Gold has traded in a range between $1,193 and $1,226 so far today…as of 7:35 am Pacific, bullion is off $23 an ounce at $1,196 in the aftermath of the Fed’s decision to finally begin scaling back its bond buying program with a modest $10 billion reduction beginning next month…the market consensus was for the Fed to not start tapering until perhaps the spring of next year, although this week’s meeting was considered a growing possibility following the U.S. budget agreement and recent encouraging economic data including two straight U.S. jobs reports showing gains of 200,000 in non-farm payrolls…Gold had already largely priced in a “taper”, so immediate major downside is likely limited (strong support around $1,200) though a test of the June low could be in the works…”big money” may attempt to push Gold below the June low in an effort to trigger stop loss orders and flush out some more weak hands, but short positions are high and that may create some interesting dynamics…year-end volatility is very possible given short positions, typical liquidity issues and portfolio “window dressing” in late December…Silver is off 57 cents at $19.16…Copper is down a nickel at $3.26…Crude Oil is up 46 cents at $98.26 while the U.S. Dollar Index has added one-tenth of a point to 80.65…despite yesterday’s rally, the Dollar Index is still on very shaky ground technically – a supportive factor for Gold…
The Fed noted that its “highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends,” and that it intends to keep the Fed Funds rate where it is (near zero) “well past the time when unemployment drops below 6.5% especially if inflation continues to run below the committee’s 2% longer-run goal.”
About inflation, Bernanke stated, “The Committee is determined to avoid inflation that is too low as well as inflation that is too high, and it anticipates keeping rates low at least until it sees inflation clearly moving back toward its 2% objective.” The PCE inflation measure the Fed watches rose 0.7% in the 12 months through October 2013…that means inflation must more than double before the Fed will even consider raising interest rates…ultimately, this has to be considered supportive of Gold and negative for the dollar…
“What happens in the next few days could also determine to some extent how the Gold price performs in the longer term,” Commerzbank said in a note. “If the Gold price should succeed in forming a stable and long-term bottom at above $1,220 per troy ounce, investor interest is likely to pick up again – after all, the considerable uncertainty over QE3 is gone, meaning that the spectre of ‘tapering’ has lost its ability to scare the Gold market. On the other hand, if the Gold price were to fall below $1,200, this could provoke a renewed wave of selling.”
Investors continue to sell out of Gold-backed ETFs which have seen outflows of some 800 tonnes this year…SPDR Gold Shares said its holdings fell another 4.2 tonnes yesterday…
Updated Copper Chart
With economies in the U.S. and Europe on the rebound, and China holding its own, demand for base metals in 2014 could be stronger than expected which would certainly help the Venture Exchange…with regard to Copper, the question is whether it will hold strong support at $3 a pound or push above a descending triangle as shown in this 13-year monthly chart…Copper’s “moment of decision” in that regard will come at some point next year…
Today’s Markets
Asia
Asian markets were mixed overnight…Japan’s benchmark Nikkei closed at its highest level since 2007, surging 271 points or 1.7%, as the yen hovered near a five-year low of 104.37 against the greenback…China’s Shanghai Composite closed at a new one-month low for a third straight session on a spike in money market rates…the People’s Bank of China (PBOC) skipped open market operations today for a fifth session and that saw the seven-day repo rate hit its highest level since June for a second straight day…
Europe
European markets are significantly higher in late trading overseas in the wake of yesterday’s big move on Wall Street…
North America
The Dow is down 18 points through the first 65 minutes of trading today...the number of Americans filing new claims for unemployment benefits rose last week to the highest level in nearly nine months, casting a shadow on the labor market…initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 379,000, the Labor Department reported this morning…that was the highest level since March and marked the second straight week that claims have risen…
The TSX is up 19 points as of 7:35 am Pacific while the Venture is off 5 points at 886…
TSX Updated Chart
The TSX has been performing according to script…it met resistance at 13500, retraced to the Fib. 61.8% level, and now appears to be gearing up for a strong finish to 2013…below is a 4-year weekly chart from John…
Contact Exploration Inc. (CEX, TSX-V)
As we’ve mentioned on numerous occasions, an Alberta energy play worthy of our readers’ due diligence is Contact Exploration (CEX, TSX-V) which is looking forward to continued growth in 2014…for more than a year the stock has traded in a horizontal channel between 18 and 28 cents, but that trend now appears to be changing as you can see in John’s 2.5-year weekly chart below…keep on the “watch list” going into 2014…CEX closed at 29 cents yesterday and has yet to trade so far this morning…
Global Cobalt Corp. (GCO, TSX-V) Update
Global Cobalt (GCO, TSX-V) came out with news this morning, announcing that it has completed 7,400 metres of drilling in 45 holes at its Karakul Cobalt Project in Russia…“Visual estimates over a number of sections suggest the mineralized zone appears to be gaining width and exhibits strong mineralization at depth,” the company stated in its release…“Overall, visual and assay results appear to demonstrate good continuity and correlation with historic results adding confidence to the resource.”
