I have posted several times about Focus Minerals (FML) one of the mid tier gold producers I own….

Activities Report for the Quarter Ended
31 December 2010
HIGHLIGHTS

• 37% increase in gold production to 21,039oz (Sept 2010 Qtr: 15,300oz).
• Continued downward trend in cash costs to A$877/oz (Sept 2010 Qtr: A$932/oz).
• Sales revenue of A$27.2 million from gold sales of 19,570oz at an average received price of A$1,388/oz – average cash operating margin of A$511/oz.
• Record ore processing through the Three Mile Hill plant with 327,319 tonnes processed @ 2.2g/t Au.
• Record mine production of 151,412 tonnes @ 3.56g/t Au from the Tindals Underground Mine.
• Production from The Mount Underground Mine and Tindals Open Pits on track to commence in the June 2011 Quarter with ore recovery commencing at The Mount from March 2011.
• Outstanding results achieved from exploration work at the Treasure Island Project with surface samples of 58.9g/t Au, 48.4g/t, 41.3g/t and 39.8g/t.
• At 31 December 2010, Focus had total cash and equivalents of $8.68 million.

Focus Minerals Limited (ASX: FML) is pleased to report a record-breaking December Quarter that saw continued growth in gold production, expansion of mine development and a further reduction in cash operating costs, putting the Company on track to achieve its targeted annualised production rate of 100,000 ounces of gold during calendar 2011.

Mine development continued at an aggressive rate during the Quarter with record mine production of 151,412 tonnes at an average grade of 3.56g/t Au from the Tindals Underground Mine, including production of 60,300 tonnes at 4.8g/t for the month of December – well above the targeted monthly average of approximately 45,000 tonnes for 2011.

A record total of 327,319 tonnes of ore was processed through the Three Mile Hill Processing Facility during the Quarter, which is a record over its 15+ year history and equivalent to an annualised throughput rate of 1.3 million tonnes.

Gold production increased by 37% to 21,039 ounces for the Quarter with the resulting cash operating cost of A$877/oz continuing the positive trend of reducing cash costs.

Exploration and development work at the Tindals Mining Centre continued at pace and the Company remains on track for the planned commencement of open pit operations at Tindals in the June Quarter.

In preparation for the start of open pit mining, the Company undertook grade control drilling, resource/reserve extension drilling and approvals work for the open pit operations with grade control returning outstanding results in many pending pit areas including 3m @ 32.7g/t and 4m @ 23.4g/t.
The Mount Underground Mine, which represents a wholly new area of production growth for the Company, also kicked off its second phase in November, with a new box-cut being excavated and 185m of decline development completed. The new underground development will enable Focus to ramp-up to full-scale production from The Mount in the second half of the year.

With the addition of The Mount and the open pits at the Tindals Mining Centre, Focus Minerals remains on track to substantially increase its production capacity during the first half of 2011.

During the Quarter, Focus formally acquired a direct 75% interest in the Lake Cowan tenement which hosts the Treasure Island Project. Greenfields exploration at Treasure Island has delivered some exceptional results including surface rock chip sampling grades of 59g/t, 39g/t, and 41g/t over outcropping strikes of more than 200 metres in three closely linked areas.

These preliminary results highlight the potential for an exciting new exploration opportunity for Focus Minerals along the world class Boulder-Lefroy fault system.
Capital investment and exploration expenditure for the Quarter totalled $5.5 million, comprising $2.2 million of mine capital development and $3.3 million of exploration expenditure. This included $1.6 million relating to The Mount development. At the end of the Quarter cash and bullion held by Focus = $8.68 million.

Campbell Baird
Chief Executive Officer

A couple of years ago I had a heated discussion with a broker… He said Gold I said either gold/oil or both because both do more or less the same thing…

This is a very interesting compnay on the verge of production. They have a market cap of ~$1b.. yes a billion dollars. A very rich long life deposits that will produce at around $100 – $120 per oz.

