2009 – Page 4 – Republic of Mining

Sherritt International at Eighty – Marching to a Different Drum – by Jane Werniuk (Part 1 of 2)

March 30, 2009

The Canadian Mining Journal is Canada’s first mining publication.

This article was originally published – February/2008

Sherritt International is a resources company built from the bricks of a Canadian nickel miner, which recently celebrated its 80th anniversary, shown by the timeline in this article. Despite the intervening decades and corporate upheavals, Sherritt is still a nickel company grounded in the strength of its research, technical innovation and operational expertise. But it has become international, and is aggressively focusing on growth in all its business units–metals, coal, power generation, and oil and gas.

In a recent two-hour interview with the company’s president and CEO Jowdat Waheed at its uptown Toronto head office, I learned that Sherritt has decided to get its story in front of the public, which prompted Waheed to invite me to visit the company’s metals, technology and coal offices and facilities in western Canada followed by a trip to see its Cuban assets, all in four days in early February. It is from this brief immersion that I bring you a snapshot of Sherritt International, today.

Metals division

This is by far the largest part of the company, bringing in 62% of Sherritt’s revenue and 80% of its operating earnings in the first nine months of 2007.

Ontario 2009 Budget Provides Miners with Tax Efficient Opportunities

March 27, 2009

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Several measures announced by Ontario Finance Minister Dwight Duncan in the 2009 provincial Budget yesterday promise tax savings to Ontario mineral producers. Perhaps the most important is the move to a single value added tax by July 1, 2010, which could save the mining sector potentially millions of dollars annually. This federally administered value added tax would have a combined rate of 13% — 8% for Ontario, matching the soon to be phased out retail sales tax, and 5% for Ottawa, matching the current Goods and Services Tax (GST).

The value added tax allows companies to be reimbursed for tax paid on business inputs through tax credits. It is estimated that Ontario´s $10 billion-plus mining sector spends about $3 billion annually on these inputs to production. More than 90% of these production inputs are purchased in Canada and 80% of the province´s mineral output is exported. The arithmetic may be complicated for individual companies and there is a lag in receiving benefits of the tax credits, but the potential for tax saving — freeing more dollars for future investment — is significant.

The Thunder From Down Under – A History of Nickel Laterites – by Stan Sudol

May 15, 2010March 27, 2009

The Canadian Mining Journal is Canada’s first mining publication.

This article was originally published – August/2005

Everything you wanted to know about laterites but were afraid to ask

The last few years of the 20th Century were not very kind to the nickel industry. In October and December of 1998 the LME price for nickel dipped to US$1.76 a pound, the lowest level ever, if you factor in inflation. The imploding Russian economy was dumping nickel on western markets, the Asian currency crisis was annihilating economic growth and metal demand, and new lower-cost mine production was threatening to come on stream.

Of great concern to Canadian nickel giants Inco Ltd. and Falconbridge Ltd., the second and third largest producers after Russian MMC Norilsk, was an upstart Australian company called Anaconda Nickel Ltd.

Andrew “Twiggy” Forrest, Anaconda’s chairman, was well known in Australian mining circles for his legendary salesmanship and determination. One could almost imagine him pounding the table like Nikita Khrushchev and boasting that “he would bury the West with low-cost laterite nickel.”

Study Confirms that Mining is a Gem in Ontario´s Economy

March 26, 2009

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

The mining industry in Ontario is a cornerstone of the provincial economy providing benefits that far outweigh its relative size, according to a study released yesterday. “Ontario Mining: A Made-in-Ontario Success Story” was presented by its author tax specialist Greg New at Queen´s Park during the Ontario Mining Association´s Meet the Miners Day. This report on mining´s impact and contributions to the economy and society of Ontario is produced every other year for the Ontario Mining Association with the assistance and cooperation of the Ministry of Northern Development and Mines. The previous study was titled “Ontario Mining: A High-Tech Productivity Powerhouse.”

“Overall, the Ontario mining industry matters to Ontario for its direct $10.7 billion in mineral production and related tax revenues, and jobs this production sustains, but also for the fact that it is a largely made-in-Ontario industry that contributes disproportionately to both the provincial tax base and the province´s international balance of trade,” said the report. This study aims to provide answers, with supporting statistics, to the who, what, where, when, how and why questions often asked about the industry.