Anticipation of results will keep this play active – very good results followed by a resumption of drilling at Karakul early in the New Year will be critical to maintain momentum in the stock…the company is also working on completing a financing at 20 cents (recently boosted to $2.25 million)…technically at the moment, GCO has solid support around current levels (see John’s chart, RSI and the uptrend line) that it really needs to hold…there’s also a rising 50-day moving average (SMA) at 15 cents…GCO will need a significant catalyst to push through stiff resistance at the Fib. 24-cent level…as of 7:35 am Pacific, GCO is unchanged at 18 cents…
Note: John, Terry and Jon do not hold positions in CEX or GCO.
Hey guys. Why don’t you never mention the real deal plays. For god sake, Big north graphite is the real deal. They have already managed to process and selling amorphous graphite and today was more good news. They will soon start producing and selling Flake graphite. The management is great, they have accomplished something amazing in a short amount of time that no junior explorer company could.
Vancouver, B.C., December 19, 2013 – BIG NORTH GRAPHITE CORP. (TSX-V: NRT) (the “Company” or “Big North”), announces that the Company has entered into a letter of intent (the “LOI”) with MAG Exploration Services Inc. (the “Vendor”) to acquire all of the shares of Grafito de Mexico, S.A. de C.V. (“Grafito”), held by the Vendor (which shares represent 97.5% of the issued and outstanding share capital of Grafito)(the “Transaction”). Grafito is the registered and beneficial owner of the El Tejon property, a past producing flake graphite mine.
The El Tejon property is a 500 hectare property and consists of the El Tejon flake graphite mine and mill (the “El Tejon Property”). The El Tejon Property is located in the state of Oaxaca, approx 38 kilometers Northwest of the City of Oaxaca, in the town of San Francisco Telixtlahuaca.
The El Tejon Property is the only flake graphite mine to have produced in Mexico. The mine and mill were originally built in 1980 by the Government of Mexico. In 1989, a second processing line was installed to increase the capacity to approximately 4400 tonnes per year of finished graphite. El Tejon was an open pit mine, and the mill was used to crush, mill, float, dry, screen and pack final product. The mine was operated by the Government of Mexico until 1988 and was run privately from 1988 until 2002. The mine closed in 2002, due to low graphite prices. At the time of closing, approximately 80% of the graphite produced was sold to the USA. Historically, the mine produced approximately 20% large flake graphite and 80% medium and fine flake graphite.
Company President Spiro Kletas commented, “We are very excited to add this project to Big North’s portfolio of graphite assets. Our strategy has been to be among the first to be able to supply graphite to the market. Not only does the El Tejon Property represent near term production potential, but also the ability for the Company to fast track our entry into the flake graphite market. The project is in an area of good infrastructure and access and has a readily available workforce in the vicinity. As a past producer, many of the infrastructure needs of a mining project have been previously addressed. Further, this tends to limit cap ex required to begin production. We believe that this project will be an excellent compliment to our current amorphous graphite projects in Sonora State and, as they contain different types of graphite, will supply different markets. Further, the Company believes that there is significant expansion potential for the mine and mill.”
