By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, October 7, 2015

Gold prices are moving sideways in Wednesday trading, following printing a one-week high on Tuesday on the back of a weaker U.S. dollar and a bigger-than-expected trade deficit for America. Soft economic data, including the disappointing non-farms payroll report last Friday, has helped bolster gold from around $1,110 to around $1,150 in early Wednesday trading. Silver has done even better, jumping from around $14.50 per ounce to around $16 per ounce, marking its highest level since June. Part of the driver is speculation that the data will cause the U.S. Federal Reserve to hold off on raising interest rates this month and possibly at its December policy meeting as well. Although gold has fallen throughout the last few years in spite of economic stimulus from the central bank, historically quantitative easing is thought to be positive for the precious yellow metal.

What gold prices do going forward is probably more important to Glen Eagle Resources (TSX-Venture:GER) now than ever before, considering that the Montreal-based company became a gold and silver producer earlier this year. In May, the TSX Venture Exchange approved Glen Eagle’s acquisition of Cobra Oro de Honduras SA. In the deal, amongst other things, Glen Eagle agreed to issue four million shares of GER to acquire 90 percent of Cobra Oro.

In June, Glen Eagle began producing, announcing thirty ounces of gold and 1,000 ounces of silver from its custom plant in Honduras. Throughput at the plant is only 60 tonnes per day, but mineralized material is averaging 6.5 grams gold per tonne and 130 grams silver per tonne. Production cost is holding under $300 per ounce, according to the company. Since the acquisition, Glen Eagle has made changes to the plant to keep production steady, while preparing for even more modifications in a bid to ramp up production. Investment following the acquisition has tallied about $236,000 for equipment and building a cyanide circuit to improve metal recovery.

On Wednesday, Glen Eagle announced that it sold $123,000 in gold and silver during the last quarter. The revenue resulted in Cobra Oro covering operating expenses and part of its capital costs for the quarter, even against the backdrop of the plant shutting down for three weeks for infrastructure improvements.

Glen Eagle says that its investment at the plant should boost production to 100 ounces of gold and 1,000 ounces of silver each month. In round numbers at current spot gold and silver prices, that would equate to roughly $131,000 per month, rather than per quarter.

To attain this goal, Glen Eagle is using the upgraded circuits and plans to increase daily throughput from 35 tonnes per day to 120 tonnes per day by adding another ball mill and making the appropriate plant site modifications to support the extra volume.

Shares of GER are up 11.1% in Wednesday morning trading at 5 cents each, albeit on only 6,000 in volume.

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