Highlights of the study would include: The total value of mineral production in Ontario in 2007 was $10.7 billion; Mining provides Ontario with a trade surplus of about $3.3 billion annually; The productivity of the industry continues to improve – each mining industry employee accounts for $660,000 of output annually; Jobs in the mining industry continue to be among the highest paid in Ontario; Total capital investment in Ontario mining, including research, exploration, construction and equipment, reached $2.7 billion in 2007, representing an increase of 58% from 2004;

McGuinty Should Establish Laurentian as the Harvard of the Mining Sector – by Stan Sudol

May 15, 2010March 17, 2009

Premier McGuinty should consolidate the province’s scattered post-secondary mineral education programs at Laurentian University and establish a world-class centre of excellence – a Harvard of the Mining Sector.

In one visionary initiative, the Premier could give Sudbury an economic boost, help resolve mining skilled labour shortages, spend university funding more efficiently and be in sync with the recently published provincial report “Ontario in the Creative Age” by Richard Florida and Roger Martin of the Rotman School of Management.

Notwithstanding the current commodity slump, there is a demographic time bomb ticking in the mineral sector as the baby boomers get ready to retire. It is believed that 60% of geo scientists – the people who find new mineral deposits – in Canada will be 65 or older by 2015.

In early 2008, the Mining Industry Human Resources Council (MIHR) projected that mining industry yearly labour requirements face three scenarios: high-growth (9,200), no-growth (6,200), and industry contraction (4,600), until 2016. These were only based on retirements.

The Human Disaster in the Canadian Territory of Nunavut – by Colin Alexander

March 17, 2009

Author Colin Alexander was the former publisher of News of the North in Yellowknife, N.W.T., and was the senior consultant on education for the Ontario Royal Commission on the Northern Environment. Currently living in Ottawa, he is also a retired trader, broker, and systems developer, and author of Streetsmart Guide to Timing the Stock Market. His most recent book, Timing Techniques for Commodity Futures Markets, was published by McGraw-Hill in 2007, and is available here at www.amazon.com.

As Canada’s Nunavut territory approaches its tenth anniversary on April 1, we should look at the mismatch between resource investment and the Inuit human capital, and consider these points:

* Employers need skilled and motivated workers. But where in their own land are the Inuit geologists and mining engineers, doctors and marine biologists? Where are the electricians, plumbers, heavy equipment operators and chefs?

* The Inuit population almost doubled between 1981 and 2006, and unemployment is very high despite considerable over-manning in administration. However, there are far more jobs in Arctic and sub-Arctic Canada than there are Indians and Inuit of employable age. Xstrata’s Raglan nickel mine in Quebec’s Nunavik region has 500 jobs onsite, with just 16% filled by Inuit.

* Resource-related jobs mostly require real qualifications, not the preferential hiring of the unqualified. As a shift boss at the Giant gold mine in Yellowknife once told me, “Any time I give someone a break who doesn’t deserve it, I risk having an accident that kills us all.”

Australia Prepares to Overtake Canadian Uranium Production – by Marilyn Scales

May 4, 2015March 16, 2009

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Australia will quadruple uranium production pushing itself ahead of Canada as the world’s largest producer. Australian state premier Mike Rann made this boast to a group of Indian journalists at the Citi Australia and new Zealand Investment conference earlier this month, according to a report in The Hindu of March 8, 2009.

The single project that would rocket Australian uranium production ahead of Canadian is the expansion of BHP Billiton’s Olympic Dam mine. The company is looking at the feasibility of expanding output from 4,300 t/y to 19,000 t/y. That would create a single mine that could produce 35% of the world’s current uranium needs.

The newspaper account did not specify whether all those tonnes per year were elemental uranium or uranium oxide. A quick peek at the BHP Billiton website confirmed that the annual output is tonnes of U3O8.

Partner Sought for Madagascar Nickel Laterite Project – by Jane Werniuk

March 13, 2009

The Canadian Mining Journal is Canada’s first mining publication.

