisation.

In addition to the encouraging results from Badu, other sampling results
obtained to date from the Gaolong project areas, situated less than 15
kilometres away, have highlighted significant widths of economic gold
mineralisation in recent surface sampling campaigns (examples from past press
releases: 3.10 g/t Au over 25 metres, 2.87 g/t Au over 15 metres, 2.48 g/t over
44 metres, 3.85 g/t over 10 metres, 2.73 g/t over 28 m). Individual 2 metre
sample runs in other areas of the Gaolong tenements have run as high as 18.75 g/
t of gold.

Hengxian: Phase 2 Drill Preparation

Further preparations are underway to initiate a second phase of diamond drill
work at the Hengxian project, with drilling expected to be initiated this
summer. The drilling will be carried out using large diameter diamond drilling,
firstly to verify earlier RC drilling results and to improve recoveries, and
also to test the major gold bearing structure at depth.

Mojiang: Field Sampling

At the Mojiang project in southern Yunnan, Caledon geologists have completed the
first pass of detailed mapping and sampling and are currently awaiting assay
results. Drilling of the Mojiang property is planned for later this year.

On behalf of the board,

Stephen R Dattels George Salamis
Executive Chairman Managing Director



For further information, please visit our website at
www.caledonresources.com

Yes good news Xmortal.

down to 11% today.... I think the MMs are at it again, back to their old games. The b/o is tight 4.50 - 5.00

Dont forget that there was director dilling few weeks ago and the encouraging news on their drilling issued yesterday. Hold tight I'd say. Volumes are low... Can someone tell me what is the buys/sells ration so far

Holding very tight here!

Gold hit a near three-month high on Thursday, as the dollar continued to weaken against most major currencies and analysts are eyeing $410/oz as the next key level.

The positive effect on the dollar of a drop in the US jobless claims numbers, announced Thursday afternoon (SA time), would usually have had a negative effect on the gold price, but Thomas Boustead, a metals analyst at Refco in the US, says the price turned higher still after the news. US jobless claims were 336 000 for June, 10 000 lower than the previous months figure.

The dollar weakened by as much as half a cent against the euro following the announcement, sitting at $1,2396 by Thursday evening (SA time).

There are people buying around $405,50/oz and they are still trying to clear it, there is some decent speculative buying in it, says Boustead, We have not been up here in a while. The gold price has not reached the $406/oz level since April 13.

Boustead said that if gold closed above the June 28 level of $400,88/oz on Thursday, then a dollar gold price of $410/oz could be in sight. Once it reaches that, then we will have another look at it, he said.

The analyst said the silver price also broke through a key level on Thursday, trading above $6,22/oz. The white metal continued to rise from there, trading at $6,36/oz by Thursday evening (SA time).

Boustead says silvers industrial properties have tracked the recently strong copper price, primarily an industrial metal, which jumped 3% on Wednesday as a strike at a major copper supplier loomed.

South African gold production tumbles
By: Gareth Tredway
Posted: '18-JUN-04 08:00' GMT Mineweb 1997-2004



South Africas bloodied gold industry showed the extent of its decline, as production numbers for the first quarter hit lows last seen almost a decade ago.

Gold production decreased by 8.3 percent to 84,616.5 kilograms in the first quarter compared to 92,314.6 kilograms produced in the same quarter last year. On an annualised basis, that would leave South Africa producing only 338 tonnes of gold this year, or only 13 percent of last years global production. Thats a long way down from the 375.8 tonnes produced last year and further still from the 425 tonnes of gold mined in 1999.

As was the case last year, South African mining houses attempted to counteract the weak rand gold price by mining at higher average grades. But the Chamber of Mines, the industrys representative body, says these efforts failed to boost production to levels previously achieved.

Because of the holidays in December, this quarter is always lower than the others. But this dip is the lowest weve seen in quite some time, I think since 95, said Roger Baxter, an economist at the South African Chamber of Mines.

Baxter says the big issues affecting the industry are the strength of the rand - which is forcing costs higher and lowering revenues - and the restrictions placed on local producers by suppliers. We believe the current value of the currency does not reflect the true cost and fundamental structure of the economy, said Baxter.