Pursuant to the terms of the LOI, Big North will acquire 100% of the interests held by the Vendor in the El Tejon Property by acquiring all of the issued and outstanding shares held by the Vendor in Grafito by paying US$1,700,000 and issuing 12,500,000 common shares to the Vendor as follows:
-US$30,000 upon signing the LOI as a non-refundable deposit;
-US$30,000 within 5 business days of signing the definitive agreement;
-US$90,000 upon the 6 month year anniversary of signing the definitive agreement;
-US$100,000 upon the 12 month year anniversary of signing the definitive agreement;
-US$100,000 upon the 18 month year anniversary of signing the definitive agreement;
-US$125,000 upon the 24 month year anniversary of signing the definitive agreement;
-US$125,000 upon the 30 month anniversary of signing the definitive agreement;
-US$150,000 upon the 36 month year anniversary of signing the definitive agreement;
-US$150,000 upon the 42 month year anniversary of signing the definitive agreement;
-US$400,000 upon the 48 month year anniversary of signing the definitive agreement;
-US$400,000 upon the 60 month year anniversary of signing the definitive agreement;
-5,000,000 common shares within 5 business days of TSX Venture Exchange (“TSXV”) approval of the definitive agreement (the “Effective Date”); and
-7,500,000 Big North Shares on the 12 month anniversary of signing of the definitive agreement.
In addition, the Vendor will retain a 3% net profits interest royalty with respect to the El Tejon Property.
The Vendor and Big North are arm’s length parties as defined by the policies of the TSXV. A finder’s fee may be paid in connection with this Transaction up to the maximum permitted by the policies of the TSXV.
The Transaction will constitute a “reviewable transaction” pursuant to the policies of the TSXV and is subject to a number of conditions and approvals, including, but not limited to, satisfactory due diligence, settlement of a definitive agreement, required corporate approvals and TSXV approval, including the review by the TSXV of a title opinion and a NI 43-101 compliant technical report for the El Tejon Property, as applicable. There can be no assurance that the Transaction will be completed as proposed or at all.
About Big North Graphite Corp.
Big North is a graphite development and exploration company focused on select projects in Mexico and Canada. The Company recently acquired three past producing amorphous graphite mines in Sonora, Mexico and is working towards accelerating the restart of the Nuevo San Pedro amorphous graphite mine. Big North is currently in the test mining phase at Nuevo San Pedro.
Recently, Big North announced that the Company had started the assembly of a processing plant that will be used for crushing, screening, sizing and drying of graphite to the specifications of future customers. Further, the Company has commenced a strategy of buying unprocessed amorphous graphite from local miners who do not possess the ability to process or ship to end users. Big North also owns high priority, large flake graphite exploration projects in Ontario and Quebec, Canada.
For further information please contact Spiro Kletas at (604) 629-8220.
ON BEHALF OF THE BOARD
(signed) “Spiro Kletas”
Spiro Kletas
President and Chief Executive Officer
Comment by Sebastian — December 19, 2013 @ 12:11 pm
Focus Graphite Signs Offtake Agreement for Lac Knife’s Future Graphite Production
OTTAWA, ONTARIO–(Marketwired – Dec. 19, 2013) – Focus Graphite Inc. (TSX VENTURE:FMS)(OTCQX:FCSMF)(FRANKFURT:FKC) (the “Company”) announced today it has entered into an offtake agreement for the future production from Lac Knife’s graphite resource located 27 km southwest of Fermont, Quebec.
The strategic agreement for up to 40,000 tonnes per year of graphite concentrate and value added products was signed on December 19, 2013 by the Company with an industrial conglomerate, comprised of heavy industry, manufacturing and technology companies located Dalian City, Liaoning Province, China.
The 10-year agreement calls for the supply of up to 40,000 tpy of large, medium and fine flake graphite concentrate and value added graphite products from Focus Graphite’s proposed Lac Knife, Quebec mining and processing facility.
The specific terms of the agreement, including pricing and renewal rights, are confidential for competitive reasons.
“On behalf of Focus Graphite we are extremely pleased to have completed our first offtake agreement. This agreement holds the potential for Lac Knife’s future development,” said Don Baxter, Focus Graphite’s President and Chief Operating Officer.
“Not only is this offtake agreement the first of its kind in the graphite industry, it is significant in the fact that it encompasses the wide spectrum of Lac Knife’s offerings in pioneering the sale of small flake to extra large flake and value added technology products,” Mr. Baxter said.
“This agreement underscores our long-held commercial objective of competing in the China market,” he added.
Comment by Paul — December 19, 2013 @ 1:47 pm