This article was originally published – April/2006

Another large Canadian nickel laterite project is Ambatovy in eastern Madagascar, off the east coast of southern Africa. The project is owned by Dynatec Corp. of Richmond Hill, Ont., and Sumitomo Corp. of Tokyo.

Ambatovy was studied extensively from 1989-95 by Phelps Dodge Corp., which sold 100% interest in the project to Dynatec between 2004 and January 2005. A bankable feasibility study, co-ordinated by SNC-Lavalin Engineers & Constructors, was released in February 2005. The results were positive, but the estimated capital expenditure was US$2.25 billion — too expensive for Dynatec to carry alone.

The company sought and found two partners. In May 2005 it signed an agreement with Impala Platinum Holdings of Johannesburg for 50% interest. Sumitomo purchased 25% interest in August 2005, reducing Implats’ and Dynatec’ holdings to 37.5% each. A shareholders agreement was signed between the three parties in mid-October, but six weeks later came news that must have been bitter. A Nov. 28 news release said, “Implats has advised that it has determined that the benefits to Implats which it had initially anticipated from the project do not now appear to be achievable.”

Falconbridge’s Nickel Laterite Koniambo Project in New Caledonia – by Marilyn Scales

May 4, 2015March 13, 2009

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.This article was originally published – April/2006

Another major Canadian player in New Caledonian nickel is Toronto’s Falconbridge Ltd. (soon to be swallowed by Inco Ltd.). Falconbridge and its 51% joint venture partner Société Minière du Sud Pacifique S.A. (SMSP), are developing the Koniambo Project in the northern part of the island for start up, perhaps as early as 2009.

Last month, Falconbridge and SMSP (which is owned primarily by the North Province) created an operating company, Koniambo Nickel S.A.S. under the leadership of president Brian Kenny. Koniambo Nickel will hold title to the Koniambo deposit. On March 1, the French minister of overseas territories François Baroin laid the ceremonial first stone for the Koniambo project.

The following day the Koniambo Nickel board met to approve this year’s work program. Preparing the earthworks and advancing the project engineering are the top priorities for 2006. Dredging of a port will begin early in 2007, and the main construction period will be 2008-09. Production will begin very late in 2009 or early in 2010.

Better Returns Expected From Revised Goro Nickel Laterite Project in New Caledonia – by Marilyn Scales

May 4, 2015March 13, 2009

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.This article was originally published – April/2006

New Caledonia, a French island territory 1,600 km off the northeast coast of Australia, is home to an estimated 25% of the world’s known nickel reserves. With rich laterite and saprolite deposits, it is no wonder this island nation is the scene of increased mining activity. A subsidiary of Paris-based Eramet currently owns five mines and a smelter scattered across the island. The other producer is Société Minière du Sud Pacifique S.A. It, too, has several mines supplying an Australian smelter.

The Goro Nickel Deposit, tucked away on the southern tip of New Caledonia, is one of the world’s largest undeveloped laterite deposits. But not for long. Construction of the mine, mineral processing plant, and extensive infrastructure is moving ahead quickly toward a start-up date of late 2007.

As of the end of February 2006, engineering is over 70% done, with about 1,600 workers on the site. Earthworks for the process plant were completed in March 2006, and will continue at the residue storage facility and on road realignment. The test mine extends to the saprolite horizon and exposed bedrock. The first of almost 2,000 skilled Filipino workers will soon arrive to start on construction.

The first berth of the port will be completed in time to receive the first module of the processing plant in May. The next milestone will be completion of the first half of the coal-fired power plant in September. The second berth of the port and the raw water pipeline will be finished in time for that event.

Money Flowing Again for Best Mining Projects – by Marilyn Scales

May 4, 2015March 12, 2009

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

There is light at the end of the ramp. There have been several financings in the hundreds-of-million-dollar range since the beginning of the year, and that leaves me hoping the worst is over for the mining community.

In early February, Osisko Mining of Montreal closed a bought deal worth C$350 million. That money is earmarked for completion of the Malartic gold project in Quebec.

Then Kinross Gold of Toronto completed a US$415-million public equity offering. The money will be used to pay down debt incurred with recent acquisitions.

Uranium producer Cameco of Saskatoon completed a bought deal that raised C$460 million. The money will strengthen the company treasury as Cameco looks for opportunities in today’s economic environment.