Despite a dollar gold price hovering around $400/oz for most of the quarter, a strong rand has held its ground below R7 to the dollar. The Rand price of gold fell a further 5.9 percent to R88 873 per kilogram during the quarter. It has since fallen to around R80,000/kg, rendering a third of the countries gold mines unprofitable. That number climbs if capital expenditure is taken into account.

At such low profits these companies have turned to slashing costs as a means to increase margins. Baxter says in South Africa the process is more difficult as the monopolistic control by industry suppliers prohibits cost control. It is not like in the US or Canada where they have a lot of leeway with their suppliers, said Baxter.

The average increase in total production costs excluding capital expenditure rose by 18 percent year-on-year with above inflation increase in water costs and steel prices singled out. Durban Roodepoort Deep and Harmony, two local gold producers have, over the past few months, publicly shown their unhappiness towards Iscors steel price model.


Gold: worst margin squeeze since '70s
By: Alec Hogg
Posted: '22-JUN-04 13:45' GMT Mineweb 1997-2004



MINEWEB: Roger Baxter, chief economist of the Chamber of Mines is with us. Roger, we had figures coming out from Australia today on their gold production. Thats going up. South Africas gold production is going down and, I guess, at this rate maybe in a few years time they will displace us as the worlds biggest gold producer?

ROGER BAXTER: Alec yes, its entirely possible. I mean obviously, we shouldnt really concentrate on being the worlds biggest gold producer, we should concentrate on being the worlds best gold producer in terms of obviously financial company performance, etc, competitiveness, and all those sort of angles built into it. I might just add, on the Aussie side whats quite interesting is that they went through quite a big dip in 2002, so they are catching up just to the levels that they were at back in the year 2000.

MINEWEB: How long has South Africa been the number one gold producer it the world?

ROGER BAXTER: In terms of the numbers we keep, literally going back as far back as the 1870s. I mean, South Africa has been responsible for the production of over 50,000 tons of gold in the last 120 years in terms of the records that weve kept, which represents by itself about 35% of all total mined gold available on surface. So weve played a huge role in the international market, and thats going to continue for quite some time into the future.

MINEWEB: So we havent run out of gold?

ROGER BAXTER: Well, lets put it this way. You have to look at the factors which have come into the equation here. There are issues related to the lack of investment in the late 80s. Remember, weve got deposits which are generally deeper, much more large-scale in nature. And the lack of investment, particularly in the late 80s, early 90s, as we were just going through the last vestiges of the apartheid era, has caught up with us now. But we have seen obviously, a number of projects over the last couple of years which have certainly been replacement-tonnage types of operations. As some of the older mines and older shafts that were developed in the 40s, 50s and 60s are sort of wearing their way out.

MINEWEB: Theres still a lot of gold there, but its just harder to get to?

ROGER BAXTER: Well, lets put it into perspective. South Africa still has about 45,000 tons under ground. Probably about 20,000 tons of that can be economically recovered in the Witwatersrand basin. And it very much depends on the economics of the situation. So, in other words, on the gold price and costs and those are two areas which obviously exacerbated the increased decline that we saw in the first quarter of this year. We saw basically a 10% quarter-on-quarter decline. Normally, over the last sort of 10-year period, its been about a 7% quarter-on-quarter decline. Slightly higher this quarter. Project economics are certainly coming into it, as certain parts of some of the mining companies are not viable. And obviously the influence of the public holidays has coming through. When I say public holidays, the leave period over January, December, always hits the industry in the first quarter, and just to highlight those numbers, you get about a 7.5% decline in the first quarter, and then in the second quarter theres about a 1% decline on average in the last decade, and then third and fourth quarters are spent trying to catch up for the rest of the year. So the public holidays and leave story is having a big influence on the industry.

MINEWEB: Roger, lets just go back for a broader look. As you said, in the late 1980s, early 90s, there was very little investment in gold mining. It does appear to have picked up. At least there have been enough announcements over the past few years that new projects would be going ahead. Is the decline in the rand price of gold and thats a result directly of the strengthening of the South African rand against particularly the US dollar is that causing some of those projects to be put on hold, or worse, actually to be abandoned?

