Gold Fields (GFI) and Pan American Silver (PAAS) (PAA.to): One thing in common, one thing different

One Thing In Common

Both Gold Fields (GFI) and Pan American Silver (PAA.to) (PAAS) have plenty of mine worker deaths on their track records. Here's the latest from GFI, meanwhile the 14 deaths suffered by the PAAS workforce in Peru since 2006 (in many and varied accidents) are noted here.

One Thing Different

Gold Fields shuts down its operations to investigate the deaths on its shifts. Meanwhile PAAS  clearly doesn't give a rat's ass about the people it employs and just keeps the machine rolling, never closing down to investigate its long track record of negligence. 

The mining company I'd prefer in my portfolio is the one that at least tries to make an effort on its accident rate. The company I reject out of hand is the twisting bullshitters who hide the multiple deaths behind award gongs received in other countries from other mines. Ross Beaty, do you really give a damn? Is it all just for show and the money? C'mon dude, explain why so many people have died at your mines one time, willyaz?

gold or the miner?

A classic question for sector investors is whether to hold gold or gold miners, as the theory usually stuffed down your throat by experts (word used very loosely) is that a gold miner will offer you leverage to the metal and compound your profits. So let's see.

We compare gold using its ETF (GLD) as the proxy, then some of the biggest goldminer names out there in Barrick (ABX), Newmont (NEM), Gold Fields (GFI), Goldcorp (GG), Buenaventura (BVN) and Agnico-Eagle (AEM).

This chart shows us how things have progressed in 2010 to date:

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So far this year, GLD has performed better than all the gold miners except NEM

Here's a little longer time span, showing the 12 month period:

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So if we take 12 months as our benchmark, GLD has performed better than all the miners except BVN.

Now a step further back, as we consider a longer five year period.

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This time GLD's 185% upside performance is trumped by three of the miners (AEM, BVN and GG), but really only AEM has put significant ground between it and its metal.

Overall, it seems to me that unless you were smart/lucky enough to have picked AEM out the pack a few years ago, holding gold is the better call and screw conventional wisdom. DYODD, dude.

So why is Gold Fields (GFI) in JV with Vena Resources (VEM.to), Otto?

Good question. Hmmmm...let's see now.

First, let's take this morning's news release about the major new gold discovery made by Gold Fields (GFI) and Buenaventura. Here's how the NR kicks off:

JOHANNESBURG, May 11, 2010 /PRNewswire-FirstCall/ -- Chucapaca's joint venture partners, Gold Fields Limited (51%) (Gold Fields) (JSE, NYSE, NASDAQ Dubai: GFI) and Compania de Minas Buenaventura S.A.A. (49%) (Buenaventura, BVN), are pleased to announce the discovery of a major gold-copper-silver deposit in their Chucapaca project area (CPA) in southern Peru.

Called the Canahuire deposit, it has a Mineral Resource estimate of 5.6 million gold equivalent ounces[1] (Table 1), with mineralisation potential beyond the extent of current drilling. The Inferred Mineral Resource for Canahuire is approximately 83.7 Mt at 1.9 g/t gold, 0.09% copper and 8.2 g/t silver for a total of 5.6 million gold equivalent (AuEq1) ounces. CONTINUES HERE

And if you do the math, 5.1m oz of that total is pure gold.

Second, let's remember what the GFI Head of Exploration said about the area in and around Chucapaca. In his opinion, what we have here is a "new district".

Third, let's check a map:

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And here's a nice close-up.

Oh look! Esquilache is just 25km away from a major new gold discovery made by GFI....hoodathunkit, eh?

Fourth, let's remind ourselves of the VEM.to NR dated May 4th 2010.

TORONTO, ONTARIO--(Marketwire - May 4, 2010) - Vena Resources Inc. (TSX:VEM - News;VEM - News; FRANKFURT:V1R - News; OTCBB:VNARF - News), a Company with strong partnerships with four of the world's largest mining companies, is pleased to announce that after field reviews conducted by its partner Gold Fields Limited ("Gold Fields") (NYSE:GFINews; JSE:GFI)(NASDAQ Dubai:GFI) in the Amantina region (18,900 hectares) in southern Peru, a technical committee comprised of geologists from both Vena and Gold Fields has agreed to advance the exploration to focus on a significant diatreme breccia target that had been previously identified by Vena in 2007. LIMA: -

The explosive breccia target known as the Amantina prospect is located approximately nine kilometres east of the historic Esquilache silver mine where Vena is actively exploring and approximately 27 kilometres east of the Gold Fields / Buenaventura Chucapaca JV project. The Amantina prospect consists of a polymictic breccia with a strongly silicified chalcedonic matrix surrounded by a zone of hydrothermal heterolithic breccias developed in Tertiary aged andesitic volcanics. The core breccia measures approximately 400 x 200 metres and trends N 20 degrees E. Additional lenticular outcrops of breccia poke through the extensive soil cover approximately 250 metres to the southeast and indicate that the overall size of the diatreme pipe may be much larger than the observed outcrop. The breccia body responded as a chargeability / resistivity high (disseminated pyrite in the siliceous matrix) during the 2007 induced polarization survey conducted by Vena and two other similar targets were identified to the southwest and northeast.