Mining Layoffs Affecting Smaller Sudbury Companies – by Bill Bradley

December 9, 2010March 11, 2009

Date Published – Mar. 9, 2009

Northern Life, Greater Sudbury’s community newspaper, gave Republic of Mining.com permission to post Bill Bradley’s article. www.northernlife.ca

The mining layoffs at Vale Inco and Xstrata are making the headlines.

But the pain is also being felt by employees in smaller companies, said one laid off worker at Mansour Mining Inc.

Jeff Marsolais, a laid off worker at Mansour Mining, said he knew of up to 70 fellow employees that have been laid off.

“Vale Inco and Xstrata layoffs get all the headlines. But the smaller companies are cutting jobs too. We are getting cut. We have families and bills to pay too,” said Marsolais.

Laurentian University economist David Robinson said smaller companies are always at risk.

“There is no guarantee for anyone these days. But there are wonderful companies here that have survived the up and down cycles in the past. We certainly are on a roller coaster now though,” said Robinson.

Agreement Strengthens Ontario Mining and First Nations Links

March 10, 2009

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

The Memorandum of Understanding (MOU) signed by the Mining Association of Canada (MAC) and the Assembly of First Nations strengthens the existing links between these two groups. Through this MOU, the mining industry will boost its engagement with First Nations economies creating employment and business opportunities. The MOU was signed by National Chief Phil Fontaine and Jim Gowans, President of Ontario Mining Association member De Beers Canada and Chair of the MAC. This historic initiative got underway when MAC and the Assembly of First Nations signed a letter of intent in November 2007.

“In resource development, First Nations and the mining community are natural partners,” said National Chief Fontaine. “Developing a new partnership between the AFN and MAC will complement and enhance the growing relationships between First Nations and Canada´s major mining companies. The resource sector will come back stronger than ever in the very near future. With a growing land base and growing populations, First Nations are poised to be key players in the years and decades to come,” he added. “We want to work together towards greater certainty and sustainable mining developments that will contribute significantly to the economic, social and environmental well-being of First Nations.”

“Canada´s mining industry is the largest private sector employer of Aboriginal people,” said Mr. Gowans.

Hidden Opportunity in Mining Sector Hard Times – by Marilyn Scales

May 4, 2015March 9, 2009

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Unless you are recently returned from a remote, primitive tropical island, you are inundated daily by doom and gloom reports, not only for the mining industry but for a broad range of banking, retail, real estate, automobile and more sectors.

“Dismal” is what the latest PricewaterhouseCoopers study calls last year for juniors.

The numbers tell a “sobering tale”, Ernst & Young said of the toll the global credit crisis is taking on the market capitalization of TSX-listed companies.

The Fraser Institute called the outlook “gloomy”, expecting at least 30% of exploration companies to fail.

“The mining industry, generally, is gripped by panic and the vast majority of firms are in lock-down mode,” says Jon Wylie, managing director of Proudfoot Consulting in Canada. “They have reacted to sharply lower commodity prices by scaling back and closing older, higher-cost mines.”

PDAC 2009 Convention – the Mining Bust of a Generation? – by Stan Sudol

May 15, 2010March 9, 2009

What a difference a year makes at the Prospectors and Developers Association of Canada (PDAC) annual convention, the largest on the planet. The PDAC is where the world’s mining analysts, investors, prospectors, exploration managers, government representatives and anyone else connected to this industry come to meet, do business, attend lectures and of course party. There is also a large Investor’s Exchange that the general public can attend to find out about the newest exploration plays or interrogate company presidents about their stock performance.

Needless to say, the mood was somewhat somber as everyone is trying to cope with commodity prices and metal demand that over the past six months have fallen off the proverbial cliff. The rapidness of the crash, along side with the unprecedented turmoil in credit and capital markets that has dried up funding for most exploration and development work has sent a legitimate fear throughout the entire junior mining sector.

A PricewaterhouseCoopers survey found that the market capitalization of the top 100 TSX-V junior mining companies plummeted from $20.2 billion on June 30, 2007 to $4.1 billion by November 2008. Investors are shunning higher risk exploration companies like the plague.