ROGER BAXTER: I think more the former than the latter. I think certain projects have been put on hold, as many mining companies feel the pinch obviously of the margin squeeze. And, secondly, there are a number of operations that are currently in a loss-making position. So weve already seen cutbacks in capital expenditure in certain operations. And, in terms of new project developments, obviously when youre looking at the economics at this stage, it places more pressure on the ability of those projects to be long-term viable. But I must just reiterate, this is a long-term industry, the decisions are generally made on a longer-term perspective on what you expect the exchange rate, and obviously cost to do over time. And in the last decade the gold-mining companies and the mining sector in general have spent a lot of time improving productivity levels, etc, etc. And just to highlight, if you go back 10 years, our relative productivity levels in terms of tons mined underground have doubled in the last decade. That just gives an indication of the levels of focus on cost containment, productivity improvement, etc.

MINEWEB: So productivity has improved, but what about revenues, relatively speaking? When last were the margins between what it costs you to get an ounce of gold out of the ground, and what you get back when you sell it when last were they at these levels?

ROGER BAXTER: Our margins in the decade of the 90s have actually been quite close, particularly if you do it on a post-capex basis. If you do it on just a cash production-cost basis, our margins would have been be averaging about 10, 15% over the last decade. If you use capex included, it takes you down to about 2, 3%. The last time they were at these levels were in the 70s, before the liberalisation of the gold market took place, and you had the big run-up in the gold price up until 1980.

MINEWEB: So thats the worst since the 1970s?

ROGER BAXTER: Its basically the worst since the 1970s, and much of the current situation is very much due to the strength of the rand. And one has to look at a number of perspectives on that. Im not sure whether you want us to go into some of those ideas, but you know, certainly, if you look at the cost and production profile in South Africa over the number of years, youve had average grades have declined over the period, as youve had certain of the older mines mining a more marginal ore body in certain cases. But if you look at some of the mines, the newer type operations are obviously mining much higher reserves. But theres not that flexibility that the older mines have to mine higher grades, when costs are rising and revenues are falling.

MINEWEB: But to extrapolate from getting back to where we were in the 1970s, what happened then and can we learn any lessons from the history of that time?

ROGER BAXTER: Very much so. If you look at the 1970s, when our gold production actually peaked in 1970, we were mining average grades of 13 grams per ton. Were down to about 4.5 today. We produced about 1,000 tons of gold, were now producing about 370 tons. So there has been a fall-off. But thats a mature industry, its reflective of a mature industry. The lessons that we can learn out of it certainly have to focus on obviously the cost and productivity angle, and that has to be a continuous evolution. You must never rely on obviously exchange rate falls to cushion you but, at the same time, looking at your cost structures, its hell of important that we understand in South Africa that a lot of costs currently are driven by issues which are outside of the control of the mining companies.

MINEWEB: Would you be mining gold shares, given this whole scenario right now?

ROGER BAXTER: Well, Im not going to be a market mover and tell you yes or no. I think the industry is obviously grappling to deal with the lower rand gold price, and with these cost pressures feeding through. I think government have increasingly taken a view that these are issues that also need to be dealt with for the broader economy. And lets just give a quick perspective, if I can, on the exchange rate side, because it does feed through if you have these cost pressures building up on the administered pricing side, for example, they raise the general level of prices, they make the reserve bank put interest rates up to a high level. That high level of interest rates tends to encourage the carry trade, which strengthens the rand, and it places your export sector under pressure. So theres a vicious circle working here.

MINEWEB: I was going to say an unvirtuous circle.

ROGER BAXTER: Exactly. So the complication that comes into that we obviously fully support the monetary policy focus of the Reserve Bank, etc, but we dont have other parts of government doing what they should do to get their cost pressures under control and give us that flexibility that we really need at the moment.

MINEWEB: Roger Baxter, chief economist at the Chamber of Mines.

I am quite puzzled as to why most gold exploring cos are not surging again, giving that the gold price is aproaching $410. Around November last year Gold price was hovering round $405-415 and at that time all exploring cos went upwards, I guess we need the press to push this forward. Can someone help understand this/ or have any views?