Strongly anomalous mercury, arsenic, lead and antimony geochemistry combined with the chalcedonic content of the breccia matrix suggest that CONTINUES HERE

Hey, there are never any guarantees when you're out exploring for gold, but GFI didn't just pick the VEM Esquilache/Amantina concession to JV because it had some leftover geologists that wanted a new spot in the mountains to go hiking. DYODD, dude.

Vena Resources news (VEM.to)

Thought for the day: When a small junior mining company specializing in Peru attracts a decent, world class joint venture partner, then you can virtually guarantee that the bigboy miner in question can spot a bargain or a good, solid team with which it can work.

So what can you deduce from a small mining company like Vena Resources (VEM.to) that has attracted not one but three world class companies to JV with it?

• In Base Metals, Vena Resources JVs with Glencore, as big as it gets in the sector.

• In Uranium, Vena Resources JVs with Cameco, world leader in the metal.

• And now in Precious Metals, Vena Resources has attracted Gold Fields (GFI) as a JV partner to explore its highly prospective Esquilache project in southern Peru.

So ask yourself this: What do serious, world leading mining companies see in VEM.to that the retail market has up to now ignored? Your humble correspondent owns, so DYODD. Now check out today's press release pasted below:

TORONTO, ONTARIO--(Marketwire - Dec. 9, 2009) - Vena Resources Inc. ("Vena" or the "Company") (TSX:VEM - News; LIMA:VEM - News; FRANKFURT:V1R - News) is pleased to announce that it has signed a definitive Joint venture agreement with Gold Fields, the third largest gold producer in the world, to create a new Peruvian company "NewCo" to jointly explore the Esquilache regional project 100% owned by Vena in southern Peru. "NewCo" rights will not include the historical San Antonio de Esquilache gold/silver mine that is currently undergoing a 3,000 meter drill program.

Under the terms of the joint venture, Gold Fields can earn an initial 51% interest in "NewCo" by spending US$1.5 million on exploration and maintenance within three years of the effective date of the joint venture agreement. Gold Fields can earn an additional 19% interest in "NewCo" by spending an additional US$3 million on exploration and maintenance within the subsequent three year period to bring its total interest to 70%. If Gold Fields does not complete the additional investment of US$3 million, its interest in "NewCo" will remain at 51%.

Further development of the project would be subject to normal straight line dilution clauses. Should either party dilute to below 15%, then it would exit with a 1% NSR. The "NewCo" owner would have the right to purchase one-half (or 0.5%) of this NSR interest for US$2 million.

Gold Fields will be the initial operator and full pre-emptive rights will apply in the case that either party wishes to assign or sell its interest in the joint venture or its rights to the NSR royalty to an unrelated party. The parties have agreed that NewCo's Management Committee will be comprised of two representatives of Vena Resources and two representatives of Gold Fields with Gold Fields having the casting vote.

Gold Fields is one of the world's largest unhedged producers of gold with attributable production of 3.6 million ounces(1) per annum from nine operating mines in South Africa, Ghana, Australia and Peru. Gold Fields also has an extensive growth pipeline with both greenfields and near mine exploration projects at various stages of development. Gold Fields has total attributable mineral reserves of 81 million ounces and mineral resources of 271 million ounces.

(1) Based on the annualized run rate for the first quarter of fiscal 2010.

Juan Vegarra, Chairman and CEO of Vena Resources commented,

"We welcome Gold Fields to the Esquilache region. Vena is very focused on drilling the historical Esquilache gold/silver mine while working with Gold Fields to explore the early-stage areas surrounding the historical mine. Access to geological knowledge and global expertise is what Vena looks for in any partnership. Gold Fields is the third global mining company that Vena has entered into a joint venture agreement with - the others being Cameco in Uranium and Glencore in Zinc."

The transaction remains subject to regulatory approvals.

To view the map associated with this Press Release please visit the following link: http://media3.marketwire.com/docs/VEM-1209.jpg

Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

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