Update on Gold Mining Stocks

September 23rd, 2015 by

There has been a generally balanced mix of encouraging and disappointing news coming out of the mining sector of late. Fortunes for some mining companies have brightened, while others have sunk to the depths of all-time low share prices. Today’s recap, however, focuses on the much stranger mix of the serious and the bizarre.

First, for the serious.

Osisko Gold Royalties Ltd. (TSX:OR), a miner headquartered in Montreal, announced a new options for shareholders yesterday: on a voluntary basis, those invested in the firm by the end of the September can take advantage of a new dividend reinvestment plan offered by Osisko. The scheme allows shareholders to convert their cash dividends into more of the company’s common stock if they choose. The only other requirement is that the shareholders must be domiciled in Canada. The next dividend payment will be distributed to shareholders on October 15th. During Wednesday’s trading session, shares of OR were about 1% higher at $14.60 each.

mine shaftMeantime, Endeavour Silver (NYSE:EXK; TSX:EDR) gave its shareholders some news worth celebrating when it confirmed that exploration at its Terranero project in Mexico has continued to yield promising silver and gold deposits. A company executive revealed that an 8-meter-wide vein of ore is expected to yield 3.25 g/t of gold (an above-average concentration) and over 500 grams of silver per tonne. On top of these results, the company also recently secured drilling permits to continue exploration at the site.

And now, for the bizarre.

Illegal Miners in South Africa

South Africa started out with an illegal mining problem. Now, in an odd twist, the elimination of one problem begets another.

goldmineIllicit mining activities are nothing new in the country, but this case is different for its unfortunate ending. Several amateur prospectors dug holes into the ground in order to access long-dormant underground mining tunnels, hoping to dig up something precious for themselves that the original miners may have missed.

Whether due to an underground explosion of a generator or because of something more innocuous, these vigilante prospectors were killed while beneath the surface. Now, the South African mineral resources department is trying to decide how to proceed: recovering the bodies from the treacherous old mines is a risky endeavor itself. It would seem a waste to lose more lives in order to preserve the dead bodies of a group of criminals.

Administrative Shake-Up

Coincidentally, at the same time as the dead illegal miners story is making the rounds, the minister of mining, Ngoako Ramathlodi, is being replaced. He will move to a new governmental post as the public service and administration minister to make way for the new minister, Mosebenzi Joseph Zwane.

goldminerAlthough the two events are not believed to be closely related, the timing of the change is nonetheless worrisome. While South African mining companies are potentially nearing an end to a labor dispute with the mineworkers’ unions, the shift in leadership could throw a wrench in negotiations due to Zwane’s inexperience. If the new mines minister struggles to establish credibility and a strong persona, the unions could lose faith in the government’s ability to properly regulate the sector.