CDN will be one of the sponsors in Sep Gold Investment Conference in Las Vegas.http://www.iiconf.com/vegas04/default.aspx#sponsor

The Case For Gold.

(Extracted from the Annual Report of Golden Prospect PLC, A 25% Shareholder In Minesite)

The gold rally over the past two years has largely been an anti-dollar phenomenon but with all the increased geopolitical tension and general financial worries, gold really has assumed the status of an insurance policy against bad times. Its safe haven status has been restored and investor appetite for this dependable alternative asset class is steadily increasing. Although historically a volatile asset to own, gold has proved itself time and again in periods of financial stress and geopolitical turmoil. What we can say about todays climate is that the only certainty is continued uncertainty, i.e. the dollar is still stressed out, inflation is gathering pace, terrorism breeds investor caution and the general unrest will not go away. Interest rates are rising, consumer debt is exploding, house prices are teetering on the edge of a big fall almost everywhere and industrial equities on both sides of the Atlantic are witnessing waning support. Seasoned market investors are holding cash, buying gold and inflation linked bonds.

There are still huge imbalances in the US economy and these will need to be corrected at some point, creatingfurther degrees of financial strain. Some pundits believe that the growing deficits in the US could eventually result in the creditor nations deciding that they no longer want to hold US dollars. If that day comes, the greenback is going to plummet.

Furthermore, to quote from many economic forecasts, it is quite possible that we will soon see a breakdown of the triangular relationship between gold, the dollar and the euro. There have already been indications in recent months that gold may move in an independent direction and if it starts climbing again in all currencies, this will be the most potent bull signal of all. Investment funds would pour in!

Central Bank selling of bullion is also drying up.Whereas previous Central Bank gold sales contributedto a weakening in the gold price and negative sentiment within the investment community, the signing of the new agreement to limit sales over the next five years has provided some additional stability and positive sentiment to the gold market has returned. Even more importantly the European Central Bank confirms that gold will remain an important element of the global monetary reserves.

The supply demand equation is also going golds way.Capital costs of new mining projects are soaring and there is a lack of new mining projects coming on stream. By and large, major discoveries have not been made in the sector for some years, so the upshot is that new big supplies are not being found. Moreover, short term interest rates, although increasing, have not risen high enough to result in more hedging and gold producers are unlikely to hedge gold in a bull market environment. In the past, mining companies have used low gold lease rates to sell gold forward in order to raise money to finance the construction of new gold
mines, but we now believe that the large, global gold producers will continue to unwind their hedge booksat an increasing pace.

Factor in a huge boom in China, India, Russia and Brazil and the ultimate buying power of gold that this will eventually produce, together with the continued erosion of confidence in the dollar, then demand must exceed supply for some many years to come. It may be worth recalling that gold last hit its zenith in the late 1980s when inflation was rising and the world had suffered two major oil price shocks. Just as America inflated away the reckless spending then so it can be expected to do the same again to address todays looming fiscal problems. The FEDs usual way out of this problem in the short run is to print money. These current financial events, the rise in oil price and other deteriorating economic trends are all building a case for significant inflation down the road and thereby the most excellent environment for physical gold and gold equities.

Given the boom in China I'd really have expected CDN to see an upswing when one also factors in the increase in gold prices and their (respectively) superior exploration results.. the good news is that we hardy CDN band of investors could just possibly be there ahead of the wave for once...well it is possible at least...it keeps me happy/sane to delude myself that just once tihs could be the case...sweet dreams.

Like Oil price, Gold price needs some constant press coverage, then we will see the share of CND soar to new highs. CDN price seems to be hovering, it really needs some good news. momentum, RSI and MACD are turning positive by the day. Any views?? Sue? Thanks

Hi Xmortal, its no good looking at the TA at the moment as I stated last week. Hence I am ignoring the TA at the moment as in the background the placement of shares is happening. Until the Golden China RNS comes there will not be much happening. It should be coming this week I believe as the 20 trading days are up now from the Strategic Relationship RNS.
We can get back looking at the TA after the RNS comes.

Thanks Sue, your are right, we need to take in consideration also Gold price, it has passed the $400 which is good and I think it is supporting the prices for all gold explorations, including CDN.

