Tag - AZK

The Russell 2000 (NYSE:IWM) is in positive territory on bullish economic news.

At 10:17 a.m. ET, the small-cap index had added 0.91 points, or 0.13%, to 686.98. The Dow Jones Industrial Average was up 24.42 points, or 0.20%, to 12,326.48.

Stocks small and large opened with gains as investors reacted to news before the opening that producer prices rose 1.1% in March, according to the U.S. Department of Labor. Economists were expecting producer prices, the selling prices received by domestic producers for their output, to climb 0.6% following a rise of 0.3% in February.

The numbers also show a jump in energy and . . .

The Russell 2000 (NYSE: IWM) and the Dow have added to their losses as credit fears grip Wall Street. At 3:06 p.m. ET, the small-cap index had dropped 20.32 points, or 2.99%, to 659.39. The Dow Jones Industrial Average (INDU) was missing 275.33 points, or 2.27%, to 11,870.41.

The sell-off has intensified as news of liquidity problems at Bear Stearns (NYSE: BSC) have spread fears of a widening credit squeeze. The investment bank reported shortly after the opening that its cash position deteriorated significantly over the past 24 hours.

The New York-based company turned to J.P. Morgan Chase & Co. (NYSE: JPM) and the New York Federal Reserve for short-term financing to alleviate its liquidity problems. Bear Stearns has been highly exposed to the meltdown in the subprime mortgage sector, first feeling pain last summer when two of its hedge funds went belly up due to bets made on securities backed by mortgages.

By hunting in the Canadian tundra, gold company Aurizon Mines Ltd. (AMEX: AZK) is developing projects to add new production to a starving market. After all, with world production declining and demand rising, there are a lot of hungry gold bugs to feed.

Aurizon is a potent combination for small-cap investors: an emerging company in a hot market. Based in Vancouver, B.C., Aurizon wants to exploit the rally in gold prices by developing its projects in the Abitibi region of northwest Quebec, which it views as one of the world’s greatest gold and base metal areas.

The company’s 100%-owned Casa Berardi mine began commercial production in the second quarter of 2007. Based on current mineral reserves, it is expected to produce about 165,000 ounces annually. Exploration still is going on at Casa Berardi, and it is in earlier stages at the company’s Joanna property. It’s at an even earlier stage at Aurizon’s gold and uranium project, Kipawa.

Like a good miner, Aurizon’s outlook is a gold bug’s grace: the U.S. dollar is going to decline further; there are more than enough dollars to go around; gold is cheap in terms of inflation, oil and financial assets; monetary reflation is at hand; mine output is declining, demand is increasing; and the political environment favors gold.

Not so great for many of us, but well and good for Aurizon. Global mine production has declined 1% to 2,447 tonnes in 2007 from 2006, according to the World Gold Council, and expectations are for similar flattish output for at least the next couple of years. Thin production is not matching demand, which the Council shows rising 4% in tonnage terms in 2007 from the previous year — led by a 6% gain in jewelry consumption.

But high and volatile gold prices took fourth quarter 2007 demand down 17% from the corresponding quarter in 2006. Demand declined the most in India, the world’s largest gold market, by 64% in the fourth quarter, following 40% growth in the first three quarters of 2007. And the weak economy and poor retail demand dented demand in the United States, which fell 14% in 2007 from 2006. Oh, those finicky bugs. Don’t they know how much it costs to put metal on their plates? 

The sector with the Midas touch these days is gold, the price of which on Tuesday climbed to a 28-year peak of around $825 an ounce for December delivery on the New York Mercantile Exchange.

Gold prices are cyclical and typically rise during periods when the dollar is weak, inflation fears are high and geopolitical tensions are escalating.

Gold’s ascent in 2007 reflects the current economic and political climate, characterized by a declining U.S. dollar, heightened Iran and Iraq tensions, skyrocketing crude oil prices and financial institutions eager to increase their gold stockpiles on any price weakness.

With gold prices nearing record highs, junior gold mining companies such as Great Basin Gold Ltd. (AMEX: GBN) and Aurizon Mines, Ltd. (AMEX: AZK) are becoming increasingly attractive. Both are Canadian mining companies that trade on the Toronto and American Stock Exchanges. Their operating results are reported in Canadian rather than U.S. dollars. 

Great Basin Gold has mining assets in two of the world’s richest gold regions—the  Witwatersrand Basin in South Africa and the Carlin Trend in Nevada. The company’s Hollister property in Nevada has an indicated resource of two million gold equivalent ounces, with production expected to commence in 2008 at 150,000 ounces per year and continue for six years. Gold resources associated with the company’s Burnstone mine in South Africa are estimated to exceed seven million ounces. Feasibility studies indicate that the Burnstone mine is capable of producing 254,000 ounces of gold annually for 19 years. Production from the Burnstone mine is slated to begin in 2009.

While not currently generating revenues, Great Basin Gold has a strong balance sheet, with cash and equivalents of approximately $100 million and no debt to support its development activities. The company recorded a net loss of $17.7 million, or $0.13 per share, in the first six months of 2007, up from $1.1 million, or $0.01 per share, in the same period last year, as a result of increased spending on exploration activities.