Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Shares in Bluestone Resources (TSXV: BSR) doubled after Guatemala approved a plan to change the contentious Cerro Blanco gold project to an open-pit operation from underground as the company considers selling it.
Bluestone stock traded at C$0.47 at midday Wednesday in Toronto, valuing the company at C$69.1 million. It has been within a 52-week window of C$0.18 to C$0.65.
The Vancouver-based company, which is 26% owned by the Lundin family trust, is proposing the $572 million project that environmentalists are fighting. Located near the border with El Salvador, it would produce 2.7 million oz. gold over 14 years, according to a feasibility study issued in early 2022. In July, the company began a review to sell its assets.
“After dedicating over two years to obtaining the environmental permit amendment, we are pleased,” president, CEO and chairman Peter Hemstead said in a release. “We will continue with our strategic review, and having the environmental permit in hand helps de-risk the project.”
Environmentalists contend the project, which Bluestone acquired from fellow Canadian miner Goldcorp in 2017 for C$18 million plus shares valued at roughly 9.9% of Bluestone, will pollute the Güija lagoon and Lempa river, the main water source for San Salvador, the Salvadoran capital.
Hemstead says the local community supports the project.
“The design for Cerro Blanco reflects safe and responsible mining practices and sustainable socio-environmental management that can contribute significant economic growth, infrastructure, training and job opportunities to Guatemala,” he said.
The project has an after-tax net present value of $1.1 billion at a 5% discount rate and an internal rate of return of 30%, according to the feasibility study. It also forecast output of 10.2 million oz. silver from processing 53.9 million tonnes of ore in a three-stage development.
The company review is considering the sale of part or all of its assets, a sale of the company and a merger or other business deal, the CEO said.
Bluestone’s environmental approval comes as new Guatemalan President Bernardo Arevalo was sworn in on Monday after a pro-democracy and anti-corruption campaign. Opponents in Central America’s most populous country tried to use the courts to prevent him from taking office after his landslide victory in August.
Elements of the military, the judiciary and conservative political parties attempted to annul the election and suspend Arevalo’s Semilla party. Although the party holds only 23 of the legislature’s 160 seats, a member was elected Congress president.
Bluestone plans to use dry stack tailings management and an independently monitored water treatment plant in Cerro Blanco’s open-pit configuration. Goldcorp, now part of Newmont (TSX: NGT; NYSE: NEM), drilled 43,000 metres on Cerro Blanco and built 3.4 km of underground works when it held the project.