I’ve held ASX: AND for some time and topped up today.

http://www.andean.com.au/mint/pepper/orderedlist/downloads/download.php?file=http%3A//www.andean.com.au/pdf/news/2009/andean_090914.pdf

IN an interesting article Paul Amery looks at the Dow/Gold Ratio.
He presents a long term and medium term view that suggests that the recovery in the Gold price has just started.

He asks:” Is gold about to embark on another upleg when measured in terms of the Dow Jones Industrial Average index?”
The chart seems to be compelling

Whilst I totally agree with his sentiment that we shouldn’t get too religious about charts (I’m often amazed how Technical Analysts advise people on the strength of a chart to buy or sell shares while knowing nothing at at all about the fundamentals of the sector or the individual company in question and repulse criticism with “it is all in the chart”) I think that it is worthwhile to understand what Amery is saying…..
“But the plotting of share prices in gold (rather than cash) terms, plus the use of a logarithmic scale, help illustrate two things. First, the current equity bear market clearly started at the turn of the millennium, not in 2007 (when many share indices hit highs in nominal terms). In fact, the equity market rebound of 2002/07 doesn’t even register on the chart because the price of gold was rising at the same time.

Second, although the Dow/gold ratio has already come down from 44 to 10 or thereabouts, the log scale of the y-axis shows that, if we are heading for the same kind of low that we saw in 1980, we’re only about a third of the way through gold’s bull market (in equity terms). That’s worth thinking about when reading debates about whether gold can break through US$1000.

As Fred puts it on his site, “the chart shows the cyclical nature of the battle between paper assets and hard assets. Paper assets excel when everyone is fixated on growth. When the growth phase ends, and preservation of wealth becomes the paramount concern, gold tends to excel. When paper burns, gold shines.”

We’re talking very long-term cycles here. But those who have stuck with precious metals at the expense of equities since 2000 have been richly rewarded. And, with real economic activity everywhere under threat from government borrowing and possible debt deflation, who’d argue against gold embarking on another upleg in its bull market against shares?”
Read full article

This lovely compnay has such a swag of wonderful projects it is hard to know what is going to happen next….

http://www.giralia.com.au/projects.asp

review summary then visit the website

Very low market cap of $9m, strong team and loads of goodies. Worth checking out…

Make sure you watch the Conrad video.

I’m in.

A recent article published to Fat Prophets’ readers reminds us in rather scathing terms that it was P Costello who sold off 2/3 of Australia’s gold reserves in 1997 for a song and cost Australia around $6 billion dollars….

With all the hype surrounding the possible return of P Costello to replace the current leader of the Libs (“All wick no bang” as aptly described by P Keating) it is worthwhile to remember that Costello was NOT very good at his job. The old maxim of not diving into shallow murky waters should be at the foremost of people thoughts … especially those that seek to return the libs to power……

Excerpt:
Since our initial recommendation in 2007 at USD 650, gold outperformed almost every other asset class. The gold bull market has been running with an annual performance of 16% since 2001. Gold closed the year 2008 with the eighth annual increase in a row. And in the year to date, the performance has been outstanding as well: the gold price has recorded an increase of 7% (in USD) and 8% (in EUR) 1, respectively. The average price in 2008 was USD 872/ounce, i.e. 25% higher than in 2007 (USD 695).

read full article

Gold explorer Andean Resources is expected to announce a capital raising to help develop its flagship Cerro Negro project in Argentina.

Shares in the company have been placed in a trading halt while the company finalises the details.

They last traded for $1.77.

The company has estimated it will cost about $434 million to bring the project into production within three years.

Last year, a pre-feasibility study suggested a low-cost operation producing up to 350,000 ounces of gold a year with cash costs of $US198 per ounce.

Recent upgrades have pushed Cerro Negro’s total resource to 2.6 million ounces of gold and 23.2 million ounces of silver.

STUART McKINNON