I think we also need to have a broader picture of where Gold is heading. Take a look on the outlook coming from Merrill Lynch, one of the best (if not the best) fund managers in the world. Also the FTSE World Gold benchmark supports this. The geographical focus in the fund is also encouraging for China. Thanks

http://www.mlim.co.uk/shared/pdfs/mlf/ut-gold-fs-uk.pdf?silo=individual-investors

weak dollar = good for gold



European exporters could fuel a euro rise
Tue 13 July, 2004 12:17



By Justyna Pawlak

LONDON (Reuters) - European corporates are getting nervous about recent strengthening of the euro and may start piling on new protection against currency risk soon, which could accelerate any further rally in coming months, some bankers say.

A strong euro means that European exports are more expensive outside the euro zone and that hurts their manufacturers' profits.

But many companies have scaled down their hedging of currency risk this year, hoping the single currency would fall steadily from its February record highs against the dollar and make it cheaper, or even pointless, to buy protection.

Many now feel they may have waited too long.

A spate of disappointing U.S. economic data, particularly on the labour market, has depressed the dollar and prompted some banks to forecast that the euro would now resume its uptrend.

"We have been getting more and more calls (from worried corporates) in the last two weeks," said Peter Fontaine, currency strategist at KBC in Brussels. "And since the (U.S.) payrolls numbers it really exploded."

On Monday, the euro hit a four-month high at $1.2436, compared with February's life record of $1.2927. It fell to $1.1759 in April when the prospects of imminent interest rate rises in the United States powered a broad rally in the dollar.

SELF-FULFILLING PROPHECY

Many analysts say the jury is still out on whether the euro will retest those record highs soon.

Global investors could go back to punishing the dollar, as they did last year, for the U.S. current account deficit.

But many analysts argue the external shortfall will be offset by further U.S. monetary tightening and economic recovery there, giving the dollar plenty of support.

Goldman Sachs, however, has revised up its three-month euro forecast to $1.2700 from $1.1600. It also expects the euro to hit $1.3200 in six months. The Reuters consensus forecast, published earlier this month, calls for the euro at $1.2200 in three months.

Currency market professionals warn that any further rise in the euro, especially above the $1.25 level could spark a wave of demand for euros from European corporates fearing that a renewed dollar decline would weigh on their profits again.

This in turn could speed up the very rise of the euro they fear.

"Many corporates are getting nervous," said Thomas Stolper, global market economist at Goldman Sachs in London. "They may not be acting yet but I would expect them to come in between $1.25 and, more aggressively, the old record highs."

Most European corporates buy currency forwards in order to hedge the risk of their future dollar revenues losing value as the dollar falls against the euro. These instruments allow them to buy dollars at a fixed exchange rate in the future.

"We expect corporate rate dollar selling to be one of the main constituents of the next leg of dollar weakness," said Stolper.

One foreign exchange salesman at a London bank said $1.30 would be a more likely trigger point to set of panic among European corporates about further euro gains and power a wave of new hedging.

However the run-up to the $1.30 level earlier this year was also marked by verbal intervention from the European Central Bank, which at the time helped deter the market from driving the euro higher.

COUNTER FLOW?

British exporters appeared less concerned that the pound will head for its 11-year highs set at $1.9140 on the same day in February as the euro's record peak. On Monday the pound hit a four month high around $1.8660, less than five cents below the February peak.

"Dollar sellers are not panicking yet," said one currency salesman from a UK bank.

"But that would change if we were to go through $1.90. At the moment there is still a bit of complacency since many firms have already hedged a fair amount of exposure this year."

Other London bankers add that while many European exporters are still waiting for a clearer trend in the euro, importers have been taking advantage of the U.S. currency's recent downtick to snap up the dollars they need to buy goods.

More importer demand would surface if the euro rose beyond $1.25, one FX salesman said.

Hi Sue when do you think we will get fresh news.Anyone no the true buy sell price this am? thanks

Hi John, see my previous posts.

Golden China RNS should be this week, right?

Hi Joe, 20 trading days are up now since the strategic relationship RNS so it should be coming.